are we getting to cheap, page-11

This is a good summary. (The forward guidance is the driver now)

Western Areas lifts H1 profit, dividendsPublished 5:53 PM, 14 Feb 2011 Last update 6:45 PM, 14 Feb 2011


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QUICK SUMMARY | FULL STORY | RESOURCES & ENERGY

AAP, with Reuters

Nickel miner Western Areas NL has increased its 2010/11 production guidance after posting a substantial rise in first-half revenue and net profit.

Western Areas also increased its interim dividend to 10 cents per share, unfranked, compared to three cents per share, unfranked, for the first half of 2009/10.

The company on Monday reported net profit for the six months to December 31 of $67.2 million, up from $10.7 million for the previous corresponding period.

Revenue from nickel sales was $230.9 million, compared to $85.5 million previously.

Production from Western Areas' Flying Fox and Spotted Quoll mines in Western Australia's Forrestania region was 16,261 tonnes, compared to 3,791 tonnes for the first half of 2009/10 and 10,020 tonnes for the second half of that financial year.

The strong output prompted the company to increase its production forecast for the current financial year by 16 per cent to about 29,000 tonnes, from 25,000 tonnes.

"We have substantial drilling programs underway or planned at our main nickel deposits of Flying Fox, Spotted Quoll and at the proposed Diggers South mine, with the target to push mine life out past 10 years," managing director Julian Hanna said in a statement.

Western Areas is looking for a joint venture partner to take a minority interest in Diggers South.

The company said it had total cash plus receivables of $167.7 million at the end of December and strong projected cashflows.

This meant it had sufficient funding for planned growth, capital expenditure, exploration activities, bond repayment obligations and potential future dividend payments over the foreseeable future.

The company previously had a policy of returning half of its net profit to shareholders in the form of dividends, but is now funnelling more funds towards exploration and expanding the business.

Shares in Western Areas closed up 26 cents, or 4.15 per cent, at $6.52.

Chinese contract on track

Western Areas expects to meet its 25,000-tonne supply contract with Chinese metals refiner Jinchuan earlier than expected as it boosts production of concentrates, to capture rising world nickel prices, the company said.

The firm has already shipped 6,785 tonnes to Jinchuan under a multi-year contract activated last July and scheduled to run through 2012.

"Jinchuan's contract is for 25,000 tonnes as quickly as we can fill it. We will probably complete that earlier than we had anticipated," Western Areas executive director of finance David Southam told Reuters.

BHP Billiton Ltd holds a separate agreement to buy 10,000 tonnes of nickel in concentrate a year from Western Areas.

Strong production from Western Areas' Flying Fox and Spotted Quoll mines in the first-half of 2010 had lead to a 16 per cent increase in full-year production guidance to 29,000 tonnes of nickel in concentrate from 25,000 tonnes this year, according to Southam.

Southam said that by early 2012, Western Areas will have the largest uncommitted production run of nickel concentrate of any major nickel supplier and will be seeking new supply agreements under more lucrative terms.

"We would be looking to try and get paid a bit more," Mr Southam said.

Nickel prices have increased by a third since mid-November to around $US28,000 a tonne, the highest since May 2008, Reuters data shows.

Mr Southam said he expects March quarter production to be higher than planned but lower than the previous quarter's 7,959 tonnes due to development work in both mines.

Higher production is scheduled in the April 1-June 30 quarter as higher nickel-bearing ore is mined, he said.

Due to the corrosion-resistant properties of nickel, the metal is mostly used in the production of nonferrous alloys. Over half of the global nickel produced goes into making stainless steel.

Western Areas, which is the third biggest Australian producer behind BHP Billiton and Minara Resources should yield 29,000 tonnes of nickel in concentrate in fiscal 2010/2011

http://www.businessspectator.com.au/bs.nsf/Article/Western-Areas-lifts-H1-profit-dividends-E35NU?opendocument&src=idp