ADMIRALTY RESOURCES NL. — Capital/Financing Update 2007

Oct 1, 2007

ASX Company Announcement

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Admiralty Resources NL ACN 010 195 972

Level 14, 200 Queen Street Melbourne VIC 3000

[t] +61-3-96701838 [f] +61-3-9670 1898 [w] www.ady.com.au

2 October 2007 Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000

Admiralty Proposed Demerger to Create Separate Listed Commodity Specific Iron Ore and Lithium Companies

Highlights:

• Admiralty Resources is embarking on a demerger of its core projects, the Cia Minera Santa Barbara iron ore operations and the ADY Resources Ltd Rincon Salar lithium project into separate Australian listings;

• Under the proposed demerger, shareholders will receive a (gratis) 1:1 in-specie entitlement for shares in a new listed vehicle, Rincon Lithium Limited;

• The decision to create separate listed vehicles for the key assets of Admiralty is expected to:

  • increase value to shareholders

  • let each business achieve the market valuation relevant to their markets

  • meet strategic, operational and capital requirements of the businesses

  • enable appropriate debt financing facilities for the expansion of iron ore operations and development of the Rincon Salar lithium project and other earnings per share positive acquisitions

  • provide investment clarity for shareholders/potential investors by separating ferrous and non ferrous/chemical commodities

  • enable separate dedicated management teams to focus on the expansion/development of the respective iron ore and lithium operations

• Admiralty will arrange a share consolidation on a 1:3.47215 ratio to reduce outstanding issued shares to around 280 million (prior to the in-specie distribution)

Background

Admiralty Resources NL (ASX Code: ADY) is a public company listed on the Australian Securities Exchange with diversified mineral interests in Chile, Argentina and Australia.

The Company is involved in four main projects:

• Cia Minera Santa Barbara (Chile) iron ore production joint venture, through its 60% interest therein;

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• Rincon Salar (Argentina) lithium carbonate, lithium hydroxide, lithium chloride, and potash project;

• Pyke Hill (Australia) nickel and cobalt joint venture, through its 50% interest therein; and

• Bulman (Australia) zinc and lead project.

Asset Rationalisation

The Admiralty Resources NL (ASX Code: ADY) Board of Directors is pleased to announce a proposed demerger of the Rincon Salar lithium assets. Key advanced Admiralty assets comprise the Cia Minera Santa Barbara iron ore production joint venture located in Chile and the Rincon Salar lithium carbonate, lithium hydroxide, lithium chloride, sodium sulphate and potash project located in Argentina.

ADY intends to undertake an in-specie distribution of shares on the basis of 1 new Rincon Lithium Limited share for every existing 1 Admiralty share held. ADY Resources Ltd, an unlisted public company that contains only the Rincon Salar project, will be listed and will have approximately 280 million shares on listing.

Importantly, the core Admiralty projects are at differing stages of development with distinct equity and debt funding and operational requirements. Whilst the iron ore operations are currently being increased to full capacity with the potential for significant expansion of production, the Rincon Salar is in the pre-development phase with a pilot scale plant nearing completion in two weeks.

It is intended that both companies will have separate devoted management teams. This will enable them to focus on the respective operational imperatives to generate maximization of shareholder value. Although iron ore production is not currently large on a global scale, potential exists to further increase reserves/resources to enable greater operational capacity going forward. Only a relatively small proportion of Admiralty’s iron ore tenements have been explored to date as the strategic imperative to date has been on cash flow generation.

The Rincon Salar lithium project has the potential to become one of the largest lithium producing operations globally. Lithium product markets are anticipated to grow solidly owing in part to the expanded uptake for lithium batteries utilized in “greenhouse gas friendly” hybrid motor vehicles and other major applications in the glass and ceramics industries.

Share Consolidation of Admiralty Resources NL

A decision has been taken to consolidate the share capital of Admiralty Resources. This will be effected by the consolidation of the outstanding issued shares of the company on the basis of 1 new ADY share for every existing 3.47215 shares held.

Production Update

Admiralty is currently in the process of ramping up production at its iron ore operations. Owing primarily to current global issues regarding delays in availability and delivery of mining equipment, production at the Santa Barbara mines has been significantly less than anticipated (100,000 tonnes per month) and is currently operating at between 900 and 1,200 tonnes per day.

Some US$2.5m of additional equipment is on order and is expected to be delivered between October 2007 and February 2008. This will ensure that when the Caleta Port becomes available after the temporary closure to iron ore shipments for the Christmas fruit season that significant stockpiles of iron ore will be available for immediate shipping.

At this stage, our best estimate for production during the year is one million tonnes from Santa Barbara. Santa Fe has informed us that they expect production of between 500,000 and one million tonnes subject to equipment deliveries and installation. Therefore, total iron ore sales are expected to be 1.5 million to 2.0 million tonnes in 2008.

For 2009, an aggressive expansion plan for 2008 is being considered to utilize the environmental permit of 3.9 million tonnes of annual production for Santa Barbara and 1.5 million tonnes of annual production for Santa Fe.

Further details regarding the proposed demerger will be announced to the ASX when they are available.

Yours sincerely,

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Phillip Thomas Managing Director [e] pthomas@ady.com.au

About Admiralty Resources NL

Admiralty Resources is a public company listed on the Australian Securities Exchange with diversified mineral interests in Australia, Chile and Argentina.

The Company is involved in four main projects:

• The Rincon Salar, Argentina, lithium carbonate, lithium hydroxide, lithium chloride, and potash project;

• The Cia Minera Santa Barbara, Chile, iron ore joint venture, through its 60% interest therein;

• The Pyke Hill, Australia, nickel and cobalt joint venture, through its 50% interest therein; and

• The Bulman, Australia, zinc and lead project.