Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

October 14, 2009 08:00 ET

Western Areas Announces 11% Increase in Mineral Resources Highlights Further Potential at Flying Fox Mine

PERTH, AUSTRALIA--(Marketwire - Oct. 14, 2009) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Western Areas (TSX:WSA)(ASX:WSA) today announced revised mineral resource estimates for the Flying Fox T4 and T5 deposits as well as initial mineral resource estimates for the T6 and T7 nickel deposits. Based on the revised mineral resources, ore reserves for T4 and T5 are being upgraded which is expected to have a positive impact on mine production and grade from early 2010 onwards.

High grade mineral resources at Flying Fox now comprise 1,584,500 tonnes at an average grade of 6.0% Nickel, containing 95,370 tonnes nickel (80,380 tonnes Indicated & 14,990 tonnes inferred). This is an 11% increase in contained nickel from the published mineral resources for Flying Fox as at 30 June 2009, after mining depletion. Details of the revised mineral resource are shown in Table 1.

Total high grade mineral resources for the combined Flying Fox / Lounge Lizard deposit announced by Western Areas and Kagara Ltd now comprise approximately 2.7 million tonnes at an average grade of 5.4% nickel for 148,470 tonnes nickel. In addition, there is a large volume of low grade disseminated mineralisation overlying the Flying Fox / Lounge Lizard deposit which contains approximately 53,650 tonnes nickel in announced mineral resources.

On 11 May 2009, Western Areas announced an agreement with Kagara Ltd to mine Lounge Lizard using access from the Flying Fox decline. Western Areas will manage and operate all aspects of the combined Flying Fox/Lounge Lizard mine. Lounge Lizard ore will be treated at the Cosmic Boy nickel concentrator and sold into Western Areas' nickel offtake agreements.

Initial mineral resource estimates for the T6 and T7 deposits are based on limited drilling over a small area. Potential exists for significant extensions to these deposits north of the current limit of drilling and a decision is likely in early 2010 to extend drilling coverage in this area of Flying Fox. Underground drilling is ongoing to extend the T4 and T5 deposits.

Discussion

As part of the revised mineral resource estimate, new images have been prepared for Flying Fox which highlight the size, grade and geometry of this large nickel system.

Interpretation of the data shows:

- extensive zones of greater than 5% nickel over 500m vertical extent

- structure of high grade ore shoots within T4, T5, T6 and T7

- potential for extensions north of T5, T6 and T7 and below T7

- rotation and movement of T7 northwards, below a fault

Managing Director, Mr Julian Hanna said: "The new images of Flying Fox provide a different perspective of the controls of high grade mineralisation, not seen in previous data. As a result, it is not difficult to see where further drilling could add significant value to this mine".

Mr Hanna added: "With mine development and production now well established at Flying Fox, the Company's focus is clearly on increasing profit, increasing production and increasing mine life - in that order".

Revised Mineral Resource

T4 Deposit

Underground diamond drilling has led to an upgrade of the mineral resource estimate for T4 after depletion due to mining. T4 comprises an Indicated Mineral Resource of 212,900 tonnes at an average grade of 5.9% nickel containing 12,500 tonnes nickel and an Inferred Mineral Resource of 42,100 tonnes at an average grade of 4.8% nickel containing 2,010 tonnes nickel. Untested areas still remain within the T4 deposit which is the target of current drilling.

Flying Fox ore development is currently focused on T4 with five level drives now developed. In 2010, ore production will focus on the large T5 deposit with less reliance on T1 and T4.

T5 Deposit

An updated interpretation and revised mineral resource estimate for T5 has been completed. This comprises an Indicated Mineral Resource of 918,200 tonnes at an average grade of 6.7% nickel containing 61,450 tonnes nickel and an Inferred Mineral Resource of 84,000 tonnes at an average grade of 5.9% nickel containing 4,920 tonnes nickel.

Significant potential exists for further high grade extensions to the T5 mineral resource and will be tested in the December Q 2009. The most substantial targets are the southern pegmatite hosted lodes which have the potential to enhance the production profile for T5.

T6 and T7 Deposits

Maiden Inferred Mineral Resource estimates have been produced for both the T6 and T7 deposits, based on limited existing data from surface diamond drilling. Significant potential exists to increase these mineral resources and it is proposed to develop an underground hanging wall drill drive in 2010, to target these areas with underground diamond drilling.

Lounge Lizard Deposit

The exploration drill drive being developed on the 630m RL mine level to provide access for drilling within the Lounge Lizard deposit is near completion. Mine development and underground drilling due to commence at the end of October 2009 will be funded by Kagara.

