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Alkane Resources Investor Presentation 2011

Nov 10, 2011

48579_rns_2011-11-10_c6e87ac4-1acf-4da1-a118-4de77a858ff6.pdf

Investor Presentation

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RESOURCES LTD
ABN 35 000 689 216
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11 November 2011

Manager Announcements Company Announcements Office ASX Limited 20 Bridge Street Sydney NSW 2000

Dear Sir,

PRESENTATION – DUBBO ZIRCONIA PROJECT

Attached is a copy of the Company’s presentation at the TZMI Congress 2011 “Asia in Focus”.

A copy of this presentation will also be available on the Company’s website www.alkane.com.au.

Yours faithfully,

for ALKANE RESOURCES LTD

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D I Chalmers Managing Director

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 [email protected]

Dubbo Zirconia Project NSW Australia An alternate source of zirconium, rare earth and niobium products

Central West Region

Location and Business Strate gy Multi commodity explorer and miner, focussed in the Central West of New South Wales, Australia Region with substantial existing infrastructure Dubbo Zirconia Project – world class resource of zirconium, hafnium, niobium, tantalum, yttrium and rare earths Gold production from Peak Hill mine 1996 – 2005. New gold development planned at Tomingley based upon 650,000 oz resource Major gold discovery at McPhillamys (~3 million oz) Joint Venture with Newmont Develop multiple operations within tight geographic area over next five years. New discoveries at Cudal (Au-Zn) , Bodangora (Au-Cu) and Galwadgere (Cu-Au)

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Corporate snapshot

Shareholder profile*

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Exchanges ASX: ALK OTCQX: ANLKY Share Price (8 November2011) A$1.14 Shares 269m Fully Diluted Market Cap ~A300m Cash ( a t 30 ep S t em b er 2011) ~A$13 m No debt 12 Month High / Low A$2.73/ $0.65 Source: FT

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Top 20 ~60%
at 30 Sept 2011
Abbotsleigh (Gandel Metals) 26%
12 Month High / Low A$2.73/ $0.65
Directors & Management
J S F Dunlop Chairman
D I Chalmers Managing Director
A D Lethlean Non‐Executive Director
I J Gandel Non‐Executive Director
L A Colless CFO Joint Secretary
K E Brown Joint Secretary
T W Ransted Chief Geologist
M D Suther anl d Genera Manager NSWl
A Wright Commercial Manager
Source: FT A MacDonald DZP Marketing
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DZP Infrastructure Dubbo region pop 80,000 State power grid State gas grid Ma or m xei d i lture j agr cu Transport hub Substantial light industry

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DZP Geolo
gy
0 200
metres
Jurassic aged trachyte intrusive
Vo can c p pe open al i i t depth
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DZP Geolo
gy
East-west cross section through centre of deposit
Recent Grits
SEDIMENTS
Basalt Dykes
TRACHYTE
SEDIMENTS
Siliceous Contact
Niobium Zirconium Zone
Horizontal Scale
0 100 m
Rare earth grade identical distribution
as the zirconium and niobium
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DZP Western contact of de osit
p
Trachyte
Sediments
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DZP Ore Mineralo gy Zirconium eudia yl te ZrSiO4 ± Ca, , Y < 2 m - 50 m μ μ Heavy REs armstrongite HREE, H2O +?U Niobium/ NaNbO3 + Ta + ?Th natroniobite < 30 m μ Tantalum also NbFeSiO 4 calcian Ca(REE)(CO3)F basnaesite Rare Earths < 100 m μ rare ancylite Sr(REE)(CO3)H2O The deposit does not contain zircon; pyrochlore; columbite; monazite or xenotime

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DZP Resources and Reserves
Measured Resource
:
35.7 million tonnes grading
0
55 metres
1 94% Zr0
0 04%HfO
0 46% NbO
-







.
2, .
2, .
2
5,
0.03% Ta2O5 , 0.14% Y2O3,0.74% REO (0.9% TREO)
Inferred Resource
:
37.5 million tonnes at similar grades

1
55
00 metres
-
TOTAL
:
73.2 million tonnes
--------------------------------------------------------------------------------------------------------------------------------
Proved Reserves
:
8.07 million tonnes grading
0 – 26 (max) metres
1.91% Zr02, 0.04%HfO2, 0.46% Nb2O5 ,
0.03% Ta2O5 , 0.14% Y2O3,0.75% REO (0.9% TREO)
These reserves are for the 400 000tpa operation over a 20 year life
Major world resource of zirconium hafnium niobium tantalum ttrium and rare earth elements
,
.
The reserves for the 1Mtpa, 20 year life will be a direct conversion of resources, to give 20Mt
-----------------------------------------------------------------------------------------------------------------------------------------------------
, , , , y

