allegiance media release just in

MEDIA RELEASE - 25 September 2006

NEW NICKEL DISCOVERY
DISCOVERY OF SAXON NICKEL DEPOSIT &
HIGH GRADE ZONES AT EAST AVEBURY & SOUTH VIKING

Emerging Australian nickel producer, Allegiance Mining NL ( ASX Code AGM ) is pleased to announce the discovery of a new nickel sulphide deposit called Saxon in drillhole A161 at a location some 800 metres east of the Avebury Nickel Mine and 150 metres south of the East Avebury prospect.

SAXON DEPOSIT – NEW DISCOVERY
Diamond core drillhole A161 was targeted to initially test the East Avebury prospect and was extended further to the south where it intersected the Saxon mineralised zone at 460 metres depth down-hole, which is approximately 290 metres vertical depth. The Saxon intercept included 8 metres averaging 1.2% Ni and 4 metres averaging 1.2% Ni. These two ore grade zones occur within a broader zone comprising 19 metres averaging 0.8% Ni. David Deitz, Director said” this new discovery could allow us to have two mines in operation over the next few years”.

The host rocks, structural setting and mineralisation styles are closely analogous with the Avebury deposit. Saxon is not an extension of Viking, but the similarities appear strong.

The Saxon ore system is located 150 metres south of East Avebury and may trend parallel to the Viking-East Avebury ore system. The volume of prospective serpentinite host rock requiring exploration has possibly been doubled by this discovery. The Saxon discovery has the potential to be the second mine within the Avebury Arc nickel province. Saxon may be a new ore system.

The exploration methods used to target the discovery hole A161 have been validated by this success which augers well for an increased discovery rate as Allegiance’s exploration focus shifts away from pre-production drilling at the Avebury Mine to more aggressive exploration of the Avebury Arc nickel province located 8 kilometres west of Zeehan, west coast Tasmania.

Chairman, Tony Howland-Rose commented that “Allegiance is excited by these new intersections which highlight the very substantial opportunity for further discoveries in the 800m gap between the current Avebury Mine Resource and the East Avebury area which contains 3 major targets, namely extensions of both the North Avebury and Viking Resources and extensions of the southern zone (Saxon) discovered in hole A161.”

CEO, Ian Levy said; “Our exploration team are clearly onto something significant here – looks like an exciting summer exploration season ahead.”

ENDS