Lounge Lizard Exploration Update Kagara is pleased to announce results of exploration drilling completed at the Lounge Lizard nickel deposit in the Forrestania region of Western Australia. The Lounge Lizard deposit lies immediately along strike of the Flying Fox nickel deposit currently being mined by Western Areas NL (WSA). Since August, a drilling program aimed at testing the potential of the disseminated nickel mineralisation intersected at Lounge Lizard by previous explorers has been in progress. The drilling has concentrated on an area extending 200 metres south of the WSA tenement boundary and has intersected substantial thicknesses of disseminated sulphides including massive sulphides on the basal ultramafic/metasediment contact over a minimum strike length of 160 metres. The thickness and continuity of the massive sulphides appears to be increasing with depth. Of the twelve holes drilled, assay results have been received from five holes with the better intersections highlighted below. Hole No Intersection LLDN001W1W1 7.11 metres at 2.20% nickel, including 3.19 metres at 3.6% nickel LLDKN001W1W1W1 38.46 metres at 0.67% nickel, including 10.66 metres at 1.15% nickel LLDKN001W3 27.64 metres at 1.30% nickel, including 3.21 metres at 5.1% nickel Hole LFPD0025W2W1W1W2 Intersected 33.70 metres of disseminated and blebby nickel sulphides together with 1.2 metres of massive sulphides on the basal contact. This hole visually appears to be the best drilled so far in the current program and assay results are expected early in the new year. The holes LLDKN001W3 and LFPD0025W2W1W1W2 are located 110 metres apart and are interpreted to represent the top to a massive nickel sulphide system open down dip and along strike to the south. Disseminated sulphides have been intersected over a minimum down dip extent of 500 metres and EM surveys have indicated that strong conductors believed to be caused by massive sulphides exist along strike of the sulphides. The long section shows the Lounge Lizard mineralisation open at depth. Drilling by WSA indicates a displacement of the mineralisation could be expected at depth. The current drill program will test this position along with shallower targets in the coming three months. The exploration program at Lounge Lizard is aimed at defining the size of the disseminated nickelsulphide system together with any massive sulphides accumulation at the basal contact. X:\Admin\Reception\ASX\ASX RELEASES 2007\ASX07 1212 Lounge Lizard Exploration Update.doc There remains a further 1.2 kilometre strike within Kagara’s tenement to be tested south of the current drilling. Access to this area is dependant on environmental clearances which are expected to be obtained within the next two months. In the interim, drilling will concentrate on further testing of the nickel sulphide mineralisation intersected at Lounge Lizard. The T1 position was tested by three holes, approximately 100 metres south of the tenement boundary. Stringer sulphides were intersected but the potential appears limited. KIM ROBINSON Executive Chairman
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