27 March 2008 The Manager Company Announcements Office Australian Stock Exchange Limited 4th Floor, 20 Bridge Street SYDNEY NSW 2000 Australasian Resources entering crucial phase in development of the Balmoral South Iron Ore Project in WA • Negotiations in final stages with Mineralogy in relation to additional iron ore tonnage • Feasibility Study near completion • Public Environmental Review (PER) document will be submitted to the EPA in April 2008 - seeks approval for a 24 Mtpa operation to reflect the possibility of the Company acquiring additional tonnage • Shougang still committed to the Balmoral South Project • Port development continuing It has been a very active period for Australasian Resources Ltd and the Company provides the following update of its recent activities. BALMORAL SOUTH IRON ORE PROJECT INCREASE IN TONNES Further to the Company’s announcement on 7 November 2007, Australasian is seeking to finalise its negotiations with Mineralogy Pty Ltd to acquire additional tonnes of iron ore at the Balmoral South Project. The Company is expecting the transaction to be finalised in the near future. FEASIBILITY STUDY As a result of the continuing progression of negotiations with Mineralogy Pty Ltd, the decision was made to review the Feasibility Study scope and consider the impact of the potential acquisition of additional tonnage on the current project design and approvals. Additional work is currently being finalised with respect to this. In addition, final submissions currently outstanding from vendors will be received in April 2008 and the feasibility study report is due to be completed in the same month for internal review. The Company is well advanced with its port development planning for the Feasibility Study in conjunction with CP Mining Management Pty Ltd and the potential vendor and port operator, Altus of Singapore, in relation to a trans-shipping port facility. The additional time to complete the Feasibility Study does not impact on the current dates for Shougang to agree to continue with development of the Balmoral South Project. The Project Agreement with Shougang refers to a Feasibility Notice being served on Shougang by the Company by June 2008, in line with the original timetable for project development. Shougang Australasian Resources Ltd Page 2 may then elect to proceed by issuing a Finance Offer to the Company on or before September 2008. ENVIRONMENTAL APPROVAL The Public Environmental Review (PER) document will be submitted to the Environmental Protection Authority (EPA) in April 2008 as a part of the project approvals process. This document seeks approval for a 24 Mtpa operation to reflect the possibility of the Company acquiring additional tonnage which is currently in the final stages of negotiation with Mineralogy. The Company is aiming to have environmental approval by October 2008 in advance of the proposed commencement of the project in late 2008/early 2009 on the basis finance is in place. SHOUGANG DEVELOPMENTS Recent discussions with Shougang representatives have confirmed their commitment to the Project and Mr Michael Chen, Deputy Managing Director of Shougang Holding (Hong Kong) Limited is due to visit Perth during April 2008 to further advance the Project. Shougang is expected to present a proposal to the Company in the near future to situate the proposed pellet plant facility at an agreed location near the city of Ri Zhao in Shandong Province. The location is immediately adjacent to an active port and gas supply. The proposed facility would be approximately 400km from Shougang’s new 10 Mtpa steel making facility at Caofeidian, which is due to be fully commissioned by 2010. A letter of support from Shougang has been provided to potential gas suppliers to the project and supports the Company’s endeavors to negotiate the terms of any gas supply agreement. Shougang is also currently providing further expertise in the development of a potentially larger port facility. With assistance from Shougang, the Company is currently in discussions with CCCC First Harbor, the largest port construction and design company in China. The purpose of the discussions is to look at the option of a deep water port to service potentially larger tonnages from the proposed Cape Preston port facility. No formal arrangement has been entered into at this point in time. Company representatives will be in Beijing in early April to finalise discussions with key Shougang groups involved in the project. IRON ORE PRICES Australasian Resources is watching the current iron ore price negotiations with interest. The recent price rises of between 65% and 71% negotiated by Brazilian company Vale, the world’s largest iron ore producer, with Japanese, Korean and European entities provide a solid endorsement for the entry of new supply sources. In particular, Vale’s recent announcement that it had secured an 86.67% increase in pellet prices from Italian steelmaker Ilva is a highly significant outcome for the Company (given the Company’s plans to produce iron ore pellets as a part of its product mix from Balmoral South). When reflected in the project financial model, such increases provide a significant boost to the economics of the Balmoral South Iron Ore Project. Yours sincerely Andrew Caruso Managing Director Level 4, 5 Mill St Perth WA 6000 PO Box 7752 Cloisters Square WA 6850 ABN 46 008 942 809 Phone: (+61 8) 9322 