Western Areas (“WSA” or the “Company”) (ASX: WSA) is pleased to provide the June Quarterly Activity report.
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.
Consistent with the Company’s strategy of investing in base metal projects at attractive entry points in the cycle, the Company acquired 19.9% of Panoramic Resources Limited (Panoramic) via a A$28.6m investment into Panoramic’s recent capital raising. The investment enhances Western Areas’ portfolio of quality nickel projects via exposure to the Savannah North Mine in the east Kimberley region of Western Australia, which has a significant nickel sulphide resource that includes valuable copper and cobalt by-products.
The Company is encouraged by the first diamond drilling program at the West Gawler Project successfully intersecting significant widths of nickel and copper bearing sulphide mineralisation at the Sahara prospect. Observations from logging and assays have identified thick intervals of nickel and copper-bearing sulphide mineralisation extending over a 250m zone. This encouraging zone will be the focus of follow up work over the coming quarter.
The Forrestania mine site had a safe and productive quarter, producing 5,114 tonnes of nickel in concentrate and shipping 4,777 tonnes of nickel to offtake customers. During the quarter the operations continued to operate in line with Covid-19 social distancing protocols and modified fly in fly out (FIFO) rosters. Following the easing of restrictions in Western Australia, the operations returned to normal FIFO roster patterns as of 1st July 2020. The Company continues to employ very few interstate employees.
At Cosmos the Odysseus mine development rehabilitation activity has now entered the lower Alec Mairs’ (AM) decline adjacent to the AM5 ore body, this is the final stage of the underground rehabilitation phase for the project, prior to the commencement of the new decline development across to the Odysseus orebody. Surface infrastructure activities included completion of the shaft collar pre-cementation works, which is now ready for the concrete foundation to be installed for the raisebore machine. Following a Covid-19 enforced shut down in South Africa, refurbishment and modification of the shaft headgear and winder have recommenced. Pending no further lock downs, the equipment will be shipped to Australia during the second half of the calendar year.
Base metal markets have somewhat stabilised and appear to be consolidating a partial recovery following the Covid19 pandemic-induced volatility and price falls during the March Quarter. Despite the volatility, the Company’s realised nickel price was slightly higher quarter on quarter at A8.50/lb. The long-term view remains positive for class one nickel sulphide products that will be increasingly required to feed the global demand forecasted for plug in electric vehicle (EV) batteries in the future.
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