DRILLING COMMENCES AT GOODYEAR NICKEL PROJECT, W.A.

Nickel producer Australian Mines Limited (ASX: AUZ) is pleased to announce that extensional diamond drilling and down hole surveys have commenced at the company’s highly prospective Goodyear Nickel Sulphide Project near Kalgoorlie WA.

Current drilling will seek to further shore up the resource and provide the basis to progress to a pre-feasibility study.

Goodyear is shaping up as Australian Mines’ next producing nickel asset, though our Marriott’s Project is not far behind.”

Drilling is scheduled to be completed in the current quarter, with assay results anticipated in the September 2008 quarter.

Goodyear is located within the company’s 100% owned East Location 45 tenement, approximately 15 kilometres from Australian Mine’s flagship asset, the Blair Nickel Mine. The tenements enclose 86 square kilometres of highly prospective and under-explored Archaean terrain, with extensive ultramafic packages and current nickel sulphide resources at Mt Martin and Goodyear.

The Goodyear nickel sulphide system is currently defined by 9 surface RC holes and 15 surface diamond holes, but large portions of the mineralised system are untested. The company believes there is potential for a significant resource upgrade at shallow depths.

Goodyear currently has an Inferred Resource of387,000 tonnes at 4.1% Ni for 16,000 contained nickel tonnes as previously reported.

The resource is located on or near the contact between the footwall basalt and the bottom of the first komatiite flow, and is currently contained within four discrete ore pods as tabled below:

Table 1: Goodyear Current Inferred Resource

1. Cut-off grade is 1% Ni

2. Specific gravity used was by regression curve derived for Blair Nickel Mine

3. Resource abuts boundary with M26/47. Figures in table relate only to resources on East Location 45.

Extensional Diamond Drilling Programme

A programme of 5 surface diamond holes has commenced testing for extensions to the existing shallow contact CO1, CO 2, and CO 3 resources, which are currently modelled as discrete ore pods within a broadly mineralised trough. The extensional drilling programme is summarised in table 2 and Figure1:

Table 2: Goodyear extensional drill programme June 2008

The company’s drilling contractor will re-enter and ream out 6 historic drill holes and leave them cased and ready for down hole electromagnetic (DHEM) and directional gyro surveys.

The directional gyro surveys when completed will provide accurate spatial positioning of the ore intercepts, which could mean that a healthy portion of the inferred resource at Goodyear may then be upgraded to the indicated category in preparation for mine planning. The re-entry programme is summarised in Table 3:

The company will complete metallurgical testwork on samples from the current drill programme. Results are anticipated for the September 2008 quarter.

The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Ernie Poole who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Poole in his capacity as Exploration Manager is a full time employee of Australian Mines Limited. Mr Poole 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.’