WSA drilling stepped up at Forrestania Nickel Project and update on Diggers South pre - feasibility study


    ASX & TSX: WSA

    WEST PERTH, Western Australia, June 29 /CNW/ - The Board of Western Areas
is pleased to announce that the Company is already moving to increase
activities at the Forrestania Nickel Project following the successful pricing
of the A$225 million of convertible bonds. This was announced on 19 June and
closed today.
    Managing Director, Mr Julian Hanna, said "Western Areas is now in a
strong position to expand the high quality resource base and increase
production from the Forrestania Nickel Project. We are seeing excellent
progress in a number of areas including exploration, mine development,
production and feasibility studies." Mr Hanna added that "although our main
focus is on the high grade Flying Fox mine, we are very encouraged by recent
drilling at Diggers South which has the potential to be a major nickel system
in its own right."
    This release provides an update of Western Areas' activities at the end
of June. The Company anticipates a steady flow of results from the start of
the new financial year.

    Flying Fox - Exploration

    Four surface and one underground diamond drill rigs are now drilling at
Flying Fox. The current drilling program is designed to extend existing
mineral resources and test areas with no previous drilling. Current targets

    1. Upper part of T1: following up a drill hole intersection with 3.3m of
       massive sulphides
    2. Southern part of T1: following up a recent drill hole intersection of
       2.6m @ 3.3% Ni
    3. Northern part of T2: testing a previously undrilled area adjacent to
       the dolerite dyke
    4. Upper part of T4: testing for extensions and defining a mineral
       resource at T4
    5. T6: testing for extensions below the high grade T5 orebody (with
       Kagara Zinc Ltd)

    The first drill hole to test the potential at T6 is already at
approximately 850m down hole depth. The target is at approximately 1400m down
hole depth (1100m vertical depth).

    Flying Fox - Production

    Massive sulphide ore is currently being mined from the 1150 stope at T
Zero North and from the 1140 and 1130 ore drives at T Zero South. The 1130 ore
drive is also being extended southwards along an ore zone which is additional
to ore reserve defined by surface drilling. This ore drive will soon access
high grade ore (estimated 6% nickel) from the recently defined T Zero South
pod. Approximately 5,800 tonnes of ore was processed by LionOre last week.

    Flying Fox - Development

    Decline development rates are currently above forecast with an average of
7m advance per day during the past week. Ground conditions in the main decline
and ore drives are excellent. A new jumbo drill rig has arrived on site to
complement the new underground mining fleet at Flying Fox which has been
upgraded during the past few months. First production from the main part of
the wide, high grade T1 ore body is on track for the December quarter.

    Flying Fox - Mineral Resource and Ore Reserve upgrades

    The drilling program at T1 and T2 is almost complete. A revised mineral
resource estimate for T1/T2 is expected to be released in July followed by a
revised ore reserve in August. Drilling has resumed at T4 to infill the high
grade sulphide zone outlined previously and define a mineral resource in this
area. Drilling is also testing for extensions to T4 below the T3 Fault.


    Diggers South - Exploration

    A fifth surface diamond drill rig is operating at Diggers South. Two
widely spaced diamond drill holes (SED 235 and SED 235W2W2) have been
completed 200m below the current mineral resource, at approximately 800m
vertical depth. Both drill holes intersected significant down hole widths (8m
and 11.6m) of disseminated sulphide. Assay results are awaited for these drill
    A down hole electromagnetic survey of SED 235 has defined a large off
hole EM conductor some distance into the footwall of the Diggers South
deposit. There is no drilling in this area and a diamond drill hole will test
this interesting target when a suitable drill rig is available.
    In addition, metallurgical drill hole SED 210 W1/W1 intersected 14m down
hole width of strongly disseminated sulphides plus 1m of massive sulphides in
the upper part of the Diggers South mineral resource. This intersection is an
area of higher grade mineralisation which is now being followed up with
further drilling. Assay results are awaited for SED 210 W1/W1.

    Diggers South - Pre Feasibility Study

    Western Areas has previously announced the pre-feasibility study for
Diggers South would be released in the June quarter. The team involved in the
Diggers South project is currently reviewing the potential for a significantly
expanded development scenario at Diggers South.
    This scenario includes potential for a cutback on the existing Outokumpu
open pit (Stage 1) which would provide access to remnant ore in the underlying
Digger Rocks mine (Stage 2) and also provide access to Diggers South (Stage 3)
by a 400m drive from Digger Rocks.
    The conceptual mine design shown on a longitudinal projection can be seen
at the WSA website. Results from this expanded pre-feasibility study are
expected to be released early in the September quarter.
    The Digger Rocks open pit has potential for significant extensions and
further drilling is required below the current design. Work is also in
progress to accelerate the permitting process to dewater Digger Rocks and
provide access to the underground mine development.

    New Morning/Daybreak - Exploration

    Drilling is scheduled to commence in July to test the potential for a
Flying Fox "T5" type deposit below the granite intrusion at the base of the
current mineral resource.


    Lynn Lake, Canada (WSA Option for 100%)

    As announced on 18 June, the initial drilling program at Lynn Lake
intersected significant widths of disseminated sulphides at three of the four
EM targets tested to date.
    Approximately 600 samples of diamond drill core have been cut and sent
for assay and results will be announced when they are available.


    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 and mine
development activities 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
mineralisation 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 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:; Craig
Oliver, Finance Director - Western Areas NL, Telephone +61 8 9486 7855, Email:; Ann Nahajski, Investor Relations - Porter
Novelli, Telephone +61 8 9386 1233, Email:;
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