Western Areas NL (WSA) announced that it has reached an agreement with Jinchuan Group Limited for a contract to sell up to 25,000 tonnes of nickel in concentrate over a two-year period from the Forrestania Nickel Project.

The nickel producer said the contract commences in early 2010 and is expected to terminate in December 2011.

Managing director, Julian Hanna said the contract was consistent with the company’s plan to sell concentrate to major smelters within and outside Australia.

“We expect the agreement with China’s largest nickel company will also provide Western Areas with exposure to one of the world’s fastest growing markets,” Mr Hanna said.

As announced in March, the first 10,000 tonnes per annum of nickel in concentrate from Forrestania up to a limit of 75,000 tonnes nickel is being sold to BHP Billiton.

Western Areas expects to double production from an estimated 10,000 tpa nickel in 2009 to reach a target of 20,000 tpa nickel in 2010, and 25,000 tpa nickel from 2011.

The company said the balance of nickel not sold to BHP Billiton during 2010 and 2011 would be sold to Jinchuan.

Meanwhile, Western Areas said it is on track to reach the target 10,000 tpa of nickel in CY 2009 at an estimated average cash cost of between US$2.00 to US$2.50/lb nickel.

The company said first production from the high grade Spotted Quoll open pit mine should overlap production from the high grade Lewinsky Lode at the top of the Flying Fox T5 orebody, starting in early 2010.

At 1003 AEST, Western Areas shares were trading at $5.58.