why no trade?, page-6

for you stinking jockstrap


ASX RELEASE
22 November 2005
RESOURCES MAJOR JOINS CAZALY AND ECHELON AT
SHOVELANNA
Cazaly Resources Limited and Echelon Resources Limited are pleased to advise that
they intend to enter into an exclusive Memorandum of Understanding (MOU) with BHP
Billiton Iron Ore Pty Ltd (BHP Billiton) in relation to the purchase by BHP Billiton of ore
produced from Cazaly’s proposed Shovelanna Iron Ore Project situated upon the ground
the subject of application E46/678.
Any MOU will be conditional upon a number of matters including the grant of E46/678,
technical and legal due diligence, Ministerial Consents required under the Mining Act
1978 (WA), any other regulatory approvals and execution of definitive documentation.
Commenting on the intended transaction, Cazaly’s Joint Managing Director Nathan
McMahon said, “We are absolutely delighted to be negotiating with BHP Billiton. We
have been approached by a number of parties over the past month but it is our view that
the proposed ore purchase will facilitate the rapid commercialisation of the Shovelanna
Iron Ore Project.”
“Cazaly is also pleased with the proposed economic sharing of the product from
E46/678. Based on the current Benchmark Price for Newman Lumps and Fines (FOB)
and assuming production of 5 million tonnes per annum, BHP Billiton, Cazaly and
Echelon would be sharing annual revenues of some $300 million.”
Matthew Rimes, Managing Director of Echelon, commented “that the option of selling
ore at the mine gate was investigated during the Scoping Study on the Shovelanna Iron
Ore Project as a way of enhancing project value. This concept allows for the rapid
commercialisation of the orebody and represents a good working model for utilising
existing infrastructure.”
A map is attached outlining the location of E46/678 in relation to BHP Billiton’s Newman
Operations.
THREAT OF LEGAL ACTION
Cazaly advises that Fortescue Metals Group Limited (FMG) has threatened Cazaly with
legal action. FMG has alleged that Cazaly Iron Ore Pty Ltd holds E46/678 on
constructive trust for FMG. The basis of this claim is not apparent.
Cazaly has considered its legal position and is confident that the FMG threats are
without substance.
Cazaly will take all necessary steps to defend any proceedings that are instituted by
FMG.
Cazaly’s securities shall remain in a trading halt until the proposed MOU has been
finalised.
For more information contact:
Nathan McMahon
Joint Managing Director
Cazaly Resources Limited
Tel: 08 9380 4600
Matthew Rimes
Managing Director
Echelon Resources Limited
Tel: 08 9322 6322
David Tasker
Account Manager
Professional Public Relations
Tel: 08 9388 0944
Mob: 0433 112 936
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E46/678
(after BHP Billiton Iron Ore, “The Blue Book”)