Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

December 02, 2008 08:00 ET

Western Areas on Target

PERTH, AUSTRALIA--(Marketwire - Dec. 2, 2008) -

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 another record month of production at the Flying Fox mine, which is on target to produce 8,000 tonnes nickel in 2008. Spotted Quoll is also on target for an updated Mineral Resource and an initial Ore Reserve for the open pit with first ore due in the September Quarter 2009. The 300,000tpa Cosmic Boy treatment plant is on time and on budget for completion this year and commissioning in February 2009.

Flying Fox Mine

October and November has seen consecutive months of record production.



Ore Hoisted Grade Contained Ni
(Tonnes) (Ni %) (Ni Tonnes)
October 21,245 4.73 1,006
November 21,737 5.08 1,104


Budgeted monthly production is 20,000 tonnes at 4.5% nickel for a cash cost of $US2.50/lb however the continued strong production from the mine should see Flying Fox achieve an estimated cash cost of nickel production for the December quarter of approximately $US2.00/lb. The 2008 calendar year target of 8,000 tonnes nickel mined is on track.

Mine development remains on target with the decline now 50 meters below the top of T4 which will commence ore access development in February 2009. Underground drilling of T4\T5 with two rigs has commenced. The decline is on target to be along side T5 in December 2009 for ore development in March quarter 2010.

Drilling at Flying Fox T4 and T6 continues to provide excellent results. FFD196 W1/W1/W1 intersected 4.0m of massive and stringer sulphides in T4 and FFD 195W2/W1 intersected 2.8m of matrix and stringer sulphides. Both drill holes continue to indicate potential for significant extensions to mineral resources and ore reserves in these areas.

Spotted Quoll Project

On 2 September 2008, Western Areas announced a Mineral Resource for Spotted Quoll of 1,045,900 tonnes at an average grade of 7.2% nickel for 75,140t contained nickel. Drilling to complete the third panel down to 500 meters vertical depth is nearing completion with significant high grade nickel intersections continuing to be reported in most drill holes.

An updated Mineral Resource targeting 100,000 tonnes contained nickel and an initial Ore Reserve is expected for the December 2008 Quarterly.

Western Areas is commencing negotiations for the Spotted Quoll offtake with a number of parties. Norilsk Australia Nickel Ltd has now confirmed that Spotted Quoll, like the Diggers South Project, has been released from the Ore Tolling and Concentrate Purchase Agreement (OTCPA) with Norilsk retaining a last right of refusal. The OTCPA provides for Western Areas to deliver the first 75,000 tonnes of nickel in concentrate from the Forrestania tenements to LionOre Australia Nickel Ltd (now Norilsk Australia Nickel Ltd). This 75,000 tonnes of nickel can be delivered by Western Areas to Norilsk either in ore or in concentrate and to date Western Areas has delivered approximately 8,000 tonnes.

As advised previously, Western Areas has received preliminary offers for the Diggers South concentrate with improved payability terms than under the OTCPA. Initial indications are that the high grade concentrate produced from Spotted Quoll will be well received by the market.

Regulatory and Environmental approvals remain on track. Negotiations with open pit contractors continue with the decision to mine due in the March Quarter 2009 and first ore in the September Quarter 2009. Forecast cash costs for the open pit remain at $US1.50-2.00\lb.

Diggers Rocks and Diggers South

The evaporation pond and dewatering infrastructure has been installed on time and on budget. Dewatering has commenced so a review of the existing mine portal can be undertaken in the March Quarter 2009. Other activities have been stopped pending the completion of offtake negotiations and an improved nickel metal price. This mine will then be ready to commence development and production once commodity prices have recovered.

Cost Review

Western Areas is targeting additional significant cost reductions in all areas of our business:

- The drilling budget for 2009 has been halved to A$12 million. The Resource and Exploration Drilling for 2008 at Forrestania is effectively complete and the fleet of nine surface rigs and one underground rig is being reduced to:



2 underground drill rigs at Flying Fox - T4 and T5 infill drilling
2 surface drill rigs - focused on Spotted Quoll
1 regional exploration drill rig


- The Flying Fox T4 and T5 mine contract is under negotiation with improved rates and terms expected. The open pit mining contract for Spotted Quoll is being negotiated.

Corporate

Western Areas remains in a strong financial position with approximately A$90 million in cash and receivables plus undrawn debt facilities of approximately A$20 million. No further bonds have been bought back and no shares have been bought back. The Board continues to monitor ways of further adding further value for shareholders.

QA-QC STATEMENT:

Mr Adrian Black from geological consultants Newexco Services Pty Ltd ("Newexco") is 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.

COMPETENT PERSONS STATEMENT:

The information within this report as it relates to mineral resources and mine development activities is based on information compiled by Mr Dan Lougher and Mr Julian Hanna of Western Areas NL. Mr Lougher and Mr Hanna are members of AusIMM and are full time employees of the Company. 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 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. These include: "Flying Fox mine, which is on target to produce 8,000 tonnes nickel in 2008. Spotted Quoll is also on target for an updated Mineral Resource and an initial Ore Reserve for the open pit with first ore due in the September Quarter 2009. The 300,000tpa Cosmic Boy treatment plant is on time and on budget for completion this year and commissioning in February 2009", and "The continued strong production from the mine should see Flying Fox achieve an estimated cash cost of nickel production for the December quarter of approximately $US2.00/lb payable. The 2008 calendar year target of 8,000 tonnes nickel mined is on track", and "The decline is on target to be along side T5 in December 2009 for ore development in March quarter 2010", and "Initial indications are that the high grade concentrate produced from Spotted Quoll will be well received by the market", and "Regulatory and Environmental approvals remain on track. Negotiations with open pit contractors continue with the decision to mine due in the March Quarter 2009 and first ore in the September Quarter 2009. Forecast cash costs for the open pit remain at $US1.50-2.00\lb". 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 or the Flying Fox deposit or the Spotted Quoll deposit 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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