Lowest Quarterly Cash Cost and Highest Production Year to Date, Odysseus Mine Underground Development Advancing as Planned

30-Apr-2019 Intellasia | | 4:13 PM Print This Post

March Quarter 2019 Highlights:

* Lowest quarterly cash cost for the year, unit cash cost of nickel in concentrate of A$2.82/lb and A$2.98 YTD

* Mine production of 6,066 nickel tonnes and 17,785 nickel tonnes YTD

* Mill production of 5,448 nickel tonnes and 16,242 nickel tonnes YTD, highest quarterly production YTD

* Cash at bank plus nickel sales receivables increased to A$149.9m (December quarter A$143.8m)

* Stronger nickel price for the quarter (A$8.31) with $10.3m cash receipted on 1 April resulting in higher sales receivable balance at quarter end

* Odysseus underground development advancing well, dewatering and decline rehabilitation progressing as planned

Western Areas (“WSA” or the “Company”) (ASX: WSA) is pleased to report significant improvements in both the grade of ore mined and cost of production for the March quarter. Production metrics remain on track to meet full year guidance and the improved nickel price should result in stronger second half earnings and operating cashflow.

The Forrestania operation continued to operate consistently and reliably. Pleasingly average mined grade across the operation improved during the quarter resulting in nickel production of 6,066 nickel tonnes in ore. The Cosmic Boy Concentrator throughput was in line with forecast producing 5,448 nickel tonnes in concentrate, noting that a major planned maintenance shut down occurred during the quarter. Both nickel mined and concentrate production were the highest quarterly production results for the financial year to date.

Nickel in concentrate sales totalled 5,189 tonnes. Timing of export shipping services resulted in an increase of nickel in concentrate awaiting shipment at quarter end, with the concentrate expected to ship and the resultant sales revenue to be recognised during April.

Cash at bank plus nickel sales receivables increased to A$149.9m (December A$147.4m) at the end of the quarter, supported by the higher nickel price and including the timing variance mentioned above, with A$10.3m received on 1 April for the shipment which occurred at the end of March.

The Odysseus mine has advanced into the underground decline rehabilitation stage following successful installation of the Schlumberger pump early in January. To date, 2,033 metres of decline have been rehabilitated to a depth of 236 vertical metres from surface. The project remains on schedule and on budget with all near term surface infrastructure complete and preparations to dismantle and prepare the haulage shaft infrastructure for export from South Africa to the Cosmos site well advanced. Evaluation of the potential upside from mining the AM5 and AM6 deposits is ongoing, with a reserve position expected to be completed in the second half of the calendar year.

While the nickel market has been recently more volatile, the Company averaged a realised price of A$8.31/lb (pre payable deductions) for the quarter. The fundamental outlook for nickel remains strong as the emerging EV battery market continues to gain momentum. This is highlighted by the LME nickel stockpile falling below 175kt, its lowest level since 2013, confirming that nickel supply remains in deficit. This provides the Company with strong encouragement for achieving better terms in the upcoming offtake renegotiations later in the year.

Western Areas Managing Director, Mr Dan Lougher, said the March quarter was another consistent performance in line with plan across the operations.

“Pleasingly the March quarter result was the lowest cash cost of production of nickel into concentrate for the year.”

“It is also very exciting to see the decline rehabilitation start at the Odysseus mine, our next long life project that will underpin the future of Western Areas.”

To view the full ASX Announcement please click here.


(Source: FTI Consulting, Strategic Communications Perth)


Category: FinanceAsia

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