Western Areas Ltd

On track to meet full year guidance: Western Areas Ltd (ASX: WSA) is Australia’s highest grade and lowest cash cost nickel producer and is expected to benefit from this position going forward. The group is on track to meet all full year guidance metrics as the company in the December quarter has increased the production, had steady cash costs and improved nickel pricing, that generated positive operating cash flow of $22.1m, compared to $9.5m in the prior quarter. The total cash and receivables (A$146.5m) is flat quarter on quarter (A$-0.3m) after the payment of the final dividend (A$5.5m) and capital investment in the MREP of A$5.5m. In the December quarter, WSA’s production has increased from the September quarter and the mill achieved record quarterly throughput of 161,218 tonnes of ore. This is due to the increased throughput of low grade fines (24,402t @ 1.4% nickel) from the recent ore sorter project. Moreover, the ongoing Odysseus DFS work has delivered a number of positive outcomes, and a larger project with longer mines life is now expected. Meanwhile, WSA stock has risen 11.33% in three months as on January 25, 2018. Going forward, the company will benefit from higher nickel price due to demand and supply gap. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $3.36
 

Production Overview (Source: Company Reports)
 

Independence Group NL

Stockman Project divestment completed: Independence Group NL (ASX: IGO) has completed the Stockman Project divestment to CopperChem Limited (CopperChem), which is a subsidiary of Washington H. Soul Pattinson and Company Limited. The company had entered into an agreement to sell its Stockman Project for total proceeds of up to A$47.2 million, that includes A$32.2 million in cash payments and a 1.5% net smelter return (NSR) royalty with a provisional value of up to $15 million. Moreover, the transaction was subject to the satisfaction of certain conditions which has been already done and Ministerial approvals have been granted. Additionally, Tropicana Joint Venture (TJV) has committed to both the Long Island mining strategy and the process plant improvement project, to further increase processing plant capacity and improve metallurgical recovery. Meanwhile, IGO stock has risen 14.77% in three months as on January 25, 2018. There is a huge demand for nickel and currently the supply is less, which indicates room for higher nickel prices. We give a “Hold” recommendation on the stock at the current price of $5.20

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