Shareholders cleaning up

Nickel developer Western Areas is scheduling production by the middle of next year after already rewarding shareholders who have been in the stock for as little as two months.

In that time, the company’s shares have nearly doubled to close on $2.20.

Those who were in on the float five years ago are gloating over their 20c per share investment and the seed capitalists must be ecstatic.

The company is currently conducting feasibility studies on five nickel sulphide deposits in the 80-kilometre long Forrestania nickel province, 450km east of Perth, which collectively contain 3.5 million tonnes at 3.2 per cent containing 115,000 tonnes of nickel worth about $A2.3 billion at current prices. This includes probable ore reserves of 314,500t at the Flying Fox mine’s T1 underground deposit grading 4.8 per cent and containing 15,000t of nickel. It is from Flying Fox that first production will come.

Western Areas has a nickel offtake agreement with big international miner LionOre to be processed at its Emily Ann plant, 80km east of Flying Fox. First stage production from Flying Fox is expected to yield 6,000tpa nickel for a pre tax $A50 million over two years from the start of production.

The company is already undertaking a bankable feasibility study for its stage two expansion, which is expected to increase Flying Fox’s nickel production to 10,000t a year by December 2007, and further increase resources/ reserves there to support a 10-year mine life.

The increased production will be achieved by a second decline to access the inferred 630,000t T5 resource beneath the T1 zone, containing 43,400t nickel and scheduled to start mid 2006

Western Areas is also planning to have a 250,000t/year treatment plant operating at the nearby Cosmic Boy deposit by the end of next year.

Cosmic Boy has contained nickel of 7,500t and there is another 30,500t at Diggers South, just south of Cosmic Boy and 13,500t at New Morning/Daybreak, just south of Flying Fox.

Western Areas managing director Julian Hanna says there is excellent potential to increase resources at New Morning/ Daybreak and Diggers South, and bring them into production by the end of 2007.

• Mark Mentiplay holds shares in Western Areas.