Western Areas project returns more high-grade nickel

Drill results from a single hole at its Spotted Quoll target, part of the Forrestania nickel project in Western Australia, sent Western Areas (WSA-T, WSA-A) shares up more than 20% in early afternoon trading.

Hole WBD28 cut 11.4% nickel over an estimated true width of 8 metres starting at 88.2 metres down-hole.

The stock climbed 88, or nearly 23.5%, to $4.63 on the announcement.

Assay results for the hole are the highest to date at the target, making for a pleasant surprise for investors. The company earlier estimated the nickel grade at 7.8% using preliminary X-ray fluorescence (XRF) analysis.

Ten holes have been drilled at Spotted Quoll so far. Highlights of drilling announced last year included 6.2 metres of 4.8% nickel starting at 121.5 metres depth and 5 metres of 6.6% nickel from 99.4 metres.

The company says the results confirm good continuity of mineralization along the 220 km of strike length at the target tested so far. Western Areas recently added a second drill rig to Spotted Quoll with the goal of defining a shallow, potentially open-pittable mineral resource (up to 200 metres depth) as quickly as possible.

Spotted Quoll is located along the same 25-km-long contact as the high-grade Flying Fox underground mine, also part of the Forrestania project, about 400 km east of Perth.

The frantic pace at Forrestania – with seven diamond drills working three deposits 24 hours a day — is aimed at building Western Areas into a mid-tier company with production of 30,000-40,000 tonnes nickel annually by 2011. Flying Fox is expected to produce around 8,000 tonnes nickel in concentrate this year, and the company expects a prefeasibility study on the development of the Diggers South mine, also on the property, to be completed in March.