WESTERN AREAS NL February Mining and developing high grade, low cost, long life nickel mines

Transcription

1 WESTERN AREAS NL February 2009 Mining and developing high grade, low cost, long life nickel mines 1

2 DISCLAIMER AND FORWARD LOOKING STATEMENT This presentation is being furnished to you solely for your information and for your use and may not be copied, reproduced or redistributed to any other person in any manner. You agree to keep the contents of this presentation and these materials confidential. The information contained in this presentation does not constitute or form any part of any offer or invitation to purchase any securities and neither the issue of the information nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment on the part of any person to proceed with any transaction. You must not take or transmit this presentation or a copy of this presentation into the United States or Japan or distribute it, directly or indirectly, in the United States or Japan or to any US persons. By your acceptance of this document, you acknowledge that you are a not a U.S. person for the purposes of the US Securities Act. Neither this document, in whole or in part, nor any copy thereof may be taken or transmitted to any other person. The distribution of this document to other persons or in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the federal securities laws of the United States and the laws of other jurisdictions. The distribution of this presentation in other jurisdictions may be restricted by law, and persons into whose possession this presentation comes should inform themselves about, and observe, any such restrictions. The information contained in this presentation has been prepared by Western Areas NL. No representation or warranty, express or implied, is or will be made in or in relation to, and no responsibility or liability is or will be accepted by Western Areas NL, employees or representatives as to the accuracy or completeness of this information or any other written or oral information made available to any interested party or its advisers and any liability therefore is hereby expressly disclaimed. No party has any obligation to notify opinion changes or if it becomes aware of any inaccuracy in or omission from this presentation. All opinions and projections expressed in this presentation are given as of this date and are subject to change without notice. This document contains forward-looking statements. These statements are subject to certain risks and uncertainties that could cause the performance or achievements of Western Areas NL to differ materially from the information set forth herein, although such information reflects forecasts and projections prepared in good faith based upon methods and data that are believed to be reasonable and accurate as at the dates thereof and although all reasonable care has been taken to ensure that the facts stated herein are accurate and that the forward-looking statements, opinions and expectations contained herein are based on fair and reasonable assumptions. Western Areas NL undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances. Individuals should not place undue reliance on forward-looking statements and are advised to make their own independent analysis and determination with respect to the forecasted periods, which reflect Western Areas NL s view only as of the date hereof. 2 The information within this PowerPoint presentation was compiled by Mr. Julian Hanna and the information as it relates to mineral resources and reserves was prepared by Mr. Dan Lougher and Mr. John Haywood. Mr. Hanna, Mr. Lougher and Mr. Haywood are full time employees of Western Areas. Mr. Hanna, Mr. Lougher and Mr. Haywood are members of AusIMM and 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. Hanna, Mr. Lougher and Mr. Haywood consent to the inclusion in this presentation of the matters based on the information in the form and context in which it appears. THIS DOCUMENT IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

3 Western Areas Corporate ASX & TSX LISTED - ASX 200 ISSUED CAPITAL: MARKET CAPITAL: 168M shares, 6M options A$4.00/share FINANCIAL CASH (31 Dec 08): A$65M CONVERTIBLE BOND: A$209M, 8% yield FINANCE FACILITIES: A$82M drawn to A$62M EXPLORATION BUDGET: A$12M in BOARD Terry Streeter Julian Hanna Craig Oliver Daniel Lougher David Cooper Robin Dunbar Chairman and 18% shareholder Managing Director and CEO Finance Director / Company Secretary Operations Director Independent Director Independent Director, Toronto based

4 Highlights 1. 8,114 tonnes nickel in first full year production at Flying Fox to Dec US$1.36/lb nickel cash costs for Flying Fox - down 47% since Sept Q Mine development extended down to the Flying Fox T4 deposit 4. 67% increase in high h grade resources at Spotted Quoll - now 125,460t Ni 5. Surface works at Diggers South and Cosmic Boy mine sites - complete 6. Cosmic Boy nickel concentrator commissioning - full production March 7. Restructure of Norilsk offtake agreement negotiating new contracts 8. Major infrastructure including 465 rooms village, power etc - complete 9. Very high safety and environmental standards maintained at mine site 4 MAJOR CAPITAL DEVELOPMENT PHASE - NOW COMPLETE

