Western Areas shares had a rare (for 2017) rise in price yesterday after releasing an encouraging June quarter and 2016-17 production report.
The company’s shares have fallen by more than 20% so far this year as global nickel prices have been generally weak, but yesterday they rose 2.1% to $2/35.
Western Areas yesterday said it had achieved all of its 2016-17 guidance (http://clients2.weblink.com.au/news/pdf_1%5C01876598.pdf).
Mine production reached 25,996 tonnes of nickel in the year to June, compared to guidance of between 25,000 to 26,000 nickel tonnes.
Unit cash cost of nickel in concentrate were reduced to $A2.38/lb. Management had targeted unit cash costs of between $A2.35/lb to $A2.50/lb for the year.
All in all, this led to the nickel producer reporting full-year cash flow of $64.6 million after all capital and exploration expenditure and corporate costs.
"Following the exit of the Company’s investment in Bluejay Mining Plc (“Bluejay”), the Western Areas balance sheet is in a very sound position, with A$140.3m cash at bank, to fund its organic pipeline of opportunities,” the company said in yesterday’s report
"The Odysseus resource was significantly upgraded during the quarter with a 311% increase of the massive sulphide resource. The total Odysseus Mineral Resource estimate now stands at 7.9Mt @ 2.5% nickel for 199,174 nickel tonnes (using a 1.5% nickel cut off), of which 93% is in the Indicated category (77% previously).
Western Areas says it is Australia’s highest grade, lowest cash cost nickel producer and its main asset, the 100% owned Forrestania Nickel Project, is located 400 kilometres east of Perth in Western Australia.
"Western Areas is also Australia’s second largest sulphide nickel miner producing approximately 22,000 to 25,000 nickel tonnes per annum from its Flying Fox and Spotted Quoll mines – two of the lowest cost and highest grade nickel operations in the world,” the company claims.
Western Areas said its ANZ corporate loan facility remained undrawn at the end of June, with the company continuing to be debt free. As disclosed in prior periods, this bank facility expired in the March quarter, but has been extended to the September quarter while the Company finalises its longer term capital management plan.
