October 10, 2008
Western Areas Announces September 2008 Quarterly Activities Report
PERTH, AUSTRALIA--(Marketwire - Oct. 9, 2008) -
THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.
The September Q was another period with excellent progress in all areas of Western Areas (TSX:WSA)(ASX:WSA) many activities. It coincided with a challenging period when the price of nickel dropped from US$21,700/tonne on 1 July to US$15,700/tonne on 30 September.
Recent falls in the nickel price have been largely offset by the weaker Australian dollar so that Western Areas is still receiving a reasonable price for nickel which is approximately 10% below our budget. This is largely compensated by the very high ore grades currently being mined at the Flying Fox T1 orebody.
As stated in a recent letter to shareholders, we believe your Company is in a very strong position to achieve its goals and to become one of Australia's premier nickel producers. We are focused on generating substantial profits from long term mining of our two key mines, Flying Fox and Spotted Quoll and on being in a position to pay dividends.
Drilling is increasing high grade mineral resources at Flying Fox and Spotted Quoll and we consider the exploration potential at Western Areas projects is unrivalled. During the quarter, your company was awarded the prestigious "Digger Award" at the Diggers and Dealers conference in Kalgoorlie for the successful development of Flying Fox and Newexco was awarded the "Discovery of the Year" award for Spotted Quoll.
- Flying Fox remains on track to reach the first full year production target of 8,000 tonnes of nickel in CY 2008 and 14,000 tonnes in CY 2011. Cash costs are already amongst the lowest in Australia.
- All major capital development work at the high grade Flying Fox T1 ore body is now complete and stoping of the two main ore blocks commenced in late September. The decline is rapidly advancing to access the large T4 deposit.
- Invoiced production during the September Q was 48,400 tonnes of ore at an average mined grade of 3.9% nickel. The grade reflects a combination of lower grade development ore plus high grade (6% nickel) stope ore from T1.
- Mineral resource doubled to greater than 1.0Mt at an average grade of 7.2% nickel for 75,140t nickel making it one of the highest grade deposits in the world. Deeper drilling producing excellent results with resource upgrade due in December Q.
- Permitting is underway for initial open pit planned to be in production in the September Q 2009. Preliminary work underway for underground mine which could increase production in excess of target 8,000tpa nickel from the open pit.
- Early site works for the underground mine comprising an evaporation pond, pipe lines, waste dump and other surface infrastructure almost complete. Plan is for a staged development of this mine to minimise early capital expenditure.
- Nickel concentrator at Cosmic Boy is 75% complete and is on budget and on target to be commissioned in the March Q 2009. Significant additional infrastructure includes expansion of the accommodation village to 450 rooms.
- The major success was doubling the mineral resource at Spotted Quoll to 320m depth. Excellent results continue with high grade intersections in all drill holes to the limit of drilling at 600m depth. Spotted Quoll has the potential to be one of the largest, highest grade nickel discoveries in recent times.
- Encouraging results from diamond drilling at Koolyanobbing, 200km north of Forrestania. The first drill hole in current program intersected multiple narrow zones of high grade nickel sulphides with spot values up to 9.2% nickel (Niton).
The full activities report can be viewed at the Companies website www.westernareas.com.au
Note: The nickel grade estimates for Koolyanobbing are from spot readings using a NITON XLt 592 portable analyser which is not JORC compliant. Formal assays are required to confirm the nickel values estimated using the Niton.
Mr Adrian Black from geological consultants Newexco Services Pty Ltd ("Newexco") is 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 and mine development activities is based on information compiled by Mr John Haywood, 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 Haywood, 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 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. 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 "we believe your Company is in a very strong position to achieve its goals and to become one of Australia's premier nickel producers", and "Flying Fox remains on track to reach the first full year production target of 8,000 tonnes of nickel in CY 2008 and 14,000 tonnes in CY 2011", and "Preliminary work for an underground mine which could increase production in excess of target 8,000t nickel pa from the open pit".
This announcement does not include reference to all available information on the Company or the Forrestania Nickel Project or the Koolyanobbing 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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