Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

March 19, 2010 08:00 ET

Western Areas Announces Spotted Quoll Underground

Increases Ore Reserves to 90,000 Tonnes Contained Nickel

PERTH, AUSTRALIA--(Marketwire - March 19, 2010) -

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 pleased to announce that the ore reserve for the first stage of the planned underground mine at Spotted Quoll has exceeded the Company's expectations.

A Probable Ore Reserve of 1,725,000 tonnes at an average grade of 4.1% nickel containing approximately 70,200 tonnes (155M lbs) nickel has been estimated from below the Tim King Pit to 525m vertical depth. Western Areas is very encouraged with the result which should underpin a long mine life of high grade production from this project.

Total current Probable Ore Reserves at Spotted Quoll including the Tim King Pit comprise 2,111,500 tonnes at an average grade of 4.3% nickel for 90,100 tonnes (199M lbs) nickel. Further drilling should convert additional Mineral Resources into Ore Reserves at Spotted Quoll.

First ore production from the Tim King Pit, one of the highest grade nickel mines in the world, is on track to commence in April 2010. Previously announced cash cost targets are US$2.00/lb nickel for the open pit and US$2.50/lb nickel for the underground mine (subject to final results of the feasibility study). The feasibility study for the underground mine is due to be completed in August and decline development is scheduled to commence in March Q 2011. 

Spotted Quoll remains open at depth and along strike. Recent drilling at 1,000m vertical depth has intersected high grade mineralisation up to 400m below the current mineral resource. The best result in this area to date is drill hole WBD 157W4 which intersected 3.5m @ 6.4% nickel. A seismic survey has been completed over Spotted Quoll to help define the geometry of the high grade mineralization and drilling is planned in the June Q to test this potential. 

Current open pit and underground Ore Reserves at Spotted Quoll should support a 10 year mine life to 2020. Excellent potential exists to extend the mine life and target production rate.

Total Ore Reserves at Flying Fox (excluding the Lounge Lizard deposit where the first ore reserve is being estimated) and Spotted Quoll are now approximately 3.4Mt at an average grade of 4.7% nickel containing 159,000 tonnes (350M lbs) nickel (Table 1).

Table 1: Ore Reserve Table – Flying Fox and Spotted Quoll Mines (adjusted for mine depletion)

Deposit Category (JORC) Tonnes Grade (Ni%)   Contained Ni (tonnes)
Flying Fox T1 Probable Ore Reserve 17,200 4.2 % 720
Flying Fox T4 Probable Ore Reserve 251,900 4.0 % 10,190
Flying Fox T5 Probable Ore Reserve 1,029,100 5.6 % 58,040
Spotted Quoll Open Pit Probable Ore Reserve 386,000 5.1 % 19,900
Spotted Quoll Underground Probable Ore Reserve 1,725,000 4.1 % 70,200
TOTAL   3,409,200 4.7 % 159,050

Ore Reserve Estimate

The Spotted Quoll Ore Reserve estimate has converted over 86% of the Indicated Mineral Resource based on a $US6/lb nickel price and foreign exchange of 0.90 $US:$AU.

Access to the proposed underground mine is planned from the Tim King Pit which is currently being mined. A view of the mine development and stoping area is shown in Figure 2.

Mine Production and Development Update

  1. Flying Fox Mine: As a result of the T4 development completed in the December Q 2009 and the commencement of development of T5 earlier than expected, production for the March Q 2010 is likely to exceed forecast tonnes and grade. Mine production averaged approximately 1,000 tonnes nickel per month for January and February and this is expected to rise in the June Q 2010 as stoping of high grade T5 ore commences.
  1. Spotted Quoll Mine: 2.4M bcm of waste has been mined from the Tim King pit which is at 25m depth. Oxidised mineralisation is exposed in the pit and first sulphide ore is scheduled to be mined in April. Production will ramp up rapidly in the September Q.
  1. Cosmic Boy Plant: The upgraded crushing circuit is nearing completion and will be commissioned by the end of March (Figure 3). The conversion of the SAG mill to a ball mill and installation of additional flotation and thickener capacity is also on schedule. The plant upgrade will be fully commissioned in June to process the increased production from the Flying Fox and Spotted Quoll mines.

