Western Areas

Australian Resources Sector Preview provided by Australian market analyst UBS.

Resources Sector – Nickel looking more stainless!

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 (WSA) is a dual-listed ASX/TSX nickel explorer that has recently made the leap to producer and has been a stand-out performer for the calendar year to date, with its shares up over 40 percent. Recently, sharemarket analysts' Macquarie Research Equities have initiated coverage and said that WSA is an "emerging nickel producer with multiple projects, a strong production growth profile and compelling exploration potential". The company's flagship asset, the Forrestania nickel project, is located around 400km east of Perth, Western Australia. Western Areas have effectively reinvented Forrestania through the rapid discovery of significant new high-grade deposits. The project now has an aggregate resource base of over 200kt contained nickel and a clearly defined growth pipeline to +18ktpa nickel-in-concentrate by 2011. Flying Fox is WSA's first producing mine at Forrestania. The mine has been designed to access a number of high-grade massive sulphide orebodies, with the T1 and T5 deposits composing the majority of current mining inventory. Progressive underground development is expected to deliver production growth from 0.5kt nickel-in-concentrate in FY07 to 9.2kt in FY09, and over 12kt in FY11. Western Areas (WSA) has progressively delineated a second potential mine, Diggers South, which is located around 40km south of Flying Fox. This lower grade project is currently the subject of a pre-feasibility study, expected to be completed later this quarter. Exploration upside: The company also has an enviable pipeline of further development opportunities and advanced exploration targets. WSA is set to aggressively explore the broader Forrestania region and its prospective properties in Manitoba, Canada. They believe the likelihood of further exploration success around Forrestania is high. WSA is an emerging nickel producer with multiple projects, a strong production growth profile and compelling exploration potential. Asset location is geopolitically attractive relative to other emerging players. An aggressive exploration program targeted into a proven nickel province increases the likelihood of further significant exploration success over the next few years.