5 Targets 2009 Increase low cost production and ore reserves at Flying Fox mine Commence open pit production at the high grade Spotted Quoll mine Ramp up production at the Cosmic Boy nickel concentrator Increase revenue by negotiating g improved nickel offtake terms Reduce costs by with new contracts and reduced drilling budget Discover another Spotted Quoll or Flying Fox type deposit 5

6 Western Areas has two highest grade nickel deposits Nickel Sulphide - Ore Reserve Grade Ni% GLOBAL NICKEL MINES ORE RESERVE GRADE Ni% WSA - FLYING FOX WSA - SPOTTE ED QUOLL 9.00 Xstrata - PROSPER RO Mincor - OTTER / JUA AN Independence - LONG SH HAFT WSA Ore Reserves Australian Nickel Deposits Global Nickel Deposits comparison with Western Areas five main nickel deposits (red) Note: Flying Fox is an ore reserve. Spotted Xs strata - TAPINOS BHP - CLIFFS WSA ANEWMORNING Mincor r- MARINERS Vale - VOISEYS BAY - RAGLAN Panoramic - LANFRANCH Mincor - MIITEL WSA - COS SMIC BOY Vale - THOM MSON BHP - PERSERVERANCE 6.00 Norilsk - NOR RILSK WSA - DIGGERS SOUTH Panoramic - SAV VANNAH Norilsk - BLACK SWAN 5.00 Jinchuan - JINCHU UAN Zinifex - AVEBURY Lundin - AGUABLANCA A Talvivaara - TALVIVAARA Nick kel grade % AYS Quoll and Diggers South are reported as mining inventory estimates (Scoping Study) and New Morning and Cosmic Boy are preliminary estimates of underground mining grades. Xstrata - Albidon - MUNALI Vale - SUDBURY Norilsk - MAGGIE HA Norilsk - KOLA Mustang - MASKWA Mirabela - SANTA RITA 4.00 BHP - Mt KEITH Norilsk - NKOMATI 3.00 Norilsk - TATI FLYING FOX MINE NEXT 6 YEARS PRODUCTION TARGETS (from March Q 2009) Reserve Grade increases to >6% Nickel in 2011 T1 T2 T5 6

7 Goal Australia s 2 nd largest & lowest cost producer Forrestania Mineral Resources FORRESTANIA MINERAL RESOURCES 425, , , , , , , ,000 tonnes nickel in mineral resources. 250,000 Target 400,000 tonnes nickel by end Strong growth in mineral resources since WSA acquired Forrestania expected to continue Tonnes of Containe ed Nickel 225, , , , , ,000 75,000 50,000 25, Calendar Year Flying Fox New Morning / Daybreak Cosmic Boy Diggers South Spotted Quoll Target 2009 FORRESTANIA PRODUCTION TARGETS Target 35,000 tpa nickel by Majority from Flying Fox, Spotted Quoll. Additional : Diggers South Cosmic Boy & New Morning 7 Note: This graph represents WSA production targets based on an estimate of annual nickel production for five different deposits and includes assumptions and forward looking statements. Production targets may vary depending on a wide variety of factors including nickel price, future estimation of mineral resources and ore reserves, mining costs, geotechnical issues, environmental permitting and future mine development and production rates. Apart from Flying Fox and Diggers South, production targets are not yet based on feasibility studies and may be varied at any time. Potential or existing investors should not rely on these production targets as a basis to invest in Western Areas NL.

