Western Areas’ Spotted Quoll gets final consent

Western Areas (WSA-T, WSA-A) has received the final consent from Australia’s environment ministry to start construction at its high-grade Spotted Quoll nickel deposit and the company expects production will begin in March or April next year.

Construction of site infrastructure will start immediately and the company expects pre-strip to begin in October.

Spotted Quoll, which is the company’s second high-grade nickel mine after Flying Fox, has a mineral resource of about 2 million tonnes at an average grade of 6.2% nickel containing 125,500 tonnes of nickel down to a vertical depth of 650 metres.

The ore reserve for the open pit is 386,000 tonnes at an average grade of 5.1% nickel for contained nickel of 19,900 tonnes. Target production is 8,500 tonnes nickel in 2010 and 9,800 tonnes nickel in 2011.

The 150-metre-deep open pit represents only 16% of the total contained nickel in the current mineral resource. A feasibility study is in progress for a substantial underground mine, which is planned to be accessed from the open pit.

A site for the decline portal has already been defined and underground development is expected to start in early 2011.

Deep drilling is underway to test for extensions to the current mineral resource. So far drilling 600 metres down dip below the current mineral resource has intersected more high-grade nickel sulphides in a similar geological setting. Drill hole WBD 157W3 intersected 1.7 metres at 4.6% nickel at a vertical depth of 1,000 metres, or 1,500 metres down dip from surface.

The drill hole intersection in WBD 157W3 is based on a preliminary analysis of diamond drill core using a Niton portable XRF analyser. This intersection requires confirmation by formal laboratory assays.

Western Areas discovered Spotted Quoll, about 400 km east of Perth, in the Western Nickel Belt at Forrestania, in October 2007.

The deposit lies about 6 km south of the Australian-based nickel sulphide explorer’s Flying Fox mine, one of the highest grade nickel deposits in the world.

Total mineral reserves at Flying Fox are estimated to be 2 million tonnes at an average grade of 4.7% containing for contained nickel of about 92,090 tonnes. In the first full year of production at Flying Fox, the mine produced 8,000 tonnes of nickel.

Spotted Quoll already surpasses Flying Fox in size, even though the current limit of drilling is only equivalent to the bottom of the Flying Fox T1 deposit.

Site work will start this month at Spotted Quoll with the construction of a haulage road, a 33 kilovolt mains powerline, a dewatering system and communications.

First ore production will coincide with the completion of the Cosmic Boy nickel concentrator in March or April of next year.

Cash costs are estimated to be less than US$2 per lb. nickel in concentrate. Total life of mine capital cost, including surface infrastructure, is estimated to be A$36 million ($33.45 million).

In Toronto at presstime Western Areas was trading at $4.75per share. The company has a 52-week trading range of $2.01-$5.80 and the company has 178.86 million shares outstanding.