In the announcement entitled Rincon Salar Project Update on the...

In the announcement entitled Rincon Salar Project Update on the 21 August 08.

Under the heading " Share Price Weakness"
Phil Stated in the last paragraph: Quote - "The main observation is that it is "UNLIKELY" that the only converting note holder to convert of the next month will do so when the share price is substantially below the conversion price of 17.5c".

Any thoughts on that one?

In the Aug 08 announcement entitled Additional $5M draw under convertible notes it states that they can be converted with cash up until the end of October, otherwise they will be converted at 17.5c at that point.

What do you make of that?

The announcement that was made on the 14th of August 08 entitled "Admiralty Update" has some very interesting reading.

It will be a very interesting ride, if you are on board over the next month or so. I wonder if the past couple of days activities are a sign of the times??

I would like to hear your positive & negative thoughts on these announcements.



NEWS RELEASE - Date 14 August 2008 / ADMIRALTY UPDATE

1.Phillip Thomas reported to the Board today that the trip to China to visit Shougang, WISCO, Shandong and other steel mills and our major equipment supplier for plant expansion was a major success.

2. Two additional financing facilities were discussed and the framework established around future joint ventures, post Admiralty moving to 100% ownership of CMSB its Chilean iron ore Joint Venture, and a closer relationship with Santander Bank, WISCO and Shougang

The details are as follows:

Shipping
1.The MV Cape Nelson loaded 27,640 tonnes to WISCO under the 06
Sales Agreement and MV Abkhazia loaded 31,756 to Shougang under
the spot sales agreement. The Shougang shipment quality exceeded the
contract Fe by 0.77% and a $120,000 bonus was realized.

2.The provision for loss was reduced by $520,000 as WISCO were able to accept a smaller ship than budgeted. The Cape Nelson was the ninth of 10 handymax shipments under this contract. There are 4 panamax shipments for 2009, although this is subject to negotiation (see below).This 06 Sales agreement was renegotiated down to 14 from 17 shipments last year, and the price then increased by 9.5%.

3.There will be approximately 42,000 tonnes available for a FOB 20-30
August laycan spot shipment or 50,000 tonnes for a 11-30 September
laycan. Revenue for August to date is US$7,140,000. This does not include the US$6.5m recently raised for working capital. Admiralty has an unrealized profit on this currency as it is held in $US, from the rapid depreciation of the Australian dollar, although most of its liabilities are in US$.

4.While the iron ore spot market is soft at the moment, due primarily to the iron and steel factories around Beijing being closed for the Olympics and some 50 million tonnes of iron ore at the Chinese Ports, Cia Minera Santa Barbara iron ore still commands a premium due to extremely low sulphur (0.01%), low aluminium and high FeO (iron oxide). The Chinese government are very concerned about sulphur pollution, and low sulphur ores are preferred.

WISCO
1. Detailed negotiations were held last Thursday and Friday with senior executives of WISCO and ITOCHU Corporation regarding a possible investment joint venture where WISCO would fund the development of a
tenement. CMSB has at least eight existing mines currently not
operating that would be suitable for such a co-development, allowing us to increase production via equity, and providing shareholders with
additional profits, apart from our own expansion.

2.Given Admiralty Resources is at an advanced stage of negotiations with Wyndham Explorations to acquire their remaining 40% of the Cia Minera Santa Barbara joint venture, WISCO will further negotiations after this has been achieved.

3. The lack of profitability of the 06 sales agreement due to lack of supply of iron ore by Santa Fe, and shipping costs rising rapidly since September 2007 was discussed and a solution was put forward to terminate this contract immediately and replace it with a new five year contract which is profitable for CMSB.

4. WISCO have indicated they will provide support to Admiralty in their efforts to enforce this Santa Fe contract where approximately 410,000 tonnes are still to be delivered at $28 per tonne ex mine. This has a FOB value to Admiralty at 63.5% Fe of US$30m. Arbitration and legal action is pending. Sales Contracts and Funding

5. Shougang - A very productive meeting was held last Monday and
Tuesday with the Executive Director and corporate banking staff of
Santander Bank, China and key executives of Shougang where the
framework and documentation was discussed for the US$40m standby
letter of Credit. The issues holding up the facility were discussed and various plans have been initiated to bring the transaction to conclusion. Due to the duration of the SBLC, a five year take off contract was negotiated, with some final detail yet to be provided by Santander and Shougang before it is executed. The agreement will then be ratified by the board of Shougang.

6. Further communication has been received this week from Santander,
who are also banker to CMSB in Santiago, Chile in regards to the
Shougang US$40m security facility.

7. Detailed negotiations were held with the Shougang Logistics group and iron ore purchasing group regarding the spot and five year supply
contracts. Most issues were resolved and agreed upon with one key
issue to be resolved when the Banking offer/drawdown/repayment
schedule is finalized. The contract is a combination of CFR and FOB to suit CMSB's 2009 and onward production schedules.

