Alliance Resources Limited (AGS) AGS holds a 25% interest in the...

Alliance Resources Limited (AGS) AGS holds a 25% interest in the Arkaroola Project in South Australia (Heathgate Resources
75%). Over the last 12-months, the JV has defined two discrete uranium occurrences at
Arkaroola characterised by exceptional grade and significant vertical extent. The Western
Zone is the immediate focus, with mineralisation defined over significant lateral extent (1.6km x
1.2km) with grades regularly exceeding 0.5% U3O8. Western Zone is currently being scoped
as a potential open pit with steady news flow expected in H2 CY06 as results come to hand,
along with a maiden JORC resource.

Mineralisation at Eastern Zone remains high-grade however is significantly deeper (+170m)
and more suitable to extraction via in-situ leach (ISL) technology. AGS is planning
metallurgical drilling in H1 CY06 to determine both the leach characteristics of the ore and to
establish if a confined aquifer required for ISL exists. In addition to Arkaroola, the JV is drilling
the M2 project targeting iron oxide copper-gold mineralisation. Patersons note South Australia
is fertile IOCG country, hosting the expansive Olympic Dam and Prominent Hill deposits.
Paterson continues to rate AGS as one of the most attractive plays in the junior uranium sector,
boasting exceptional grade, considerable lateral extent (Patersons estimate the project could
host in excess of 25kt contained U3O8), a favourable location adjacent to the Beverley
Uranium mine and a credible JV partner in Heathgate Resources.
OVERVIEW · A 19-hole exploration program was conducted during the December Q at the Beverley 4
Mile prospect intersecting uranium mineralisation in 11 of the 19 holes. · Best results include 4.5m @ 0.562% U3O8, 6.0m @ 0.230% U3O8 and 5.0m @ 0.104%
U3O8. · A scoping study for conventional open pit mining has commenced. Figure 12: AGS Share Price Performance and Management Source: Patersons estimates, IRESS DirectorsN a m ePositionShares on Issue228.8mDaily Vol.1,043,404John DunlopChairmanMarket Cap.$76.6mDebt$0.0mIan Gandel Non-Executive Director5 2 W e e k R a n g e$0.03 - $0.36Cash$5.7mTony LethleanNon-Executive DirectorIan PamenskyCompany SecretarySubstantial ShareholdersShares (m)%Abbotsliegh Pty Ltd82.0216.7John Dunlop5.32.4RBC Global 4.32.0Top 20 Shareholders128.058.8AGS continues to be a stand-out of the junior uranium sector. The presence of Heathgate
Resources, operators of the Beverley Uranium Mine, offers AGS the potential to fast-track
production in the event a mineable resource is defined. Patersons conitnues to be impressed
by the grades at Western Zone and we look to the upcoming maiden JORC resource in H2
CY06 to determine the extent of grade continuity at Arkaroola. At the end of the Dec Q
AGS had net cash of $5.7m, an active 2006 exploration program and applications over a
further 1200km of prospective tenure.