The deal with contractor Barminco is worth $45 million and takes in the T1 deposit, currently containing reserves of 237,000t grading 5.3% nickel. Extensions to that are believed possible following recent encouragement.

A 35m deep boxcut to access the mine decline is planned, with the decline unusual in that it will be located entirely within an 80m wide dolerite dyke adjacent to the T1, T2, T4 and T5 deposits.

Western Areas managing director Julian Hanna said it would be 15-18 months before the company would be producing nickel at an anticipated rate of 6000 tonnes per annum of nickel in concentrate.

Under an agreement reached earlier this year with LionOre Mining International, up to 100,000t of ore from Flying Fox will go to LionOre’s Emily Anne processing facility – 90km away. As part of the deal, LionOre has provided Western Areas with a $20 million funding facility, whilst the Commonwealth Bank has offered a facility of the same amount.

Meantime Western Areas believes the deeper T5 zone at Flying Fox has the potential to become a major high-grade deposit in its own right, with a potential 500,000 tonnes at 5% nickel targeted in drill programs underway. T5 is at about 1000m depth.

Shares in Western Areas climbed more than 10% yesterday and were up another 1c in midday trade today at $1.56.