Alkane Resources — Capital/Financing Update 2011

Aug 14, 2011

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RESOURCES LTD
ABN 35 000 689 216
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ASX ANNOUNCEMENT 15 AUGUST 2011 (ASX : ALK) (OTCQX : ANLKY)

Corporate Profile

Alkane Board

ALKANE SIGNS THIRD MOU FOR ZIRCONIUM MARKETING - 100% Zr COMMITTED

• DUBBO ZIRCONIA PROJECT (DZP) - Third MOU

• Alkane Resources Ltd has signed a Memorandum of Understanding (MOU) with a leading European manufacturing and trading company to form a joint venture to market DZP zirconium products.

This Company specialises in advanced ceramic materials and will service markets in Europe, North America and other areas of special demand.

• The joint venture will undertake a marketing study to identify opportunities for zirconium output from the expanded 1 million tpa development scenario of the DZP to ensure all product is committed to key end users.

• Alkane will own 80% of the marketing joint venture and a sales/service office will be established in Europe.

• This MOU assures that subject to the feasibility study detail, the DZP will proceed directly to the 1 million tpa development.

• Revenue estimate for zirconium production is now US$125-150 million, which represents 25-33% of annual DZP revenue estimates of US$400-450 million.

• Output committed by current MOUs for 1Mtpa operation:

100% 75% 50% 25% 0%	Zirconium	Niobium	LREE	YHREE
	US$125 – 150M
		In Progress	In Progress	In Progress

J S F Dunlop (Chairman) D I Chalmers (Managing Dir) A D Lethlean (Director) I J Gandel (Director) L A Colless (Joint Secretary) K E Brown (Joint Secretary)

Contact

Ian Chalmers Managing Director Email: ichalmers@alkane.com.au

12 month share price range A$0.395 - $2.73

Market Cap 12 August 2011

~A$455 million

ASX Code: ALK

269 million shares

OTCQX Code: ANLKY

ADR ratio 1:10

30 June 2011 Cash Cash ~A $18.3 million No debt

Senior Management

Terry Ransted – Chief Geologist Mike Sutherland – GM NSW Tony Wright – Commercial Manager Alister MacDonald – DZP Marketing

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

• MOUs for other DZP products are at an advanced stage of negotiation.

65 Burswood Road, Burswood WA 6100, AUSTRALIA (PO Box 4384, Victoria Park WA 6979, AUSTRALIA) Telephone: +61 8 9227 5677 Facsimile: +61 8 9227 8178 www.alkane.com.au mail@alkane.com.au

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RESOURCES LTD
ABN 35 000 689 216
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Alkane Resources Ltd continues to progress the Dubbo Zirconia Project (DZP) towards development through the signing of another non-binding Memorandum of Understanding (MOU) to form a joint venture to market zirconium products in Europe, North America, and other defined markets. This current partner is a leading European manufacturing and trading company (Company) specialising in advanced ceramic materials and has many years experience in the zirconium industry. Alkane has signed the MOU through its wholly owned subsidiary, Australian Zirconia Ltd (AZL).

A condition of the MOU, to prevent disruption to the Company’s current supply arrangements, is that its name is kept confidential until a commercial development has been finalised.

The joint venture will undertake a marketing study to identify opportunities for zirconium output not yet committed from the expanded 1 million tpa development scenario of the DZP to ensure all product is assigned to key end users. The study will include zirconium chemicals, chemical zirconias and the identification of potential off-take agreements in respect of zirconium metal production.

The participating interests of the parties will be 80% AZL and 20% the Company. The joint venture will also establish a sales/service office in Europe and identify warehouse facilities for product storage in major markets.

Customer feedback for zirconium chemicals and zirconium dioxide powders supplied from the DZP demonstration pilot plant has been very positive and this marketing joint venture, in addition to the existing agreements to produce zirconium oxychloride (ZOC), has significantly expanded the sales and revenue potential for the Project.

Alkane believes that the signing of this MOU is another key milestone for the company and the development of the Dubbo Zirconia Project. Potential revenue from zirconium output at the 1Mtpa development is estimated to be US$125-150 million per annum, and total revenue from the Project is estimated to be around US400-450 million based upon conservative and long term sustainable commodity prices.

About Zircon and Zirconium Materials

The total downstream zirconium market worldwide is forecast by TZ Minerals International Pty Ltd (TZMI) to reach 163,000 tpa of zirconia (ZrO2) by 2012, which will require 250,000 tpa of zircon feed or approximately 18% of total zircon usage. The zirconium market is the highest growth market for zircon at around 11% per annum and includes zirconium chemicals, chemical and fused zirconia and zirconium metal.

At this growth rate, the zirconium market will require the equivalent one new DZP sized operation each year (1M tpa ore processed to produce 15,000 tpa zirconia) to meet demand.

