great qtrly but higher profit, div and production outlook was...

great qtrly but higher profit, div and production outlook was well known and looking forward to the "encouraging explo results" to be announced in about a month
- but thought the most important comment which nobody has spoken about was :

"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."

This has come about via fantastic production filling the Chinese contract very quickly but what it means is 2 things

- firstly, but probably at the hopeful odds of say 8 to 1, obviously makes WSA premium t/o material as if they weren't already
- secondly and at long odds-on, we will finally get some decent coin for our premium product - WSA never discloses the offtake terms because of cofidentiality but blind Freddy can see we've been getting bent over a barrel whilst in the 'prove ourselves' start up period
the ann. of 5/1/11 said the avg Ni price was USD22,390/t for the half but do the sums on revenue divided by sales tons for the half yrly and we only received AUD17,428/t - (I recall getting into JBM around 04/05 and you could just about multiply the avg PON by the tonnage sold and that would be their revenue - I'm assuming that Cosmos had already gone through that start up/unproven period as they were a few years into it and post-open-pit/underground and they therefore attracted full value for their nickel)

currently PON is 28,600 and whilst doing figures on the spot price is probably a bit optimistic and taking costs for smelting,refining,royalties, let's say 24,000/t multiplied by 29kt/yr would add an EXTRA say 180mil to the top line OVER the pittance we received this half - after tax about an EXTRA 70cents EPS

no doubt smarter people than myself running big mining co's are aware of this so maybe 8 to 1 is overs for something to happen in the next year