INTERVIEW WITH MR. JULIAN HANNA, MANAGING DIRECTOR OF WESTERN AREAS NL (WSA)

“Mineral Resource Doubles at spotted Quoll”

http://www.brr.com.au/event/51057

FRIDAY, SEPTEMBER 5, 2008, 2:45 PM.

            BRR    Today on Boardroomradio I’m speaking with the Managing Director of Western Areas, Mr. Julian Hanna.  Julian, thanks for joining us today.

10        WSA    Good morning James, I’m pleased to be here.

            BRR    The latest release from Western Areas showed that you’ve been able to significantly increase the mineral resources by the Quoll following some extensive drill work you’ve done.  Julian, could you just start by telling us what

15                    you’re learning about Spotted Quoll?

            WSA    We’ve had a pretty good run with the drilling there, James, from discovery in October last year to ten months ago, we’ve been drilling 24 hours a day non-stop, and we’ve been able to increase resource.  We’ve announced results previously in May.  The resource was around about 35,000 tonnes contain

20                    nickel and an average grade of 6.3% nickel.  We’ve since more than doubled that. Well, that was just current round of drilling, and we’re up well over a million tonnes than an average grade of 7.2% nickel.  So we’ve defined 75,000 of nickel, but the key to all of these is that we’re still only drilled it down to 300 meters vertical depth. So it’s a long way to go in front of us and

25                    all about drill rigs have now shifted to test below that 300 meters depth and take us in down to the next panel down the 600 m.

            BRR    And, Julian, you’ve articulated there that this mineralisation continuing at depth, it surges forward some options for Western Areas in terms of the mine

30                    design and you’ve talked about open pit but also doing some underground mining, what’s the development here?

            WSA    The way we’re looking at developing Spotted Quoll is initially with an open pit mine. We put out a scoping study a while ago and that was for 160-meter deep open pit mine.  It would produce around about 80,000 tonnes of nickel a

35                    year commencing mid 2009, and because of the high-grade in the fabulous continuity of the mineralisation the cash costs to be an estimated for production for that open pit were only around about US$1.50 a pound of nickel. So that would make it certainly the lowest cost nickel mine in Australia. We don’t see operations stopping there. We’ve had some significant

40                    intersections below the pit as it stands today.  Probably, you know, central to that is 18 meters at 10%, 12  at 9%, these are the numbers below the pit, so clearly with the drilling that is current down to 300 m depth we’re already looking at the potential to have an underground mine extending below the pit.  What our mining engineers are doing is looking at the potential to

45                    concurrently mine open pit and underground.  Instead of, as most gold mines, for example, do that, they mine the outer pit and then they develop a portal in the bottom of that pit and commence underground mining below the pit.  What we’re looking to do here is bring that underground process four to five-fold as we can, so that the potential is for the underground production to overlap the open pit, and that could take the production well above the 80,000 tonnes that we’ve envisaged in the first few years of mine life here.  I think so it clearly below that, and what we’ve demonstrated I think is the potential for extensions to this mine.  So even if we look at it today at that 8,000 tonne a

5                      year production rate, potentially there’s about eight years of mine life in front of us where we stand today just in the resources.  Obviously that needs to go into our reserve and needs to be scheduled into open pit and underground mining production there, but the potential I think is for a much bigger operation and longer life and highly profitable mine.

10

            BRR    Now Julian, I understand when Western Areas did first come across Spotted Quoll it came as a bit of a surprise to find the deposit so shallow and you know how the three deposits across about 6-kilometer stretch the Western nickel does extend quite significantly to the south of Spotted Quoll, what are

15                    the implications to further exploration for Western Areas and what work you’re doing?

            WSA    James, the bulk we have tied up there’s 25 km long. It’s very, very well strongly mineralised.  Most historic exploration, the next you go as back as far as 40 years, were shallow, generally stopped at granite and we now know

20                    that the mineralisation that we see in all these deposits is effectually hidden below this flat line sheet of granite.  So the discovery of three deposits being Flying Fox, which is now in production, New Morning, which will be in production in a couple of years’ time, and now Spotted Quoll within that central 6-km belt all related to this granite context suddenly opens up a hole

25                    of this 25-km long context for further discoveries.  So what we’ve done is -----Spotted Quoll was as you say a lucky find. It was very close to surface and we’re able to pick it up with EM relatively simply in the first drill hole 6% , you know, nickel from day one. So we’ve been sport there so what we’ve done is we’ve extended the EM coverage for 10 kilometers along this contact south of

30                    Spotted Quoll.  We’ve identified a number of targets there and we’re just really commenced testing those EM targets. In addition to that, because nickel sulphide leached relatively easily from surface and EM will only see down to run about 100 m vertical depth, we’re also targeting a number of these geological structures but the lava channels that host Spotted Quoll, that

35                    host New Morning, that host Flying Fox, we know there are at least three or four of those south of Spotted Quoll, so we’re also targeting drilling on those we’re also targeting drilling on those lava channels looking for mineralisation that may not be as close to surface as Spotted Quoll was.  So, EM is our first task to find new discoveries as rapidly as we can, but certainly beyond that

40                    there’s a real potential for new channel host to deposits of the Spotted Quoll, Flying Fox, New Morning (inaudible) (00:05:44). So plenty of drilling to be done in front of you, James.

            BRR    Okay, Julian, we will certainly be keeping our eyes on the new flow from

45                    Western Areas as you understand more about this Western nickel belt, and we look forward to further news from you in the future.

            WSA    Okay.  Well, thanks so much James.

INTERVIEW CONCLUDED

Contact brr@brr.com.au for more information

DISCLAIMER: Transcripts made available by Boardroomradio.com is a free service whereby the transcripts are created by one or more third party contractors without any involvement or oversight by Boardroomradio.com or the respective company, firm, partnership or individual that is being transcribed.  Boardroomradio.com and its contractors, client companies, firms, partnerships and guest speakers (paid or otherwise) do not invite reliance upon, nor accept responsibility for, the information they provide. Boardroomradio.com makes every effort to provide a high quality service. However, neither Boardroomradio.com, its transcript providers, nor the providers of any other written or oral data made available on the Boardoomradio.com site (and its partner sites) give any guarantees, undertakings or warranties concerning the accuracy, completeness or up-to-date nature of the information provided. Users should confirm information from another source if it is of sufficient importance for them to do so. Boardroomradio.com, its directors and employees do not accept any liability for the results of any actions taken or not taken on the basis of information in this site, or for any negligent misstatements, errors or omissions.