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Western Areas books profit but warns of cost pressures

  • Wednesday, August 22, 2018
  • Source:ferro-alloys.com

  • Keywords:Western Areas, profit, warn, cost pressure
[Fellow]Western Areas books profit but warns of cost pressures

[ferro-alloys.com]Nickel miner Western Areas has issued a warning on inflationary pressures and higher costs after unveiling an improved full-year operating performance aided by a firmer nickel price.

Shares in the Dan Lougher-led miner tumbled at the open after the company issued full-year 2019 cost guidance of $2.80/lb to $3.20/lb, up from $2.63/lb in 2018.

The company posted an underlying net profit after tax of $11.8 million for full-year 2018, up from a loss of a similar quantum in the previous year.

It attributed the improving profitability to a higher average nickel price over the period of $7.53/lb, a 23 per cent jump on the previous year.

The company declared a 2¢ fully franked final dividend in line with last year, representing a 46 per cent payout from net profit after tax.

Western Areas increased its cash from $140.3 million to $151.6 million over the period.

Mr Lougher said the company welcomed the improved financial metrics and earnings margins following a number of challenging years driven by the unsustainably low nickel price.

“Western Areas continues to efficiently operate its core assets and has an exciting period ahead with the upcoming Odysseus definitive feasibility study, a new offtake agreement to be secured for our high nickel grade mill recovery enhancement product, plus the commencement of more formal discussions on our existing concentrate offtake contracts with BHPB Nickel West and Tsingshan Group, which expire towards the end of calendar year 2019,” he said.

However, Mr Lougher noted cost pressures being experienced by all WA resource operations with rising input costs for fuel, labour, parts and other consumables.

“We are also cognisant of the increasing challenges to access experienced professional labour and the diminishing pipeline of industry graduates,” he said.

“We continue to value our outstanding workforce, and to sponsor new initiatives to attract undergraduates and other professionals to the industry.”

Western Areas also noted contractor rate discounts, negotiated during the last two years of low nickel prices, had ceased because of an improving nickel price.

  • [Editor:王可]

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