Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

February 02, 2010 08:00 ET

Western Areas Announces Record Nickel Production at Flying Fox

Perth, Australia--(Marketwire - Feb. 2, 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.

Dear Shareholders,

We have received a number of enquiries from shareholders on the production grade (3.3% nickel), higher cash cost (US$3.95/lb nickel) and associated lower metallurgical recoveries in the December Q 2010 activities report. The December Q was a period of substantial operating waste and ore development to access the lower T4 and upper T5 ore bodies. This resulted in lower grades being mined compared with the previous three quarters. 

Development ore is generally lower grade than stoping ore and this flows through to higher unit costs. The focus on development at Flying Fox during the December Q was the main factor behind the higher mining and milling costs reported. A large proportion of the development expenditure incurred in December Q was not capitalised as the useful life of the development was relatively short (<1 year). 

In CY 2009, Flying Fox exceeded the Company's target of 240,000t at 3.8% nickel containing >9,000 tonnes nickel. Actual production was 244,367t at 3.8% containing 9,193 tonnes nickel. The average cash cost for the year was US$2.54/lb nickel which is largely consistent with the target US$2.50/lb nickel for 2009. Flying Fox is a long life low cost nickel mine and is set to be joined by Western Areas' second long life high grade mine, Spotted Quoll. 

Western Areas remains in a strong position. The Company is on track at Flying Fox were it is ramping up production from T5. At Spotted Quoll, first high grade ore is due in April and an underground Ore Reserve is due in the June Q, At the Cosmic Boy Plant, capacity is being doubled to meet the expanded production from Flying Fox and Spotted Quoll. 

Western Areas remains committed to paying a dividend of 50% of net profit after tax.

Western Areas does not normally announce short term production figures because these will vary on a day to day or month to month basis unless averaged over longer periods of time due to the usual development and stoping cycles within a mine.

We are able to announce that Flying Fox achieved production in January of 22,200 tonnes at 3.9% containing 874 tonnes nickel (unreconciled). This compares with the announced target of 730 tonnes nickel per month for the March Q. Flying Fox also recorded a daily production record for the last three days of January with an average 80 tonnes of nickel mined per day at an estimated grade of 4.1% nickel. 43% of this record production came from the large T5 deposit (where mining has only just commenced) with the balance from T1 and T4. 

We report this information because it may provide shareholders with an indication of the production that can be achieved once multiple high grade ore faces have been developed at Flying Fox. This is largely a result of the development completed in the December Q 2009. 

QA-QC STATEMENT:

The information within this report as it relates to exploration results or mineral resources or ore reserves is based on information compiled by Mr Julian Hanna and Mr John Haywood. Mr Hanna and Mr Haywood are members of AusIMM and are full time employees of the Company. Mr Hanna and Mr Haywood 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 Hanna and Mr Haywood 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 STATEMENTS: 

This release contains certain forward-looking statements. Examples of forward looking statements used in this release are: 'The Company is on track at Flying Fox were it is ramping up production from T5. At Spotted Quoll, first high grade ore is due in April and an underground Ore Reserve is due in the June Q, At the Cosmic Boy Plant, capacity is being doubled to meet the expanded production from Flying Fox and Spotted Quoll', and, ' it may provide shareholders with an indication of the production that can be achieved once multiple high grade ore faces have been developed at Flying Fox'.

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 the 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.

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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