Australian nickel producer Western Areas has announced that it has acquired Glencore’s Cosmos Nickel Complex for A$24.5 million.
The project is located right next to Western Areas’ existing Forrestania Nickel Operation in Western Australia, about 370km north-west of Kalgoorlie.
According to Western Areas’ announcement, the acquisition is consistent with the company’s growth strategy.
“The Cosmos Nickel Complex will complement our existing Forrestania Nickel Operations, and is an excellent, prudent and low cost investment which is consistent with our brownfields acquisition strategy. Western Areas’ strong track record in exploration, successful project development and low cost operations is precisely what this Project needs to prosper outside of the large corporate environment,” said Western Areas Managing Director, Mr Dan Lougher.
“We believe we have acquired the project at the correct stage of the current commodity cycle. We’ve now significantly increased our exposure to upside via substantial additional high quality development and exploration opportunities, as the nickel market is expected to move into a tighter demand and supply balance over the coming years.”
Xstrata suspended operations at Cosmos at the end of 2012 due to prolonged weak nickel prices, but Western Areas has high hopes for the project.
“We look forward to closing this acquisition and commencing both an extensive exploration effort, alongside our existing exploration programs, and initiating development studies on the high grade Odysseus deposit,” Mr Lougher said.
“The exploration program at FNO will remain unaffected, with the replacement and addition of reserves being an absolute focus for both our near and long term organic growth pipeline. Western Areas’ balance sheet is in a strong position and, once debt free in July 2015, together with ongoing cash flow generation, the Company expects to be able to support dividends for shareholders while maintaining ample capacity to fund a ramp up of exploration activity and drive organic capital improvement projects.”