Western Areas approves $299m Odysseus

Nickel producer Western Areas has given the green light to develop its Odysseus project following completion of a definitive feasibility study, which detailed a capital cost of $299 million.

The study forecasts annual output of 13,000 tonnes of nickel concentrate over a 10-year mine life, with first production scheduled for December 2022.

The DFS has also estimated earnings before interest, taxes, depreciation and amortisation of $1.24 billion.

The announcement comes after the company approved a $32 million early works program for the project in April.

The capex within the DFS has increased between $99 million and $109 million from the pre-feasibility study range, mainly due to the installation of a shaft haulage system for $68 million.

Managing director Dan Lougher said the study was an excellent outcome for the company.

“The DFS project team was able to refine the PFS work, which resulted in positive outcomes on many fronts, delivering a substantially larger and longer life project," he said. 

“With the board making the decision to mine, the capital expenditure outlays are relatively minor over the next 12‐24 months.

“This provides significant optionality to the company, given that we are able to fund these costs from our cash reserves, which are currently in excess of $150 million.  

“In fact, the major pre‐production expenditure, totalling $162 million, is not required until FY22 and FY23.”

Western also said it would commence optimisation studies assessing the potential of bringing the AM5 and AM6 deposits into production, which are located adjacent to Odysseus.

The news comes after Panoramic Resources recently said it would reopen its mothballed Savannah nickel project in the east Kimberley, while Poseidon Nickel flagged a restart of the Black Swan project.

Shares in Western finished the day ahead 3.43 per cent at $2.41 each.