Tag: WSA

Macquarie’s Commodities Strategy team has upgraded its short term nickel price forecasts by 7-8%, medium-term by 10-13% and long-term by 3%. WSA’s rating remains Outperform with a price target of $3.30, up from $2.80.

Macquarie has upgraded its FY20 and FY21 nickel price forecasts by 34% and 9% respectively to incorporate the early reinstatement of the nickel ore ban. This leads to a 266% increase in forecast FY20 earnings for Western Areas.

September quarter production was in line with Macquarie’s forecasts. The company has recently released the results of the Odysseus definitive feasibility study and the broker considers the economics are robust, which underpin nickel production for the next decade.

June quarter production of coking coal was in line and cash flow was stronger. The company has achieved 21,000t in FY18, as per recent guidance. Nickel mined in the quarter was 6,381t for an FY18 total of 24,442t.

UBS observes the part for nickel in the growing electric vehicle/battery market continues to drive a positive interest for the company.

Citi analysts seem pleased with the June quarter production report. They anticipate both higher grades and recoveries in H2. Neutral rating retained as the target price withstands lower nickel price forecasts plus a stronger AUD in forward modeling.

March quarter production was solid and in line with Macquarie’s expectations. The business was cash-flow positive during the quarter.

Independence Group ((IGO)) scores better on various financial metrics and Morgan Stanley expects there are more catalysts for that stock.

The company has surprised with a capital raising announcement following the weak cash flow in the March quarter. Up to $70m is to be raised via a placement and share purchase plan.

Western Areas has done a good job in reducing costs to below guidance, the broker suggest, and Spotted Quoll posted record production in the Dec Q. One-offs have nevertheless reduced the company’s cash balance.

March quarter production suggests to Citi Western Areas is well placed to meet or exceed FY15 guidance. The stock remains one of the broker’s top picks in the base metal segment.

Western Areas June quarter production numbers beat the broker. Notably free cash flow was very strong. Merrills expects FY15 guidance to come with the FY14 result.

Commodity analysts at Citi are now self-declared "nickel bulls" and if their predictions prove correct, investors in the sector are yet to see the true nature of the term "commodities boom". Citi continues to see lots of upside, despite the 50+% rally in prices year-to-date. Nickel is projected to peak at US$26,500/t in 2016.

Citi has rolled forward earnings-based multiples and incorporated a bullish view on nickel, based on the likelihood that Indonesia’s ore export bans will be enforced.

Western Areas is receiving its second rating upgrade in less than a month. The reason is Credit Suisse’s increasing confidence that nickel prices are on the way up. The company is likely to have already retrieved its Cosmic Boy expansion plans from the archive, in the broker’s opinion. Joint ventures with cash-strapped base metal juniors and M&A speculation are also in focus again.

September quarter production was ahead of UBS’ expectations by 3%. Cash costs at $2.28/lb also beat expectations. The UBS commodity team has made deep cuts to nickel forecasts, with an average decline of 16% over the next three years. The broker strongly believes that the nickel sector lacks significant positive catalysts for the next six to 12 months.

The broker has trimmed its price forecasts for aluminium, nickel, uranium and coking coal but raised its longer term price view on iron ore. Despite price declines, the broker notes producers will benefit from anticipated A$ weakness.

Western Areas has updated the resource and delivered a maiden reserve estimate for the Spotted Quoll North ore. The new resource is 129,000 tonnes of contained nickel at 9.5% and this increases the overall contained nickel in the resource by 4%. the reserve is 96,000 tonnes of nickel with average grade at 5.7%.

Western has announced a 50% resource upgrade and maiden reserve at Spotted Quoll. Outperform and $4.40 target retained, with the broker preferring WSA as a pure-play nickel producer, delivering positive cashflow despite depressed prices and offering the capacity to add value through high grades.

Citi rates the stock as Buy

Credit Suisse rates the stock as Outperform –

June quarter production fell just short of the broker, but FY targets were beat for the most part and there is a nice stockpile to start the year off with.

Lower revenues meant interim earnings were below the broker’s forecast and BA-ML suggests there is now downside risk to consensus full year estimates.

Western Areas production was roughly in line with the broker on modest grades with reasonable costs the highlight. A resource upgrade at Spotted Quoll provides potential for mine and/or concentrator expansion, the broker notes.

Target $5.20 (was $5.90). UBS has reduced its assumed mining inventory at Flying Fox to reflect recent exploration results. The changes in model mean a cut in price target.

Western Areas has signed an offtake agreement Jinchaun Group to sell 15,000t of nickel over one year. The fat this is a one year and not long term deal is a positive, the broker suggests, given in one year’s time nickel prices may well be a bit healthier.