Western Areas (WSA) released June Q results with 6.4kt Ni in concentrate at C1 costs of A$2.80/lb (before payability), beating Argonaut’s forecast of 4.9kt Ni at A$2.55/lb. The strong finish to the year resulted in WSA meeting revised guidance of ~21kt, with FY18 actual of 21.1kt at A$2.63/lb. The Company generated strong cash flow during the Q adding $16m cash to finish the year at $152m. We believe WSA is in a strong position from cash and future cash flow to self-fund growth projects, including the Odysseus underground mine with pre-development capex of $190-200m (PFS estimate). Upgrade to BUY with a $3.40 target price
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