Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

February 16, 2009 08:00 ET

Western Areas Announces Major Restructure of Norilsk Nickel Offtake Agreement

PERTH, AUSTRALIA--(Marketwire - Feb. 16, 2009) -

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 it has executed an agreement with Norilsk Nickel Australia Pty Ltd ("NNAu") to restructure the existing Ore Tolling and Concentrate Purchase Agreement ("OTCPA") relating to Western Areas' 100% owned Forrestania Nickel Project. The Board considers that this restructure will have a significant and positive impact on Western Areas' future activities and provide additional flexibility to enable the Company to achieve its growth plans.

Western Areas has agreed to terminate its right to toll treat ore at NNAu's Lake Johnston concentrate plant from 1 March 2009 in exchange for an option for Western Areas to remove up to 100% of the Flying Fox concentrate product from the OTCPA. If Western Areas does not elect to remove Flying Fox product from the OTCPA then the Company will continue to sell nickel concentrate to NNAu under the existing terms of the OTCPA. In this event NNAu will continue to buy nickel concentrate produced from Western Areas' Cosmic Boy nickel concentrator. The new agreement with NNAu has been approved by Western Areas' main financiers, ANZ Bank.

Western Areas Managing Director Mr Julian Hanna said, "The new agreement will provide significant benefits to Western Areas with minimal risk. These benefits include the ability to blend nickel ores from a range of deposits at Forrestania which will allow Western Areas to optimise recoveries through the Cosmic Boy concentrate plant. It will also provide the opportunity to negotiate improved offtake terms with other parties, increase revenue from production and provide potential funding for future expansion of the Forrestania Project by securing finance linked to new offtake agreements."

Mr Hanna added, "Western Areas is already advanced in negotiations with a number of potential offtake partners for the high grade Spotted Quoll mine. Negotiations will now be expanded to include the high quality Flying Fox concentrate. We have set a target date to announce an outcome to these negotiations in early March. In the unlikely event that improved terms can not be negotiated, the sale of Flying Fox concentrates to NNAu will continue on the existing terms of the OTCPA."

Commissioning of Western Areas' Cosmic Boy nickel concentrator is proceeding successfully with no significant problems encountered. The plant is on target to reach design capacity and performance by the end of February to coincide with termination of Western Areas' right to toll treat ore at NNAu's Lake Johnston concentrator from 1st March. Higher metallurgical recoveries are also expected to be achieved through the purpose built Cosmic Boy plant. A separate release on progress of commissioning the Cosmic Boy concentrator will follow.

Main terms of the restructure of the NNAu-Western Areas Agreement (OTCPA)

1. NNAu's obligations to toll treat Western Areas' Forrestania ore at NNAu's Lake Johnston concentrate plant will cease on 1 March 2009.

2. Western Areas retains the right to sell Flying Fox nickel concentrate produced through the Cosmic Boy nickel concentrator to NNAu on the existing terms, however:

- Western Areas will have an option but not the obligation to remove 40% of Flying Fox concentrate from the existing OTCPA from 1 April 2009

- Western Areas will have a second option but not an obligation to remove 100% of Flying Fox concentrate from the existing OTCPA from 1 January 2010

- In the event Western Areas exercises the second option, the OTCPA will cease and both parties will have no ongoing obligations or liabilities.

3. The concentrate grade required to be supplied to NNAu under the existing terms of the OTCPA will be reduced from 16% to 14% nickel in concentrate. This should further improve metallurgical recoveries through the new Cosmic Boy plant.

4. Western Areas will acquire surplus plant items owned by NNAu at no cost. These items include a ball mill, thickener and flotation cells which are key lead time items required for any future upgrade of the Cosmic Boy plant.

Offtake Negotiations and Investor Roadshow

Western Areas Chairman Mr Terry Streeter, Managing Director Mr Julian Hanna and Finance Director Mr Craig Oliver have commenced a two week international trip. The purpose is to progress offtake negotiations, to inform investors of the potential benefits of this new agreement and update investors on the outstanding results reported in the December Q report.

A Powerpoint presentation for the international roadshow will be released via the Company website later today.

COMPETENT PERSONS STATEMENT: The information within this report is based on information compiled by Mr Julian Hanna of Western Areas NL. Mr Hanna is a member of AusIMM and is a full time employee of the Company. Mr Hanna has sufficient experience which is relevant to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.' Mr Hanna consents 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: "this restructure will have a significant and very positive impact on Western Areas' future activities and provide additional flexibility to enable the Company to achieve its growth plans", and "The new agreement will provide significant benefits to Western Areas with minimal risk", and "This will allow Western Areas to optimise recoveries through the Cosmic Boy concentrate plant.", and, "This should result in increased revenue from production and provide potential funding for future expansion of the Forrestania Project by securing finance linked to new offtake agreements", and "we have set a target date to announce an outcome to these negotiations in early March", and "The plant is on target to reach design capacity and performance by the end of February". 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 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.

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