Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

January 12, 2011 21:40 ET

Western Areas Announces December 2010 Quarterly Activities Report

Strong Production, Low Cash Costs, Record Nickel Sales

PERTH, AUSTRALIA--(Marketwire - Jan. 12, 2011) -

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

All major production targets for CY 2010 were exceeded at the end of the December Q. Mine production was 26,281 tonnes (57.9M lbs) nickel in ore compared with guidance of 20,000 tpa for CY 2010 and cash costs were US$2.02/lb nickel in concentrate compared with guidance of US$2.50/lb. This outstanding result is due to the exceptional quality of the assets and hard work and professionalism of the Western Areas' team.

In the December Q, mine production was 7,959 tonnes (17.5M lbs) nickel compared with 8,302 tonnes (18.3M lbs) nickel in the September Q 2010. High ore grades (6.2% nickel) in the Tim King Pit plus positive reconciliation in contained nickel from mining to date at Flying Fox T5 (15%) and T4 (30%) contributed to the strong production. In addition a decision to mine Spotted Quoll underground was announced during December.

Record sales of nickel concentrate were made to Jinchuan in the December Q as a result of the expanded trucking fleet, more containers and larger capacity ships. Total sales to BHP Billiton, Jinchuan and Minara for the six months to 31 December 2010 were 13,247 tonnes nickel in concentrate and ore. These nickel sales coincided with a strong average LME nickel price of US$22,390/tonne (US$10.16/lb) for the six months to 31 December 2010. 

December Q Highlights

  1. Production from Flying Fox mine was 96,635 tonnes mined at 4.6% nickel for 4,459 tonnes (9.8M lbs) contained nickel.
  1. Production from the Tim King Pit at Spotted Quoll was 56,696 tonnes mined at 6.2% nickel for 3,500 tonnes (7.7M lbs) contained nickel.
  1. 123,027 ore tonnes were milled to produce 5,976 tonnes (13.2M lbs) nickel in concentrate. The average plant recovery was 90%.
  1. Cash costs (before smelting/refining charges) for December Q were US$1.99/lb nickel, 20% below the long term guidance target of US$2.50/lb nickel.
  1. Current stockpiles contain an estimated 5,936 tonnes (13.1M lbs) nickel in ore and concentrate which should contribute to ongoing strong sales.
  1. At 31 December Western Areas had a total of A$156.7M cash plus nickel sales receivables compared with A$118.4M at the end of the September Q. 
  1. Spotted Quoll Stage One underground mine feasibility confirmed a robust 8 year project with IRRs ranging from 41% (US$6/lb Ni) to 96% (US$10/lb Ni).
  1. Drilling below Spotted Quoll indicates the high grade deposit may extend to at least twice the depth of the planned Stage One underground mine.
  1. $20M pa exploration program underway with drilling to test Flying Fox T6/T7/T8 deposits, plus new targets at Forrestania and regional nickel projects.
  1. The 2012 convertible bond was partly restructured to extend the maturity date & reduce the coupon rate. A bond repayment account was established with $40m.
  1. Western Areas welcomed David Southam as Finance Director in November.

Western Areas is now generating significant cash flows and profits from mining and milling operations with record nickel sales into a high nickel price. The Company has a strong balance sheet plus 5,936t nickel in ore and concentrate stockpiles. The Board remains focused on safety, expanding nickel production and maximising shareholder returns.

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, ore reserves and mine development activities is based on information compiled by Mr. John Haywood, Mr. Tim Peters, 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. Peters is a member of AusIMM and is a consultant to Western Areas. Mr. Haywood, Mr. Peters, 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 Peters, 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 "providing confidence the Company will exceed its target of 25,000 tpa nickel in ore for FY 2011", and "planned decline development will reach the base of the T5 orebody at 325m RL during the March Q.", and "potential construction of a pilot scale leaching operation in Finland", and "excellent potential of the Sandstone JV Project for new discoveries", and "Makwa has excellent potential to become a low cost and profitable mining operation".

This announcement does not include reference to all available information on the Company or the Forrestania Nickel Project or the Regional Nickel Projects of FinnAust Mining Plc 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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