offshore iron ore....

DE GREY LOOKS OFFSHORE FOR PILBARA IRON PROSPECTS

De Grey Mining Limited (ASX: DEG) is pleased to advise that it is seeking to secure
title over 1,292 square kilometres of tenements with geology prospective for iron
mineralisation in shallow waters west of Cape Preston in the Pilbara region of
Western Australia.

De Grey has entered into an option-to-purchase Heads of Agreement with Geotech
International Pty Ltd over the 640 square kilometre Fortescue Island Exploration
License Application (ELA) and has pegged an additional 652 square kilometres
immediately adjacent to Geotech’s ELA (Figure 1).

The target mineralisation in the application areas is accumulations of unconsolidated
iron oxide minerals in the seabed sediments formed by erosion from the Brockman
Iron Formation.

Geotech’s Fortescue Island ELA and De Grey’s surrounding applications cover
shallow waters (generally less than 20 metres deep) approximately 70 kilometres
WSW of the iron ore port of Dampier.

The south eastern boundaries of the applications are located less than 15 kilometres
from Citic Pacific’s Sino Iron Magnetite Project and Australasian Resources
Balmoral South Magnetite Project. These projects are located in an iron province
with potential for 60 to 100 billion tonnes of mineralisation with a grade of 30-31%
Fe1.

Pre-competitive aeromagnetic data clearly show the seaward extension of the
bedrock Brockman Iron Formation BIF units (Figure 2) but also show more subdued
magnetic features that may correspond to detrital deposits of iron oxide minerals.
In 1970, VAM Limited2, exploring for heavy minerals at shallow depths in sediments
onshore and offshore of the mainland coast south of Fortescue Island reported
shallow deposits containing up to 15% total heavy minerals, of which up to 75% was
iron oxides, as goethite and martite (a type of hematite).

The area investigated by VAM features subtle, positive magnetic response features
similar to those covered by the Geotech and De Grey ELAs.

1 According to section 18 of the JORC Code – reported by Hellman & Schofield Pty Ltd Oct 2005
2 VAM Limited Report: Heavy Mineral Sand Examination. Ashburton Goldfields WA. WAMEX
Database Report A1725.

The concept for potential extraction would involve dredging of material containing
iron to a barge-mounted gravity concentration plant and would represent a potential
new source of export iron ore requiring very modest infrastructure compared to
conventional Pilbara iron ore developments.

Terms of De Grey’s deal with Geotech include:

1. DEG to pay Geotech on signing of Heads of Agreement $10,000 cash and
issue 2.5M DEG options exercisable at 7.5c prior to 30 June 2011.

2. Upon grant of the tenement, DEG to pay $50,000 cash and 2.5M DEG shares
for a 2 year option to purchase.

3. DEG may exercise the option for $250,000 cash and 5M DEG shares within
the 2 year option period or extend the option period for a further 2 years for
$100,000 cash and 2.5M DEG shares. The exercise price will be $500,000
cash and 2.5M DEG shares if the option period is extended.

4. Upon purchase of the EL, Geotech retain a 1% royalty on the gross value of
minerals produced.

De Grey Managing Director Gary Brabham said “This is a great conceptual target
with huge tonnage potential which is especially attractive given today’s strong
demand and high prices for iron ore. It’s unconventional but certainly requires no
great advances in technology to explore and potentially exploit.”