Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

April 15, 2011 08:00 ET

Western Areas Announces March 2011 Quarterly Activities Report

Record Concentrate Sales & Low Cash Costs Sustained

PERTH, AUSTRALIA--(Marketwire - April 15, 2011) -

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

Western Areas (TSX:WSA)(ASX:WSA) reports another quarter of low cost production and record nickel concentrate sales from Forrestania. This quarter's results are in line with, and in some cases exceed guidance provided in the December Q demonstrating the consistency of operations.

Combined mine production was 7,400 tonnes (16.3M lbs) nickel compared with 7,959 tonnes (17.5M lbs) nickel in the December Q. High grades (6.1% nickel) in the Tim King Pit plus consistent performance in the Flying Fox T5 deposit contributed to strong production. Average cash cost for nickel in concentrate was US$2.23/lb.

Record sales to BHP Billiton and Jinchuan for the March Q totalled 6,813t nickel in concentrate, being 662t higher than the previous September Q record. As a result, nickel in concentrate stockpiles decreased by approximately 50%. Record sales coincided with a strong average LME nickel price of US$26,903/tonne(US$12.20/lb) for the quarter.

Drilling has also confirmed a major high grade extension below the planned Stage One Spotted Quoll underground mine. The aim of this drilling is to add 40,000 - 60,000 tonnes nickel to Spotted Quoll. This could potentially support an increase in the mine life and production rate above the current annual target of 10,000 tpa nickel.

March Q 2011 Highlights

  1. Production from Flying Fox mine (excluding Lounge Lizard) was 77,205 tonnes mined at 5.4% nickel for 4,132 tonnes (9.1M lbs) contained nickel.
  1. Production from the Tim King Pit at Spotted Quoll was 53,819 tonnes mined at 6.1% nickel for 3,268 tonnes (7.2M lbs)contained nickel.
  1. 126,383 ore tonnes were milled to produce 6,226 tonnes (13.7M lbs) nickel in concentrate. Average plant recovery was 92%, exceeding forecast by 3%.
  1. Average cash cost (before smelting/refining charges) was US$2.23/lb nickel, well below Western Areas' long term guidance of US$2.50/lb.
  1. Stockpiles contained an estimated 5,418 tonnes (11.9M lbs) nickel in ore and concentrate.
  1. Cash and nickel sales receivables totalled A$208.8M. This compares with A$156.7M at the end of the December Q, representing a net positive movement of A$52.1M after paying shareholders a dividend of A$18.0M.
  1. A major drilling program is underway at Flying Fox to test the T6, T7 and T8 sulphide zones, with the aim of extending mine life beyond ten years.
  1. Spotted Quoll Stage One underground mine development is due to commence in April with the initial three year contract awarded to Barminco.
  1. Mineralisation at Spotted Quoll now appears to continue to at least 1,700m down dip (~1,200m vertical depth) and remains open at depth and along strike.
  1. 19.9% owned Canadian company Mustang Mineral Corp announced outstanding platinum/palladium results from initial drilling at an IP anomaly in Manitoba.
  1. 77% owned FinnAust Mining Plc commenced drilling to test high priority base metal targets in Finland, prior to a potential UK listing in October 2011.

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 "This could potentially support an increase in mine life and mine production rate above the target 10,000 tpa nickel", and "Western Areas has set a new exploration target in the Stage Two extension at Spotted Quoll of between 40,000 tonnes to 60,000 tonnes contained nickel", and "Funds are being used to continue the drilling program and prepare for the potential listing on the London AIM Market around October this year".

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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