WSA buy?, page-101

Western Areas (WSA) - Solid December Qtr

Created on Wednesday, 25 January 2017 08:41

Western Areas (WSA) generated a strong December Q producing 5.8kt nickel in concentrate at C1 costs of $2.35/lb (before payability), beating Argonaut’s forecast of 5.4kt at $2.50/lb. WSA’s cash balance increased to $104m from $81m in the previous Q, benefiting from higher nickel prices, lower costs, higher sales and several positive one-off items. The Company is maintaining growth and development projects including the Odysseus Project Feasibility Study (due in The Mach Q 2017) and regional exploration at both Cosmos and Forrestania. We believe the development of Cosmos as a second production facility and the ongoing group Resource development puts WSA in a strong position to benefit from a nickel price recovery. In light of the recent share price weakness, Argonaut upgrades WSA to a BUY (from HOLD).