Sherlock Extended TenementsIn December 2006, the Company...

Sherlock Extended Tenements
In December 2006, the Company concluded agreements with Fox Resources Ltd and Metals Australia Ltd to acquire the controlling interest in exploration lease E47/1227 adjacent to the Sherlock Bay Nickel Project. The Company also applied for an additional two exploration leases in the vicinity (E47/1226 and E47/1251) previously held by Fox.
Mining Lease M47/567 and surrounding miscellaneous leases held by Australasian are shown below in relation to the three leases (E47/1226, E47/1227, and E47/1251).
Australasian Resources Limited December 2006 Quarterly Report
Page 4
The new leases cover over 470 km2 and are highly prospective for precious and base metals.
According to previous technical reports completed by other companies, exploration to date has largely consisted of geophysical surveys and preliminary drilling which has located occurrences of nickel/copper sulphide mineralisation.
The acquisition is seen by Australasian as an opportunity to add value to its current Sherlock Bay Nickel Project. Continued high demand for nickel and recent exploration success in neighbouring tenements are also positive factors that support the acquisition.
The key terms of the transaction are as follows:
�� Australasian paid $150,000 to Fox as consideration for the transactions in the Agreement.
�� Fox agrees to sell and transfer its 70% interest in exploration licence 47/1227 free of encumbrances to the Joint Venture in the proportions Australasian 70%, Metals 30%.
�� Fox assigns its option to acquire the remaining 30% interest in 47/1227 to the Joint Venture which, if exercised, will be payable in the proportions Australasian 70%, Metals 30%.
�� The Joint Venture applies for exploration licences over Fox’s surrendered area E47/1251 and E47/1226 and in the proportions Australasian 70%, Metals 30%.
�� Australasian will sole fund exploration on the Joint Venture tenements and the 30% interest of Metals will be free carried through feasibility to a decision to commence economic mining in the case of each individual tenement.
�� Australasian remains the Manager of the Joint Venture between Australasian and Metals whilst it retains majority interest and is the sole contributor to expenditure.