8 Exploration: Central Yilgarn Nickel Province - many high quality drilling targets identified 90km LONG MINERALISED CONTACT AT FORRESTANIA MANY NICKEL OCCURRENCES 25km WESTERN CONTACT 9 LAVA CHANNELS IDENTIFIED 3 TESTED TO DATE 8 500km LONG NICKEL PROVINCE 7 NICKEL PROJECTS 5 HIGH GRADE DISCOVERIES IN PAST 5 YEARS

9 Flying Fox Mine longitudinal projection. (1st mine) Four large, high h grade nickel deposits (T1, T4, T5, T6/T7) extending over 1km vertical extent to 1400m depth. Mine decline currently at 750m depth T1 mined grade 4.3% nickel (Dec Q 08) T1 in production target t 8,000t Nickel CY m 8,600 t nickel in high grade (3.6% Ni) Ore Reserves - 600m T4 production mid Drilling extensions 12,800 t nickel in high grade (4.1% Ni) Mineral Resource - 800m T5 production early years ore reserves 9 69,200 t nickel in high grade (6.8% Ni) Mineral Resource 49,700 t nickel in high grade (5.9% Ni) Ore Reserves -1100m T6/T7 Mineral Resource drilling required 3 nickel zones, 5 EM conductors, 9% nickel intersected -1400m

10 Flying Fox cross section high grades to 1400m depth - 200m - 400m - 600m - 800m m m -1400m

11 Flying Fox at surface and at 500m depth View of entry to Flying Fox underground d mine. Drill rigs at T4 and T6 11 6% nickel exposed in 5.5m wide ore drive. Stoping ore widths up to 24m in progress.

12 Flying Fox Mine US1.36/lb cash cost Dec Q 08 Quarterly ore and grade mined at Flying Fox 12 Quarterly mill grade and cash A$ cost/lb nickel

13 Spotted Quoll planned 2 nd Mine (open pit, underground) PROBABLE ORE RESERVE OPEN PIT MINE Estimate cash cost : <US$2.00/lb Ni 5.4% Ni containing 16,500t Nickel in planned open pit to 150m vertical depth - 200m TARGET FIRST PRODUCTION Dec Q PRELIMINARY STUDY FOR UNDEGROUND MINE WITH TARGET PRODUCTION: 10,000 tpa nickel. REVISED MINERAL RESOURCE (12 January 2009) - 400m 2 million 6.2% Ni containing 125,460t Nickel to 640m vertical depth 2009 TARGET: >150,000 tonnes nickel Growth in Value of Spotted Quoll Mineral Resource - at US$11,000/t Nickel - 600m US$M October November December January February March April May June July August September October November December January Resource Upgrades from April 2008 to January 2009 February March April May June Value Nickel US$M

14 Spotted Quoll continuous high grades to 640m depth - 200m - 400m m

15 High grade nickel occurs in (or near) lava channels (three lava channels: Flying Fox, New Morning, Willy Willy) 15 Flying Fox Production: High grade, low cost underground mine. Target US$2.00/lb cash cost Spotted Quoll Feasibility: High grade, low cost open pit mine. Target <US$2.00/lb cash cost New Morning Pre Feasibility: Potential high grade underground nickel mine. Potential extensions Excellent potential - for new high grade nickel discoveries in other lava channels along 25km belt

16 25Km Western Nickel Belt 9 lava channels identified Western Areas has deep drilled d 3 of the 9 prospective lava channels (red). Resulting in discovery of high grade Flying Fox, Daybreak & Spotted Quoll deposits Exploration now targeting channels south of Spotted Quoll. 16

17 Diggers South (planned 3rd mine) INITIAL LOW COST SITE WORKS COMPLETE Trial mine dewatering completed. Plan to access previous Outokumpu underground mine to 200m depth FIRST MINERAL RESOURCE Indicated Mineral Resource 1.5% Ni containing 44,700t Nickel 17 Negotiations in progress for nickel offtake agreement

18 Cosmic Boy (planned 4th mine) Outokumpu Mine Portal Portal exposed - January 2009 Cosmic Boy large nickel system, open at depth

19 Forrestania major infrastructure in place ACCOMMODATION VILLAGE 465 rooms with all amenities INFRASTRUCTURE Major roads, airstrip, grid power, village, offices Plant: 10 years tailings storage, bore fields etc 19 STAFF AND CONTRACTORS Experienced & highly skilled mining workforce Strong site based management team

20 Forrestania export of nickel concentrate FORRESTANIA CONCENTRATE PLANT Commissioned Feb 2009 LOADING WESTERN AREAS NICKEL CONCENTRATE - ESPERANCE 20 NORILSK NICKEL REFINERY - FINLAND

