Alkane Resources — Capital/Financing Update 2008

Sep 22, 2008

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RESOURCES LTD
ABN 35 000 689 216
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ASX ANNOUNCEMENT –23 September 2008

Corporate Profile

Alkane Board

TOMINGLEY GOLD PROJECT FEASIBILITY STUDY UPDATE

J. S. F. Dunlop (Chairman) D. I. Chalmers (Managing Dir) A. D. Lethlean (Director) I. J. Gandel (Director)

I. R. Cornelius (Director)

• Results have been received for the final eleven diamond core holes completed at the Caloma, Wyoming One and Wyoming Three deposits within the Tomingley Gold Project

L. A. Colless (Joint Secretary) K. E. Brown (Joint Secretary)

Contact

• These core holes were designed to confirm the geology and provide samples for metallurgical test work, and have continued to demonstrate the continuity of the mineralisation.

• Selected results include:

• PE 289D 19 metres grading 3.85g/t gold from 97 metres including 11 metres grading 5.76g/t gold from 102 metres PE 292D 9.5 metres grading 2.89g/t gold from 130.8 metres including 3 metres grading 5.42g/t gold from 132 metres WY 844D 15 metres grading 3.26g/t gold from 149 metres WY 845D 34 metres grading 2.04g/t gold from 44 metres including 5 metres grading 5.31g/t gold from 65 metres WY 847D 12 metres grading 8.95g/t gold from 135 metres including 2 metres grading 33.9g/t gold from 137 metres WY 848D 35 metres grading 2.63g/t gold from 94 metres including 20 metres grading 3.56g/t gold from 94 metres

• The Definitive Feasibility Study is progressing with major infrastructure issues of land access, water and power close to finalisation.

• Detailed metallurgical assessment of all deposits in progress.

• Discussions regarding Project financing commenced.

Ian Chalmers Managing Director 96 Parry Street PERTH WA 6000 Telephone +61 8 9328 9411 Facsimile +61 8 9227 6011 Email ichalmers@alkane.com.au Web – www.alkane.com.au

12 month share price range

A$0.515 - $0.28

Market Cap 22 August 08

~A$73 million

ASX Code: ALK

242.4 million shares (June 08)

June 2008 Cash

~ $9.7 million No debt

Media Relations

Westbrook Communications Level 1, 17 Castlereagh Street SYDNEY NSW 2000

Telephone +61 2 9231 0922 Facsimile +61 2 9231 0131 Web – www.westbrookfin.com.au

Registered Office: 129 Edward Street Perth WA 6000 Telephone: 61 8 9227 5677 Facsimile: 61 8 9227 8178 PO Box 8178 Perth Business Centre Western Australia 6849 www.alkane.com.au mail@alkane.com.au

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Tomingley Gold Project (TGP)

The TGP is located in the Central West of New South Wales, about 400 kilometres west of Sydney. The Project is centred on three gold deposits located 14 kilometres north of the Company’s Peak Hill Gold Mine. The TGP is located in an area of substantial existing infrastructure with the major Newell Highway transecting the project, linking a number of towns with a regional population base exceeding 150,000 (figure 1). No camp facilities are required and the workforce can be sourced locally. A natural gas pipeline and railway are located five kilometres west of Tomingley, and power is available from the New South Wales state grid.

Exploration drilling discovered the Wyoming One deposit in 2002 and Wyoming Three in 2003. Major RC and core drilling defined the 606,400 ounce resources (see 2007 Annual Report for details) in 2004/05. The Caloma deposit was recognised in 2006 with resource drilling commencing in 2007.

Resource Drilling - Caloma

The major reverse circulation (RC) and diamond core resource definition drilling program at Caloma was completed in May and a total of 22,034 metres were drilled. The drilling program focussed on a 400 metre long central section of the 1,000 metre north-south trending Wyoming style feldspar porphyry host which is located at the contact of pelitic sediments in the west and an andesitic volcanic and volcaniclastic sequence to the east (figure 2). The program was completed on a 20 metre by 20 metre pattern to ensure the definition of a Measured and Indicated Resource to a depth of about 150 metres. RC results have been summarised in previous Quarterly Reports.

Ten core holes (PE 253D – 257D, PE 271D – 272D, PE 289D and PE 292D – 293D) totalling 2,571 metres have also been drilled at Caloma to check the geology, structures and mineralisation defined by the RC drilling and to provide samples for metallurgical testing. Results have been received for the final five holes and are summarised in Table 1.

Multiple mineralised structures have been defined within the main feldspar porphyry host which is 80 to 100 metres in width. As a result of the current drilling a robust geological model has been developed and it is apparent that most of the mineralised structures within the porphyry have an approximate northerly orientation, with a shallow westerly dip. These structures range in width from a few metres to in excess of 20 metres and appear to extend across the full width of the porphyry host. Intersecting structures, or structures intersecting lithological contacts, occasionally generate substantial intercepts. East-west, and apparently vertical, cross cutting dolerite dykes displace the mineralisation at irregular intervals. The drilling has also demonstrated that the mineralised structures project through the eastern contact of the porphyry into the volcaniclastic sediments and have expanded the resource potential into that area.

