EXPLORATION STRATEGY AND PROJECTS UPDATE

Transcription

1 November 26 th, 2010 ASX & TSX: WSA News Release EXPLORATION STRATEGY AND PROJECTS UPDATE Western Areas wishes to announce the following results from a range of the Company s nickel projects and interests in Australia, Finland and Canada. This follows the Board s decision to increase the rate of exploration and acquire new projects within well defined nickel provinces, in areas with low sovereign risk and with well established mining related infrastructure. Western Areas Board has a very positive view on future nickel prices and as a result, the Company s exploration budget has been increased 30% to A$20M for CY This budget excludes FinnAust Mining Plc (WSA 75%), which is intended to become self funded from March Q This increase in exploration activity is part of a clear strategy to develop Western Areas towards becoming a major global nickel company. The primary focus remains the Forrestania Nickel Project where the Company already has substantial production and mining infrastructure. The main objectives at Forrestania are to: 1. Sustain >25,000 tpa nickel mine production from Flying Fox and Spotted Quoll mines 2. Increase ore reserves and mine life at Flying Fox and Spotted Quoll to over 10 years 3. Develop a third mine which can benefit from utilising the existing infrastructure 4. Generate significant dividend returns to shareholders from low cost operations Western Areas was recently awarded second place for Producer of the Year (2010) in an Australia wide review of mining companies by Resource Stocks magazine. This recognition follows previous awards for mining and exploration and is a great credit to the excellent team of staff, consultants and contractors who work in all areas of the Company s operations. On the exploration front, drilling is in progress at the Spotted Quoll, North Endeavour, New Morning and Sandstone projects in Australia and at the Rautavaara Project in Finland. In addition, substantial geophysical surveys have either recently been completed or are in progress at Sandstone, and at the East Bull Lake and Mayville projects in Canada. This announcement summarises some of the recent exploration results and developments at these projects. AUSTRALIA 1. Spotted Quoll Mine. Drilling below the mineral resource is continuing to intersect high grade nickel indicating potential for an increase in resources and reserves at the deposit beyond feasibility study expectation. The mine currently has a planned 9 year mine life and production target of approximately 10,000 tpa nickel from open pit and underground operations. Recent drilling results include an intersection in WBD 157W1W1 of 5.8% nickel, 600m down plunge below the ore reserve (Figure 1). This intersection along with other high grade drilling results confirms the exceptional continuity of the nickel mineralisation at Spotted Quoll and the potential for a significant increase in ore reserves.

2 Production from the Tim King Pit at Spotted Quoll reported in the September Q Activities Report, was 66,978 tonnes mined at 7.4% nickel for 4,939 tonnes contained nickel, 72% ahead of budget for contained nickel. Figure 1: Longitudinal section of Spotted Quoll showing recent drill hole intersections

3 2. North Endeavour: Drilling at the North Endeavour Prospect, 6km south of the Forrestania nickel concentrator, is continuing to provide encouraging early results. Several recent drill holes have intersected nickel sulphides and drilling is ongoing to test the potential for a higher grade zone associated with down hole EM conductors. 3. Sandstone Joint Venture: A major drilling and geophysical campaign is underway to follow up previously reported nickel intersections and identify new nickel sulphide occurrences. This program is expected to continue for at least six months. Sandstone covers a large area of prospective and largely underexplored geology 450km north of Forrestania. Western Areas considers Sandstone is the Company s most prospective Australian nickel project, outside Forrestania. FINLAND 1. FinnAust Mining Plc: Western Areas and Finland company Magnus Minerals have formally executed a Deed of Acknowledgement which confirms Western Areas is now the major shareholder (75%) in FinnAust Mining Plc. FinnAust has started preparing for a possible listing on the London AIM market during The intention is to raise funds for a major exploration and resource drilling campaign in the Kainuu Outokumpu metal province and to undertake metallurgical testwork and studies on a number of ore treatment options during the first twelve months. Drilling in 2011 is planned to test numerous identified targets within FinnAust s nine project areas, with potential for three main base metal sulphide deposit types: Talvivaara type nickel/zinc deposits hosted by large hydrothermal alteration systems. FinnAust has identified several of these type targets in preliminary drilling in Outokumpu type high grade copper deposits associated with serpentinites and black schist. Several EM conductors in favourable settings have been identified for drilling. VMS type copper/zinc deposits within a previously unrecognised felsic sequence underlying large hydrothermal alteration systems in the northern Kainuu belt. FinnAust is also currently undertaking a search for a Chief Executive Officer to run the planned listed company. This person is expected to have a strong exploration, mining and corporate background and will be based in Helsinki, Finland. 2. R1 Deposit, Rautavaara Project: The current resource drilling program has confirmed that the ~130m wide zone of nickel/zinc sulphide mineralisation extends to 250m and is open at depth (Figure 2). R1 mineralisation has close similarities to the Talvivaara type ore. R1 is one of many occurrences of known nickel/zinc/copper mineralisation owned by FinnAust and is regarded as a potential test case for early development. The initial target at R1 is to define a mineral resource containing in excess of 50,000 tonnes nickel and 100,000 tonnes zinc which could be mined by open pit and treated using BioHeap tm leaching technology. An initial resource estimate will be released in the March Q 2011.

