PERTH, AUSTRALIA--(Marketwire - Oct. 7, 2008) - Western Areas NL -
THIS NEWS RELEASE IS Dear Shareholders, With the current state of the market it is timely to update existing shareholders on the significant progress being achieved at Western Areas (TSX: WSA.TO)(ASX: WSA.AX) and to remind potential investors of the outstanding quality of Western Areas' assets. We believe your Company remains in a very strong position to achieve its goals and become one of Australia's premier nickel producers. Recent falls in the nickel price have been largely offset by the weaker Australian dollar so Western Areas is still receiving a reasonable price for nickel which is approximately 10% below our budget. This is compensated for by the excellent ore grades currently being mined from the T1 ore body. The Company's main goals over the next 12 months are to: 1. Produce 8,000 tonnes nickel in first full year production at Flying Fox by end 2008 2. Generate significant profit from mining high grade Flying Fox T1 ore in 2008/2009 3. Declare a maiden dividend from net profits in early 2009 4. Commence production from the high grade Spotted Quoll mine in September Q 2009 5. Commission the Stage One nickel concentrator in March Q 2009 6. Continue the exploration success with a new high grade nickel discovery 7. Reach target 400,000 tonnes nickel in mineral resources at Forrestania by end 2009 Excellent progress is being achieved in all areas of the Company's activities: Flying Fox mine production: Stoping of high grade ore commenced in September from two large ore blocks at the T1 ore body which is now effectively fully developed. The Ore Reserve grade expected to be mined from these two stope blocks is approximately 5% nickel. Production from T1 and the underlying T2 deposit is expected to continue throughout 2009. Flying Fox mine development: The mine decline has advanced below the T3 fault zone with no geotechnical or water issues and is already approaching the large T4 deposit. Level development at T4 is due to start in the March Q 2009 with production on track to commence in July 2009. Flying Fox shaft decision: The proposed ore haulage shaft from T4 is being reviewed and may be postponed which would save around $50M in capital costs. This is based on utilising an improved trucking fleet and ventilation system which could increase decline haulage capacity from 240,000tpa ore to potentially 350,000tpa ore from the T4 and T5 deposits. Flying Fox drilling: Drilling is in progress to increase Flying Fox mineral resources in areas not previously tested. Drilling is targeting the south end of T4 (above the T5 ore body) and T6 (below the T5 ore body). Recent drilling at T7 has produced very encouraging intersections of 1.8m and 2.0m of massive sulphides. Details will be provided in the September Q report. Spotted Quoll mineral resource: Four drill rigs are working to extend Spotted Quoll above and below the current mineral resource which comprises 1.05Mt at an average grade of 7.2% nickel containing 75,140 tonnes nickel. Results continue to be very encouraging and a resource upgrade is expected in the December Q. Spotted Quoll mine development: Spotted Quoll is being fast tracked towards production from an openpit mine scheduled to commence in the September Q 2009. This is expected to be one of the lowest cost nickel mines in Australia with target production of 8,000tpa nickel. A review for an underground mine which could exceed the open pit target is in progress. Diggers South mine development: Early site works for an underground mine comprising an evaporation pond, pipe lines, waste dump and other infrastructure are expected to be completed in October. Mine dewatering is planned to start in the December Q and negotiations for an offtake agreement for Diggers South concentrate are in progress. Nickel Concentrate Plant update: Construction on the Stage One nickel concentrator at Cosmic Boy is 75% complete. The project is on time and on budget and is expected to be commissioned in March Q 2009. Western Areas retains the right to continue toll treating ore at Norilsk's Lake Johnston plant, 90km east of Flying Fox. Regional Exploration update: First diamond drill hole (KNDD 004) below previously reported high grade nickel intersections at Koolyanobbing North, 200km north of Forrestania intersected several narrow zones of high grade stringer nickel sulphides with spot values up to 9.2% nickel (Niton estimates - refer to disclaimer). Assays are required to confirm the Niton estimates but these results provide encouragement for a possible discovery in this area. Discussion Western Areas owns 100% of two of the highest grade and what are expected to be two of the lowest cost nickel mines in the world, Flying Fox and Spotted Quoll. These two deposits are expected to generate substantial profits for many years and underpin the Company's target to produce 35,000 tones of nickel per annum from a number of mines from 2011. The Company is in a strong financial position with approximately A$100M cash and a A$30M in undrawn debt facilities. Substantial infrastructure and a highly skilled work force is already in place to develop these outstanding assets. Western Areas' intention is to declare a maiden dividend of 50% of net profit after tax from the December 2008 half year profit. In addition, we consider the Company has an unrivalled exploration track record in a large nickel province with excellent potential for new discoveries. We remain confident about the future of the nickel industry and about Western Areas' premier position within this industry. Yours sincerely, Julian Hanna, Managing Director QA-QC AND COMPETENT PERSONS STATEMENT: Note: The nickel grade estimates for Koolyanobbing North drill hole KNDD 004 quoted in this release are indicative only and have been estimated from spot readings of stringer sulphides in diamond drill core using a NITON XLt 592 portable analyser which is not JORC compliant. Formal assay results are required to confirm the nickel estimates. The information within this report as it relates to mineral resources and mine development activities is based on information compiled by Mr Dan Lougher and Mr Julian Hanna of Western Areas NL. Mr Lougher and Mr Hanna are members of AusIMM and are full time employees of the Company. 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 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 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 "The Company's main goals over the next 12 months are to: "Produce 8,000 tonnes nickel in first full year production at Flying Fox by end 2008, Generate significant profit from mining high grade Flying Fox T1 ore in 2008/2009, Declare a maiden dividend from net profits in early 2009, Commence production from the high grade Spotted Quoll mine in September Q 2009, Commission the Stage One nickel concentrator in March Q 2009, Continue the exploration success with a new high grade nickel discovery, Reach target 400,000 tonnes nickel in mineral resources at Forrestania by end 2009", and "utilising an improved trucking fleet and ventilation system which could increase decline haulage capacity from 240,000tpa ore to potentially 350,000tpa ore from the T4 and T5 deposits", and "This is expected to be one of the lowest cost nickel mines in Australia with target production of 8,000tpa nickel", and "these results provide encouragement for a possible discovery in this area", and "These two deposits are expected to generate substantial profits for many years and underpin the Company's target to produce 35,000 tones of nickel per annum from a number of mines from 2011", and "Western Areas' intention is to declare a maiden dividend of 50% of net profit after tax from the December 2008 half year profit", and "We remain confident about the future of the nickel industry and about Western Areas' premier position within this industry". 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 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 Areas' 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. ContactsJulian HannaWestern Areas NL
Managing Director
+61 8 9334 7777
Email: jhanna@westernareas.com.au
Craig Oliver
Western Areas NL
Finance Director
+61 8 9334 7777
Email: coliver@westernareas.com.au
www.westernareas.com.au
Paul Downie
Porter Novelli
Director Investor Relations
+61 8 9386 1233
Email: pdownie@wa.porternovelli.com.au
