Western Areas and Reed Resources have joined to explore three target areas at Mt Finnerty, 150km north-east of Forrestania in Western Australia.

Under the terms of the agreement, Western Areas can earn up to 65% interest in the nickel rights by funding two stages of exploration on the Mt Finnerty tenements which are granted and available for immediate work.

Exploration at Mt Finnerty will focus on three clearly defined nickel sulphide target areas which show anomalous geochemical signatures (up to 1% nickel and 400ppm copper) in previous, shallow RAB drilling of strongly weathered ultramafic units; 4km long soil nickel anomaly (>250ppm nickel) and a coincident 2km long copper anomaly (>170ppm copper) and basal contacts of high MgO ultramafic sequences with potential channel embayments that are effectively untested by previous drilling.

Western Areas' managing director Julian Hanna says the agreement is consistent with the company's strategy to conduct exploration for high grade nickel sulphide deposits in highly prospective, yet under-explored areas in the Forrestania region.

"We currently have substantial land holdings in the region," Julian Hanna says.

"This agreement with Reed enables us to cast an even wider net for exploration opportunities within this highly mineralized region where Western Areas has built up considerable knowledge," he says.

"Western Areas is actively exploring the region to supplement our production from the Flying Fox mine and anticipated production from a second mine at Diggers South."

Western Areas recently intersected 4% nickel in shallow drilling at its Koolyanobbing North Project (100%), located approximately 200km north of Forrestania. Diamond drilling is planned at this project as soon as a drill rig is available.

Additionally, the company is earning 60% interest in the Koolyanobbing East Joint Venture. An IP survey at the Deborah prospect, completed last month is expected to generate a number of drilling targets.