Western Areas NL - Letter to Shareholders - Exploration Strategy


    ASX & TSX: WSA

    WEST PERTH, Western Australia, April 4 /CNW/ -

    Dear Shareholder,

    During the past two weeks, Western Areas has announced three significant
milestones for the Company. In summary, these announcements are:

    -   15 March - Option agreement to acquire nickel and zinc projects at
        Lynn Lake in Canada
    -   23 March - Mine production update and record development rates at
        Flying Fox mine
    -   28 March - Major upgrade in resources at Diggers South to 80,300t
        contained nickel

    These announcements have resulted in a number of enquiries from
shareholders, mainly related to the Company's ongoing exploration strategy and
drilling priorities in Australia.
    Western Areas first priorities are to expand production at Flying Fox and
complete a feasibility study for a second mine at Diggers South. However the
Company is also committed to discovering another high grade "Flying Fox type"
deposit at the Forrestania nickel project as well as exploring and developing
high quality nickel assets in Canada.
    At Forrestania, a number of excellent drilling targets have been
identified, mostly in areas with existing mineral resources or significant
drill hole intersections. The Company has four diamond drill rigs on site and
has secured a fifth diamond rig which is expected to arrive during the June
quarter. Although drilling is currently focused on increasing ore reserves at
the T Zero, T2 and T4 deposits at Flying Fox, we expect to be able to move two
of these drill rigs to start testing the backlog of exploration targets during
the next couple of months.
    To provide an indication of the outstanding potential for new discoveries
at Forrestania, an interpreted long section of the central 50km strike length
of the project is available for viewing on the company's website by viewing
the full version of this release and a large scale print will be mailed to
shareholders in mid April. The long section highlights 12 mineralised areas
which have been identified for drilling.
    (Note: The mineral resources and significant drill hole intersections
summarised in this release have been released to the market previously. All
drill hole intersections are down hole widths).

    The target areas are, from south to north:

    1.  Purple Haze - current mineral resource is 560,000 tonnes at 0.9%
        nickel, as disseminated sulphides. The target is high grade massive
        nickel sulphide associated with the disseminated nickel

    2.  Diggers South - current mineral resource is 7.8 million tonnes at
        1.0% nickel for 80,300t contained nickel (including 3.0 million
        tonnes at 1.5% nickel for 44,700t contained nickel). Significant
        potential exists for extensions to this resource and importantly, for
        high grade massive sulphides below the disseminated deposit.

    3.  Digger Rocks - Outokumpu's mine produced 1.5Mt at 1.9% nickel.
        Current mineral resource is 54,900 tonnes at 3.7% nickel. In addition
        there are wide disseminated nickel drill hole intersections outside
        the resource including 35m @ 1.0% Ni and 50m @ 0.5% Ni.
        Significant potential exists for extensions to the current resource.

    4.  Fireball - 2km north of Diggers South. Previous drilling intersected
        25m @ 0.9% Ni and 3.0m @ 4.5% Ni. Potential exists for high
        grade massive sulphides associated with the disseminated
        mineralisation. No recent drilling in this area.

    5.  South Ironcap - 4km north of Diggers South. Previous drilling
        intersected 25m @ 0.8% Ni and 35.0m @ 0.7% Ni. Potential exists
        for high grade massive sulphides associated with the disseminated
        mineralisation. No recent drilling in this area.

    6.  Cosmic Boy - Outokumpu's largest mine produced 1.9Mt at 2.0% nickel.
        Current mineral resource in the upper part of the deposit is 180,000t
        at 2.3% nickel. Potential exists to discover repetitions and
        extensions to the two large ore shoots which were mined, below and
        down plunge from the mine. Only limited deep drilling to date.

    7.  Liquid Acrobat - 5km north of Cosmic Boy. Previous drilling
        intersected 54m @ 0.85% Ni and 25.8m @ 0.7% Ni along the Cosmic
        Boy contact. Potential exists for a near surface disseminated
        resource and high grade massive sulphides below the disseminated
        mineralisation. A high priority target for deeper drilling.

    8.  Willy Willy - 7km south of Flying Fox mine. Untested EM target
        associated with anomalous shallow copper and nickel geochemistry and
        a granite intrusion, on the same contact as Flying Fox and New
        Morning/Daybreak deposits. High priority target.

    9.  New Morning/Daybreak - 3km south of Flying Fox mine. Two high grade
        deposits, with similar geology to Flying Fox. A revised mineral
        resource estimate is being finalised. Best intersection to date at
        Daybreak is 20m @ 6.8% nickel and potential exists for Flying Fox
        "T5 type" mineralisation below the main granite intrusion.

    10. Flying Fox Mine Extensions - Current mineral resource is 1.4Mt at
        6.5% nickel for 90,500t contained nickel. Potential remains for
        significant extensions to existing mineral resources within the mine,
        notably at the T4 deposit (where drilling is in progress and an
        initial mineral resource estimate is being finalised) and below the
        T5 deposit (the "T6 Target"). The four deepest drill hole
        intersections at T5 are: FFD163 W4W1 10.3m @ 8.0% Ni, FFD163 W9
        16.1m @ 9.7% Ni, FFD163 W9W1W1 5.9m @ 7.9% Ni, and FFD163
        W9W1W1W1 21.8m @ 5.7% Ni.

    11. Flying Fox North - 1km north along strike from Flying Fox mine.
        Highly anomalous nickel and copper geochemistry in 1970's shallow
        drilling. Three recent drill holes have as yet failed to locate the
        granite intrusion which is associated with Flying Fox. Deeper
        drilling is required to target the granite and test for nickel

    12. Beautiful Sunday - 8km north of Flying Fox mine. Current mineral
        resource is 480,000 tonnes at 1.4% nickel. The target is high grade
        massive nickel sulphide associated with disseminated and stringer
        nickel mineralisation

    On behalf of the board I would like to thank the shareholders of Western
Areas for their continued support of the company.

    Yours Sincerely


    Julian Hanna
    Managing Director

    (Note: Mineral resources and significant drill hole intersections
summarised in this release and shown on the sketch longitudinal projection
have been released to the market previously. All drill hole intersections
included in this release are down hole widths).

    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, 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 exploration results,
Mineral Resources and Ore Reserves is based on information compiled by Mr
Julian Hanna who is a member of AusIMM and 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 an 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 his 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.
    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
    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 9486 7855, Email: jhanna@westernareas.com.au; Craig
Oliver, Finance Director, Western Areas NL, Telephone +61 8 9486 7855, Email:
coliver@westernareas.com.au; Ann Nahajski, Investor Relations, Porter Novelli,
Telephone +61 8 9386 1233, Email: anahajski@wa.porternovelli.com.au;

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