Level 2, 2 Kings Park Road / PO BOX 1891 West Perth WA 6872

West Perth, WESTERN AUSTRALIA, 6005

Ph: (08) 9334 7777 Fax: (08) 9486 7866

Website: www.westernareas.com.au

NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES

6 April 2016

Dear Shareholder

Western Areas Limited - Share Purchase Plan Introduction

On behalf of the directors of Western Areas Limited (Western Areas), I am pleased to offer eligible shareholders (as defined in the enclosed Terms and Conditions) (Eligible Shareholders) the opportunity to participate in the Western Areas Share Purchase Plan (SPP).

Pursuant to the SPP Eligible Shareholders are invited to apply for up to A$15,000 worth of new fully paid ordinary shares in Western Areas (New Shares) (subject to discretionary scale back) without paying any brokerage or other transaction costs. The SPP proceeds will be capped at A$10 million and Western Areas reserves the right to scale back applications.

The offer under the SPP is only open to Eligible Shareholders who were registered as holders of fully paid ordinary shares in Western Areas as at 7.00 pm (Sydney time) on Wednesday, 30 March 2016 and whose registered address is in Australia or New Zealand. Participation in the SPP is optional, but the right of Eligible Shareholders to participate in the SPP is not transferable.

Purposes of the SPP and use of funds

On 31 March 2016, Western Areas announced an underwritten placement to institutional, professional and sophisticated investors to raise approximately A$60 million (Placement) and the SPP. The SPP will not be underwritten. Assuming the full amount of A$10 million is raised from the SPP, approximately A$70 million will be raised in total. The funds from the Placement and SPP will be used for the following purposes:

• To replenish working capital for the total purchase price and transaction costs for Cosmos of approximately A$26 million.

• For repayment of amounts drawn under the ANZ corporate facility of A$25 million.

• To continue to invest in project growth such as exploration at Cosmos and Western Gawler, and the advancement of study work to pre-feasibility status ("PFS") at Odysseus later in the year. Post the PFS, the initial estimate for the investment required to move to a Bankable Feasibility Study at Odysseus is approximately A$5 million.

• To provide greater financial and operational flexibility to enable the previously announced deferred discretionary capital projects (such as vertical development at Spotted Quoll and the Mill Recovery Enhancement Project) and exploration programs to be promptly and efficiently recommenced as and when justified by the nickel market environment.

• For general working capital purposes including the payment of the costs of the equity raising.

  For further details as to the proposed use of funds, refer to investor presentation released by Western Areas in connection with the Placement on 31 March 2016.

  Summary of key details

  
  

  Eligible Shareholders may subscribe for New Shares at an issue price of A$2.00 per share which is the same price at which institutional investors took up new shares under the Placement and represents a discount of approximately 7.4% to the closing price of A$2.16 per Western Areas share on 30 March 2016 (being the last trading day prior to announcement of the Placement and SPP).

  
  

  If you are an Eligible Shareholder, you may apply to purchase a parcel of New Shares in A$2,500 increments from a minimum of A$2,500 up to a maximum of A$15,000 without incurring brokerage.

  
  

  As noted above, you may only apply for a maximum amount of A$15,000 worth of New Shares. If you have two or more registered holdings, the total of all the applications must not exceed A$15,000. Western Areas reserves the right to decline applications from multiple registered holdings if the total exceeds A$15,000, including where those registered holdings are in similar but not identical names, are directly or indirectly or are held alone or with others.

  
  

  Western Areas intends to raise up to a maximum of A$10 million under the SPP. Western Areas intends to scale back applications should total demand exceed A$10 million in its absolute and sole discretion. Western Areas may take into account, among other factors, the size of an applicant's shareholding in determining the amount (if any) by which to scale back that applicant's application. Should this occur, you may be allocated New Shares to a value which is less than the parcel for which you applied and the difference will be refunded to you without interest. Full details of the SPP are set out in the enclosed Terms and Conditions and Application Form.

  
  

  The SPP opens on Wednesday, 6 April 2016. To apply for New Shares under the SPP, Eligible Shareholders may either:

  
  

  • complete and return their enclosed Application Form in accordance with the details on the form, together with a cheque, bank draft or money order drawn on an Australian bank in Australian dollars; or

    
    

  • pay directly via BPAY®1 on the internet or by telephone (for shareholders with an eligible Australian bank account only).

Application Forms must be received by Western Areas' share registry, or a BPAY payment must be received, by no later than 5.00pm (Sydney time) on Wednesday, 27 April 2016.

You should be aware that the market price of Western Areas shares on ASX may rise and fall between the date of the SPP offer and the date that the New Shares are issued under the SPP. As a result, the number of New Shares that you receive may be more or less than the number that you might calculate using the market price of Western Areas shares on the date the New Shares are issued.

The SPP does not take into account your individual investment objectives, financial situation, tax position or particular needs. You should consider seeking independent financial and taxation advice before making a decision as to whether or not to accept the offer.

I encourage you to read and consider carefully the enclosed Terms and Conditions.

If you have any questions relating to the SPP, please contact the Company Secretary on +61 8 9334 7777. For registry related questions please contact Western Areas' share registry, Computershare Investor Services Pty Limited, on 1300 727 692 or +61 3 9415 4000 (from overseas).

