Scoping Study Commenced

Prairie Downs Zinc Project

Prairie Downs Metals Ltd has engaged internationally experienced engineering firm, Lycopodium Engineering Limited, to commence feasibility studies on the Prairie Downs Zinc Project. The objective is to assist decision making regarding initiation of project development. The first stage will comprise a scoping study to determine the economics of an initial smaller scale operation based upon the current resource of one million tonnes at a grade of 8.3% zinc, 1.7% lead and 22g/t silver, augmented by the recently discovered Zed Lode mineralisation.

The biggest issue facing the development of resource projects today is the shortage of personnel and equipment. In this regard, there are two distinct advantages to a smaller scale operation at Prairie Downs: suitability for modular construction; and the availability of small scale equipment.

A modular plant can be built outside of Australia to take advantage of lower construction and labour costs. A modular plant also requires far less site preparation and a much smaller workforce to install. Small scale equipment is readily available "off the shelf" whereas larger scale equipment, such as ball mills, can have lead times of two years or more. The disadvantages to a smaller scale operation are a high ratio of fixed to variable costs and higher capital costs per tonne of throughput.

At this time an operation of the order of 250,000tpa is envisaged, producing around 20,000 tonnes per annum of zinc in concentrate. A modular plant could be constructed, transported, installed and commissioned at Prairie Downs within a two year time frame. This period would also allow sufficient time for completion of feasibility work and regulatory requirements.

The scoping study results are expected to be available by the beginning of March. The results will assist in determining whether the company focuses on step out drilling to substantially expand the current resource; or on infill, metallurgical and geotechnical drilling required for development.

Information in this report that relates to Exploration Results or Mineral Resources is based on information compiled by Mr Mark Hansen, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Hansen has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Hansen consents to the inclusion in this report of the statements based on his information in the form and context in which it appears.