Western Areas Ltd

WSA Details

Significant increase in Odysseus high grade nickel resources: Western Areas Ltd (ASX: WSA) has announced that the company has trebled the defined high grade Massive Sulphide Mineral Resource at its Cosmos Odysseus Project. Key highlights from the latest mineral resource update include 311% increase in the Total Massive Sulphide resource to 22,838 nickel tons grading 8.4% Ni, which now includes 8,836 nickel tons grading 6.1% Ni in the Indicated category and 78% increase in the Odysseus North disseminated indicated resource to 81,156 nickel tons grading 2.6% Ni (previously 45,519 nickel tons grading 2.8% Ni). Further, there is an overall increase in the indicated to inferred disseminated resource ratio from 77% to 94%, which includes a ratio increase of 56% to 93% in Odysseus North, and increase in Indicated resource provides greater flexibility to the proposed mine design and schedule of the Definitive Feasibility Study (DFS). Currently, the total Odysseus Mineral Resource Estimate now stands at 7.9Mt @ 2.5% Ni for 199,174 nickel tons at a cut-off of 1.5% Ni.

Sale of Bluejay: The company has completed the sale of 100% of its shareholding in Bluejay Mining plc (previously named FinnAust Mining plc) following a bookbuild process conducted overnight in London. Western Areas sold its 18.8% holding in Bluejay realizing A$27m net of fees. This transaction will return material value back to Western Areas following a period of significant growth and value generation by Bluejay.  Further, the funds returned to the company will be used to fund organic development and growth projects, such as the Mill Recovery Enhancement Project at Forrestania and the Odysseus Definitive Feasibility Study at Cosmos. Following the sale of the remaining Bluejay shareholding, the full year post-tax accounting profit on the sales conducted over the full financial year is estimated around A$26m (1st half profit of A$3m has already been recognized). WSA stock lost over 37.5% in the last six months (as of June 20, 2017) and currently trading at 52 week lows. However, given the ongoing developments such as increasing high grade nickel resources and Sulphide, we give a “Buy” on the stock at the current price of $ 2.08


WSA Daily chart; (Source: Thomson Reuters)

Independence Group NL

IGO Details

Independence Group NL (IGO or the Company) (ASX: IGO) advises it has entered into an agreement to sell its Stockman Cu-Zn Project in north-east Victoria (Stockman Project) for a consideration of A$47.2 million, comprising A$32.2 million in cash payments1 and a 1.5% net smelter return (NSR) royalty with a provisional value of up to A$15 million2, which then converts to an uncapped 1% NSR. The sale of the Stockman Project is consistent with IGO’s strategy of focusing on high-quality assets of scale, longevity and geographical focus, where IGO can leverage its operational expertise and discipline to unlock further growth opportunities.

As a result of the sale, IGO expects to record an after-tax impairment on the Project in FY17 of up to A$20 million, based on the current carrying value of the asset. A binding asset sale agreement has been entered into between IGO and CopperChem Limited (CopperChem), a wholly owned subsidiary of Washington H. Soul Pattinson and Company Limited (WHSP). Although IGO recognizes the value of the Stockman Project, CopperChem is ideally positioned to continue its exploration and development, while it has retained upside exposure. Over the past six months, the stock has declined 24.7%, while it was down 16.1% in the last three months (as on June 20, 2017).  We give a “Buy” recommendation on the stock at the current price of $ 3.30
 

IOG Daily chart; (Source: Thomson Reuters)

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