Nickel miner Western Areas has returned to positive territory with a net profit of $516,000 in the six months to December.
Nickel miner Western Areas has returned to positive territory with a net profit of $516,000 in the six months to December.
With higher nickel prices helping boost margins, the latest figures indicate an improved performance on the same period in the previous financial year, when Western delivered a $20 million after-tax loss, driven in part by impairments.
The write-offs included a $7 million impairment of the company’s shares in London-listed FinnAust Mining, which Western partially sold down for $3.6 million in the most recent half.
The two businesses had previously undertaken a joint venture for exploration in Finland.
In its most recent report, Western Areas’ earning before interest, tax, depreciation and amortisation came in at $29.3 million, up around 58 per cent from the first half of financial year 2016.
Revenue was 7 per cent higher at $113.4 million as nickel prices averaged $6.59 per pound, a rise of 16 per cent from the corresponding period.
Mine production was slightly down, with output of 13,224 tonnes in the six months to December compared with 13,977t.
Western managing director Dan Lougher said the company had improved mine performance metrics and cost management.
“Western Areas set in place a management plan for financial year 2017 with a view to maintaining a strong financial position and priority given to maximising cash generation rather than raw production volume,” he said.
“Successful implementation of this plan in the first half has resulted in $28.1 million free cash flow generated post all capital expenditure, tax, royalties and corporate costs.
“The company took decisive action in August 2016 when announcing the deferral of capital expenditure and some exploration activities into the first half of financial year 2017.
“Following this period of consolidation, we have now re-commenced normal development activities at both mines in line with plans.
“With over $100 million in cash at bank and no debt, I believe the company is exceptionally placed to weather external policy changes and nickel price volatility.
“Importantly the second half will see the impact of much improved offtake terms, further exploration results at Cosmos and the completion of the pre-feasibility study at Odysseus.”
Shares in Western Areas were down 1.2 per cent to $2.55 each.
