{"id":54610,"date":"2014-07-22T03:12:01","date_gmt":"2014-07-22T07:12:01","guid":{"rendered":"http:\/\/countingpips.com\/?p=54610"},"modified":"2014-07-22T03:12:01","modified_gmt":"2014-07-22T07:12:01","slug":"why-the-western-areas-share-price-rose-today-2","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/07\/why-the-western-areas-share-price-rose-today-2\/","title":{"rendered":"Why The Western Areas Share Price Rose Today"},"content":{"rendered":"
July 22, 2014<\/div>
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By MoneyMorning.com.au<\/u><\/a><\/p>\n

What Happened to the Western Areas Share Price? <\/h2>\n

Shares of Western Areas [ASX:WSA]<\/strong> rose by 3.83% on Tuesday, closing at $5.13. The share price has more than doubled since the beginning of this year. <\/p>\n

Why Did This Happen to WSA Shares?<\/h2>\n

Western Areas is Australia\u2019s second largest sulphide nickel miner, producing 25,700 tonnes per year of nickel in-ore from its Flying Fox and Spotted Quoll mines.<\/p>\n

The WSA share price<\/a> has increased since Indonesia, the world’s top supplier of the metal, began talking about a ban on nickel exports (now enforced). <\/p>\n

Today the company announced its performance results for the year. At the Spotted Quoll operation, nickel production rose 31.8% on last year to 13,973 tonnes. The Flying Fox operation produced 14,713 tonnes of nickel. This was down 13.5% on last year\u2019s result.<\/p>\n

The increased nickel price was good for the company. It moved from a net debt position to a net cash position of $10.3 million. Full-year cash costs were 7.4% below guidance at $2.50 per pound. <\/p>

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Indonesian elections are heating up, and Joko Widodo seems to be the clear leader in the race. Results will be announced shortly. This means a change in government, increasing the risk that the nickel ban will be dropped. <\/p>\n

On top of this, recently Vale SA [SA:VALE5]<\/strong> was ordered to shut down one of its largest nickel processing plants by the New Caledonia government. The plant encountered a spill of \u2018acid-containing solution\u2019, a small amount of which entered a nearby creek. Vale is the world\u2019s second largest nickel producer. <\/p>\n

In this case, the nickel spot price continues its volatile climb. Spot nickel reached $19,525 per tonne last night, up just under 60% for the year. <\/p>\n

What Now For Western Areas?<\/h2>\n

The company is living up to its slogan, \u2018Think Nickel, Think Western Areas\u2019.<\/p>\n

Fundamentally, the company\u2019s nickel assets look good \u2014 very high grade and low cost.<\/p>\n

Flying Fox is a very high grade mine with a current reserve estimate of 1.5 million tonnes at an average grade of 4% nickel. Nonetheless, with the company mining Flying Fox at a production rate of roughly 300,000 tonnes of nickel per year, the remaining mine life is just 4.5 years.<\/p>\n

Saying this, there is significant exploration upside at deeper depths for the company, which could materially upgrade its mine life. <\/p>\n

The Spotted Quoll mine is also very high grade nickel, at roughly 5.5%. The mine life and reserves are likely to extend beyond 10 years. <\/p>\n

Nonetheless, the share price has nearly doubled since the Indonesian nickel export ban was enforced. Furthermore, with speculative interest focusing on nickel, the price is volatile.<\/p>\n

The market is concerned about supply, mostly because of Indonesia\u2019s export ban. If Indonesia decided to reverse its ban, Western Areas\u2019 shareholders could be in for a lot of pain. <\/p>\n

Western Areas looks like it will continue to be a rollercoaster ride on the Nickel price. <\/p>\n

Jason Stevenson<\/a>+
Resources Analyst, Money Morning<\/em><\/strong> <\/p>\n

Join Money Morning on Google+ <\/u><\/a><\/strong><\/p>\n

The post Why The Western Areas Share Price Rose Today<\/a> appeared first on Stock Market News, Finance and Investments | Money Morning Australia<\/a>.<\/p>\n

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\nBy MoneyMorning.com.au<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au What Happened to the Western Areas Share Price? Shares of Western Areas [ASX:WSA] rose by 3.83% on Tuesday, closing at $5.13. The share price has more than doubled since the beginning of this year. Why Did This Happen to WSA Shares? Western Areas is Australia\u2019s second largest sulphide nickel miner, producing 25,700 tonnes […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-54610","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/54610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=54610"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/54610\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=54610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=54610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=54610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}