ZOC (36% ZrO2) is the primary zirconium chemical used to produce most downstream zirconium chemicals, chemical zirconia, and zirconium metal. Existing ZOC production relies on zircon as the key raw material for downstream zirconium products. China dominates world ZOC supply with a 90% share of the 200,000 tpa market , which is currently worth around US$800 million. Approximately 40% of Chinese ZOC production is exported as ZOC or downstream zirconium chemicals and zirconia, while the remaining 60% is consumed in China.

Strong zircon demand, combined with a flat to falling supply outlook, has fuelled a dramatic increase in zircon prices. Contracted zircon prices from mineral sands companies are US$2,300-2,500/tonne in Q3

65 Burswood Road, Burswood WA 6100, AUSTRALIA (PO Box 4384, Victoria Park WA 6979, AUSTRALIA) Telephone: +61 8 9227 5677 Facsimile: +61 8 9227 8178 www.alkane.com.au mail@alkane.com.au

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2011, while spot prices reached RMB 21,000 per tonne (US$3,200/t) or higher in China (17% VAT included) in early May. This resulted in ZOC prices increasing by over 285% in the past year to approximately US$4,000/t, FOB China for August deliveries. As ZOC contains 36% zirconia, the current ZOC price equates to approximately US$11,100 per tonne of zirconia for August deliveries. Current Chinese chemical zirconia prices range from US$10,000 to 15,000/t.

As a source of zirconium is critical, substitution is least likely in this market with AZL’s DZP, which is backed by a very long and sustainable mine life, being the only alternative to zircon for the immediate future.

Also see Table 1 in Alkane’s Quarterly Report to the ASX 28 July 2011.

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Other DZP production

Alkane is continuing to work on several other MOUs dealing with the niobium concentrate and ferroniobium products; and the light rare earth concentrate and heavy rare earth concentrate.

The MOU on zirconium marketing brings closer the development commitment for the DZP with a Definitive Feasibility Study anticipated to be released at the end of August 2011 and production to commence possibly late in 2013 or early in 2014.

BACKGROUND

Alkane is a multi commodity explorer and miner with its operations focused in the Central West of New South Wales , about 400 kilometres 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.

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Alkane Resources Ltd – ASX Announcement

15 August 2011

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The Dubbo Zirconia Project is based upon a world class resource of the metals zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements. 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 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 included the construction and operation of a Demonstration Pilot Plant, and a development commitment is anticipated Q4 2011 leading to production possibly in late 2013 or early in 2014.

The Tomingley Gold Project currently has a 660,000 ounce gold resource within the Wyoming and Caloma deposits (full details are in the 2008 Annual Report and the ASX announcements of 2 October and 16 December 2009). A feasibility study for the development of the project with potential 50,000 to 60,000 ounce per annum production was completed in late 2010 and development financing options are well advanced.

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 significant gold deposit at McPhillamys within the Moorilda Project . An initial resource of Indicated plus Inferred resources containing 2.96 million ounces of gold and 60,000 tonnes of copper has been defined (full details ASX announcement of 5 July 2010) . Newmont is proceeding to complete a Bankable Feasibility Study for the development of the deposit.

Elsewhere in the region, at Galwadgere within the Wellington Project, Alkane has defined a 2 million tonne 1.00% copper Indicated Resource (details 2005 Annual Report) which is being reviewed for its development potential. Other advanced exploration projects have produced encouraging drill intercepts and new exploration targets have been identified at several more locations.

In Western Australia the Company hold a diluting 23% residual interest in a nickel sulphide joint venture with Xstrata Nickel (Jubilee) near Leinster .

Competent Person

Unless otherwise advised, the information in this report that relates to exploration results, mineral resources and ore reserves is based on information compiled by Mr D I Chalmers, FAusIMM, FAIG, (director of the Company who 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 a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Chalmers consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Disclaimer

This report contains certain forward looking statements and forecasts, including possible or assumed reserves and resources, production levels and rates, costs, prices, future performance or potential growth of Alkane Resources Ltd, industry growth or other trend projections. Such statements are not a guarantee of future performance and involve unknown risks and uncertainties, as well as other factors which are beyond the control of Alkane Resources Ltd. Actual results and developments may differ materially from those expressed or implied by these forward looking statements depending on a variety of factors. Nothing in this report should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.

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Alkane Resources Ltd – ASX Announcement 15 August 2011

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Resource Statement July 2011

Dubbo Zirconia Project

Toongi	Tonnage	ZrO2	HfO2	**Nb2O5 **	**Ta2O5 **	Y2O3	REO	U3O8
Deposit	(Mt)	(%)	(%)	(%)	(%)	(%)	(%)	(%)
Measured	35.70	1.96	0.04	0.46	0.03	0.14	0.75	0.014
Inferred	37.50	1.96	0.04	0.46	0.03	0.14	0.75	0.014
TOTAL	73.20	1.96	0.04	0.46	0.03	0.14	0.75	0.014
These Mineral Resources are based upon information compiled			by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent person
as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the
inclusion in the report of the matters based on		his information in the form and context in which it appears. The full details of methodology were given in the 2004
Annual Report.

