{"id":60148,"date":"2014-09-10T22:34:05","date_gmt":"2014-09-11T02:34:05","guid":{"rendered":"http:\/\/countingpips.com\/?p=60148"},"modified":"2014-09-10T22:34:05","modified_gmt":"2014-09-11T02:34:05","slug":"why-the-western-areas-share-price-fell-today-3","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/09\/why-the-western-areas-share-price-fell-today-3\/","title":{"rendered":"Why the Western Areas Share Price Fell Today"},"content":{"rendered":"
September 10, 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> fell by 3.41% on Wednesday, closing at $5.05. The share price has nearly doubled since the beginning of this year. This compares with the nickel price which is up 41% this year. Saying this, today\u2019s share price fall follows the nickel decline of 5% overnight. <\/p>\n

Why Did This Happen to Western Areas?<\/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 has increased since Indonesia, the world’s top supplier of the metal, began talking about a ban on nickel exports (now enforced). And with Indonesian elections now ended, the new President, Joko Widodo, is expected to continue with the unrefined nickel export ban. <\/p>\n

If the nickel ban continues, analysts have predicted a supply shortage of the metal leading into next year. And now the Philippine government wants to enforce similar bans; however, these bans won\u2019t come in for at least another five years. <\/p>\n

As such, the nickel spot price continues its volatile climb. <\/p>

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After reaching a two-year high of almost $22,000 a tonne in May, the three month forward nickel price closed at $18,925 per tonne last night. <\/p>\n

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

Everyone is looking at Indonesia and the nickel price. This will determine the future for shareholders. <\/p>\n

But 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. <\/p>\n

But 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

At the Spotted Quoll operation, nickel production rose 31.8% on last year to 13,973 tonnes. 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

The increased nickel price has been 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>\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. Shareholders seem reluctant to pay more for the company than they are doing so now. <\/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 Fell 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] fell by 3.41% on Wednesday, closing at $5.05. The share price has nearly doubled since the beginning of this year. This compares with the nickel price which is up 41% this year. Saying this, today\u2019s share price fall follows the […]<\/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-60148","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/60148","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=60148"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/60148\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=60148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=60148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=60148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}