The deposit contains low levels of U and Th. Production of uranium is currently prohibited in NSW

DZP Metallur gy

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Process development work began in 1999 and the basic flow sheet trialed at mini-pilot plant stage in 2001 - 2002

  • Preliminary test work on HCl, HF, NaOH leaching, and H2SO4 roasting and leaching

  • Preliminary flotation to assess potential for pre-concentration

  • Scan of various physical separation processes

  • Definitive flotation test work for pre-concentration

Only H2SO4 roast/leach gave potentially viable process

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DZP Flow Sheet
Flow sheet has been tested by demonstration pilot plant since 2008
PROCESS
Whole of ore sulphuric acid
leach, solvent extraction
separation and refining, with
chemical precipitation to
produce final products.
Unique in the world today.
The process does not produce
a mineral concentrate and does
not concentrate the uranium
and thorium.
These waste products are
neutralised and dispersed in
the residue storage facilities at
less concentration than in the
primary deposit.
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DZP Demonstration Pilot Plant 2008

Marketin ‐ Zirconium A lications g pp

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Zirconium Industr
y
China consumes about
50% of world’s zircon
output.
About 30% of that zircon
is converted to
downstream products.
China currently
produces about 90% of
world’s ZOC and 60% of
FZA.
China has limited
domestic supply of
zircon and acquire from
ma or proj ducers (Aust
and S Africa).
Zircon Zirconium silicate ZrSiO4 Primary Zr mineral source Value
2010 1.2 million tonnes ~US$1.6 billion � US$3.0B DZP is the only short to
medium term substitute
Zircon um proi ducts Zircon a ri Z O2 [, rcon um c] Zi i h [em ca s, r me] i l Z t [a] l
for zircon as a source
2010 120,000 tonnes ~US$0.7 billion � US$1.4B
of Zr
Source: TCMS
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DZP Zircon ‐ Zirconium Chemicals Pricin g

DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing DZP Zircon ‐ Zirconium Chemicals Pricing
PRODUCT
ZrO
Q2 2010
US$/T
Q1 2011
US$/T
Q2 2011
US$/T
Q3 2011
US$/T
PRODUCT ZrO Q2 2010
US$/T
Q1 2011
US$/T
Q2 2011
US$/T
Q3 2011
US$/T
2



Zircon (producer/trader) 65% $900 ‐$1,150 $1,500 ‐$2,100 $1,700 ‐$2,750 $2,200 ‐$2,800
(100% ZrO2 basis) 100% ($1,380 ‐$1,770) ($2,310 ‐$3,230) ($2,620 ‐$4,230) ($3,380 ‐$4,310)
ZOC(zirconium oxychloride) 36% $1,350 ‐$1,450 $2,300 ‐$2,600 $3,600 ‐$4,000 $3,500 ‐$3,900
(100% ZrO2 basis) 100% ($3,750 ‐$4,030) ($6,390 ‐$7,220) ($10,000 ‐$11,110) ($9,720 ‐$10,830)
ZBS (zirconium basic sulphate)
(100% ZrO2 basis)
33%
100%
$1,770
($5,360)
$3,000
($9,090)
$6,000
($18,180)
$4,800
($14,550)
ZBC(zirconium basic carbonate) 40% $2,100 $3,400 $5,400 $5,300
(100% ZrO2 basis) 100% $5,250 $8,500 $13,500 $13,250
Fused Zirconia 98.50% $2,900 ‐$3,100 $4,100 ‐$4,400 $6,000‐$7,000 $6,000‐$7,000
Chemical Zirconia 99.50% $4,200 ‐$4,400 $7,200 ‐$7,500 $10,000‐$12,000 $10,000‐$12,000
Chemical Zirconia 99.90% $5 300 $5 500
,

,
$8 500 $10 500
,

,
$12 000 $15 000
,

,
$13 000 $15 000
,

,
Source: TCMS
Averaged quarterly prices as compiled from multiple sources
Source: TCMS

