Western Areas NL
TSX : WSA
ASX : WSA

Western Areas NL

May 07, 2009 08:00 ET

Western Areas Finalises Offtake Agreement and Commences Transporting Concentrate

PERTH, AUSTRALIA--(Marketwire - May 7, 2009) - 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.

The Board of Western Areas is pleased to announce that formal offtake agreements have been executed with BHP Billiton for the sale of up to 10,000 tonnes of nickel in concentrate per annum for a total of 75,000 tonnes from the Forrestania Nickel Project. The terms of the Heads of Agreement for the offtake were announced on 12 March 2009.

Western Areas has commenced transporting nickel concentrate 340km from the Cosmic Boy concentrator at Forrestania to BHP Billiton's Kambalda operation. Approximately 11,000 tonnes of nickel concentrate with an average grade of 14.2% nickel containing 1,540 tonnes nickel metal are currently stockpiled at the Cosmic Boy nickel concentrator. In addition there are over 30,000 tonnes of stockpiled ore with an average grade of 4.0% nickel containing 1,200 tonnes nickel awaiting treatment at Cosmic Boy.

Western Areas has also consented to the assignment of the residual 60% interest in the existing offtake agreement with Norilsk Nickel Australia ("OTCPA") to BHP Billiton. The assignment will streamline the smelter treatment and sale process for concentrate from Forrestania. Western Areas retains the right to terminate the OTCPA at any time from 1 January 2010.

Western Areas is currently seeking new offtake contracts in China and elsewhere for the balance of concentrate above the 10,000 tonnes nickel per annum to be sold to BHP Billiton. The Company has previously announced production targets for the Flying Fox mine and proposed Spotted Quoll mine up to 25,000 tonnes nickel per annum from 2010. Additional production is targeted from proposed mines at Cosmic Boy, Diggers South and New Morning as the nickel price improves.

Discussion

Western Areas Managing Director, Mr Julian Hanna said, "We think Western Areas represents a reliable supplier of high quality nickel concentrate and we look forward to building a long term relationship with BHP Billiton. The new offtake agreement provides significant benefits to Western Areas including the ability to sell nickel concentrate within Australia".

Mr Hanna added "the agreement with BHP Billiton is consistent with the Board's decision to split the Forrestania nickel sales into at least two contracts. The BHP Billiton contract is intended to lock in a long term revenue base for the Company and future offtake agreements are intended to be shorter term contracts selling nickel concentrate to third parties".

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: "The Company has previously announced production targets for the Flying Fox mine and proposed Spotted Quoll mine up to 25,000 tonnes nickel per annum from 2010. Additional production is targeted from proposed mines at Cosmic Boy, Diggers South and New Morning as the nickel price improves." 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.

About Western Areas NL

Western Areas owns two of the world's highest grade and lowest cost nickel deposits (Flying Fox and Spotted Quoll) at the Forrestania Nickel Project, 400km east of Perth. Flying Fox is in its second year of full scale production and Spotted Quoll is scheduled for development in the second half 2009. Initial surface development has been completed for two additional planned underground mines (Cosmic Boy and Diggers South) and potential exists to develop the high grade New Morning underground mine depending on improved nickel prices.

The Company has completed commissioning of Stage One of the Forrestania nickel concentrator. Western Areas plans to upgrade the nickel concentrator (with current capacity of approximately 300,000tpa ore) in two stages to a target of 750,000tpa ore. The first upgrade is due for completion in the March Q 2010 to treat ore from the planned Spotted Quoll mine. All other major infrastructure items including an accommodation village for 460 people, grid power, roads, water, tailings disposal, airstrip etc are complete.

The site operations are managed by an experienced technical and management team. In 2008, Western Areas' exploration consultants Newexco were awarded the 'Australian Explorer of the Year Award' for the discovery of the Spotted Quoll deposit. Western Areas was also awarded the prestigious 'Digger of the Year Award' at the Diggers and Dealers conference in August 2008 for the successful development of the Flying Fox mine.

Western Areas is one of Australia's most active nickel explorers and is targeting to increase the total of high quality mineral resources at Forrestania to 400,000t Ni in 2009. In addition to the Forrestania Nickel Project, the Company has interests in six other nickel projects within the 500km long Central Yilgarn Nickel Province in Western Australia and a substantial nickel/copper/PGM exploration project west of Sudbury in Ontario, Canada.

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