19/02/2015 - 15:21

Low costs boost Western Areas result

19/02/2015 - 15:21

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Mid-tier nickel miner has posted a strong half-year with a 782 per cent surge in profit to $23.6 million thanks to lower costs, along with productivity and efficiency improvements.

Western Areas managing director Dan Lougher.

Mid-tier nickel miner has posted a strong half-year with a 782 per cent surge in profit to $23.6 million thanks to lower costs, along with productivity and efficiency improvements.

Western Areas reported a 15 per cent rise in revenue to $164.9 million in the six months to December, with managing director Dan Lougher saying the company had recorded its lowest costs in three years.

Unit cash costs of nickel in concentrate were lowered to $2.37 per pound.

“In respect of dividends, the company is pleased to announce a final fully franked interim dividend of 3 cents per share, representing a threefold increase on the previous corresponding period,” Mr Lougher said.

“The interim dividend resulted in a payout ratio of around 30 per cent, with potential for an increase in the final dividend, assuming similar nickel price environment and business conditions.

“This demonstrated the gains achieved in cost reduction and sound working capital management,” he said.

Western Areas also reported a 175 per cent increase in operating cashflow to $52.9 million, and net cash of $53.7 million, following debt retirement of $95.2 million.

Mr Lougher said volatility in nickel prices could have a material outcome on quotational price movements.

“It is important to note that should the nickel price remain the same or increase to consensus forecast levels in the second half of this financial year, then Western Areas will be the beneficiary of positive QP outcomes which would feed through to higher profitability, cashflow and returns to shareholders.”

The company lowered its cash cost guidance for the next six months and said it would save around $17 million in operational costs.

Western Areas shares closed 3.8 per cent lower at $4.03 per share. 

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