8. Shipping prices have dramatically fallen over the past few weeks and this is good news for both clients and CMSB. The cost of a cape size vessel during the week was quoted as $36 per tonne ex Chile to China for a five year contract which is competitive with Australian iron ore, given the premium Brazilian/Latin American iron ore commands on a CFR basis over Australian iron ore. The trip to China from Chile is three days shorter than that from Brazil.

9. WISCO - Discussions were held regarding a longer term supply contract over a five or ten year period. A binding MOU is in place for the supply of one million tonnes per annum over a three year period which is subject to our increase in production. We are waiting on comments from WISCO regarding this five year sales contract, that was provided to them last week, before finalization and execution.

10. WISCO indicated they wanted to support our financing arrangements as per the MOU signed in October last year. To this end, a Memorandum of Understanding document was signed by the President of WISCO and Phillip Thomas indicating that they would like to invest in a project jointly with Admiralty via Cia Minera Santa Barbara now that it has access (subject to final agreements with CMP) to a Cape Size port in 2009. This project will be scheduled for 2009 when Admiralty has 100% ownership of CMSB.

11. Shandong Iron and Steel - Phillip Thomas met with their Deputy
Director and Director of Purchasing to discuss joint participation
opportunities in Chile regarding supply of iron ore, financing and
investment opportunities. Shandong are the now the second largest iron and steel producer in China behind Baosteel.
The State-owned Shandong Iron and Steel Group Co Ltd was created
out of the restructuring of Jinan Iron and Steel Group and Laiwu Steel Group -- the sixth- and seventh-largest steel makers in China -- and Shandong Metallurgical Industry Corp. The three belong to the Shandong provincial state assets management commission.
Shandong Iron and Steel Co has a registered capital of 10 billion yuan ($1.4 billion) and is fully government-owned. Under the provincial steel industry plan, the new group is to have an annual output of 31.6 million tonnes, second to Shanghai-based Baosteel, the country's largest steel maker. Last year, Jinan produced 12.12 million tons of crude steel and Laiwu turned out 11.7 million tons.
Price hikes aside, demand for iron ore by steel-makers is set to grow by 26 percent a year until 2010, Wang Jionghui, an official with China Minmetals Corp, the largest Chinese metals and minerals producer, said.

Capital

1. Work on our US$200m note issue is proceeding well. Yesterday, we had a third due diligence meeting with senior executives from Merrill Lynch who had come from Sydney, Singapore and Hong Kong. They reported bullish conditions for the placement of "hot" iron ore company paper in an otherwise difficult prime market. The business plan is currently being updated for possible joint ventures described above. A key deliverable is the resources summary from the Chillan Veijo deposit where SRK will be asked to provide this estimate. This is required to demonstrate to investors CMSB has sufficient indicated and proven reserves to deliver both its five year sales contracts. Some additional drilling maybe required. To-date we have drilled seven holes to a depth of 220 metres.

2. We put in place a converting note with YA Global Investors that has a non-dilutive period to 31 October where we intend to repay both the Hawkswood loan on 30 September and the YA Global facility. This will be replaced by the Shougang/Santander or other facilities we are
working on. Our preference is not to do any more placements, if possible as we have at least US$240m of debt facilities close to settlement, and the possibility of up to three joint venture arrangements in 2009. Under the Admiralty/CMSB joint venture agreement CMSB is required to repay to Admiralty the 4 year cumulative debt, currently US$38.99m outstanding in February 2009, otherwise all the assets go to Admiralty under a security charge arrangement. Production - Action Against Besalco Maquinarias

3. In early 2007, CMSB signed a production agreement with Besalco
Maquinarias. They gave us repeated undertakings during 2007 that they could increase production to 90,000 tonnes per month which is the amount of iron ore required for two average size handymax ships. As a important and critical backup strategy, Admiralty reached an agreement with Santa Fe to provide 500,000 tonnes of the one million tonne order Admiralty placed with its then (minority held) joint venture CMSB. Santa Fe delivered 90,000 tonnes of this contract during 2007.

4. The plant had been constructed for more than 100,00 tonnes production but due to Besalco's design and equipment specification it fell short of this amount.

5.CMSB has taken this breach of specific performance and contract to an arbitrator for adjudication and claimed that it is owed 600,000 tonnes of iron ore and is owed US$83million. The Chilean arbitrator has to-date been in support of CMSB claims but it is still being arbitrated. CMSB has until Monday, August 17th to provide the Judge Arbitrator with a written response to the Besalco document lodged last week contesting our claims and evidence.

6.In the event CMSB is successful with the claim it will be ratified by a higher court and then CMSB will be able to apply for charges or a lien to be placed on assets of the subsidiary and parent public company until payment is received.

7. Last Wednesday, we spent the day examining the plant design, layout throughput mass balance and upgrade of the Japonesa-Japonesita plant and our planned 3 million tonne plant at Chillan Veijo. When both Caleta and Totoralillo ports are operational, shipping capacity will be approximately 3.4m tonnes per annum. At 2,500 tonnes per hour crushing capacity per plant we will achieve production of 2.0-2.2m tonnes per annum. With two plants we will reach our current environmental permit and 2009 shipping capacity.