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WAR
WARA
Western Areas Limited - Press Statement
WESTERN AREAS LIMITED
(Registration Number: 1959/003209/06)
Share code: WAR & ISIN No: ZAE000016549
ADR Ticker symbol: WARUY
CUSIP No: 957654304
("Western Areas")
PRESS STATEMENT
In our 2004 Annual Report, when addressing the mineral resources and reserves
and reporting on the advice of independent consultants SRK Consulting, it was
stated that:
"SRK Consulting has determined that additional geological modeling at South Deep
is advisable, and the mineral reserve estimate has been qualified accordingly.
SRK Consulting is of the view that additional geological modeling would improve
the understanding of Phase 1 mine mineral resource estimate, and thus reduce the
risks associated with applying this interpretation to the Phase 2 area. It would
also improve the confidence in the various mining methods selected for Phase 2
and associated production schedules."
(Phase 1 refers to the portion of mineral reserve mineable from existing
infrastructure, while Phase 2 is the mineral reserve below existing
infrastructure)
In light of the above, in July 2004 the South Deep Joint Venture partners
(Placer Dome and Western Areas) commissioned a review to oversee the estimation
of mineral resources and reserves in keeping with international best practice.
An Independent Review Panel (IRP), comprising a panel of national and
international experts in the fields of mineral resource and reserve estimation
processes was constituted to conduct the review.
A draft report by the IRP was considered at a Board meeting of the Joint Venture
partners on Friday 3rd February 2006. Although the results of the report have
not yet been signed off, the partners decided that disclosure of the major
findings was appropriate.
The provisional results of the work undertaken indicate a mineral reserve
estimate for South Deep of 29.3 million ounces, using a long-term gold price of
R87 193 per kilogram. This compares with the previously reported 55.6 million
ounces (31 December 2004), with the difference largely attributable to a
reduction in the Phase 2 mineral reserves of approximately 19 million ounces.
From a mineral resource perspective, the contained ounces reduced from 75
million ounces to 67 million ounces, with the latter being reported at a lower
cut-off grade of 4g/t (excluding the SV1 area, which forms part of the area
north of the South Shaft complex, where a cut-off grade of 6g/t was used).
The changes to the mineral reserves are not anticipated to impact on the current
25 year life of mine as it relates to the existing infrastructure. The
difference in mineral reserves occurs predominantly in Phase 2 of South Deep -
that is the future mine below existing infrastructure that would have come on
stream after the current life of mine.
The IRP report indicated that three main issues impacted the South Deep mineral
reserves:
a) A new geological model was constructed that incorporated additional drilling
data, a more detailed Upper Elsburg stratigraphy, the results of a
sedimentological analysis of the Upper Elsburg"s and the structural data
acquired from the 3-D seismic survey undertaken in 2004;
b) Regional pillars were redesigned and enlarged to reduce seismic risk, improve
pillar stability and enhance safety, resulting in reduced areal extraction of
the orebody; and
c) Optimization work resulted in long hole stoping being introduced into certain
project areas, which lowered the cut-off grade leading to increased tonnages and
lower average grades in these areas.
The seismic survey that was conducted covered the southern sector of South Deep.
The survey demonstrated that the dip of the ore body was shallower in certain
areas of the mining authorisation than was previously anticipated, particularly
in the Phase 2 area.
While this means that the mineral reserves in Phase 2 are reduced, a portion of
the ore body that was previously indicated as being below infrastructure (namely
deeper than 110 Level) is now accessible from the South Deep Twin Shaft System.
Furthermore, the ability to access a greater portion of the ore body from
existing infrastructure reduces capital requirements of the mine.
Western Areas will release a more detailed statement on its share of the mineral
resources and reserves at South Deep once sign-off from a competent person has
been received. Western Areas will provide a comprehensive explanation in its
2005 Annual Report.
For further information please contact:
Gill Marcus on gmarcus@wal.co.za
Johannesburg
6 February 2006
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 06/02/2006 03:54:04 PM Produced by the JSE SENS Department
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