Western Areas Limited (ASX: WSA) provided its quarterly update on 30 October 2018. With significant activities and operations on track, the company witnessed an excellent start for the year 2019. Following the release of this news, the share price of the company increased by 3.125 percent as on 30 October 2018.
In its quarterly update, the company reported that a Lost Time Injury (LTI) occurred in the September quarter when a contractor fell over a hose in the concentrator workshop and sustained a fractured knee cap. Due to this incident, the (Lost Time Injury Frequency Rate) LTIFR now stands at 1.81.
In the first quarter of FY 2019, Mine grades at both Spotted Quoll and Flying Fox were ahead of the plan which resulted in less material movements to produce 5,868 nickel tonnes in the ore. In the September quarter, the Cosmic Boy Concentrator processed 156,706 tonnes of ore at an average grade of 3.9 percent nickel for a total of 35,445 tonnes of concentrate grading 15.1% nickel. This resulted in 5,379 nickel tonnes produced at a metallurgical recovery of 89% with average concentrator availability of 97%. The unit cash cost of production of nickel in concentrate was A$2.99/lb (US$2.19/lb), which is well within the full year guidance range of A$2.80/lb to A$3.20/lb.
The total jumbo development for the quarter was 1,352m, which included 213m of capital decline development. During the quarter, 400m of lateral capital development and 259m of operating waste development occurred, which included 86m of paste?fill development to facilitate slot drilling.
The operational cash flow for the September quarter was A$24.8 million. The sales volumes were lower than expected due to weather delays impacting deliveries. The Company is expecting that the sales volumes to more closely match or exceed production volumes next quarter as seasonal weather conditions pass. The Cash at bank at quarter end was A$150.9 million which is slightly lower than June quarter A$151.6 million. The capital expenditure increased up to A$5.2m in the September quarter which is in line with the company’s guidance. To date, all metrics of the company are well within the FY 2019 guidance which was released in August. However, with the release of the Odysseus DFS and the Board’s decision to mine, growth capital expenditure associated with FY19 will now increase A$12 million to reflect the upgraded work program.
After the commissioning of the Mill Recovery Enhancement Project (MREP) in the June quarter, activities during the September quarter were focused on the ramp?up of production volume for the next six months. Early in the quarter, the Company announced regarding a significant expansion of its exploration strategy in South Australia, with the execution of a Farm?In and Joint Venture Agreement with Iluka (Eucla Basin) Pty Limited on five tenements, contiguous with the Company’s existing Western Gawler tenure.
In the last six months, the share price of the company decreased by 35.45 percent as on 29 October 2018. WSA’s shares traded at $2.310 with a market capitalization of circa $612.61 million as on 30 October 2018 (AEST 4:00 PM).
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