Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

July 19, 2011 08:00 ET

Western Areas Announces June 2011 Quarterly Activities Report

Full Year Mine Production of 32,222 Tonnes Nickel Exceeds Target by 10% and Contributes to Strong Cash Position of A$209m

PERTH, AUSTRALIA--(Marketwire - July 19, 2011) -

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

Following another strong quarter of nickel production and sales, Western Areas (TSX:WSA)(ASX:WSA) is able to report that 32,222 tonnes nickel in ore were mined in FY 2010/11. This exceeds previously announced guidance targets of 29,000 tonnes of nickel in ore by 10%. Western Areas also achieved record sales of 27,498 tonnes of nickel (in concentrate and ore) and produced nickel at average cash cost of US$2.11/lb nickel for the full year. As a result, the Company is in a robust financial position with $209M in cash and $15M in receivables.

The Board remains focused on returns to shareholders and anticipates the final dividend will exceed the interim 10 cent dividend paid for the half year ending 31 December 2010.

Combined mine production for the June Q was 8,561 tonnes (18.9M lbs) nickel compared with 7,400 tonnes (16.3M lbs) nickel in the March Q. High grades (average 6.3% nickel) in the Tim King Pit plus consistent performance from the Flying Fox mine continued to contribute to the strong production. In addition, there were 6,169 tonnes of contained nickel in ore and concentrate stockpiles at the end of the Quarter.

Average cash cost for nickel in concentrate was US$2.45/lb (A$2.31/lb) for the June Q. The nickel price averaged US$11.02/lb at an exchange rate of AUD/USD of 1.06 compared with a nickel price of US$12.20/lb and exchange rate of AUD/USD of 1.00 for the March Q.

Underground mine development commenced in April at Spotted Quoll and was ahead of schedule at the end of June. Drilling is continuing at Spotted Quoll with three drill rigs providing further encouraging results below the Stage One underground mine. The aim of this Stage Two drilling is to add 40,000 to 60,000 tonnes nickel to Spotted Quoll.

June Q 2011 Highlights

  1. Production from Flying Fox mine (excluding Lounge Lizard) was 88,873 tonnes mined at 4.8% nickel for 4,236 tonnes (9.4M lbs) contained nickel.
  1. Production from the Tim King Pit at Spotted Quoll was 69,133 tonnes mined at 6.3% nickel for 4,325 tonnes (9.5M lbs) contained nickel.
  1. A total 17,670 tonnes contained nickel has been mined from the Tim King Pit to date, a 44% positive reconciliation compared to the depleted Ore Reserve.
  1. 138,513 ore tonnes were milled to produce 6,783 tonnes (15M lbs) nickel in concentrate. Average plant recovery was 93%, exceeding forecast by 4%.
  1. Average cash cost (before smelting/refining charges) was US$2.45/lb nickel, below long term guidance of US$2.50/lb, despite the impact of a strong AUD.
  1. Cash at bank was A$209M at 30 June. This compares with A$154M at the end of the March Q, representing a net positive cash movement of A$55M.
  1. On 8th June, Western Areas announced the milestone of 100,000 tonnes of concentrate exported to China, with a gross value of over $300M.
  1. Stockpiles at 30 June contain 6,169 tonnes (13.6M lbs) nickel in ore and concentrate.
  1. Western Areas Board approved an increase in the exploration budget to $30M.
  1. Drilling is in progress at the Flying Fox, Spotted Quoll and Diggers South deposits.
  1. FinnAust Mining Plc (77% WSA) appointed a Finland based CEO to run the new company and also commenced the process for the planned London AIM listing.

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 together with a 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 "The Board remains focused on returns to shareholders and anticipates the final dividend will exceed the interim 10 cent dividend paid for the half year ending 31 December 2010." and "The aim of this Stage Two drilling is to add 40,000 to 60,000 tonnes nickel to Spotted Quoll."

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 Areas' 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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