Straws are discrete research notes that relate to a particular aspect of the company. Grouped under #hashtags, they are ranked by votes.
A good Straw offers a clear and concise perspective on the company and its prospects.
Please visit the forums tab for general discussion.
Western Areas has gone into a trading halt pending announcement regarding a change in control transaction. Though not stated this will presumably be in regards to IGO's previously flagged interest. The AFR is reporting the offer will now be all cash (previously thought to include script). They've indicated a price of $3.30, which is barely any premium at all, albeit it's been trading higher since August on news of IGO's interest. If that happens it'll will be the second bid I've caught this week. I'm going to run out of companies at this rate...
[Held]
I'm not sure whether IGO shareholders know what's worse - buying Western Areas (WSA) or not buying Western Areas. Yesterday IGO's share price tanked yesterday on news they were in preliminary talks with WSA to buy the underperforming nickel miner. Then today it has emerged they could get outbid by Twiggy Forrest who has turned up on WSA's register as a substantial holder. On top of that, speculation has mounted BHP might want a piece of the action, utilising proceeds of it's yet to be finalised sale of coal assets. Both Fortescue and BHP are keen to tout their green(er) credentials, with nickel being a key component of mainly higher performance batteries. In response to the prospect of competition IGO has slumped another 2% today.
Western Areas is a largely WA-based nickel miner who always seems to be 'nearly there'. They seldom fail to disappoint when on the cusp of breaking out. Some traders talk about the classic play being to buy when their SP has a '1' in front of it and sell when it has a '3' in front of it. Their older assets are getting pretty tired and will be exhausted in the next few years but their ace in the hole is the Odysseus mine, which has a 15 year+ mine life and is due to start production in FY23. It positions them as one of the few nickel miners with a clear line of sight into the 2030s. One way or another it seems like a good chance they'll be under new management soon.
[I hold WSA. I don't hold IGO, BHP or Fortescue. Getting some IGO scrip as part of the proposed deal is not entirely unattractive]
8/4/21 MARCH QUARTER PRELIMINARY PRODUCTION RESULTS
Western Areas Ltd (ASX: WSA, “Western Areas” or the “Company”) is providing a preliminary March quarter production update for the Forrestania Operations, and is pleased to report an improvement in both mine and milled physicals, resulting in strong nickel in concentrate production for the quarter.
HIGHLIGHTS:
Although these are good results and WSA is up almost 7% tday at $2.275, on 31/3/31 they extended their SPP ( Share Purchase Plan) til 20/4/21. They are hoping to raise $15M at $2.15 per share~ eligible shareholders can buy up to $30k of shares....so IMO the share price may stay around these two amounts until after the close of the SPP
02-Sep-2020: Maiden Ore Reserve for AM6 Boosts Cosmos Base Case
Also, Last week: 25-Aug-2020: FY20 Full Year Financial Result and FY21 Guidance plus FY20 Financial Results Corporate Presentation and Appendix 4E & FY20 Full Year Statutory Accounts
[I'm not currently holding WSA, but I often do. They are a profitable nickel miner. My preference in the sector currently for nickel exposure is IGO, which I do hold - and I also hold S32. All 3 companies (WSA, IGO & S32) are on my Strawman.com scorecard.]
24-7-2020: WSA Quarterly Activities Report
WESTERN AREAS FINISHES FY20 IN STRONG POSITION – STRATEGICALLY SET FOR LONG TERM NICKEL PRODUCTION
Western Areas (ASX: WSA) is pleased to provide the June Quarterly Activity report.
JUNE QUARTER 2020 HIGHLIGHTS:
Western Areas Managing Director, Mr Dan Lougher, said it has been a busy quarter at Western Areas across many fronts, including exploration, project development and operations, while also advancing and building long term strategic optionality into the Company via an investment in Panoramic Resources.
"Pleasingly our assets continued to operate reliably and consistently, enabling the Company to materially deliver into all FY20 guidance metrics, acknowledging a slight shortfall in nickel concentrate production, achieving 99.7% of guided production range.
Most encouragingly during the quarter, our systematic and sustained exploration effort at the West Gawler Project in South Australia has started to show its potential as a new base metal region, with the first diamond drill hole at the Sahara target area intersecting a significant interval of mineralisation,” Mr Lougher said.
--- click on link above for the full report --- [the above is just the first bit]
[I hold WSA shares]
Also: (today, 24-7-2020): Assays Confirm Nickel and Copper Sulphide at Sahara
And one month ago (23-6-2020): Western Gawler Drilling Strikes Significant Nickel & Copper
Plus: 23-7-2020: SGQ: Mt Alexander - Drilling Update
[WSA owns 25% of the tenements and the minerals contained within them - that St George Mining - SGQ - is discussing in that announcement]
Also: 19-6-2020: Western Areas takes 19.9% Stake in Panoramic Resources (PAN)
19 July 2019: Offtake Agreement for High Grade Nickel Sulphide Product
May 2019: This is the bull case for WSA from WSA (i.e. in their own words, taken from a recent quarterly report):
Western Areas has Australia’s highest grade nickel mines and is a low unit cash cost producer. Its main asset, the 100% owned Forrestania Nickel Project, is located 400km east of Perth in Western Australia. Western Areas is also Australia’s second largest independent sulphide nickel miner producing approximately 22,000 to 25,000 nickel tonnes in ore per annum from its Flying Fox and Spotted Quoll mines - two of the lowest cost and highest grade nickel operations in the world.
An active nickel project developer at Cosmos and explorer at Western Gawler in Australia, the Company also holds exploration interests in Canada through shareholdings in Grid Metals (formerly Mustang Minerals). Additionally, the Company has exposure to the emerging lithium market via its shareholding in Kidman Resources Limited.
The Board remains focused on the core business of low cost, long life nickel production, new nickel discoveries and generating returns to shareholders. It has put in place the cost structure and capabilities to prosper throughout the cycle by adopting prudent capital management and an opportunistic approach. Its latest presentation can be found at http://www.westernareas.com.au/investor-centre/corporate-presentations.html
--- ends ---
That was taken from their March Quarter Activities Report.
Disclosure: I hold WSA shares. I bought some more yesterday (27th May 2019) after the nickel price rose again. Because they are a single commodity producer, you would need to be bullish on nickel, because if nickel goes down, so do they, but if you like the exposure to nickel, they're a good company within that space.
Additional: Matt Haupt, the lead PM for WLE (WAM Leaders Fund) holds WSA in WLE. He also holds IGO (as I do). He also holds Oz Minerals (OZL) among the smaller miners, as well as the usual suspects - the big names like BHP, RIO & S32. OZL are a copper miner mostly - which I don't hold. My preferred copper exposure is via Sandfire (SFR, copper & gold) and Independence Group (IGO, nickel, copper, gold, cobalt). I do hold S32, but not BHP or RIO currently. I think the time to buy / hold iron ore miners is when the iron ore price is low, not when it's high - like it is now. And the best exposure to iron ore on our market - when the price is high - is via FMG, which, again, is best bought when the iron ore price is low. BHP is up a lot this year, RIO and FMG are up even more, within a couple of percentage points of their 12 month highs. WSA on the other hand is well down on where they were a year ago, and that makes them a lot more interesting to me. They're smaller, riskier, and leveraged to a single commodity but it's a commodity I'm comfortable with exposure to, and that's why I've recently (yesterday) topped up my WSA shareholding.