Western Areas NL

Western Areas NL

October 08, 2010 08:00 ET

Western Areas Announces September 2010 Quarterly Activities Report

Strong Production, Record Nickel Sales and Low Cash Costs

PERTH, AUSTRALIA--(Marketwire - Oct. 8, 2010) - Western Areas NL (TSX:WSA)(ASX:WSA) -


Combined production from the Flying Fox and Spotted Quoll mines increased from 6,810 tonnes (15M lbs) nickel in the June Q 2010 to 8,300 tonnes (18.3M lbs) nickel in the September Q 2010. Outstanding ore grades (averaging 7.4% nickel) in the Tim King Pit at Spotted Quoll contributed to the record production. High production levels are set to continue as the large, high grade T5 deposit at Flying Fox is opened up.

The Cosmic Boy nickel concentrator treated 131,542 tonnes of ore and produced approximately 6,678 tonnes of nickel in concentrate during the September Q. The average plant recovery was 89%. Reconciled cash cost for the September Q was US$1.75/lb nickel in concentrate, a record for the Forrestania Project to date.

The increase in production coincided with a sharp increase in nickel sales with the commencement of nickel concentrate exports to Jinchuan at the end of July. Total sales to BHP Billiton and Jinchuan during the September Q were 6,140 tonnes nickel in concentrate. These nickel sales coincided with a strong LME nickel price which averaged US$22,729/tonne, (US$10.31/lb nickel) during the September Q.

Western Areas made three shipments to Jinchuan during the September Q. With significant stockpiles of ore and concentrate at Forrestania, more containers and larger capacity ships available, potential exists to increase the rate of nickel sales to China. 

September Q Highlights

  1. Production from Flying Fox mine was 84,935 tonnes mined at 4.0% nickel for 3,363 tonnes (7.4M lbs) contained nickel.
  1. Production from the Tim King Pit at Spotted Quoll was 66,978 tonnes mined at 7.4% nickel for 4,939 tonnes (10.9M lbs) nickel.
  1. Record milled production (excluding Lounge Lizard) with 131,542 tonnes ore treated to produce 6,678 tonnes (14.7M lbs) nickel in concentrate
  1. Cash costs (before smelting/refining charges) for Sept Q were US$1.75/lb nickel, 30% below long term guidance targets of US$2.50/lb nickel.
  1. Current stockpiles contain an estimated 4,985 tonnes (11.0M lbs) nickel in ore and concentrate should contribute to strong sales in December Q 2010.
  1. At 30 September Western Areas had total cash plus nickel sales receivables totalling A$118.4M.
  1. Drilling below the New Morning deposit, mid way between the Flying Fox and Spotted Quoll mines continuing to produce encouraging nickel results.
  1. Resource drilling at R1 deposit in Finland intersecting wide zones (up to 133m) nickel, zinc and copper sulphide mineralisation similar to Talvivaara Mine.

December Q Targets

  • Maintain high production levels from Flying Fox and Spotted Quoll mines

  • Increase rate of nickel sales to China during a period of strong nickel prices

  • Announce results of Spotted Quoll underground mine feasibility study

  • Commence drilling to test high grade extensions below Flying Fox mine

  • Commence major drilling campaign at Sandstone JV Project

Western Areas has announced a target to sustain 25,000 tpa nickel mine production at Forrestania and become Australia's third largest nickel miner. Exploration is focused on increasing ore reserves beyond 10 years mine life and discovering and developing other deposits in Western Australia.

The full activities report can be viewed at the Company's website www.westernareas.com.au.


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.


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:

  • "Maintain high production levels from Flying Fox and Spotted Quoll mines

  • Increase rate of nickel sales to China during a period of strong nickel prices

  • Western Areas has announced a target to sustain 25,000 tpa nickel mine production at Forrestania and become Australia's third largest nickel miner"

  • "structural settings highlights the excellent potential of the Sandstone JV Project for new discoveries"

This announcement does not include reference to all available information on the Company or the Forrestania Nickel Project or the Finland JV Project 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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