shareholder update

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19 September 2008 3,000 TPA ERMS SYNRUTILE DEMONSTRATION PLANT

AUSTPAC PRODUCES DRI USING IRON ORE FINES

SOLIDS TRANSFER FOR EARS SECTION COMMISIONED

Austpac is pleased to provide a further progress report on the commissioning of the Company’s ERMS SR (synrutile) Demonstration Plant at Newcastle, NSW. This week the following milestones have been reached:

The solids transfer and material handling systems of the EARS acid regeneration section of the Demonstration Plant have been successfully commissioned, as have the fluid bed roasters for iron chloride pelletising, pyrohydrolysis, coal gasification and metallisation.

Austpac’s Direct Reduced Iron (DRI) process is now operational. The purpose of the fluid bed metalliser is to reduce iron oxide to iron metal using the Company’s proprietary DRI process. Iron ore fines from Pilbara region of WA were used in the metalliser to successfully produce a DRI product. It is highly significant that Austpac’s DRI process has now been demonstrated as applicable for value-adding to iron ore. Austpac has acquired a 50 tonne bulk sample of this material, which is held ready for further processing as appropriate. The DRI process is protected by a patent application.

The EARS section of the Plant, which has a 40 tonnes per day capacity, will now begin to process 100 tonnes of spent pickle liquor acquired from a major steel pickling plant. 40 tonnes of regenerated hydrochloric acid will be stored for leaching and the remainder will be used by the galvanising industry. Once this operation is completed, ilmenite leaching will start, together with the production of ultra high grade synrutile and DRI pellets for market trials. With DRI being produced at the Demonstration Plant, and with pickle liquor regeneration and synrutile and iron pellet production about to commence, Austpac looks forward to the commercialisation of the Company’s innovative technologies. For further information please contact:

Mike Turbott

Managing Director – Tel (+61 2) 9252-2599