2288 Fax: (+61 8) 9324 2164 Email: [email protected] www.austresources.com.au 27 March 2008 Media Release Australasian Resources entering crucial phase in development of the Balmoral South Iron Ore Project in WA • Feasibility Study on the Balmoral South Project in WA nearing completion, with environmental documentation to be submitted to the EPA in April 2008; • Company looking to commence a 12Mtpa operation in 2010/11, with strong likelihood of company acquiring additional tonnage from Mineralogy Pty Ltd and potentially increasing production to 24Mtpa; • Discussions regarding port development and construction advancing positively; and • Major Chinese partner continues to reinforce commitment to development of project. Australian iron ore company Australasian Resources Limited is entering a crucial phase in the development of its Balmoral Iron Ore Project in the Pilbara region of Western Australia, with key studies nearing completion and important approvals documentation to be submitted in coming weeks – with Chinese partner Shougang Corporation continuing to offer significant support. Australasian is planning to lodge environmental documentation seeking approval for a 24 Mtpa operation, to reflect the possibility of the Company acquiring additional tonnage, in the near future and expects to have this approval by October 2008. The company is in the final stages of negotiation with Mineralogy Pty Ltd regarding the acquisition of additional iron ore tonnage. Under the terms of an existing agreement with Mineralogy Pty Ltd, the company has the right to mine one billion tonnes of iron ore from the Balmoral South Iron Ore Project. The negotiations currently nearing completion are expected to see the company increase this tonnage significantly. Australasian is planning, subject to the successful completion of the feasibility study, to commence production from the project in 2010/11, with production initially expected to be 12 Mtpa. However, current negotiations with Mineralogy could see this production increase to as much as 24Mtpa. As a result of the continuing progression of negotiations with Mineralogy Pty Ltd, the company has chosen to review the feasibility study scope and consider the impact of the potential acquisition of additional tonnage on the current project design and approvals. Additional work is currently being finalised with respect to this and is not expected to affect the current development timeline for the project. Australasian Resources Ltd Page 2 The feasibility study report will be completed by April 2008 for internal review, once final submissions currently outstanding from vendors have been received. The additional time to complete the Feasibility Study does not impact on the current dates for Shougang to agree to continue with development of the Balmoral South Project. The current Project Agreement refers to a Feasibility Notice being served on Shougang by the Company by June 2008, in line with the original timetable for project development. Shougang may then elect to proceed by issuing a Finance Offer to the Company on or before September 2008. In addition to the completion of the feasibility study, Australasian Resources is also in discussions with CP Mining Management Pty Ltd and the potential vendor and port operator Altus of Singapore, in relation to a trans-shipping port facility at Cape Preston. Australasian also continues to receive the strong support of its Chinese partner Shougang Corporation, with Mr Michael Chen, Deputy Managing Director of Shougang Holding (Hong Kong) Limited due to visit Perth during April 2008 so as to further advance the development of the Project. Shougang recently advised the company that “they look forward to progressing this multi-billion dollar development, upon receipt of results from the bankable feasibility study.” Shougang is due to present a proposal to the Company in the near future to potentially situate the proposed pellet plant at an agreed location near the city of Ri Zhao in Shandong province in China. The location is immediately adjacent to an active port and gas supply facility. The proposed pellet plant would be approximately 400km from Shougang’s new 10 Mtpa steel making facility at Caofeidian, which is due to be fully commissioned by 2010. A letter of support from Shougang has recently been provided to potential gas suppliers to the project and supports the Company’s endeavors to negotiate the terms of any gas supply agreement(s). Shougang is also currently providing further expertise in the development of a potentially larger port facility. With assistance from Shougang, the Company is currently in discussions with CCCC First Harbor, the largest port construction and design company in China. The purpose of the discussions is to look at the option of a deep-water port to service potentially larger tonnages from the proposed Cape Preston port facility. No formal arrangement has been entered into at this point in time. Company representatives will be in Beijing in early April to finalise discussions with key Shougang groups involved in the project. - ENDS - For further information please contact: Andrew Caruso Managing Director Australasian Resources Limited Tel: +61 8 9322 2288 David Tasker Professional Public Relations Tel: +61 89388 0944/ +433 112 936 Website: www.austresources.com.au
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