Core Drilling - Wyoming One

Nine core holes (WY 840D – 848D) totalling 1,213 metres have also been completed at the Wyoming One and Wyoming Three deposits located to the south west and west of Caloma. As with Caloma, the drilling was designed to provide confirmatory geological information and samples for metallurgical testing. Results have been received for the five holes drilled at Wyoming One and are summarised in Table 2. The final Wyoming Three hole (WY841D) did not intersect significant mineralisation.

Gold mineralisation at Wyoming One is located under 30 metres of transported clay cover, and distributed within and adjacent to a sub-vertical, south-plunging, feldspar porphyry sill that intrudes into andesitic volcaniclastic sediments. The deposit has been separated into a number of distinct mineralised zones. The bulk of the defined resource (547,700 ounces – see 2007 Annual Report for details) is hosted within the feldspar porphyry which covers a near-surface area of about 60 metres by 150 metres, and averages 1.5g/t to 2.0g/t gold. Gold mineralisation is associated with quartz sulphide veins within intensely altered host rock.

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Alkane Resources Ltd – ASX Announcement 23 September 2008

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Higher grade mineralisation, often grading >5g/t gold over several metres, is associated with quartzsulphide veining in a number zones including contact mineralisation adjacent to the eastern margin of the porphyry; as cross cutting (east-west) vertical structures within the porphyry; and in the hangingwall zone, which lies approximately 30 metres east of the porphyry contact and is stratigraphically controlled by a fine-grained carbonaceous mudstone. This linear zone extends over a strike length of at least 300 metres and widths of up to 15 metres.

Mineralisation has been intersected down to a vertical depth of 450 metres within the Wyoming One deposit.

Definitive Feasibility Study (DFS)

The DFS is managed by Mintrex Pty Ltd, the consulting division of Perth engineering group, Holtfreters Pty Ltd with input from Alkane personnel and external consultants. Due to delays in finalising the Caloma resource and associated mining and metallurgy, the overall time table for completion of the study has been extended to May 2009. The major components of the DFS are:-

Resource Compilation and Mining Schedule

The compilation of the Caloma resource has been extended by the expansion of the potential target zone and the delays in receipt of assay results. A revised resource statement, including Caloma is currently anticipated by the end of November. The mining schedule will be developed once the Caloma resource is available and the existing Wyoming One and Three pits are optimised.

Metallurgy

Previous scoping studies on Wyoming and Caloma mineralisation have indicated that +95% gold recovery from oxide ore and +90% recovery from sulphide ore with standard grind and cyanide leach would be expected. Full testing is currently underway on multiple representative samples and final results should be available in March 2009.

Land

The key property for the Project has been secured under an option to purchase, with peripheral land acquisition agreements close to being finalised.

Water

A number of existing water production licences based on the Macquarie River aquifer system at Narromine 40 kilometres north of Tomingley are available for purchase, and an acquisition agreement is being finalised. The capital cost for the pumping facility and pipeline will be included in the project capital costs.

Power

Power for the project is available through the NSW State grid and a power line will be constructed from Peak Hill 14 kilometres to the south. Current estimates of power costs through the State grid are considerably lower than that generated by diesel or gas facilities.

Infrastructure

Finalisation of other project site infrastructure requirements are well advanced, including an underpass below the Newell Highway to transport Caloma ore 500 metres from the open pit to the plant site west of the Wyoming One pit.

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Alkane Resources Ltd – ASX Announcement 23 September 2008

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Plant Design

Preliminary plant layout and major components have been determined based upon the base case model of 1Mtpa throughput and engineering data currently available.

Financing

Current estimates for the base case development model of the 1Mtpa operation, indicate capital costs would be around A$50 million ± 20%, depending upon sourcing of new plant or the availability of suitable second hand equipment. Depending upon the final Caloma resource, this operation could generate an average of 70,000 ounces for the minimum five year mine life. A preliminary estimate of operating costs has indicated un-optimised cash costs of about A$550 ± 10%, per ounce of gold produced.

General discussions have commenced with banks and other financial institutions to consider possible funding options for the project.

DFS Schedule

The current DFS is scheduled for completion in April-May of 2009, but final timing will depend upon completion of the Caloma resource and mining plan, plus optimisation of the Wyoming pits.