A full copy of this release including diagrams can be seen at the company's website.



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Table 1: Mineral Resource Statement as at 13th October 2009 - Flying Fox
Deposit, high grade massive sulphide mineralisation (above lower cut-off
of 2% Nickel)
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Mineral Measured Indicated Inferred
Resource Ni Ni Ni Ni Ni Ni
Category Tonnes (%) (tonnes) Tonnes (%) (tonnes) Tonnes (%) (tonnes)
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T1 South - - - 102,500 4.4 4,530 35,200 4.9 1,720

T1 North - - - 45,400 4.2 1,900 12,700 4.8 610

T4 - - - 212,900 5.9 12,500 42,100 4.8 2,010

T5 Massive - - - 918,200 6.7 61,450 84,000 5.9 4,920

T6 - - - - - - 47,500 5.0 2,360

T7 - - - - - - 67,700 5.0 3,370
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TOTAL - - - 1,279,000 6.3 80,380 305,500 4.9 14,990
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Resource Parameters: Flying Fox Mineral Resource estimates were completed by Mr John Haywood who is Geology Manager for Western Areas NL. Massive and matrix sulphide mineralisation was modeled as 3D solids, and a block model was created using "Datamine Studio" software, filling the solids with cells and sub-cells; with Ni estimated by Ordinary Kriging. The mineralisation at Flying Fox exhibits moderate to good continuity of width and grade. High confidence exists in the geological model for the Flying Fox deposits and is validated by mining.



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Item Details Comments
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Cells Size 5m (X) by 10m (Y) by 5m (Z) Sub-celled to match solids
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Interpolation Method Ordinary Kriging Validated by ID2 estimate
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Search Radii Fixed and dynamic Variable
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Nominal Drill Variable - 10m by 10m
hole spacing to 80m by 80m
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Surface diamond drill hole collar surveys used differential GPS with underground diamond drill holes surveyed by total station; down hole surveys used a gyroscopic instrument, Maxibor2 or Deviflex tool; a comprehensive density database was utilised; there is high assay confidence with systematic QA/QC procedures and a validated acQuire database. An alternate inverse distance squared estimate was made to validate the ordinary kriged resource. A validation of drill holes against block model grades was made.

QA-QC STATEMENT: Mr Adrian Black from geological consultants Newexco Services Pty Ltd ("Newexco") and Mr John Haywood of Western Areas NL are responsible for the verification and quality assurance of the Company's exploration data and analytical results from the Forrestania Nickel Project. Surface diamond drill hole collar surveys used differential GPS, downhole surveys employed a north seeking gyroscopic instrument; comprehensive density database; high assay confidence with systematic QA/QC procedures; and validated database. Samples of quarter core from the drill holes described in this release are prepared and analysed by ALS Chemex Ltd laboratory in Perth for nickel, copper, cobalt and other elements. Core samples are crushed and pulverised to 90% passing 75 microns then analysed for nickel by ore grade determination using the ALS OG-62 method. Assays standards are routinely inserted in the sample stream by Newexco for quality control.

The information within this report as it relates to mineral resources and mine development activities is based on data compiled by Mr John Haywood and Mr Julian Hanna of Western Areas NL. Mr Haywood and Mr Hanna are members of AusIMM and full time employees of the Company. Mr Haywood and Mr Hanna have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.' Mr Haywood and Mr Hanna consent to the inclusion in the report of the matters based on the information in the form and context in which it appears.

FORWARD LOOKING STATEMENT: This release contains certain forward-looking statements. Examples of forward-looking statements used in this release include: "ore reserves for T4 and T5 are being upgraded which is expected to have a positive impact on mine production and grade from early 2010 onwards", and, "Potential exists for significant extensions to these deposits north of the current limit of drilling and a decision is likely in early 2010 to extend drilling coverage in this area of Flying Fox. Underground drilling is ongoing to extend the T4 and T5 deposits", and, "potential for extensions north of T5, T6 and T7 and below T7", and, "it is not difficult to see where further drilling could add significant value to this mine", and, "Company's focus is clearly on increasing profit, increasing production and increasing mine life - in that order."

These forward-looking statements are subject to a variety of risks and uncertainties beyond the Company's ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward-looking statements.

This announcement does not include reference to all available information on the Company or the Forrestania Nickel Project and should not be used in isolation as a basis to invest in Western Areas. Any potential investors should refer to Western Area's other public releases and statutory reports and consult their professional advisers before considering investing in the Company.

For Purposes of Clause 3.4 (e) in Canadian instrument 43-101, the Company warrants that Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

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