Exploration Update

Costean Seven Prospect

Assay results received from the recent first drill program at Costean Seven have confirmed the existence of mineralisation derived from diamond drilling near surface. All holes were mineralized to varying degrees with respect to copper, lead, zinc and silver. Mineralisation is zoned. Intermittent narrow intersections variably graded up to 19.5% Pb, 0.9% Cu, 7.6% Zn and 245ppm Ag. Schedule one below details the most significant drill results to date at Costean Seven.

These results demonstrate the continuation of base metals mineralisation over 3.7 kilometres.

Vanadium Mineralisation

Earlier in the year the Company undertook a detailed mapping program at the Project to provide geotechnical data and to gain a better understanding of the geology. Initial analysis using a Niton XL3T handheld XRF machine indicated the existence of significant vanadium mineralisation in association with barite. Analysis of surface samples collected has been completed which confirms the existence of vanadium mineralisation yielding grades greater than 1% V2O5 over 3.7 kilometres of strike length.

Grades greater than 1% are rarely achieved in a mining scenario. Windimurra mine produced vanadium at an average grade of 0.46% vanadium. Other Australian projects at an advanced stage include Barrambie (Reed Resources 0.8% V2O5), Balla Balla (Aurox Resources 0.65% V2O5 and 45% Fe) and Bigrlyl (Energy Metals Ltd 0.19% V2O5 and 0.17% U3O8).

Internationally, production from from the Bushveld Complex averages 1.5% V2O5 from many operations held by Xstrata and Highveld steel. This constitutes approximately 45% of world production. Mount Kachkanar, Gusevogorsk and Pervoural'sk in Russia, contain approximately 0.5% V2O5 and are operated by Nizhny Tagil Iron and Steel Works and the Chusovskoy Metallurgical Works. Largo Resources in Brazil reports production from a reserve grading 1.35% V2O5..

Vanadium enriched carbonitised volcaniclastics and a barite unit are unconformably juxtaposed with Zn/Pb/Ag mineralisation, in veins hosted by mafic intrusives and volcanics. The carbonistised volcaniclastics and barite cap, outcrop over approximately 4 kilometres. Vandium grades above detection limits (>1%), as proffered by an independent laboratory (ALS Laboratory). Absolute vanadium concentrations are not reportable due to the specialised nature of the samples and very high grade. At this stage preliminary investigations suggest the vanadium to be extractible by conventional methods. Preliminary and independent mineralogical analysis by "Roger Townend and Associates", described samples as mottramite and vanadinite (both of which are vanadium ore minerals) in spatial association with copper minerals such as chalcocite, malachite, covellite, bornite, digenite and chalcopyrite, in addition to barite (see Schedule two attached 123.45 Kb).

In view of the high grades encountered in the preliminary work described above, the Company has commissioned a mineralogical study in relation to vanadium, and is investigating metallurgical studies.

Resource Drilling

A multi-purpose drill rig has recently completed pre-collars targeting depth and strike extensions to the current 4.7 million tonne zinc resource. A total of 25 pre-collars have been now been completed to be followed by diamond tails. Initial results are expected in mid-late November.

The primary objective of the current drill program is to increase the high grade resource to underpin at least five years of high grade production. Once this initial program of drilling has been completed, the exploration focus will initially concentrate on further assessment of the various copper, vanadium, zinc and lead zones, which includes Costean Seven and Kerr's Find, and cover a strike length of some 5 kilometres.

Alec Pismiris
Company Secretary

For further information contact:
Alec Pismiris
Company Secretary
+61 08 9225 5755

SCHEDULE ONE

Costean Seven
Significant Intersections

Zinc / Lead

Copper / Silver