April 29 2019: From MNN: MiningNews.Net. Reporter: Michael Quinn.
Western Areas delivers as planned
CONSISTENTLY well-performed nickel miner Western Areas looks to have delivered another bog standard quarter in the March period, with all key operational metrics broadly in line with previous quarters.
Arguably the highlight was the cash cost of the 5548 tonnes of nickel in concentrate of US$2.01 per pound, the lowest achieved in the current financial year, while cash at bank at quarter's end of A$116.7 million was down on December's $134.3 million after customer payments totalling $10.3 million were received on April 1.
Cash at bank plus nickel sales receivables gained $2.5 million quarter on quarter to $149.9 million.
Growth expenditure for the next addition to the Western Areas' stable, the Odysseus project at Cosmos, totalled $6.6 million, with the majority of the expenditure relating to the ongoing underground decline rehabilitation works, underground dewatering and the shaft haulage system detailed design and relocation.
Meanwhile the company spent $2.7 million on exploration and flagged the emergence of the Mystic prospect in South Australia's Western Gawler "following the identification of elevated nickel in oxide mineralisation" - first reported in the September 2018 quarter.
"The corridor is broadly defined as 300m wide and 400m along strike, open to both the north and south," Western Areas said.
"Further aircore drilling is planned to extend drilling coverage and evaluate the economic potential of this zone in the second half of 2019."
Western Areas said it was "particularly encouraged by these result as they represent the highest?grade nickel mineralisation identified to date across the Fowler Domain of the Western Gawler project".
Western Areas' ground lies east and south of the Jacinth mineral sands operation. [JC's note: Jacinth is operated by Iluka: ASX:ILU]
Shares in Western Areas were unchanged at $2.34 in afternoon trade, capitalising the company at $640 million.
The stock was at levels around 30% higher 12 months ago.
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21-May-2019: WSA is now $2.22, 12c (or 5%) lower than they were when Michael Quinn penned that piece three weeks ago. Base metals were lower overnight and it would seem the demand for nickel - and copper in particular - is not as strong as some had been predicting. There is certainly scope for base metal prices to move lower in the short term, but medium to longer term I think they're going higher, especially if a trade deal is inked between the US and China. The main risk with WSA is that they are a single commodity miner (nickel) and so their fortunes are always going to be very strongly tied to the nickel price. Their main advantage is their cost advantage. They have a couple of high grade and low cost nickel mines. If you want to play nickel, my picks in the sector are WSA & IGO, but you would need to be bullish on nickel first.