4 Figure 2: Cross section of Rautavaara R1 deposit showing drill hole intersections CANADA 1. East Bull Lake: (Western Areas earning 65% from Mustang Minerals Corp) During late September 2010 a helicopter-borne Z-Axis Tipper Electromagnetic (ZTEM) geophysical survey was carried out over the East Bull Lake (east) and (west) blocks situated 30 kilometres east of Elliot Lake. East Bull Lake is a mafic intrusive complex with two distinctive lobes connected by a mafic dyke. Highly anomalous nickel, copper and PGM mineralisation is widespread on the project, generally around the margins of the western intrusion. East Bull Lake is located approximately 50km west of Sudbury, Ontario. Based on the recent geophysical results, a number of interesting ZTEM conductors were identified across the property. The magnetic results also contain detailed magnetic data which support the exploration targets. A more detailed interpretation of the available geophysical data, including previously flown VTEM surveys, will be conducted to define drilling targets. 2. Mayville Project (Mustang Minerals Corp Western Areas ~14% shareholder): Mustang Minerals ( Mustang ) recently acquired an option on the Tanco Property from Tantalum Mining Corporation of Canada ("Tanco") - announced by Mustang on July 13, The property is located immediately south of Mustang s Mayville Project, where Mustang has outlined a NI open pit resource consisting of 9.2 million tonnes at 0.61% copper, 0.23% nickel and 0.43 g/t platinum group metals (PGM)). In October the Company flew a Versatile Time Domain Electromagnetic (VTEM) survey at 100 metre line spacing over the Tanco Property, which appears to contain a similar sequence of rocks to the Mayville deposit. A prominent geophysical conductor was identified Tanco

5 Anomaly which is interpreted to be along strike to the north of a previously mapped gabbro - volcanic contact. This conductor is a high priority target for future exploration and drilling. Mustang has announced plans for exploration drilling in the Mayville Project area. -ENDS- For further details, please contact: Julian Hanna Dan Lougher Managing Director Western Areas NL Operations Director Western Areas NL Telephone Telephone jhanna@westernareas.com.au dlougher@westernareas.com.au Shane Murphy FD Third Person Telephone / shane.murphy@fdthirdperson.com.au Or visit: DISCLAIMER AND QA-QC STATEMENT: Note: The nickel estimates for the North Endeavour drill hole quoted in this release are indicative only and have been estimated using systematic readings using a NITON XLt 592 portable XRF analyser. 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. Mr Bill Amann from geological consultants Newexco Services Pty Ltd ( Newexco ) is responsible for the verification and quality assurance of the geophysical data used in this release. 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 and Mr Charles Wilkinson. Mr Hanna and Mr Wilkinson are members of AusIMM and are full time employees of the Company. Mr Hanna and Mr Wilkinson 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 a 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 Wilkinson consent to the inclusion in the report of the matters based on the information in the context in which it appears. FORWARD LOOKING STATEMENT: This release contains certain forward-looking statements. Examples of forward-looking statements used in this release include: FinnAust Mining Plc (WSA 75%), which is intended to become self funded from March Q 2011, and, This increase in exploration activity is part of a clear strategy to develop Western Areas towards becoming a major global nickel company and, The main objectives at Forrestania are to: 1. Sustain >25,000 tpa nickel mine production from Flying Fox and Spotted Quoll mines 2. Increase ore reserves and mine life at Flying Fox and Spotted Quoll to over 10 years 3. Develop a third mine which can benefit from utilising the existing infrastructure 4. Generate significant dividend returns to shareholders from low cost operations and, Drilling below the mineral resource is continuing to intersect high grade nickel indicating potential for an increase in resources and reserves at the deposit beyond feasibility study expectation and The initial target at R1 is to define a mineral resource containing in excess of 50,000 tonnes nickel and 100,000 tonnes zinc which could be mined by open pit and treated using BioHeaptm leaching technology. An initial resource estimate will be released in the March Q 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 or the Spotted Quoll, Flying Fox or New Morning deposits 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 , the Company warrants that Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.