Averaged quarterly prices as compiled from multiple sources

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Source: TCMS

Marketin ‐ Niobium A lications g pp

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Structure of Niobium Industr
y
Metallurgical
CBMM in Brazil
� Structural steels
� Stainless and heat produces about 90%
of world demand.
resistant steels
Pyrochlore FeNb
� Superalloys
� Super conducting Early 2011 a Japanese
magnets Korean consortium
acquired 15% of
ColumbiteTantalite Nb2O 5 CBMM for US$1.95B
Oxides
� Glass September 2011 a
� Ceramics Chinese consortium
acquired 15% of
DZP Nb CBMM for US$1.95B
Concentrate
Nb Raw Materials Intermediate Products Applications
Ferro‐niobium FeNb Niobium pentoxide Nb2O5 Value
2010 85,000 tonnes ~US$2.0 billion � US$3B
Source: TZMI
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Niobium Demand and Price
Niobium 2010
(Ferroniobium units)
consumption
~85,000t – 90% Brazil
Estimate for 2012
~100,000t
Ferroniobium price spiralled to US$60/kg in March 07 and is currently around US$40 - 45/kg
Sources: IAMGOLD / TZMI
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Marketin ‐ REE A lications g pp

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Rare Earth Su l ‐ Demand
pp y
Will rare earth supply
demand be in balance
from 2015 with Lynas
and Molycorp
producing?
High probability for
LREE but not HREE
The DZP has a 75%
LREE - 25% HREE
split which gives it a
demand advantage
Separated rare earth products Value
2010 120,000 tonnes ~US$2.0 billion � US$6B ?
Source: IMCOA
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DZP Rare Earth Pricin g

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Rare Earths Prices (US$/kg FOB China REO)
Source:Metal Pages© Numbers have been rounded
Earths Prices (US$/kg FOB China REO)
Source:Metal Pages© Numbers have been rounded
Earths Prices (US$/kg FOB China REO)
Source:Metal Pages© Numbers have been rounded
Earths Prices (US$/kg FOB China REO)
Source:Metal Pages© Numbers have been rounded
Light Rare Earth DZP
Distribution
Q2 2010
Average
Q3 2010
Average
Q4 2010
Average
Q1 2011
Average
Q2 2011
Average
Q3 2011
Average
Lanthanum Oxide 19.51% $7.13 $25.75 $53.00 $75.00 $138.00 $128.00
Cerium Oxide 36.70% $5.58 $24.50 $50.00 $77.00 $138.00 $126.00
Praseodymium Oxide 4.05% $30.60 $48.25 $77.00 $118.00 $215.00 $242.00
Neodymium Oxide 14.12% $31.13 $49.50 $80.00 $125.00 $253.00 $313.00
Samarium Oxide 2.20% $4.50 $22.25 $34.00 $69.00 $120.00 $128.00
Heavy Rare Earth
Europium Oxide 0.07% $521.67 $570.00 $625.00 $723.00 $1867.00 $5133.00
Gadolinium Oxide 2.15% $8.25 $28.75 $44.00 $81.00 $167.00 $192.00
Terbium Oxide 0.34% $545.00 $570.00 $605.00 $693.00 $1767.00 $3967.00
Dysprosium Oxide 2.05% $196.67 $275.00 $295.00 $405.00 $983.00 $2433.00
Ho, Er, Tm, Yb, Lu 2.89%
Yttrium Oxide 15.84% $11.42 $26.25 $56.00 $93.00 $158.00 $172.00
DZP LREE 76.68% $12.06 $30.58 $57.20 $81.00 $163.00 $167.00
DZP YHREE 23.32% $42.23 $62.34 $78.70 $119.00 $240.00 $421.00
DZP LREE Concentrate $8.44 $21.41 $40.00 $61.00 $114.00 $117.00
DZP YHREE Concentrate $29.59 $43.64 $55.00 $83.00 $168.00 $295.00
Compiled by IMCOA

These prices are for individual separated rare earth oxides at 99% purity, and the actual value for DZP concentrates will depend on market acceptance of the concentrate, but for this table 70% of the value has been assumed. The prices quoted above are averaged for the full quarter.

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Source: IMCOA

Financial – DZP Product Out ut and Revenues p

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1 million tonnes pa of ore processed

Anticipated Production and Revenues
Product 1,000,000 tonnes per annum
Output Revenue % of total
ZBS, ZOH, ZOC, ZrO2 15,700tpa A$196M 39%
Nb -Ta conc / FeNb 3,005tpa A$111M 22%
LREE concentrate 3,050tpa A$108M 21%
YHREE concentrate 1,120tpa A$90M 18%
TOTALS 22,875tpa A$505Mpa
Tonnage based upon recoveries developed from mass balances of the demonstration pilot plant, and revenues based upon flat long term
pricing and an exchange rate of A$:US$ of 0.85. Numbers are rounded. Product prices predicted Q2 2011 averages or as determined by
specific industry consultants
  • ZBS = zirconium basic sulphate; ZOH = zirconium hydroxide; ZOC = zirconium oxychloride Equivalent ~99% ZrO2 + HfO2

