Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

January 28, 2010 06:00 ET

Western Areas Announces December 2009 Quarterly Activities Report

PERTH, AUSTRALIA--(Marketwire - Jan. 28, 2010) - Western Areas NL (TSX:WSA)(ASX:WSA)

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

Major mine development was completed at Flying Fox to enable Western Areas to meet the rapid production ramp up scheduled over the next six months. With the focus on development during December Q, ore tonnes and grade were marginally lower than the September Q which is reflected in increased cash costs. However numerous high grade ore sources are now accessible at the T1, T4 and T5 deposits which is expected to result in cash costs returning to the target US$2.00 to $2.50/lb nickel by mid 2010.

In addition, the Flying Fox mine decline has reached the top of the large T5 deposit where the first ore drive is already producing significant volumes of high grade ore. Production from Flying Fox is expected to increase from the target average 730t nickel per month in March Q 2010 to 1,000t nickel per month in June Q 2010 which will provide a platform for higher nickel production going forward. Nickel sales were also strong in the December Q 2009 and the majority of the backlog of concentrate stockpiles has now been sold to BHP Billiton.

At Spotted Quoll mine, the Tim King pit is ahead of forecast with approximately 1.5 million bcm of waste removed since mining commenced in the December Q. First high grade ore is expected to be intersected in the open pit in April with a scheduled average production rate of 400t nickel per month in June Q 2010 increasing to 1,100 per month in September Q 2010. The ore reserve and feasibility study for the proposed 10 year underground mine at Spotted Quoll is targeted for completion in mid 2010.

There were very encouraging exploration results up to the date of this report not only at Forrestania but also from other joint venture projects in Western Australia and Finland.

Western Areas had A$90.7M cash at the end of the quarter. In addition, receivables were A$18.1M and ore and concentrate stockpiles at cost were valued at A$10.3M.

Highlights

  1. 3,091 tonnes nickel in concentrate sold at average price of US$7.71/lb nickel. Cash production costs were US$3.95/lb nickel before smelting and refining costs with a rolling 12 month average cash production cost of US$2.54 in conc.
  2. Production was in line with guidance at 64,985 tonnes processed at 3.1% Ni with 88% recovery. Contained nickel in stockpiles comprised approximately 770 tonnes nickel at the end of the quarter.
  3. Mine development has now reached the Lewinsky Lode at the top of the T5 orebody which has a current Probable Ore Reserve of >1.0Mt @ 5.6% nickel.
  4. Record drill hole intersection of 78.0m @ 9.3% nickel within the T5 ore body at Flying Fox demonstrates the exceptional continuity of the massive sulphide.
  5. Mine development of the Tim King Pit at Spotted Quoll is ahead of schedule. The open pit contains 19,900 tonnes nickel at an average grade of 5.1% Ni.
  6. Drilling 400m below the current Spotted Quoll underground resource (2.0Mt @ 6.2% Ni for 125,500t Ni) intersected 3.5m @ 6.4% Ni confirming potential for significant extensions.
  7. Stage Two upgrade at Cosmic Boy nickel concentrator is expected to improve metallurgical recoveries and double the capacity of the plant by June 2010.
  8. Widely spaced RC drilling at the Sandstone joint venture 450km north of Forrestania intersected anomalous nickel sulphides over several intervals. 
  9. Initial drilling at the R1 target at Rautavaara in the Finland joint venture has intersected wide zones (up to 109m) of sulphide mineralisation.
  10. No LTI (Lost Time Injuries) were reported at Forrestania during the quarter.

The full activities report can be viewed at the Company's 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: "numerous high grade ore sources are now accessible at the T1, T4 and T5 deposits which is expected to result in cash costs returning to the target US$2.00 to $2.50/lb nickel by mid 2010", and "Production from Flying Fox is expected to increase from the target average 730t nickel per month in March Q 2010 to 1,000t nickel per month in June Q 2010 which will provide a platform for higher nickel production going forward", and "First high grade ore is expected to be intersected in the open pit in April with a scheduled average production rate of 400t nickel per month in June Q 2010 increasing to 1,100 per month in September Q 2010", and "Stage Two upgrade at Cosmic Boy nickel concentrator is expected to improve metallurgical recoveries and double the capacity of the plant by June 2010", and "If the seismic survey identifies additional targets at Spotted Quoll, it is likely to be extended elsewhere along the 25km long Western Nickel Belt at Forrestania", and "early encouragement from the results of the initial drill programmes at Sandstone are seen by Western Areas as favourable in unlocking the nickel prospectivity of this extensive largely covered, poorly explored ultramafic sequence".

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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