Nickel miner posts half-year profit jump, raises production guidance

IN a dramatic turnaround from its $96.2 million loss in the second half of 2013, Australian nickel miner Western Areas has posted a 29 per cent rise in first half-year profit to $2.7 million.
Western Areas managing director Dan Lougher said it was satisfying to be one of the few nickel mining companies in the world to return a profit.
“The standout financial measure for the half was the $19.2 million in free cash flow we generated, which was a $24.2 million turnaround from the previous half,” he said.
In light of continued strong project performance, Western Areas has upgraded its production guidance for 2014, while simultaneously predicting a slight drop in production costs. The company’s original forecast of between 25,000t and 26,000t of nickel has been increased to 27,000t of nickel and the cash cost of production has dropped from between $2.80 and $2.90 per pound to less than $2.70/lb.
Mr Lougher said the improved outlook was testament to the operational team’s focus on numerous small and large projects across the business.
“Whilst we have been able to improve our cost profile with the cooperation of major service providers, our commitment to stringent and disciplined cost management remains core to our business ethic at Western Areas,” he said.
As of 31 December, the company had combined mineral resources of 22.9 million tonnes grading 2 per cent nickel for 461,694t of nickel.
Western Areas’ total mine production for the December quarter was 7407t of nickel in ore at an average grade of 4.7 per cent nickel. The Flying Fox mine contributed 3791t to this total, while the Spotted Quoll mine produced 3616t of nickel in ore. As a result, the company’s half year mine production totalled 15,697t of nickel in ore.
Concentrate sales for the quarter were 6409t of contained nickel, resulting in half year sales of 12,963t of contained nickel.