Ore Reserve Parameters

(Table 2) The following parameters were used to estimate the Spotted Quoll Probable Ore Reserve. 

Criteria   Explanation
Mineral Resource estimate for conversion to Ore Reserves   The estimation of the Spotted Quoll Underground Ore Reserve was based on the geological interpretation and model produced by John Haywood, Geology Manager for Western Areas NL. Only Indicated Resources have been used in the estimation of the Ore Reserve. Refer to Table 3 for details of the resource model.
Study Status   Feasibility Study.
Cut-off Parameters & assumptions   A stope cut off of 2.0% Ni was used with a minimum stoping width of 2.5m.
Cut-off values are based on a flat Ni price of US$6/lb and US:AUD forex of 0.9
Mining Factors or assumptions   Planned dilution is considered as that waste material that may be mined in order to practically extract the stope.  It considers the orebody geometry, geotechnical conditions and mining method selected.  In the stoping area above the 990mRL the planned dilution consists of; 0.5m footwall dilution and 0.75m hangingwall dilution.  Where geotechnically significant features are intersected an additional 0.75m of hangingwall dilution is included.
In the stopes below the 990mRL the hangingwall dilution is set at 0.5m.   Where geotechnically significant features are intersected an additional 0.75m of hangingwall dilution is included.
Unplanned dilution is applied as a continuous "sheet" of waste applied to the strike length and height of the individual stopes.  Unplanned dilution allows for additional overbreak from the footwall and hangingwall over above that already designed.
Unplanned factors for stoping are 3% dilution and 95% mine recovery.
Planned dilution is assigned at the grade reporting from the block model.  All unplanned dilution is assumed at 0% Ni grade.
Metallurgical factors or assumptions   Metallurgical nickel recovery factors are based on an As/Ni ratio. This is derived from detailed testwork on the underground Primary Ore.
Penalty element levels are assumed to be negligible on the basis of blending testwork performed to date.
Other    
Classification   Only Indicated Resources have been used to produce this Probable Ore Reserve.
Audits or reviews   No external review of the Ore Reserve estimate has been conducted

Table 3: Mineral Resource Table – Spotted Quoll (including Tim King Pit)

Deposit Category (JORC) Tonnes Grade (Ni%)   Contained Ni (T)
Spotted Quoll Indicated Mineral Resource 1,701,000 6.0 % 101,310
Inferred Mineral Resource 231,300 6.4 % 14,760

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 is based on data compiled by Mr. John Haywood of Western Areas NL. The information within this report as it relates to Ore Reserves is based on data compiled by Mr. Tim Peters, Mr. Stephen King and Mr. Dan Lougher. Mr. Lougher, Mr. Peters and Mr. King are members of AusIMM. Mr. Lougher is a full time employee of the Company. Mr. Peters is a mining consultant with Piran Mining Pty Ltd and Mr. King a mining consultant with GijimaAST. Mr. Lougher, Mr. Peters and Mr. King 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, Mr. Peters and Mr. King 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: "Western Areas is very encouraged with the result which should underpin a long mine life of high grade production from this project" and, "drilling should convert additional mineral resources into ore reserves" and "Previously announced cash cost targets are US$2.00/lb nickel for the open pit and US$2.50/lb nickel for the underground mine", and, "The feasibility study for the underground mine is due to be completed in August and decline development is scheduled to commence in March Q 2011" and "First ore production from the Tim King Pit, one of the highest grade nickel mines in the world, is on track to commence in April 2010", and "Current open pit and underground ore reserves at Spotted Quoll should support a 10 year mine life to 2020", and, "Excellent potential exists to extend the mine life and target production rate".

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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