Western Areas returns to profitability

22nd August 2017 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – Nickel miner Western Areas has returned to profitability in 2017, as revenues increased.

A net profit after tax of A$19.3-million was reported for the financial year ended June, compared with a net loss after tax of A$29.8-million in 2016.

Revenue for the full year increased from A$209.1-million to A$213.9-million, while earnings before interest, taxes, depreciation and amortisation were up from A$24.7-million to A$84.9-million over the same period.

Western Areas MD Dan Lougher told shareholders on Tuesday that in 2017, the company set out to maintain a strong financial position, and to give priority to maximising cash generation.

“We achieved this through measures such as the planned deferral of certain capital expenditure in the first half of the year and the implementation of various efficiency projects driven by our operations team.

“I am pleased that the Western Areas team has reliably delivered on all these promises, and accordingly, we have now achieved seven consecutive years of delivery to guidance or better.”

During the full year under review, Western Areas mined 25 996 t of nickel, producing 23 005 t from its milling operations. Sales volumes during the full year were down slightly from the 24 793 t in 2016 to 22 639 t; however, nickel prices during this time improved from A$5.69/lb to A$6.11/lb.

"We have seen government policy stability, particularly in Asia, which has had an impact on nickel prices. While we do not ignore the external environment, we’ve remained committed to our task of setting up the company for growth,” Lougher told shareholders.

He noted that this was achieved with the company’s portfolio of opportunities expanding, and its balance sheet being in better shape than ever.

“Following the nickel price hitting a low of around $3.90/lb in June 2017, the beginning of 2018 has commenced positively with the August price currently averaging $4.75/lb. Pleasingly, strong demand in the high-end stainless steel market, particularly in China, has remained robust, while the activity in the electric vehicle battery market is growing exponentially.”

Looking at 2018, Western Areas expected to mine between 23 500 t and 25 000 t of nickel, producing between 21 500 t and 22 500 t of nickel-in-concentrate.