Western Areas (WSA) Update

Western Areas (WSA) has a target price of $9.50 and an Outperform recommendation from Australian Stockmarket analyst Macquarie Research Equities.

Western Areas (WSA): Nickel Fundamentals Strengthening

Western Areas has recently announced initial estimates for its Spotted Quoll resource. The initial numbers are impressive and have seen WSA have a good run of recent times. The question we must now answer is whether further upside remains. We look to Macquarie Research Equities (who believe WSA has the makings of a strong long term growth story driven by an aggressive exploration program and quality asset base), to provide some insight.

Western Areas NL (WSA) - Outperform
Current Price: $9.72
Target Price: $9.50
Source: IRESS

Western Areas (WSA) Fundamental Analysis

Macquarie Research Equities (MRE) Fundamental View:
1. The initial resource of 545kt at 6.3% nickel containing 34.5kt nickel is impressive. The resource is predominantly indicated (~87%) and only extends to a depth of 200m. WSA Management is excited by the potential to increase the Spotted Quoll resource below 200m with 3 rigs on site to conduct this drilling in the June Quarter.
2. MRE expects management to continue to aggressively drill to build an identifiable path to its 30-35ktpa nickel production target from Forrestania by 2011.
3. While it is early stages, should Spotted Quoll grow into a >50ktpa nickel deposit, with cash costs at least in line with Flying fox, there is potential for a clear uplift in value.
4. MRE believes the catalyst could be further exploration success at the Spotted Quoll resource.