Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

July 30, 2009 08:00 ET

Western Areas Announces June 2009 Quarterly Activities Report

PERTH, AUSTRALIA--(Marketwire - July 30, 2009) -

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

The Board of Western Areas (TSX:WSA)(ASX:WSA) is able to report to shareholders that the June quarter was another period with outstanding results from production, ore processing, mine development and exploration. In addition, Western Areas announced a number of major strategic developments which are expected to have a long term and positive impact on the Company. As a result, the Board believes that Western Areas is in a very strong position to benefit from strengthening nickel prices and market conditions.

Highlights - Operations

1. 2,570 tonnes nickel mined during the quarter bringing the total for the past 12 months to 10,330 tonnes nickel mined, exceeding the target of 10,000 tonnes.

2. Average grade mined from Flying Fox was 4.3% nickel, a 16% increase over March Q. Average cash cost was US$2.14/lb nickel, in line with expectations.

3. Metallurgical recovery averaged 90% nickel. Fine tuning of the Cosmic Boy plant has resulted in significantly improved recoveries to 93.5% for July.

4. Flying Fox mine development ahead of schedule with high grade ore now being mined at T1 and T4 deposits. T5 is on target to be reached in Dec Q 09.

5. Drilling identified significant extensions to the upper part of T5. Intersections include 13.2m @ 10.0% Ni, 12.3m @ 8.7% Ni, 5.3m @ 10.2% Ni.

6. Drilling in progress to test potential for extensions to Spotted Quoll below the current mineral resource of 2.0Mt @ 6.2% Ni containing 125,500t Ni.

7. Final permitting underway for initial Spotted Quoll open pit which should see development commence in August and first production in March Q 2010.

8. Board decision due in Sept. Q to double capacity of Cosmic Boy concentrator to 550,000tpa ore. Construction expected to commence in August.

Highlights - Strategic

1. Two year offtake contract signed to sell 25,000 tonnes nickel in concentrate to Jinchuan Group Ltd, China's largest nickel company, starting early 2010. As well as favourable terms, the agreement is expected to provide excellent exposure to the world's fastest growing nickel market. The Jinchuan contract is in addition to the existing contract with BHP Billiton for 10,000 tpa nickel.

2. Transition from the Norilsk offtake contract in February 2009 to the BHP Billiton contract (effective May) resulted in no nickel sales for three months, impacting June Q cash flows. Current site stockpiles of concentrate (approximately 14% Ni) and ore (approximately 4% Ni) contain approx. 3,500 tonnes nickel which will be sold into the BHP Billiton contract in a higher nickel price environment.

3. Agreement with Kagara Ltd on Lounge Lizard deposit adjacent to Flying Fox mine with initial payment of A$20M received from Kagara. This consolidates one of the world's highest grade nickel mines with combined mineral resource greater than 2.5Mt @ 5.5% nickel, containing approximately 140,000 tonnes nickel. Western Areas will manage all aspects of the mine and sell the concentrate.

4. Balance sheet strengthened during the June Q with A$45M long dated loan from BHP Billiton, A$20M payment from Kagara and A$35M placement to Australian and offshore institutions. Majority of funds will be used to develop Spotted Quoll, expand the plant and increase the rate of exploration drilling.

Western Areas has already exceeded previously announced targets to reduce underground mining and surface drilling contractor costs by 10%.

The full activities report can be viewed at the Companies website www.westernareas.com.au

QA-QC STATEMENT:

Mr Adrian Black from geological consultants Newexco Services Pty Ltd ("Newexco") and Mr Charles Wilkinson from Western Areas 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 information compiled by Mr John Haywood, Mr Dan Lougher and Mr Julian Hanna of Western Areas NL. Mr Haywood, Mr Lougher and Mr Hanna are members of AusIMM and are full time employees of the Company. Mr Haywood, Mr Lougher 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, Mr Lougher 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 including nickel production targets. 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.

Examples of forward looking statements used in this report include: "major strategic developments which are expected to have a long term and positive impact on the Company", and "the agreement is expected to provide excellent exposure to the world's fastest growing nickel market", and "Final approval is expected in late in early August", and "Western Areas is on track to meet production targets of around 9,000 tonnes nickel in 2009 and over 20,000 tonnes nickel in 2010", and "The Company has previously announced an overall target to produce up to 35,000tpa nickel from a number of mines at Forrestania".

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. 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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