Nickel miner Western Areas has pushed about $32.6 million worth of capital expenditure planned for FY16 back by a year, as it prepares to weather the weak nickel market.
Nickel miner Western Areas has pushed about $32.6 million worth of capital expenditure planned for FY16 back by a year, as it prepares to weather the weak nickel market.
Under a 20-month capital expenditure ‘smoothing program’, $32.6 million that would have been spent during the financial year will be outlaid in FY17 instead.
But the company says production guidance on both cost and volume, and associated mine plans, will not be affected by the spending push-back.
The measures include an $11 million reduction in mine development, a $4 million cut in exploration spending at its flagship Forrestania project, a $3 million to $4 million cut to feasibility and exploration spending at its Cosmos nickel complex, and the deferral of a Mill Recovery Enhancement project, which will save $14.6 million.
Managing director Dan Lougher said the prudent decisions made by the board were aimed at maintaining the company’s financial strength, while retaining maximum flexibility to respond to any upswing in nickel prices.
““Since we completed the budgets for FY16, we have seen the nickel price fall from around $US4.50/lb,” Mr Lougher said.
“Western Areas is one of the few nickel companies globally that can withstand these low prices, especially with our currently debt free balance sheet.
“In response to these changed conditions, we have acted to preserve the considerable strength of the company, whilst maintaining our flexibility to be able to rapidly respond to any positive movements in the nickel price.
“These types of adjustments have been implemented in prior financial years and can be implemented seamlessly by the operations team.
“They will have the advantage of smoothing our sustaining capital commitments over the coming two financial years, following investments made in the current financial year in both the highly prospective Cosmos nickel complex and the long lead items for our mill recovery enhancement project.”
Western Areas will soon release its September quarter production figures, in which it expects to report $60 million in cash at bank.
Last week, the company announced it was moving ahead with plans to increase its holding in South Australian tenements held by Monax Mining and Strandline Resources to 90 per cent, and expects to begin a new drilling campaign in the coming weeks.
Western Areas shares were unchanged at $2.46 at midday.