Tomingley Gold Project

	DEPOSIT	MEASURED	INDICATED	INDICATED	INDICATED	INFERRED	INFERRED		TOTAL
	Top Cut	Tonnage Grade	Tonnage		Grade	Tonnage	Grade	Tonnage	Grade	Gold
	2.5x2.5x5.0m model	(t) (g/t)	(t)		(g/t)	(t)	(g/t)	(t)	(g/t)	(koz)
	Wyoming One	2,227,000 2.07	882,000		2.25	3,478,000	1.62	6,587,000	1.86	393.2
	Wyoming Three	630,000 1.87	58,000		1.73	154,000	1.25	842,000	1.75	47.3
	Caloma	2,047,750 2.04	440,050		1.71	1,371,620	1.36	3,859,420	1.76	218.5
	**Total **	4,904,750 2.03	1,380,050		2.06	5,003,620	**1.54 **	11,288,420	**1.82 **	658.9
	These Mineral Resources are based upon information compiled by			Mr	Richard Lewis MAusIMM (Lewis Mineral Resource Consultants Pty Ltd) who is a competent
	person as defined in the 2004 Edition of the Australasian Code for Reporting of					Exploration Results, Mineral Resources and Ore Reserves. Richard Lewis consents to
	the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology are given in the ASX
	Report dated 25March 2009 and 2 October 2009 .

Peak Hill Gold Mine

DEPOSIT MEASURED INDICATED INFERRED		TOTAL
0.5g/t gold cut off Tonnage Grade Tonnage Grade Tonnage Grade	Tonnage	Grade Gold
(t) (g/t) (t) (g/t) (t) (g/t)	(t)	(g/t) (koz)
Proprietary 9,440,000 1.35 1,830,000 0.98	11,270,000	1.29 467.4
3.0g/t gold cut off Tonnage Grade Tonnage Grade Tonnage Grade	Tonnage	Grade Gold
(t) (g/t) (t) (g/t) (t) (g/t)	(t)	(g/t) (koz)
Proprietary 810,000 4.40	810,000	4.40 114.6

These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the 2004 Annual Report.

Wellington – Galwadgere

DEPOSIT MEASURED INDICATED
0.5% Cu cut off Tonnage Grade Grade Tonnage Grade Grade
(t) (% Cu) (g/t) (t) (% Cu) (g/t)
Galwadgere - - 2,090,000 0.99 0.3
These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent person
as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted consents to the
inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the 2005
Annual Report

Moorilda – McPhillamys (ODEJV)

Moorilda – McPhillamys (ODEJV)	Moorilda – McPhillamys (ODEJV)	Moorilda – McPhillamys (ODEJV)	Moorilda – McPhillamys (ODEJV)	Moorilda – McPhillamys (ODEJV)	Moorilda – McPhillamys (ODEJV)
DEPOSIT TOTAL INDICATED INFERRED
McPhillamys 0.3g/t Au cut-off Inner Ore Zone Outer Ore Envelope Total DEPOSIT McPhillamys 0.5g/t Au cut-off Inner Ore Zone Outer Ore Envelope Total	Tonnage Grade Grade (t) (g/t) % Cu	Tonnage Grade Grade (t) (g/t) % Cu	Tonnage Grade Grade (t) (g/t) % Cu	k Ounces gold	tonnes copper
	51,650,000 1.10 0.07	23,504,000 1.19 0.07	75,154,000 1.13 0.07	2,723.6	55,091
	9,624,000 0.44 0.04	7,167,000 0.43 0.03	16,791,000 0.43 0.03	234.7	5,729
	61,274,000 0.99 0.07	30,671,000 1.01 0.06	91,945,000 1.00 0.07	2,958.3	60,820
	INDICATED INFERRED TOTAL
	Tonnage Grade Grade (t) (g/t) % Cu	Tonnage Grade Grade (t) (g/t) % Cu	Tonnage Grade Grade (t) (g/t) % Cu	k Ounces gold	tonnes copper
	41,260,000 1.27 0.08	16,097,000 1.57 0.09	57,357,000 1.36 0.08	2,499.9	46,933
	2,169,000 0.69 0.03	1,338,000 0.62 0.03	3,507,000 0.66 0.03	74.6	1,170
	43,429,000 1.24 0.08	17,435,000 1.50 0.08	60,864,000 1.32 0.08	2,574.5	48,104

These Mineral Resources are based upon information compiled by Mr Richard Lewis MAusIMM (Lewis Mineral Resource Consulting Pty Ltd) who is a competent person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Richard Lewis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology were given in the ASX Announcement 5 July 2010. Totals may not tally due to rounding.

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Alkane Resources Ltd – ASX Announcement 15 August 2011