4 January 2008

ASX Announcement

EXPLORATION UPDATE

Australian Mines Limited (ASX: AUZ) is pleased to release an update on the Company’s exploration projects at Blair Mine, Golden Ridge Joint Venture (GRJV), East Location 45, Lake Yindarlgooda, Bounty and Marriott’s which are all located on highly prospective ultramafics belts in W.A.

The projects are classified as either nickel or gold in the summary below: (see attached diagram for Project Locations)

Blair Underground Exploration

(a) Progress
Drilling at around 600-700 metres per month has continued unabated testing for local extensions to known ore shoots in the upper reaches of the mine. On the L01C shoot up dip extensions to the 907 production stope have been indicated by this programme.

Development on the 01C surface at the 380 level in the Blair Deeps has intersected massive sulphide mineralisation (assays up to 11.4% Ni) located in the expected structural position of the B01C shoot. No resources currently exist for the B01C shoot in Blair Deeps and the occurrence of this mineralisation at the 380 level suggests the B01C shoot may be re-appearing in Blair Deeps.

(b) Work Planned
The N10 structure hosting Area 57 (56,000t @ 2.7% Ni) is to be tested 200 metres to the north of Area 57 where a WMC surface diamond hole GOD79 drilled in 1993, returned 0.97m @ 5.35% Ni. An in-hole intersection DHEM plate exists for the WMC hole with no follow up drilling performed to date.

Commencement of Blair Deeps resource extensional drilling probing the E03C and C01C shoots (currently producing at 4% Ni), to 170 metres depth below the current deepest working level.

Drill testing the predicted B01C shoot position at 350 level will commence in next quarter.

Blair GRJV Nickel Project (Pioneer 51%, Australian Mines 49%)

The JV is exploring 105 square kilometres of tenements surrounding the Blair Nickel Mine and has to date returned significant nickel anomalism.
(a) Progress
  • GRJV has drilled 5,000 metres of aircore in the north west area of the tenements to locate the basal contacts and to test near the base of weathering for geochemical evidence of sulphide mineralisation (assays are awaited).

(b) Work Planned

  • A Moving Loop Transient Electromagnetic Survey (MLTEM) has been planned to test the multiple contacts identified by the above-mentioned aircore drilling
  • An MLTEM survey has been planned to test the southern part of the the folded komatiite unit that hosts Anomaly 11 and Anomaly 20SW (west of Blair south)

East Location 45 Nickel Project (AUZ 100%)

This project is exploring 87 square kilometres immediately to the south of the GRJV tenements. East Location 45 has extensive untested areas of fertile ultramafic rocks as well as nickel sulphide resources at Mt Martin and the Goodyear Project.
(a) Progress
  • 3D geological modelling was completed at Goodyear Project

(b) Work Planned
  • An orientation MLTEM survey will be conducted over Goodyear
  • An MLTEM survey will be conducted over the ultramafic units to the west of Goodyear
  • A reconnaissance rotary air blast (RAB) programme will be carried out on ultramafic units in the vicinity of the Mt Martin Gold Mine, which is known to have nickel sulphide ore associated with the gold system.


Bounty Nickel Project

This project comprises 43 square kilometres of tenements on the northern end of the Forrestania Greenstone Belt which is being explored in conjunction with Azure Minerals Limited with whom AUZ have an agreement for the acquisition of the nickel rights.

(a) Progress

  • The project was evaluated by geological consultants CSA Australia Pty Ltd as consultants for AUZ.
  • 11 RC holes for a total of 1,100 metres were drilled to test co-incident nickel and copper anomalism over short strike length EM conductors. The holes were cased ready for Down Hole EM surveys (DHEM).
  • Favourable ultramafic units were drilled and assays are awaited

(b) Planned Work

  • DHEM surveys after assays are returned from the above-mentioned RC programme.
  • Further drill testing of short strike length EM targets with favourable geological settings and coincident nickel and copper anomalism.


Yindarlgooda Nickel Project

Australian Mines entered into an option agreement to purchase two exploration tenements over ultramafic units on the southern shoreline of Lake Yindarlgooda, which is located 35 kilometres east of Kalgoorlie.
(a) Progress

  • 18 RAB holes for a total of 467 metres were drilled to test the geological model and identify supergene anomalism.
  • The best intercept was 5m @0.53% nickel from 1 metre downhole.

(b) Work Planned

  • No further work is planned.
  • AUZ will not take up the option to purchase the Yindarlgooda tenements.


Marriott’s Nickel Project

The Marriott’s project is located on a granted mining lease 65 kilometres south of Leinster.
(a) Progress

  • Marriott’s was modelled to a depth of 160 metres for a total resource as follows:
Resource Category Ore (tonnes) Ore Grade (Ni%) Nickel Metal (tonnes)
Indicated 460,000 1.12 5,100
Inferred 370,000 1.15 4,300
Total 830,000 1.13 9,400

The resource was increased by approximately 25% following the latest drilling.

(b) Work Planned

  • Complete a preliminary open pit and /or underground scoping study.
  • Complete resource definition RC drilling between existing diamond drill lines and explore for down plunge potential.

Duplex Hill South Gold Project

The project is located under cover 3 kilometres west of the historic Wombola Gold Camp, in an area of strong gold in soil anomalism. Drilling to date has defined a resource at Woodline 1 as follows: -

Resource Category Ore Tonnes Ore Grade g/t Gold Ounces
Indicated 123,000 2.9 11,500
Inferred 5,000 4.6 700
Total 128,000 3.0 12,200

(a) Progress

  • RC drilling has intersected laminated quartz reef 2.5 metres thick some 20 metres to the south of Woodline 1 (assays are awaited).
  • 3D modelling has highlighted untested potential down plunge and to the north of Woodline.


(b) Work Planned

  • RC drilling along strike to north and south of the Woodline 1 Deposit.
  • RAB drilling to explore the potential of supergene anomalism at Woodline South.


Corporate:

The company is planning to spend approximately $700,000 on nickel and gold exploration in the March and June quarters.


For further information contact:
Brett Young
Chief Operating Officer
Australian Mines Limited
Tel: 08 9481 5811

For media enquiries contact:
Robert Williams
Farrington National
Tel: 02 9332 4448

The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr M Elias who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Elias is employed by CSA Australia Pty Ltd and is a Non-Executive Director of AUZ. Mr Elias has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’

Location map of AUZ Projects

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