/THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR
FOR DISSEMINATION IN THE U.S./
ASX & TSX: WSA
WEST PERTH, Western Australia, Jan. 8 /CNW/ -
The Board of Western Areas is pleased to announce a number of initiatives
and key targets which are expected to have a significant impact on a range of
exploration and mining activities during 2008. The Board considers these
initiatives will provide further opportunities to increase Mineral Resources
and Ore Reserves at Forrestania, expand nickel production at Flying Fox,
increase cash flows from mining activities and identify and develop new mines.
During 2008 Western Areas is aiming to have established itself not only
as a successful explorer but also as a highly profitable nickel producer. We
then look forward to being in a position to announce the first dividend
payment to shareholders in January 2009. The Company's goal is to become a
very profitable, mid tier company targeting sustainable production of 30,000
to 40,000 tonnes nickel pa by 2011. We believe Western Areas has the
combination of high quality assets, a strong shareholder base, experienced
management and a highly motivated technical and mining team to achieve these
Recent initiatives and key targets are summarised below.
1. Hedge Book Restructure. In December 2007, Western Areas settled
US$12 million of hedge contracts. Only 740 tonnes of hedged nickel
production remain at an average price of US$5.10lb and this is
expected to be paid out by the end of March 2008. Production from
Flying Fox will be unhedged from April which should coincide with the
high grade T1 ore body ramping up to full production. With the close
out of the post April 2008 contracts, Western Areas has assumed an
average realised nickel price of US$10.15/lb for CY 2008. This
compares with a recent published forecast by 19 analysts who
predicted an average nickel price of US$13.38/lb for CY 2008.
2. Flying Fox - Mine Production. Ore is currently being mined from the
T Zero deposit and upper level of the T1 deposit. The first parcel of
7,500 tonnes ore from T1 was treated by Norilsk in early January at
an average grade of 4.03% nickel, in line with expectations.
Approximately 7,000 tonnes of additional high grade T1 ore has
already been mined and is expected to be treated in January.
A second crosscut is being developed into the central part of T1
which will be used to access the widest part of the deposit with high
grade stopes planned up to 14m wide. Sustainable ore production of
15,000 tonnes per month is expected to be reached in the March Q and
is forecast to rise to an average 20,000 tonnes per month by the end
of the June Q. The forecast mining rate represents a substantial
increase over the original feasibility study and is due to the
recently revised mine design for T1.
3. Flying Fox - Mine Decline. The decline is meeting the average
forecast advance rate of 140m per month and is on target to reach the
T4 deposit in December 2008 and the T5 ore body in December 2009. The
improved advance rate is due to the consistently good ground
conditions in the footwall sediments and the use of a dedicated
decline advance team with a twin boom jumbo drill rig specifically
for this work.
4. Flying Fox - T1 North and T4. Drilling is continuing to extend high
grade mineralisation at T1 and T4. Recent drillholes intersected 2m
of massive sulphide in an untested area of T1 north of the dolerite
dyke and 5.2m and 2.2m of massive sulphide at the southern limit of
drilling at T4. A revised Mineral Resource estimate for T1 (North) is
expected in the March Q and an initial Mineral Resource at T4 in the
June Q. Two surface drill rigs are drilling T4 and one underground
drill rig is drilling T1 (North). Western Areas recently announced a
target to increase Mineral Resources at Flying Fox to a total 150,000
tonnes contained nickel by the end of December 2008.
5. Flying Fox - T5 Extensions. Western Areas has commenced evaluating
two areas with potential for significant extensions to T5 which
includes announced Mineral Resources containing approx 70,000 tonnes
nickel at an average grade of 6.8% nickel.
a. A review of significant widths of disseminated and stringer
nickel sulphides overlying T5 is underway. Previous Mineral
Resource estimates assumed a 2% nickel lower cut-off grade
which excluded the lower grade mineralisation.
b. Drilling will test for extensions to high grade massive
sulphide below the T5 Mineral Resource which remains open below
previously announced intersections including 16.1m @ 9.7%
nickel and 10.3m @ 8.0% nickel.
6. Flying Fox - T6 and T7. On 10 December 2007, the Company announced
four drill holes intersected significant zones of disseminated,
stringer and high grade massive nickel sulphides near the southern
margin of several down hole EM conductors. The central part of the
main T7 EM conductor has not yet been intersected (refer to
photograph). Drilling has resumed in this area and the aim is to
define the potential size and geometry of the T6, T6 Fault and T7
sulphide zones as soon as possible.
