The board of Western Areas announced that following a competitive tender process, the company has agreed key terms with Jinchuan Group Limited to sell up to 15,000 tonnes of nickel in concentrate (FOB Port of Esperance) for a one year period. Both companies are now finalizing documentation.

Mr Julian Hanna MD of Western Areas said that "We are pleased to continue the strong relationship we have forged with China's largest nickel company. We have been selling nickel concentrate to Jinchuan since July 2010. The new contract commences in March 2012 and contains improved terms for Western Areas over the existing agreement." The terms of the new agreement with Jinchuan remain confidential."

Western Areas believes the short term nature of the contract places the company in an enviable position in having flexibility to negotiate future sales of nickel concentrate.

Mr Hanna added that "We are seeing independent analysis indicating the nickel concentrate market is heading into a sustained period of short supply. Western Areas' ability to be a reliable supplier of high quality nickel concentrate provides a clear strategic advantage over our peers. We consider that in the current volatile market, the decision for a short term contract will be beneficial for the Company."

The tender process attracted bids from a number of major global operating and investing companies. Western Areas is encouraged by the potential for future strategic alliances with those companies for partnering certain Western Areas' projects in Australia and offshore.

Mr Hanna said that "By negotiating a short term contract with Jinchuan, Western Areas now has time to explore partnerships which can assist with the development of some of the Company's other assets and new mine opportunities."

During FY 2010-11, Western Areas sold a total of 25,055 tonnes of nickel in concentrate into the BHP Billiton and Jinchuan offtake agreements at a cash cost of USD 2.11 per pound. This level of sales is targeted to continue for up to 10 years based on current production estimates. The Flying Fox and Spotted Quoll mines and Cosmic Boy concentrator are meeting all expectations in terms of tonnes and grade mined, concentrate specifications and metallurgical recoveries.