Forrestania Nickel Project, Australia

The Forrestania Nickel Project is located 400km east of Perth, Western Australia. Flying Fox is the first mine to be developed at the project, which contains some of the highest grade nickel in the world. The project also includes Archean Greenstone belts and substantial exploration potential. Western Areas plans to develop five mines at the site by 2011, with targeted production of 35,000t per annum of nickel.

Two additional planned underground mines - Cosmic Boy and Diggers South - are wholly owned by Forrestania Nickel Project.

The company will upgrade its nickel concentrator in two stages to achieve a target of 750,000 tonnes per annum (tpa) ore. The first stage is fully commissioned with an ore capacity of 300,000tpa. The second stage is scheduled for March 2010 to treat ore from the Spotted Quoll mine. Major infrastructure such as grid power, roads, water, tailings disposal and an airstrip is set for completion during the second stage.

Western Areas’ objective is to increase the capacity of the high-quality mineral resources at Forrestania to 40,000t of nickel in 2009. The Flying Fox mine started production in 2008 and produced 200,597t at 4.05%, containing 8,118t of nickel in concentrate.

Mine upgrade

Flying Fox comprises several mineral zones, extending downwards from T Zero to the recently discovered T7 zone. The discovered minerals extend more than 700m below T1, in a zone up to 600m wide to the limit of drilling. Drilling is expected to result in a 50% increase in resources to 150,000t of contained nickel.

Western Areas plans to extend the size and potential of the T6 and T7 zones in 2009. It also plans to increase the current resource inventory by 50% to 150,000t of contained nickel.

Forrestania nickel concentrator

Western Areas opened the Forrestania Nickel Concentrate Plant in March 2009. The nickel concentrator at Cosmic Bay treats high-grade nickel ore from Flying Fox.

The Cosmic Bay concentrator uses conventional flotation technology to process ore into nickel concentrate with an average grade of 14% nickel. The Cosmic Bay mill has been constructed and designed by GR Engineering Services.

A major expansion of the nickel concentrate plant will take place in the summer of 2009. This expansion will process additional ore from the Spotted Quoll mine. In 2007, the mineral resource increased 67% to 2.0Mt at an average grade of 6.2% nickel, containing around 125,460t nickel over 640m depth.

Spotted Quoll includes more than 125,000t of nickel with high-quality mineral resources.

New agreement with BHP Billiton

Western Areas has entered into an agreement with BHP Billiton for a contract to sell up to 10,000t of concentrated nickel per annum to a total of 75,000t in March 2009. Western Areas is planning to produce a total of 20,000 to 25,000tpa nickel from Flying Fox and Spotted Quoll from 2010.

Prospects for further extension

Underground diamond drilling has increased the possibility of the mineral resources in the upper panel of the Flying Fox T4 deposit. Mining is set to commence at T4 during the summer of 2009.

In the upper panel of T4, the revised total mineral resources include 231,400t at an average grade of 5.8% nickel, including 13,490t of nickel.

The underground drilling focus will shift to infilling the lower panel of the T4 deposit down to T5. With the continuous high-grade nickel mineralisation, the combined T4/T5 deposit will extend to around 450m in vertical extent and 420m in strike length within Western Area’s tenements.

The revised mineral resource in the upper panel of T4 signifies the prospects of major extensions to Flying Fox.

As of April 2009, Flying Fox has produced around 1,000t nickel per month at an average grade of 4% nickel from T1. It is expected that the ore grade would increase to 5-6% nickel as the mine accesses the larger T5 deposits in early 2010.