Activity report for The period ending 30 September 2018

31-Oct-2018 Intellasia | | 6:00 AM Print This Post

September Quarter 2018 Highlights:

* One lost time injury, resulting in a LTIFR of 1.81

* Mine production of 5,868 nickel tonnes

* Mill production 5,379 nickel tonnes with 89 percent recovery

* Unit cash cost of nickel in concentrate of A$2.99/lb, well within guidance range

* Operating cash flow of A$24.8m and closing cash at bank of A$150.9m

* Capital expenditure, early works at Odysseus, feasibility study costs and exploration total A$25.4m

* Mill Recovery Enhancement Project (MREP) in ramp up mode with new bagging facilities installed and operational

* Substantial progress on Odysseus definitive feasibility study (DFS) with a decision to mine and DFS results announced post quarter end

Western Areas (“WSA” or the “Company”) (ASX: WSA) is pleased to report an excellent start to the year, with operations on track and significant development activity comprising early works at Cosmos, new primary ventilation fans installed and commissioned at Spotted Quoll and the new filtration and bagging facilities at the MREP completed on time and budget.

Mine grades at both Spotted Quoll and Flying Fox were ahead of plan and reserve for the quarter which resulted in less material movements to produce 5,868 nickel tonnes in ore. Cosmic Boy concentrator throughput was in line with plan and, with 89 percent recovery, delivered its highest quarterly concentrate production in nine months at 5,379 nickel tonnes.

A key focus for the quarter was completion of the Odysseus DFS at Cosmos, which was released post quarter end. The study highlights a long mine life, low cash operating cost and low sustaining capital expenditure operation. Using nickel prices currently lower than consensus forecasts the projected economic outcomes are excellent, but also importantly demonstrate that the Project is well funded from existing cash reserves for a number of years. There are also significant upside opportunities for the Company to investigate, including a mining optimisation study of the adjacent AM5 and AM6 deposits which contain 57.6kt of nickel classified in the Indicated Mineral Resource category.

The MREP has commenced its ramp up mode from commissioning and is continuing to produce in line with specification.

A number of small samples were sent to potential customers in early October, and a container with 20t of product was prepared as a bulk trial for export.

The nickel price remains volatile, with geo political factors putting further downward pressure on the market during the quarter, despite nickel fundamentals being strong for stainless steel and future battery demand growth. LME nickel stockpiles have fallen to around 220kt, down over 40kt from the prior quarter, demonstrating that demand continues to outstrip supply. Post quarter end, Western Areas attended the 2018 LME Conference where these views were reinforced by all commentators and analysts. LME week was also an excellent opportunity to meet existing and potential new customers for nickel concentrate with our current contracts having just over 12 months to run.

Western Areas Managing director, Dan Lougher, said the September quarter was about commencing the new financial year with a strong start and focussing on delivery of the Odysseus DFS.

“The DFS for Odysseus, our next planned mining and processing operation, was completed and approved post the end of the quarter.”

“The September quarter outcomes were in line with our expectations and pleasingly nickel in concentrate production was the highest it has been in the last nine months.”

(Sourec: FTI Consulting, Strategic Communications Perth)

 


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