7. Flying Fox - Decision on Shaft. A scoping study on an ore haulage
shaft being conducted by RSV Consultants has proposed 3 options for
further study. These are:
a. 900m raise bore from the main decline with (greater than)
500,000tpa ore haulage capacity;
b. 1,000m raise bore plus 400m blind sink shaft to access T6 and
c. 1,400m deep, 6m diameter shaft sunk from surface to the main
decline at T5.
The main benefits of a shaft would be increased ore haulage capacity
(which could potentially double production from the 250,000tpa
envisaged in the T5 feasibility study), improved ventilation and
reduced unit costs. The decision to proceed with a shaft will be
largely dependent on the size and grade of the T5, T6 and T7
deposits. The target date for this decision is end of the September Q
8. Spotted Quoll - Mineral Resource. Mineral Resource drilling to 200m
vertical depth has resumed at the Spotted Quoll deposit. Assay
results from two additional drill holes (described in a release on 11
December) have now been received. WBD 23 intersected 4.1m @ 4.7%
nickel and WBD 24 intersected 4.8m @ 4.8% nickel confirming the
excellent continuity of this deposit in the area tested to date. Some
coarse arsenopyrite has been intersected on the margins of the
mineralised shear zone and preliminary metallurgical test work is
being undertaken on the drill core.
A second drill rig has been sourced to accelerate the resource
drilling program and test for high grade Flying Fox type deposits
associated with granite intrusions which may occur below 200m.
A Mineral Resource estimate to 200m depth is due in the March Q.
9. Diggers South - Offtake and Feasibility Study. Western Areas is
currently seeking offtake terms for Diggers South concentrate and
expressions of interest have been received from several major
parties. All the main components of the Pre Feasibility Study for the
main Diggers South disseminated deposit (Stage 3) are now complete.
Geotechnical drilling for the underground mine is in progress as part
of the Feasibility Study and a target date for a decision to mine is
due at the end of the June Q.
10. Cosmic Boy - Nickel Concentrate Plant. Site works are in progress,
all final engineering design plans have been received and plant
construction has been put out to tender. Construction of the Stage
One 250,000tpa concentrate plant is due to commence in early March.
Construction will be funded from the proceeds of the 2007 convertible
bond and no additional financing is required. The Cosmic Boy village
has been upgraded to 300 rooms to accommodate the plant and Diggers
11. Regional Exploration. Active exploration programs are planned at the
Mt Finnerty, Lake King and Sandstone JVs during the March Q. An EM
survey is already underway over areas of highly anomalous nickel
geochemistry at Mt Finnerty and an IP survey is due to commence at
Lake King in late January to test for anomalism associated with
potential extensions to nickel sulphide mineralisation announced
previously. An initial (Niton) geochemical program is due to commence
at Sandstone in January.
Details of three diamond drill holes completed at Koolyanobbing will
be released in the March Q when assay results from a number of
sulphide intervals are available. Additional geophysical surveys are
planned within the Koolyanobbing project.
12. Canada - Lynn Lake Nickel Project. Two drill holes were completed
below the old Sherritt Gordon EL nickel mine at the end of the
December Q. Both drill holes intersected wide zones of disseminated,
stringer and vein nickel and copper sulphides up to 40m down hole
widths. Details of these drill holes will be released when assay
results are received. Drilling at the EL Mine will resume in mid-
Drilling will then focus on testing other EM targets in the Lynn Lake
nickel camp. Permitting is also underway for an access track into the
McBride Lake zinc deposit 70km east of Lynn Lake to enable drilling
to commence during the June Q.
We look forward to reporting results from these many activities during
what should be a very exciting and positive year for shareholders.
Managing Director and CEO
QA-QC STATEMENT: 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, down hole 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 exploration results
or mineral resources is based on information compiled by Mr Julian Hanna. 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 style of
mineralization and type of deposit under consideration and 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 STATEMENTS: This release contains certain forward-looking
statements. Examples of forward looking statements used in this release are
'the Company's goal is to become a very profitable, mid tier company targeting
sustainable production of 30,000 to 40,000 tonnes of nickel pa by 2011' and
'initiatives and targets which are expected to have a significant impact on a
wide range of exploration and mining activities during 2008.' Forward-looking
statements are subject to a wide 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. Current or potential shareholders should not rely on forward
looking statements as a basis to invest in Western Areas NL ("the Company").
In addition, this announcement does not include reference to all available
information on the Company or the 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.
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.
For further information:
For further information: Julian Hanna, Managing Director - Western Areas
NL, Telephone +61 8 9334 7777, Email: firstname.lastname@example.org; Craig
Oliver, Finance Director - Western Areas NL, Telephone +61 8 9486 7855, Email:
email@example.com; Ann Nahajski, Investor Relations - Porter
Novelli, Telephone +61 8 9386 1233, Email: firstname.lastname@example.org;
Or visit: www.westernareas.com.au