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Western Areas Ltd, refreshing the banking facilities

Team Veye | 14 Jan 2021 ASX - WSA
Western Areas Ltd, refreshing the banking facilities

Western Areas Ltd (ASX: WSA)

Western Areas Ltd (ASX: WSA) (“Western Areas” or the “Company”) on 24 December 2020 advised that the credit approved term sheet to establish a secured A$75m Revolving Credit Facility (“RCF”) had been agreed between the Company and Commonwealth Bank of Australia (“CBA”)

Key RCF Highlights:

  • Allows the Company to continue to advance its active feasibility and exploration programmes across the Company’s assets
  • The facility builds on the Company’s significant cash reserves, strong balance sheet and cash flows from existing operations
  • Ability to increase the facility by A$25m (total facility A$100m), subject to lender consent
  • Tenure – 3 years with an option to extend by a further 1 year, if mutually agreed

Western Areas had been working with its lenders to refresh its banking facilities to provide financial flexibility and working capital options to the Company if required, as it continued to develop the Odysseus mine at Cosmos.

(Chart source: TradingView)

The company “Western Areas Limited” (ASX: WSA) has an Earn-In and Joint Venture Agreement with Metal Hawk whereby WSA holds the   right to earn a 75% interest on three of Metal Hawk's projects; Kanowna East, Emu Lake and Fraser South by spending $7.0 million over 5 years. Metal Hawk is free carried to decision to mine and retains gold rights at Kanowna East and Emu Lake. Metal Hawk provided an update on the exploration activities on 18 December 2020

Highlights:

  • At the Kanowna East Project, 148 holes have been drilled to date for 9,417 metres. This includes 49 holes drilled for 2,311 metres by Western Areas Limited (ASX: WSA) as part of WSA’s nickel exploration program.
  • The aircore rig is took halt during Christmas period and will recommence its operations at Kanowna East in January 2021.
  • A track mounted lake rig is scheduled to begin drilling at Kanowna East in Q1 2021.
  • Stage-1 aircore drilling has been completed at the Emu Lake Project with 59 holes drilled for 3,801 metres.
  • Gold assays are expected early in the new year (Data Source – Company Reports)

 

Veye’s Take

With the securement of the RCF, the Company’s banking facilities are now refreshed and provide comfort that working capital is in hand as it continues to advance construction of the Odysseus underground mine. The facility agreements with the new primary debt provider (CBA) are expected to complete early in the calendar year 2021 giving a boost to exploration activities ahead. The stock has made a “Double Bottom” pattern on the price charts indicating strong support near the levels of $1.97. After taking support at these levels, it has made “Higher High” on the price charts well supported by the RSI positive divergence and MACD in a positive zone. The stock touched the upper Bollinger band and is experiencing slight resistance. The levels near $3.01-$3.03 pose minor resistance for the stock, closing above it can have the potential of giving good returns in the short to medium term. Veye maintains a “Hold” on “Western Areas Ltd” at the current price of $2.88

Disclaimer

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