21 Forrestania Cosmic Boy nickel concentrator 21

22 Terms and Benefits from restructuring Norilsk Agreement 1. Western Areas terminates the right to toll treat ore with Norilsk 2. Western Areas retains the option to sell nickel conc to Norilsk 3. Western Areas can remove up to 100% of Flying Fox conc from Norilsk 4. Conc grade will reduce from 16% to 14%, further improving recoveries 5. Western Areas acquires key plant items from Norilsk at no cost 1. Provides Western Areas greater optionality and independence 2. Better payability terms with new third party offtake agreements 3. Targeting significant funding with new offtake agreements 4. Ability to blend Flying Fox with other ores & concentrates 5. Key plant items to increase capacity of Forrestania plant 22 This is a major strategic development which provides additional flexibility to enable the Company to achieve its growth plans.

23 Canada: East Bull Lake Nickel Project, near Sudbury. - testing potential for major new Ni/Cu/PGM discovery WESTERN AREAS EARNING 65% FROM MUSTANG MINERALS 23 Drilling planned March Q 2009 TARGET EM CONDUCTORS AROUND 2 Ni/Cu/PGM MINERALISED INTRUSIONS

24 WESTERN AREAS Summary Goal to be Australia s 2 nd largest & highest grade nickel producer by 2011 Flying Fox already probably the lowest cash costs nickel mine in Australia Flexibility with offtake agreement seeking new and better terms Excellent exploration potential for new high grade nickel discoveries Dual listed ASX & TSX advanced projects in Australia and Canada Awarded Digger Award 2008 and Explorer of the Year 2008 Very experienced team management, staff, consultants and contractors Strong capital structure top 3 shareholders control ~ 35% of WSA % Ni 7.4% Ni 8.8% Ni 9.2% Ni 7.9% Ni

25 Global Nickel Sulphide - smelters and producers AUSTRALIA CANADA RUSSIA CHINA FINLAND AFRICA BHP VALE XSTRATA NORILSK JINCHUAN JILIN JIEN HENGHAO NORILSK BCL 1 smelter 4 smelters 4 smelters 3 smelters 1 smelter 1 smelter Western Areas (FNX) Talvivaara ** Norilsk Norilsk Xstrata Independence Mincor Panoramic (OZ Minerals) Mustang ** Crowflight ** First Nickel** Victory Ni ** C. Royalties ** 1 colour coded for offtake party Albidon ** 25 2 ** commissioning, feasibility or refinancing BRAZIL 3 (OZ Minerals) - care & maintenance Mirabela **

26 What s happened to the Nickel Price? US$15/lb SUBSTITUTION CAP sweet spot : US$10-15/lb Ni US$10/lb US$8/lb US$6/lb MARGINAL PRODUCTION NICKEL PIG IRON FLOOR 26

27 16 Year nickel price and LME stockpiles 27

28 0.5Mt planned Laterite and Nickel Pig Iron production LATERITE MINES (NEW) ktpa Ni Startup OWNER Goro N.Caledonia Vale Inco Ravensthorpe Australia BHP Billiton Onça-Puma Brazil Vale Inco Vermelho Brazil Vale Inco 28 Barro Alto Brazil Anglo Çaldağ Turkey European Ni SUBSTANTIAL NEW PRODUCTION IS Gwangyang Sth Korea Posco, MARGINAL BELOW US$6-8/lb Ni. Ramu PNG CMCC Koniambo N.Caledonia Xstrata New Laterite 390 Nickel Pig Iron China various

29 CHINESE NICKEL INDUSTRY JILIN JIEN JINCHUAN 29 HENGHAO

30 CHINESE NICKEL SMELTERS & REFINERIES JIEN NICKEL SMELTER & REFINERY JILIN PROVINCE 30 PIN JING NICKEL SMELTER YUNNAN PROVINCE

31 CHINESE NICKEL PIG IRON INDUSTRY PIG IRON NICKEL FURNACE YUNNAN PROVINCE NICKEL PIG IRON FURNACE YUNNAN PROVINCE 31