Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

September 30, 2009 08:00 ET

Western Areas Announces Record Nickel Sales and Exploration Update

PERTH, AUSTRALIA--(Marketwire - Sept. 30, 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) achieved record nickel sales of approximately 2,800 tonnes of nickel in concentrate for the September quarter sold at an estimated average price of US$7.90/lb nickel. The final price will be determined after the quotation period is finalised. The majority of this concentrate has come from existing stockpiles where production expenses where incurred during the June quarter, as well as from recent ore production at Flying Fox.

The average LME nickel price for the September quarter is an increase of approximately 35% above the LME price of US$5.90/lb for the June quarter. Western Areas expects significant additional cash flow above what would have been received if the nickel had been sold in the June quarter. Some sales are subject to final settlement calculated in the coming months.

Current stockpiles of concentrate at Forrestania contain an estimated 1580 tonnes nickel and the intention is to sell a large part of this concentrate in the December quarter. In addition there are approximately 900 tonnes of nickel in ore stockpiled at the mine and at Cosmic Boy.

The Cosmic Boy nickel concentrator is operating at full capacity and is producing a high grade, high quality product. The concentrator capacity is being increased to treat ore from Spotted Quoll as well as Flying Fox to meet the target to double production from the estimated 10,000tpa nickel in CY 2009 to 20,000tpa nickel in CY 2010. With mining expected to commence at the Spotted Quoll open pit next week and excellent progress on Flying Fox underground mine development, the Company is in a solid position to meet this target.

Production and financial statistics for the September quarter 2009 will be reported in the Activities Report planned to be released in the week of 19th October.

Exploration Update

Current exploration and mineral resource extension drilling is focussed in four areas:

1. Flying Fox T4, T5 and Lounge Lizard Deposits

Underground diamond drilling is continuing to produce high grade intersections in new areas of the mine. A revised Mineral Resource estimate for the T4/T5 deposits is expected to be announced early in the December quarter. In addition, the 630mRL drilling drive planned to provide drilling access to Lounge Lizard is almost complete.

2. Spotted Quoll Extensions

On 18 September, Western Areas announced a high grade intersection 600m down dip below the current mineral resource, in a similar geological setting. Drilling is continuing in this area with the aim of defining extensions to the mineral resource which could have a significant impact on proposed underground mine production.

A seismic survey of the Spotted Quoll area has commenced with the aim of defining the 3D geometry of the mineralised contact and identifying potential new zones of massive sulphide. Seismic has been very effective in defining drilling targets in the Kambalda nickel district. If the survey is successful at Spotted Quoll, it is likely to be extended elsewhere along the 25km long Western Nickel Belt at Forrestania.

3. Western Nickel Belt

Systematic drilling has commenced to follow up high grade nickel mineralisation intersected at the Boojum South prospect (now renamed Arrowhead) 9km south of Spotted Quoll. Initial drilling reported in the June Q Activities Report intersected disseminated and high grade narrow vein style nickel sulphides below granite at shallow depth. This prospect is regarded as a high priority by the site based geologists.

4. Sandstone JV (WSA earning up to 70% of nickel rights with Troy Resources NL)

An initial shallow drilling program has been completed to test four target areas. Based on geology and Niton estimates recorded on site, encouraging results were reported from two areas. Compilation of data has commenced and formal assay results are required to confirm preliminary nickel results. The joint venture covers a large area of prospective geology not subject to previous systematic nickel exploration.

BioHeap Project Update

Western Areas announced on 12 August 2009 an option to acquire 100% of the BioHeap bacterial leaching technology from Pacific Ore Ltd (ASX:PSF). Western Areas is conducting due diligence on the BioHeap technology which includes test work being undertaken on a range of low grade nickel sulphide ore types from the Forrestania Nickel Project.

In line with the BioHeap strategy, Western Areas has entered an agreement for the right to earn 75% interest in a number of exploration properties in central Finland at relatively low cost. Unlisted Finnish company Magnus Minerals Ltd (Magnus) has conducted a detailed assessment of the 150km long Kainuu Schist Belt and has built up tenement holdings to cover seven project areas considered to have potential for Talvivaara type deposits.

Talvivaara Mining Company Plc is developing the Talvivaara open pit mine and is using bacterial leaching technology (similar to BioHeap) to extract nickel, zinc, copper and cobalt from low grade sulphide ores. Talvivaara Mining has announced initial production targets of 33,000 tpa nickel, 60,000 tpa zinc and 10,000 tpa copper.

The Western Areas/Magnus exploration projects consist of large, coincident magnetic and electromagnetic anomalies interpreted to occur in similar geological settings to the Talvivaara mine. Only one project, Rautavaara (50km south of Talvivaara) has had any significant drilling. Between 1977 and 1980, widely spaced drilling was completed by the Geological Survey of Finland over a small part of the 10 km long Rautavaara target. Several drill holes intersected significant widths (up to 125m true width) of sulphide mineralisation at shallow depth with the same or similar grades of nickel and zinc as seen at Talvivaara mine.

Managing Director, Mr Julian Hanna said: "We are currently having discussions with landholders and authorities in Finland to enable surface exploration to get underway. The planned drilling program will only proceed when we are more confident on the effectiveness of the bacterial leaching technology and have an indication of potential future production costs".

Mr Hanna added, "The Western Areas Board is mindful of the requirement to use the Company's existing capital to expand production at Western Areas' high quality operations at Forrestania. The Finland project will be managed by the joint venture and will have no impact on our core exploration and mining activities at Forrestania in Western Australia".

QA-QC STATEMENT:

The information within this report as it relates to exploration results or mineral resources or ore reserves is based on information compiled by Mr Julian Hanna and Mr Charles Wilkinson. Mr Hanna and Mr Wilkinson are members of AusIMM and are full time employees of the Company. Mr Hanna and Mr Wilkinson 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 Hanna and Mr Wilkinson 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 are: 'Western Areas expects significant additional cash flow above what would have been received if the nickel had been sold in the June quarter' and, 'estimated 1580 tonnes nickel and the intention is to sell a large part of this concentrate in the December quarter' and, 'target to double production from the estimated 10,000tpa nickel in CY 2009 to 20,000tpa nickel in CY 2010. With mining expected to commence at the Spotted Quoll open pit next week and excellent progress on Flying Fox underground mine development, the Company is in a solid position to meet this target.' , and, 'If the survey is successful at Spotted Quoll, it is likely to be extended elsewhere along the 25km long Western Nickel Belt at Forrestania' , and, 'A revised Mineral Resource estimate for the T4/T5 deposits is expected to be announced early in the December quarter,' and, 'The planned drilling program will only proceed when we are more confident on the effectiveness of the bacterial leaching technology and have an indication of potential future production costs', and, 'The Finland project will be managed by the joint venture and will have no impact on our core exploration and mining activities at Forrestania in Western Australia'.

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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