09/03/2021 - 12:00

Western Areas launches $100m raising

09/03/2021 - 12:00

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Nickel miner Western Areas has secured $85 million to complete the development of its Odysseus project in the northern Goldfields while announcing plans to raise a further $15 million.

Western Areas launches $100m raising
The Odysseus project forms part of Western Areas' Cosmos operations near Leinster. Photo: Western Areas

Nickel miner Western Areas has secured $85 million to complete the development of its Odysseus project in the northern Goldfields while announcing plans to raise a further $15 million.

Its 8.1-million-tonne Odysseus project forms part of the company’s Cosmos operations, near Leinster.

Western Areas expects to mine about 900,000 tonnes per annum from Odysseus during the project's 10-year operating life, according to a definitive feasibility study completed in October 2018.

Proceeds from the equity raising will be used to fund a portion of the project's capital costs, which are estimated to be $299 million with first production targeted for mid-2023.

It comes shortly after Western Areas disclosed a $12 million first-half loss and downgraded its full-year nickel production forecast last month.

The company said it would also use the proceeds to fund exploration activities including at its Forrestania operations in the Goldfields, which comprise the Flying Fox and Spotted Quoll mines.

Last month, Western Areas disclosed "operational challenges" at Forrestania that impacted production during the December quarter, impacting first-half results.

The two mines produced a combined 11,183t of nickel (in concentrate) in 1H21 compared with 17,503t in 1H20.

The company's Odysseus project is targeting 13,000tpa until FY24, after which it is expected to produce 14,600tpa until FY31.

Western Areas also plans to progress studies related to the inclusion of both the AM6 and New Morning deposits in the Odysseus and Forrestania mine plans, respectively.

Managing director Dan Lougher said the equity raising would provide enough funding for both Odysseus's development and exploration activities.

“With greater balance sheet flexibility, the company will be able to take advantage of opportunities within the portfolio and maximise returns to our shareholders,” he said.

The placement is being led and underwritten by Goldman Sachs, at a floor price of $2.15 per share. A final price will be announced on March 10 following the completion of a bookbuild process.

Western Areas plans to raise an extra $15 million from a share purchase plan, which will be conducted at the final placement price.

The company expects to recommence trading on March 11 after requesting a halt this morning.

It last traded price (March 8) was $2.34 per share – down from $3.06 in late January.

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