The falling nickel price has pushed Western Areas into an after-tax net loss of A$20-million for the six months ended December, compared with a net profit of A$23.6-million in the previous corresponding period.

The average realised price of nickel fell by about 30% over the period under review, resulting in revenue declining from A$164.6-million in the first half of 2015, to A$105.9-million. Western Areas pointed out on Thursday that the net loss also included a write-off of A$4.7-million relating to the revaluation of a low-grade stockpile and some regional exploration expenditure, with a further A$7.5-million impairment charge recorded on historical exploration expenditure by the company’s 60% held FinnAust Mining.

MD Dan Lougher told shareholders that despite the significant impact of the weak nickel price environment, Western Areas had realised significant cost reductions, with cash costs declining from $2.11/lb to $1.63/lb. “Western Areas has previously experienced and seen through the challenges of a volatile nickel price.

With the repayment of all convertible bond debt, the lowering of our corporate and operating costs and our ability to defer capital expenditure (capex), the company is well positioned to take advantage of opportunities and an anticipated recovery in the nickel price.” In October, Western Areas announced the deferral of nearly A$32.6-million of capex from 2016 to 2017, with exploration expenditure also decreasing from A$15-million to A$11-million.

“The company’s strategy of continuing to invest prudently in our medium- to long-term growth at Forrestania, Cosmos and Western Gawler will ultimately deliver returns to shareholders. “In this regard, we are about to embark upon a highly targeted diamond drilling programme at Cosmos, while early work on the high-grade Odysseus project is indicating significant opportunities for capital and operating expenditure reductions from the previous Xstrata studies,” Lougher said.

For the full 2016, Western Areas maintained its production guidance of between 25 000 t and 27 000 t, while nickel-in-concentrate production was expected to reach between 24 000 t and 25 000 t.

• [Editor:Juan]