Western Areas Announces September 2011 Quarterly Activities Report

PERTH, AUSTRALIA--(Marketwire - Oct. 20, 2011) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Western Areas (TSX:WSA)(ASX:WSA) is able to report another period of strong mine production and nickel sales in the September Q. Excellent drilling results have also been reported from below the Flying Fox and Spotted Quoll Mines, providing encouragement that the Company can achieve its short term goal to extend mine life at both these key deposits to ten years. In addition, exploration at a number of projects in Australia, Canada and Finland has identified a number of exciting targets which are planned to be drilled in the December Q.

Results for the quarter have provided a positive start to the new financial year and despite recent volatility in markets and metal prices, the Company is in a strong position. Western Areas is one of Australia's lowest cost nickel producers with solid cash flows, a sound balance sheet, and outstanding assets managed by an experienced and dedicated team.

During the Quarter, shareholders received a final dividend (to 30 June 2011) of 15 cents per share to bring the total for the past year to 25 cents This represents a yield of around 5% based on the recent share price. The Board remains focused on generating returns to shareholders and on creating growth through continuing exploration success.

Combined mine production for the September Q was 7,658 tonnes (16.9M lbs) nickel at an average grade of 4.9% nickel. In addition, there were 8,132 tonnes of contained nickel in ore and concentrate stockpiles at the end of the quarter.

Average cash cost for nickel in concentrate was US$2.29/lb (A$2.20/lb) for the September Q. The average closing LME nickel price for the Q was US$10.00/lb at an exchange rate of AUD/USD of 1.05 compared with US$11.02/lb and an exchange rate of AUD/USD of 1.06 for the June Q.

September Q 2011 Highlights

1. Production from Flying Fox mine (excluding Lounge Lizard) was 95,647 tonnes mined at 4.5% nickel for 4,258 tonnes (9.4M lbs) contained nickel.

2. Production from the Tim King Pit at Spotted Quoll was 59,955 tonnes mined at 5.7% nickel for 3,400 tonnes (7.5M lbs) contained nickel.

3. 20,769 tonnes contained nickel has been mined from the Tim King Pit to date. First production from Spotted Quoll underground mine is expected in December.

4. 134,413 ore tonnes were milled to produce 6,413 tonnes (14.1M lbs) nickel in concentrate. Average plant recovery was 93.4%, against a forecast of 89.9%.

5. Average cash cost (before smelting/refining charges) was US$2.29/lb nickel, below long term guidance of US$2.50/lb, despite the impact of a strong AUD.

6. Total nickel sales during the September Q were 33,633 tonnes of nickel concentrate containing approximately 4,751 tonnes (10.5M lbs) nickel.

7. Western Areas announced that a tender process to sell 25,000 tonnes of nickel in concentrate is expected to be complete at the end of November.

8. Drilling at the Flying Fox T6 deposit, 100m below the T5 Ore Reserve intersected 34.7m (true width ~9m) at 8.9% nickel.

9. Cash at Bank plus receivables totalled $223 million at 30 September.

10. Geophysical survey at East Bull Lake JV in Canada has identified several large potential conductors below 300m. Drilling planned to commence in December Q.

11. FinnAust Mining (79% WSA) is planning follow up drilling to test previous significant nickel/copper intersections at the Tormala gabbro intrusion in Finland.
    
    
12. Western Areas won the Emerging Exporter Award in Western Australia.
    

The full activities report can be viewed at the Company's website www.westernareas.com.au.

QA-QC STATEMENT:

Mr Adrian Black from geological consultants Newexco Services Pty Ltd ("Newexco") and Mr Charles Wilkinson from Western Areas are 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 together with a 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 mineral resources, ore reserves and mine development activities is based on information compiled by Mr John Haywood, Mr Tim Peters, Mr Dan Lougher and Mr Julian Hanna of Western Areas NL. Mr Haywood, Mr Lougher and Mr Hanna are members of AusIMM and are full time employees of the Company. Mr Peters is a member of AusIMM and is a consultant to Western Areas. Mr Haywood, Mr Peters, Mr Lougher and Mr Hanna 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 Competent Persons as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.' Mr Haywood, Mr Peters, Mr Lougher and Mr Hanna consent 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 including nickel production targets. 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.

Examples of forward looking statements used in this report include "providing encouragement that the Company can achieve its short term goal to extend mine life at both these key deposits to ten years", and "The Board remains focused on generating returns to shareholders and on creating growth through continuing exploration success".

This announcement does not include reference to all available information on the Company or the Forrestania Nickel Project or the Regional Nickel Projects of FinnAust Mining Plc and should not be used in isolation as a basis to invest in Western Areas. Potential investors should refer to Western Areas' 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 43-101, the Company warrants that Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.