Yours sincerely

Ian Macliver

Non Executive Chairman

1 Registered to BPAY Pty Ltd ABN 69 079 137 518.

WESTERN AREAS LIMITED

SHARE PURCHASE PLAN TERMS AND CONDITIONS

Eligible Shareholders have the opportunity to participate in the Western Areas Share Purchase Plan offer (SPP) by subscribing for up to A$15,000 of new fully paid ordinary shares in Western Areas (New Shares) without incurring brokerage or transaction costs. The terms and conditions of this offer, including how to participate are set out below.

1. SPP KEY DATES

   
   

   EVENT DATE*
   Record Date	7.00 pm (Sydney time) on Wednesday, 30 March 2016 (Record Date)
   SPP opens	Wednesday, 6 April 2016
   SPP closes	5.00 pm (Sydney time) on Wednesday, 27 April 2016
   Issue of New Shares	Thursday, 5 May 2016 (Issue Date)
   New Shares issued under the SPP expected to commence trading	Friday, 6 May 2016
   Dispatch of holding statements	Monday, 9 May 2016

   * Western Areas reserves its right to vary the dates (even if the offer has been opened or BPAY payments or Application Forms have been received) without prior notice by making an announcement to the ASX, subject to the ASX Listing Rules and the Corporations Act 2001 (Cth) (Corporations Act), including extending the closing date or accepting late applications, either generally or in particular cases, or to withdraw the SPP without prior notice. No cooling off rights apply to applications submitted under the SPP. The commencement of quotation of the New Shares issued under the SPP is subject to confirmation from ASX.

   
   

2. ARE YOU AN ELIGIBLE SHAREHOLDER?

   
   

3. If you:

   
   

4. were registered as a holder of Western Areas ordinary shares as at the Record Date (being 7.00 pm (Sydney time) on Wednesday, 30 March 2016) and your registered address is in Australia or New Zealand; and

   
   

5. do not hold shares on behalf of persons who reside outside Australia or New Zealand, are not located in the United States and are not acting for the account or benefit of a person located in the United States,

   
   

   you will be eligible to participate in the SPP and an Eligible Shareholder.

   
   

6. The Directors who are Eligible Shareholders may participate in the SPP.

   
   

7. Western Areas has determined that it is not reasonably practical for holders of Western Areas shares with registered addresses in jurisdictions outside Australia or New Zealand to participate in the SPP having regard to the number of such holders and the costs of complying with regulatory requirements in other countries. To the extent that you hold shares on behalf of another person resident outside Australia and New Zealand, you may not distribute these Terms and Conditions to such persons and may only purchase shares on behalf of them if you have investment discretion

   
   

8. In accordance with relevant New Zealand securities law, a person who, on the Record Date was registered as a holder of shares with a New Zealand address but who, as at the time of this offer, no longer holds shares is not eligible to participate in the SPP.

   Eligible Shareholders are required to make the representations set out in Sections 18 of these Terms and Conditions.

   
   

   This is not an offer outside Australia or New Zealand

   This document may not be released or distributed in any country other than Australia and New Zealand. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in any country other than Australia and New Zealand. In particular, the shares to be issued under the SPP have not been and will not be registered under the US Securities Act of 1933, as amended (US Securities Act) or the securities laws of any state or other jurisdiction of the United States.

   Neither this document nor the application form may be distributed to persons in the United States. These materials do not constitute an offer to sell, or the solicitation of an offer to buy, securities in the United States. The shares to be offered and sold in the SPP have not been, and will not be, registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States.

   Consistent with the representations contained in these Terms and Conditions and the Application Form (the Application Form) included with these Terms and Conditions, you may not submit any completed Application Forms for any person in the United States or who is, or is acting for the account or benefit of, a person in the United States. Failure to comply with these restrictions may result in violations of applicable securities laws.

   
   

9. PARTICIPATION BY ELIGIBLE SHAREHOLDERS




Single Holders	If you are the only registered holder of a holding of Western Areas shares, but you receive more than one offer under the SPP (for example, due to multiple registered holdings), you may only apply for one maximum parcel of New Shares with an aggregate value of no more than A$15,000.
Joint Holders	If you are recorded with one or more other persons as the joint holder of a holding of Western Areas shares, that joint holding is considered to be a single registered holding for the purpose of the SPP, and the joint holders are entitled to participate in the SPP in respect of that single holding only. If the same joint holders receive more than one offer under the SPP due to multiple registered holdings, the joint holders may only apply for one maximum parcel of New Shares with an aggregate value of no more than A$15,000.
Custodians and Downstream Custodians	If you are a custodian within the definition of "custodian" in ASIC Class Order [CO 09/425] (Custodian) and hold Western Areas shares on behalf of one or more persons (each a Participating Beneficiary), or on behalf of a "downstream custodian" within the definition of ASIC Class Order [CO 09/425] who holds the beneficial interest in Western Areas shares on behalf of a Participating Beneficiary, you may apply for up to a maximum of A$15,000 worth of New Shares for each Participating Beneficiary, subject to providing a notice in writing to Western Areas certifying the matters set out in paragraph 9 of ASIC Class Order [CO 09/425] (the Custodian Certificate). If a Custodian applies for New Shares on behalf of a Participating Beneficiary, Western Areas will not issue New Shares unless the Custodian Certificate is received before the Issue Date. Custodians should request a pro forma Custodian Certificate when making an application on behalf of Participating Beneficiaries. To request a Custodian Certificate, and if you would like further information on how to apply, please contact Western Areas share registry, Computershare Investor Services Pty Limited, by emailing [email protected]