Mr D I Chalmers, FAusIMM, FAIG, (director of the Company) has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian Chalmers consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Table 1: TGP - Caloma Core results greater than 1.0g/t gold @ 23 September 08

Hole No	East	North	RL (m)	**Azimuth **	Inclin	Intcpt (m)	Grade (g/t Au)	Interval (m)	EOH (m)	Comments
PE 272D	**614730 **	**6393960 **	271	**090° **	60°	2	1.89	**60 –62 **	210.6	Caloma
**PE 289D **	**614799 **	**6394230 **	271	**090° **	60°	19	3.85	97 – 116	201.6	Caloma
**incl **						11	5.76	102 – 113
also						**1.7 **	1.40	**150.3 - 152 **
PE 292D	**614689 **	6393922	270	**090° **	60°	4	1.03	118 – 122	279.6	Caloma
also						9.5	2.89	130.8 – 140.3
**incl **						3	5.42	132 – 135
also						9	2.66	214 – 223
**incl **						3	4.62	214 - 217
also						4	1.26	243 – 247
**PE 293D **	**614690 **	**6393879 **	270	**090° **	60°	**9.1 **	1.36	**143 – 152.1 **	279.6	Caloma
**incl **						**2.1 **	3.12	**152 – 154.1 **
also						6	**1.37 **	239 – 245

Gold analysis of quarter core by 50g fire assay. True widths are approx 90 - 95%.

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Alkane Resources Ltd – ASX Announcement

23 September 2008

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Table 2: TGP – Wyoming One Core results greater than 1.0g/t gold @ 23 September 08

Hole No	East	North	RL (m)	**Azimuth **	Inclin	Intcpt (m)	Grade (g/t Au)	Interval (m)	EOH (m)	Comments
WY844D	**614048 **	6393312	268	**360° **	60°	15	3.26	**149 - 164 **	**180.6 **	Wyoming 1
also						1	6.20	168 - 169
**WY845D **	**614097 **	**6393348 **	268	**300° **	60°	**34 **	**2.04 **	44 – 78	**150.6 **	Wyoming 1
**incl **						5	**5.31 **	65 - 70
also						8	**2.52 **	101 - 109
also						10	2.85	116 - 126
also						**18.7 **	1.40	130.3 - 149
**WY846D **	614127	6393324	268	**270° **	60°	39	1.06	41 -80	80.6	Wyoming 1
**incl **						16.3	1.44	**46.9 –63.2 **
WY847D	**614197 **	**6393276 **	**267 **	**270° **	60°	3	2.17	77.5 –80.5	**204.6 **	Wyoming 1
also						3	**1.94 **	115 - 118
also						12	8.95	135 - 147
**incl **						2	33.9	137 - 139
also						2	**1.07 **	151 - 153
**WY848D **	**614167 **	6393374	268	**265° **	60°	35	2.63	94 – 129	**207.4 **	Wyoming 1
**incl **						20	3.58	94 - 114
also						6	**1.07 **	**151 - 157 **
also						**14.7 **	2.05	**164 – 178.7 **
**incl **						4	3.35	167 - 171
also						3	**3.34 **	200 - 203

Gold analysis of quarter core samples by 50g fire assay. True widths are approx 70 - 75%.

BACKGROUND

Alkane is a multi commodity explorer and miner with its operations focussed in the Central West of New South Wales , centred about 400km northwest of Sydney. Over several years, including experience in developing the Peak Hill Gold Mine, Alkane has built a substantial resource base and is proceeding towards several developments. Excluding the TGP , other major projects are:

The Dubbo Zirconia Project is based upon a world class resource of the metals zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements. The deposit also contains significant uranium. Over several years Alkane has developed a flow sheet which can recover a variety of products which have expanding applications in electronics, ceramics, catalysts, special alloys and glasses, fuel cells, special rechargeable batteries and permanent magnets, nuclear power and as environmental drying agents. Following a $3.3 million Commercial Ready Grant from AusIndustry in 2006, the feasibility study was reactivated. The study includes the construction and operation of a Demonstration Pilot Plant, and a development commitment is anticipated later in 2009.

Near Orange, the Company has a joint venture ( ODEJV ) with Newmont, one of the world’s largest gold miners, which resulted in the discovery in 2006 of a potentially significant gold deposit at McPhillamys within the Moorilda Project . This discovery included intersections of 123 metres grading 1.96g/t gold and 77 metres at 1.65g/t gold within a 300 metre by 200 metre mineralised zone. Recent diamond drilling has confirmed the potential of the project to host a major gold system with an intersection in KPD003 of 366 metres grading 1.85g/t gold.

Elsewhere within the region, Alkane has defined a 2 million tonne 1.00% copper Indicated Resource (details 2007 Annual Report) which is being reviewed for its development potential at Galwadgere within the Wellington Project , and several other advanced exploration projects with encouraging drill intercepts.

In Western Australia the Company holds 9 million shares (15.15%) of listed iron ore explorer BC Iron Limited and a diluting 25% residual interest in a nickel sulphide joint venture with Xstrata Nickel (Jubilee) near Leinster .

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Alkane Resources Ltd – ASX Announcement 23 September 2008

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