Western Areas swings back to profit

PERTH (miningweekly.com) – Nickel miner Western Areas has swung back to profit in the half-year ended December 31, as earnings before interest, taxes, depreciation and amortization (Ebitda) improved by 58% over the previous corresponding period.

Ebitda for the half-year reached A$29.5-million, resulting in net profit of A$500 000, compared with a loss of A$20-million in the previous corresponding period.

MD Dan Lougher said on Wednesday that the company welcomed the nickel price improvement, compared with the previous corresponding period, but noted that it was the delivery of significant Ebitda improvements and mine performance metrics that were the most pleasing.

“Western Areas set in place a management plan for 2017 with a view to maintaining a strong financial position and priority was given to maximizing cash generation rather than raw production volume.

Successful implementation of this plan in the first half has resulted in A$28.1-million free cash flow generated post all capital expenditure, tax, royalties and corporate costs.”

Lougher noted that although nickel sales had been 1 077 t lower year-on-year, the company had generated a further A$10.7-million in Ebitda, which, in part, is a reflection of the improved nickel price but also dedicated cost management.

“All of this has been achieved by our workforce which has not wavered or been distracted by external challenges. The company has now operated without a lost-time injury for 1 057 days and we continue to innovate in areas such as blasting techniques, nickel sulphate marketing potential and industry leading nickel offtake contracts.”

Lougher pointed out that the company took decisive action in August 2016, announcing the deferral of capital expenditure and some exploration activities into the first half of 2017, adding on Wednesday that following this period of consolidation, the company has now restarted normal development activities at both mines, in line with plan.

Meanwhile, Western Areas has increased its production expectations for the full 2017, from between 22 500 t and 24 500 t, to between 25 000 t and 26 000 t, while the guidance for nickel-in-concentrate production has increased from between 20 200 t and 22 000 t, to between 22 000 t and 23 000 t.