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Top-up funds Odysseus voyage

estern Areas Ltd shareholders are facility, plus cash flow
Whoping a recent equity rasing will al- from Forrestania and
low the company to put a torrid month for now the capital rais-
the nickel sector behind it and get on with ing. With that we can
the business of building a new mine. run all our projects;
Western Areas announced in mid-March the feasibility study
that it was seeking to raise $100 million via a at New Morning and
placement and SPP to fund development of the Scats project
its Odysseus nickel project at the Cosmos build at Forrestania
complex, near Leinster in Western Austral- and our exploration
ia. The announcement coincided with a big programmes, as well
fall in LME nickel prices after news out of as Odysseus, without
China pointed to Tsingshan finding a new any issues.”
low-cost entry into the burgeoning nickel The Odysseus de-
sulphate battery market. velopment will utilise
Despite the unfortunate timing, Western shaft hoisting tech-
Areas managing director Dan Lougher is nology, a rarity in the Dan Lougher
happy with the result of the capital raising, decline-dominant West Australian under-
telling Paydirt the funds would allow the ground mining sector. improvement, Lougher was confident the
company to press ahead with its growth Lougher said construction of the Odys- March quarter would show improvement
plans. seus underground mine and infrastructure thanks to a rebound in the Spotted Quoll
“The main driver was to make sure we was progressing well, with the main devel- mine.
had adequate cash to deliver the Odysseus opment having reached the 2km mark. “Shareholders are worried about For-
project and $70 million of the raising will go “Everything is going well on the project restania,” he said. “We have to turn it
to Odysseus,” Lougher told Paydirt. “The – this capital raising is not about a cost around which we are doing and that will be
balance sheet is now there to deliver the blowout – and we will be in ore at Odysseus shown in the March and June quarter per-
project. It means we are covered for Odys- South by September,” he said. formance. We are very confident in saying
seus and we and our shareholders don’t The company was preparing to pour con- that.”
have to be worrying every day about what crete for the main winder house at the time “The bottom line is that Flying Fox is per-
the nickel price is doing.” of print, which will pave the way for surface forming much better, but only has reserves
Lougher admitted the timing of the capi- infrastructure to begin. til mid next year. Spotted Quoll has a good
tal raising was unfortunate. The company In conjunction with development of the few strong years yet and then we have the
announced the placement and proposed main Odysseus deposit, Western Areas is New Morning deposit in feasibility study.
SPP on March 9, amid a LME nickel price conducting a feasibility study on the inclu- We have also started the mill scats project
collapse which saw the spot price fall from sion of the AM6 orebody into mining. which is being built and commissioned for
$US19,689/t on February 22 to $US15,907/t “We are now we are running a full fea- May/June. That will flow into the MREP
on the day of the raising. sibility study on AM6,” Lougher said. “The plant with a lot of market focus on the high-
“It is never a good time to raise money met work will allow us to bring the flowsheet grade product which it will produce.”
and in hindsight 2-3 weeks earlier would’ve into the ‘Australian’ style [focusing on recov- Lougher was sanguine about the market
been ideal, we just hit a negative time in the ery rather than concentrate grade]. That will shocks which had seen nickel shed much
market,” Lougher said. “But we knew we be complete by April-May and we can then of its recent gains.
had to carry on.” incorporate that into the finalised mining “It all depends on the bigger picture,” he
Western Areas’ other option was to sell schedule for Odysseus and probably make said. “The biggest driver for the nickel price
its 17% position in Panoramic Resources the plant bigger, from 1.1 mtpa to something is sentiment and Tsingshan saying they can
Ltd but Lougher said that would have been like 1.5 mtpa.” turn NPI into matte and then into sulphate
contradictory to the company’s long-term While possible expansion of Odysseus has created a stir. But if you look at the fun-
strategy. offers shareholders hope for the future, damentals, the big players actually need
“There were some investors asking why Lougher recognises the more pressing that additional nickel and more; the demand
we wouldn’t just sell our Panoramic stake,” need to ease fears about the company’s growth curve is very significant. I’m not sure
he said. “Well, if you believe in the EV story short-term outlook. that even with Tsingshan there is enough to
like we do, then this is a project with copper, The company’s cornerstone asset, the satisfy EV demand.”
nickel and cobalt and they are all essential Forrestania nickel operations in WA, has With Odysseus not due to come online
to EVs. It fits with our strategy to keep it.” underperformed in the last two quarters as until late 2022, the company can wait for the
Lougher said the proceeds from the rais- the original Flying Fox mine edges towards market to settle.
ing – $85 million in a placement is secured, depletion. “We’re not interested in a quarter-by-
the $15 million from the SPP is yet to be Production was down nearly 30% to quarter focus,” Lougher said. “One of our
confirmed – would be immediately applied 7,291t nickel-in-concentrate for the first half biggest shareholders increased its holding
to the Odysseus development. of FY2021 (2HFY2020: 10,268t) as grades in the placement and sees the value in Od-
“We have $234 million left to spend on and problems underground impacted out- ysseus and our strategy.”
Odysseus,” he said. “We had $98 million put.
in cash at December 31, a $75 million debt While Flying Fox is unlikely to see major – Dominic Piper
To present, exhibit or attend as a delegate please contact Namukale Nakazwe

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