looking strong on opening, page-9

Australasian Resources Ltd (formerly Sherlock Bay Nickel Corporation Ltd) is a minerals exploration company with projects covering iron ore, gold and nickel located in the Pilbara and regions near Kalgoorlie and Norseman in WA.

ARH's main focus is the Balmoral South iron ore project.

Another key project is the Sherlock Bay nickel/copper project.

In addition, the company at the end of 2005, made an agreement with Mineralogy Pty Ltd for the exclusive right to purchase the Cane River project.

Mineralogy is the owner of the Balmoral iron ore deposit, reputed to be the largest undeveloped magnetite project in the world.

Mineralogy's project has the benefit of having environmental approval and a Western Australian Act of Parliament which was passed by the Western Australian Parliament in 2002.

Sherlock's acquisition of the Cane River project was consistent with the Board policy announced earlier this week whereby Sherlock would concentrate on energy and iron ore projects which will benefit from the continuing and future growth in China.

Cane River holds the right to mine 400Mt of magnetite ore from granted mining leases on the Balmoral Southern Block magnetite deposit, which is situated 40km from Mineralogy's proposed port at Cape Preston, 80km west of Karratha.

Furthermore it holds the rights to 100 per cent of the iron ore on the Cane River tenement, which is located approximately 150km south of the Balmoral Southern Block.

The Cane River project plans to produce a direct shipping iron ore sinter feed product of plus 60pc Fe consisting of a blend of two parts of Cane River pisolite and one part high-grade magnetite concentrate (71pc Fe) from the Balmoral Southern Block, for a total production rate of 15.5Mtpa.

Mineralogy has previously blended Balmoral Central Block ore concentrate and iron ore from a deposit owned by Fortescue Metals Group.

Testing of the blended product was completed by the internationally recognised testing facility of SGA in Germany and produced excellent results.

Details of the Cane River project include:

* Production rate of 15.5 million tonnes of sinter feed per year;

* Located 40km from the coast and 80km south of Karratha;

* Adjacent to the Karratha-Bunbury gas pipeline enabling low energy costs;

* Construction of a short light-gauge 150km rail line from the Cane River deposit to the coast, keeping capital costs low;

* The early capital and operating cost studies suggest a project with a capital cost of under $US1 billion and after-tax profit in excess of $200 million per annum;

* Access to the proposed environmentally approved deep water port at Cape Preston;

* Guaranteed magnetite resources with the potential for significant expansion at Cane River;

* Leverage from Mineralogy's advanced feasibility work, which

supports rapid development of the Cane River project with construction

targeted for late 2007; and

* Benefiting from Mineralogy's excellent reputation and established network of contacts in the China market which has been developed over a period of 20 years.