Western Areas – Quick View

The newly discovered nickel sulphide deposit of Sunrise at Forrestania, Western Australia, is located between Western Areas’ (WSA) Spotted Quoll mine and New Morning deposit within the highly prospective Western Belt package, and in close proximity to existing infrastructure. WSA is the third-largest and highest margin nickel producer in Australia with A$165m in cash (as at 30 June) and has off-take agreements in place with BHP and Jinchuan. This leaves it well positioned to fund its exploration and development activities and to benefit from any rise in the nickel price as a result of the Indonesian government’s ban on nickel exports.

Sunrise deposit bolsters Forrestania
Sunrise is 300m south-east of the high grade New Morning deposit in the Western Belt. It extends 400m north-south to a depth of at least 400m below surface and is open to the north and at depth. Lithology of the deposit is atypical of other deposits at Forrestania, with mineralisation interpreted as being contained within ultramafic rocks that form part of a hanging wall sequence. Although drilling is early stage, the Sunrise discovery validates WSA’s exploration strategy in the area and adds a potentially new source of production.

Flying Fox: Flagship high-grade deposit delivers
Flying Fox production for Q412 was 96,289 ore tonnes at an average grade of 5.3%. Production was up 19% from Q3 due to an increased production from the wider 335 long-hole stope in T5. There is potential upside to the current resource with infill and extensional resource drilling in progress at Lounge Lizard, with encouraging intersections of 34.7m at 8.9% nickel at T7. Currently the life of the mine is pegged at eight years.

Spotted Quoll: Reserve upgrade extends mine life
The Spotted Quoll probable ore reserve was upgraded in June 2012 by 94%, from Q3, to 3.1m tonnes of ore at 4.2% nickel for 131,360 tonnes of nickel reflecting an “indicated resource to probable reserve” conversion ratio of 88%. A recently completed mine optimisation study indicates a staged increase in underground production from 9.5ktpa in FY13 to 15ktpa in FY15.

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