Western Areas NL: Flying Fox Mine Decline-Clarification of Access Rights

PERTH, AUSTRALIA--(Marketwire - July 17, 2008) - THIS NEWS RELEASE IS Following a release by Kagara Ltd ("Kagara") on 8 July 2008, Western Areas (TSX: WSA.TO)(ASX: WSA.AX) wishes to clarify statements included in the release which relate to Western Area's Flying Fox mine decline.

Western Areas considers that certain statements in Kagara's release could imply that Kagara may have access to the Flying Fox mine decline in December 2009 and that Kagara's right to access the decline is subject only to the decline having sufficient haulage capacity and Kagara reimbursing a component of the decline capital cost.

The issues Western Areas wishes to clarify are concepts that are intended to form the basis of an Access Agreement, the terms of which are yet to be negotiated between Western Areas and Kagara. An Access Agreement will be required in the event that Kagara intends to mine nickel ore on the Lounge Lizard tenement (M77/545) and use Western Area's Flying Fox decline to bring that ore to the surface. Flying Fox is located on an adjacent mining tenement.

Western Areas rarely comments on other company releases. However we have received many enquiries on the impact that Kagara's implied timing of access to the Flying Fox decline could have on Western Area's production. Western Areas has announced target production of 8,000t nickel from Flying Fox in 2008 ramping up to 14,000t (and potentially 20,000t) by 2011.

Based on Western Area's feasibility studies, the decline is expected to be fully committed to mine development and production at the Flying Fox T1, T4 and T5 deposits (excluding potential extensions) at least until 2014. The decline may also be extended to the T6 and T7 deposits where drilling is in progress to define mineral resources in this area of the mine.

An existing Deed of Covenant describes Kagara's rights to access the Flying Fox decline and defines the concepts that are intended to form the basis of an Access Agreement. The following section summarises the key concepts for the proposed Access Agreement:

If economic nickel ore mineralisation is defined on M77/545 by Kagara and if requested by Kagara, Western Areas will negotiate an Access Agreement to provide Kagara with access to the Flying Fox decline. The Access Agreement would include the following concepts:

1. Western Areas production from Flying Fox decline will not be materially impacted by Kagara's development extending from the Flying Fox decline.

2. The combined production of nickel accessed from the Flying Fox decline cannot exceed the capacity of the decline.

3. Western Areas will not incur any costs, risks or liabilities for Kagara's mine development activities linking the decline and any nickel deposit on M77/545.

4. Both parties will negotiate a fair payment to be made by Kagara to reimburse Western Areas part of the capital cost of the decline. Payment to be based pro rata on the relative values of the nickel deposits accessed by Western Areas and Kagara, based on the tonnes of nickel contained in ore reserves.

5. If the parties fail to negotiate and execute an Access Agreement within 42 days after the draft Access Agreement is presented, either party may refer the matter to an independent expert to determine the terms and conditions of the Access Agreement based upon the key concepts set out at 1 - 4 above.

In addition to the Access Agreement, many practical mining issues (including mine safety, mine and contractor management, ventilation, mining schedules, blasting cycles, extraction sequences etc.) would need to be resolved. Flying Fox is a large underground mine with high grade nickel extending to greater than 1400m depth and a work force of approximately 120 people.

Discussion

Western Areas has previously advised Kagara that it will negotiate in good faith the terms for an Access Agreement in the event that an economic nickel deposit is defined at Lounge Lizard. This can only be achieved if Western Areas is satisfied that Flying Fox production will not be materially impacted by Kagara's development, that Western Areas receives fair payment for part of the capital cost of the decline and that all the mining and safety issues can be resolved.

DISCLAIMER AND COMPETENT PERSONS STATEMENT:

The information within this report as it relates to the Company's planned operations and production projections has been compiled by Mr. Julian Hanna and Mr. Dan Lougher who are both full time employees of Western Areas.

Mr. Hanna and Mr. Lougher are members of AusIMM and 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. Lougher 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. An example of a forward looking statement used in this release is: 'Based on current feasibility studies, the Flying Fox decline is expected to be fully committed to mine development and production at the T1, T4 and T5 deposits (excluding potential extensions) at least until 2014. The decline may also be extended to the T6 and T7 deposits where drilling is in progress to define mineral resources in this deeper area of the mine.' Forward-looking statements are subject to a variety of risk 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 Flying Fox deposit 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.

Contacts

Julian Hanna
Western 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
Website: www.westernareas.com.au

Paul Downie
Porter Novelli
Director Investor Relations
+61 8 9386 1233
Email: pdownie@wa.porternovelli.com.au