Western Areas Reports Full Year Financial Results and FY17 Guidance

PERTH, AUSTRALIA--(Marketwired - Aug. 25, 2016) -

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Western Areas Ltd (ASX:WSA) ("Western Areas" or the "Company") today announces the Company's financial results for the year ended 30 June 2016 (FY16).

In a decade low nickel price environment, the financial results of Western Areas have been significantly impacted by a 28% fall in the average realised nickel price (in Australian dollar terms) compared to the prior year. The nickel price fall alone equated to an A$88.7m reduction in revenue, flowing directly through to the bottom line pre-tax. Counter to this, the Company generated a A$21.7m reduction in cost of sales and total capital and exploration expenditure was reduced by A$22.0m compared to FY15.

The Company's reported net loss after tax (NLAT) of A$29.8m was also impacted by previously reported first half expenditure, write-offs and impairments on certain non-core and non-Forrestania exploration related activities totalling A$13.2m (tax effected). Prior to these charges, the underlying NLAT was A$16.6m¹. Second half FY16 reported NLAT, on a marginally lower nickel price and sales, improved by A$10.2m to a NLAT of A$9.8m.

At an operational level, the Company pleasingly met or exceeded all guidance metrics for the year and did so safely. Continued operational efficiency and cost reduction programs also delivered a lower unit cash cost of production of A$2.26/lb (US$1.64/lb) result, which has seen Western Areas continue to deliver positive operating margins and cashflow from operations.

With cash at bank of $75.7m at year-end and no debt, Western Areas has a strong balance sheet demonstrating resilience in a challenging market. The Company is focused on maximising cash generation and has the benefit of high grades and operational flexibility at its mines as well as growth options at Forrestania, Cosmos and Western Gawler, ensuring it is well positioned to remain nimble through the nickel price cycle.

A presentation of the results has been released today.

Key Metrics:

• Debt free status reduced interest and finance costs by A$12.9m;
• Cash at bank and receivables of A$105.0m
• Sales revenue of A$209.1m (A$312.7m);
• Average realised price of nickel fell by 28% to A$5.69/lb (A$7.87/lb);
• EBITDA of A$40.2m (A$131.5m): 2^nd half EBITDA increased A$2.9m;
• Cost of sales reduction of A$21.7m;
• Reported NLAT of A$29.8m (A$35.0m NPAT): Underlying NLAT of A$16.6m;
• Unit cash cost of production A$2.26/lb (A$2.31/lb) or US$1.64/lb (US$1.94/lb); and
• Capital expenditure and exploration cash spend reduced by A$22.0m(Comparisons in brackets refer to FY15)

Compared to the prior year, the greatest impact on profitability and cashflow was the A$2.18/lb reduction in the nickel price, with a small sales volume variation driven by timing differences. However, metrics within the Company's control generated positive operational cashflow and EBITDA due to a A$21.7m reduction in cost of sales and total capital expenditure and exploration reduced by A$22.0m compared to FY15.