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like ours.” breathing space to ensure Odysseus’ de-
The increased interest led directly to im- velopment and decide where it fits best in
proved terms for Western Areas. the market.
“Payability [the percentage offtakers pay “We have ring-fenced it as we do think the
for the total nickel content of concentrate] is market will tighten and we prefer to maintain
obviously key and in that regard, we were the optionality for now,” Belladonna said.
very happy with the outcomes of the offtake “We could include financing in offtake or
negotiations. We will capture an increased introduce partners. It is best to explore all
proportion of value via improved payabili- options before locking in that production.”
ties. Ultimately it means our revenue line is Given the bullish nature of nickel produc-
enhanced without additional cost.” ers, talk has inevitably turned to consolida-
The payabilities are commercial-in-con- tion of the WA sector. IGO kicked off pro-
fidence but the terms of the deals are for ceedings by launching and then cancelling
each company to take 10,000 tpa nickel-in- a hostile bid for Panoramic but there is ex-
concentrate, Nickel West over three years pectation among analysts that further M&A
and Jinchuan over two. activity will occur.
The offtake agreements cover Western What part will Western Areas play?
Areas’ flagship Forrestania operation, but “There is some logic to it, but M&A isn’t
the next round of discussions will likely in- usually about the industrial logic, it is more
volve deals over the company’s newest about the personalities involved,” Bella-
development, the Odysseus project, also donna said. “The reality of closing a deal is
in WA. harder than believed to be. We keep an eye
Belladonna said while Odysseus offtake and you shouldn’t expect Western Areas to
was not on the table, many groups wanted sit on the sidelines. We want to control our
to discuss its future. Joe Belladonna own destiny and we sit with a strong bal-
WA nickel peers Mincor Resources NL ance sheet if we need it.”
and Panoramic Resources Ltd are already “Odysseus was not covered in the latest
tackling production restarts but Odysseus’ round of negotiations, it is still a little too far – Dominic Piper
size and longer mine life could make it the off with first production at the end of 2022,”
most attractive of the new plays. he said. “Everyone was very interested in it
“It has a 10-year mine life with 10,000 though, as it is one of the few projects com-
tpa of nickel sulphide production; that is ing online in that period out to 2025 when
very rare,” Belladonna said. “It equates to we expect supply to tighten and the down-
80,000 tpa of nickel sulphate production stream operators becoming involved.”
which makes it a significant asset, espe- Those projections give Western Areas
cially because it is uncontracted.”

Western Areas has chosen
to stick to nickel concentrate
production rather than pursuing
nickel sulphate value-addition

The underground mining skills
developed at Spotted Quoll will be
put to use at the company’s next
development, Odysseus

aUSTRaLIa’S PaYDIRT FeBRUaRY 2020 Page 37