koolan island iron ore

Latest Announcement from ASX:

AZTEC RESOURCES LIMITED 2002-12-27 ASX-SIGNAL-G

HOMEX - Perth

+++++++++++++++++++++++++
PLACEMENT TO SG AUSTRALIA

The Company hereby announces that it has made a placement of shares and options to SG Australia Ltd (SG). SG is the investment banking arm of the major European bank, Societe Generale. The placement
reflects confidence in the Koolan Island Project by SG and an intention by SG to work with the company to assist the development of the project.

The placement will consist of the issue of 9,375,000 ordinary fully paid shares and (subject to shareholder approval) 4,687,500 free options (exercisable at 20 cents expiring on 31 January 2005), at an issue price of 3.2 cents per share, thereby raising $300,000 for the
Company.

PLACEMENT TO PROFESSIONAL INVESTORS

The Company also announces that it has made a placement to professional investors of 15,490,450 ordinary fully paid shares and (subject to shareholder approval) 7,745,225 free options (exercisable at 20 cents expiring on 31 January 2005), at an issue price of 3.2 cents per share, thereby raising a further $540,760 for the Company.

The funds raised by the placements will be used by the Company to progress the Koolan Island Iron Ore project towards a bankable feasibility following the successful completion of the study by Hatch Associates in November 2002. That study showed that based on a number of assumptions, the project has the potential to generate strong positive cash flow based on mining 36,000,000 tonnes of ore over 19 years.

KOOLAN ISLAND BACKGROUND

Aztec is the 70% owner (with an option over the remainder interest) of the Koolan island Iron Ore Project. Koolan Island hosts one of Australias premium grade iron ore deposits located 130 km north of Derby, Western Australia.

BHP started mining iron ore in the region in 1951 on nearby Cockatoo Island and operated the mine until 1984. Cockatoo Island was reopened by Portman Mining in 2000 to mine remnant ore and currently produces
premium high grade fines.

BHP opened the Koolan Island Mine in 1965 and operated it until 1993.
During this time approximately 67 million tonnes of high grade hematite ore was extracted from the island.

The recently completed Hatch study focused on the construction of a geological model based on data obtained from BHP of the unmined lateral and depth extensions of the main ore body and the development
of an optimal pit design. The study confirmed that there are significant potential resources to support an operating mine at Koolan Island.

BANKABLE FEASIBILITY STUDY & FUTURE RESOURCE DRILLING PROGRAMME

Aztec intends to proceed towards a bankable feasibility study on the project. The next stage of the process is to prepare and conduct a drilling programme in early 2003 of the satellite and main ore bodies to confirm the resources available on the island. Drill hole location
data and orebody sections have been sourced from the previous drilling conducted by BHP on the satellite orebodies. This information will be used in planning the proposed drilling programme.

B R Matich
MANAGING DIRECTOR