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#Takeover Target
stale
Added 3 years ago

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]

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#Takeover Target
stale
Added 3 years ago

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]

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#1/4ly Production Results
stale
Last edited 4 years ago

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:

  •  Total nickel mined 4,236 Ni tonnes, up 20% quarter on quarter
  •  Mined ore grade of 3.6% Ni, up 27% quarter on quarter
  •  Nickel produced in concentrate of 4,267 Ni tonnes, up 21% quarter on quarter as a result of higher mined grades and mill recoveries

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

View Attachment

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Valuation of $2.98
stale
Added 4 years ago
31-Mar-2020: 12-month PT: $2.98. Western Areas is a nickel miner, and nickel (and other base metals) will be under pressure until we get bullish again on global growth, which is unlikely to be for at least 6 months. If we enter a deep global recession, it will obviously take longer. I don't hold any nickel stocks currently, so I don't hold WSA. I think copper will rise before nickel, so I'm holding Sandfire (SFR). Once copper begins to rise consistently, it could be a good time to start looking at nickel and other base metals companies. 29-Sep-2020: Update: $2.98 still looks good for this nickel producer. Not sure if they'll get there by March 2021, but I reckon they will by September/October 2021. I'm maintaining my $2.98 price target. Base metals will recover strongly when the world's economies recover, and copper will likely recover AHEAD of the actual real-world recovery. Nickel won't be too far behind copper. And nickel has other supply issues that are specific to nickel that could also drive the price up. 30-Mar-2021: WSA hit my 12-month price target of $2.98 (set 12 months ago) in January this year - with two months to spare. They have since lost almost one third of that to be back at around $2/share. Their SP fell on the 28th Jan when they released their December Quarter Activities Report - which clearly underwhelmed the market, and then the nickel price fell by ~16% from US$8.80/lb in late February to be around US$7.35/lb (per pound) now, so WSA's SP is just above their long term support zone between $1.89 and $2. For the past 15 years, since 2006, WSA's SP has been down to that support zone on 6 different occasions and bounced off it every single time, they have not dropped below $1.89 for 15 years. And they're about to test that level once again. I'm betting they bounce off it again, for the seventh time, and that would make them a buy I believe. Assuming you want to own a decent quality nickel mining company, and, after all, who doesn't? Answer: most people. But if you're one of those few who like nickel here, as a battery metals play, Western Areas could be about to bounce off that support level yet again, and that would be bullish. I am not currently holding them, but I'm having a good look at them.
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#Reserves/Reports
stale
Added 4 years ago

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.]

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#Reports & Presentations
stale
Added 4 years ago

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: 

  • Odysseus underground mine development preparing for fresh decline take-off toward the Odysseus deposit
  • Strategic 19.9% investment in Panoramic Resources Ltd completed for A$28.6m
  • Exploration success at Western Gawler has the potential to unlock a new base metal province
  • Forrestania and Cosmos operations continue materially unaffected by Covid-19
  • Nickel production contained in ore mined of 5,841 tonnes. FY20 total of 23,391 tonnes
  • Mill production of 5,114 nickel tonnes in concentrate. FY20 total of 20,926 tonnes (99.7% of guidance)
  • Unit cash cost of nickel in concentrate of A$3.23/lb. FY20 total A$3.13/lb, reporting at the mid-point of guidance
  • Operating cashflow of A$22.9m with cash at bank of A$144.8m and no debt
  • Cash plus receivables and liquid assets of $190.6m (Mar Q A$193.3m)

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)

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#Reports & Presentations
stale
Last edited 5 years ago
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#New Offtake Agreement
stale
Last edited 5 years ago
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Valuation of $4.00
stale
Added 5 years ago
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#Bull Case
stale
Last edited 5 years ago

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.

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