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Western Areas Ltd.

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Summary

Project:

Cosmos Nickel Complex

Deposit:Odysseus
Location:Australia
Commodities:Nickel
Date:10/22/2018
Report Code:JORC
Report Type:Feasibility Study
Project Stage:Pursuing Environmental Approval
Report details:22-10-2018: Western Areas Ltd. announces a Feasibility Study report for its Odysseus deposit at the Cosmos Nickel Complex project. DFS results incl. pre-tax NPV of A $418M (7%), IRR of 28%, 10yr LOM at the project. Western Areas Ltd (ASX: WSA, “Western Ar
Resources:(Reserve, Prob.): 8.1Mt @ 2.0% Ni for 164kt Ni contained
CP/QP:[Resources]: Andre Wulfse (Internal)
ABSTRACT:Western Areas Ltd (ASX: WSA, “Western Areas” or the “Company”) is pleased to announce the results of the Cosmos Odysseus Definitive Feasibility Study (“DFS”), which confirms a robust 10‐year operation producing 130kt of contained nickel in concentrate. Odysseus is expected to generate significant EBITDA and free cashflow at a very low all‐in sustaining cost (“AISC”). The Board has approved a decision to mine (“DTM”), with Odysseus (or the “Project”) to continue the separate early works program announced in April 2018. The Project does not require any significant capital outlay for a number of years, therefore providing optionality around funding future commitments. The DFS demonstrates a larger, longer life project with improved economics compared to the Pre‐ Feasibility Study (“PFS”). The Project also has significant upside opportunities, with optimisation studies to commence on the potential of bringing the AM5 and AM6 deposits into production, which collectively comprise an Indicated Mineral Resource of 57.6kt of nickel adjacent to Odysseus. With first nickel concentrate scheduled for the December 2022 quarter, Odysseus will be one of the few nickel sulphide mines coming on‐line just as forecast demand for class one nickel is expected to substantially increase in the Electric Vehicle (“EV”) sector. Accordingly, the Company expects, and is already receiving, significant interest in offtake contracts. The DFS released today includes a number of significant changes compared to the March 2017 PFS, including a shift in operating methodology, which has culminated in a larger, longer life project, delivering substantially improved economic outcomes. Based on the same commodity pricing assumptions in the PFS (which are lower than consensus forecasts), Odysseus is expected to generate a 47% increase in free cash flow over the life of the Project (compared to the PFS) and contribute an average $130m per annum free cash flow (pre‐tax) from FY23. A summary of the key metric changes from the PFS to the DFS are summarised on the table below

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