Nb-Ta conc / FeNb = ~70% Nb2O5 + Ta2O5 calcined basis

LREE = La, Ce, Nd, PrYHREE = Y, Gd, Dy, Tb

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DZP DFS Financials
DUBBO ZIRCONIA PROJECT
DFS Financial Summary
DUBBO ZIRCONIA PROJECT
DFS Financial Summary
Project Capacity 400,000 tonnes pa 1,000,000 tonnes pa
Capex – Plant1 $278M $543M
Infrastructure + Owners $84M $165M
SUB TOTAL $362M $708M
EPCM $36M $43M
Contingency $72M $142M
TOTAL 470M 893M
$ $
Revenue $189M $505M
Operating Costs $97M $196M
EBITDA2 $92M $309M
IRR3 16.8% 30.2%
NPV4 $181M $1,207M
1 - Includes acid plant; 2 - Annual average after ramp up; 3 - 20 year life, pre-tax; 4 - 20 year life after tax
DFS was completed on the 400,000tpa case but costs and revenues factored for the 1Mtpa.
Actuals for the 1Mtpa being documented

1 - Includes acid plant; 2 - Annual average after ramp up; 3 - 20 year life, pre-tax; 4 - 20 year life after tax

DFS was completed on the 400,000tpa case but costs and revenues factored for the 1Mtpa. Actuals for the 1Mtpa being documented

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DZP Marketin Develo ments g p

. Three MOUs completed that should take all of the 1Mtpa zirconium output 1. Joint venture with major chemical company and trading company to produce 15,000 – 20,000tpa of ZOC (5,400 – 7,200tpa ZrO2) from DZP feed, for internal . consumption and potential expansion

2. Joint venture with Mintech Pty Ltd to produce 10,000 – 12,000tpa of ZOC (3,600 – 4,300tpa ZrO2) for existing customers

3. Joint venture with European manufacturing and trading company to market a variety of zirconium products into Europe and North America 3,500 – 4,000tpa ZrO2

MOU completed for 100% of niobium concentrate output. A JV to produce FeNb with a European alloy manufacturer and distributer.

Various MOUs in discussion for light rare earth concentrate and heavy rare earth concentrate.

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DZP Site Infrastructure

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DZP Develo ment athwa
p p y
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DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway DZP Developmentpathway
2012
2013
2014
‐> 2009 2010 2011 2012 2013
2014
DZP Resource definition 2001 ‐ 2002 ~~�~~
Flow sheet development 2002
Laboratory Zr – Nb 1999 – 2002 Co
ntin
ue
d pr
od
uct
Pilot plant Zr – Nb 2002
~~dev~~ ~~elo~~ ~~pm~~ ~~ent~~
Mine Plan & Scheduling 2002
Plant Design & Engineering 2002
Laboratory Y & REE 2009 ‐
Demonstration Pilot Plant 2008 ‐
ZNbPdDiibi
r rouct struton
Y ‐ REE Product Distribution ~~�~~
Secure Offtake Agreements ~~et~~ ~~il c~~ ~~ost~~ ~~s fo~~ ~~r~~
Definitive Feasibility Study 2002
e

**xpa **

nd

ed

dev

elo
pm en t
Environmental Impact (EA) 2000 ‐>
Detailed Design
Financing / Development Consent
Construction
Production

DZP Strate ic Si nificance g g

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Majority of “downstream” zirconium products are derived from zircon, whose output is governed by ilmenite/rutile from mineral sands mining operations. DZP is the only short to medium term substitute for zircon as a source of Zr

China dominates downstream zirconium business at ~90% but feed is zircon.

Niobium production dominated by one company, CBMM in Brazil with 90% of market. Rare earth and yttrium production dominated by China (95%). DZP offers . new source particularly for important Y and HREE

Production costs are spread across the four metal outputs – zirconium (hafnium), niobium (tantalum), light rare earths and yttrium-heavy rare earths.

Project located in region with very favourable infrastructure and legislative framework, both at a State and Federal level.

The DZP provides an alternative and strategic source for a number of important metals, and is capable of producing for hundreds of years from one ore body.

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Conclusion

Dubbo Zirconia Project

A strateg c ani d alternate supp y or l f the z rcon um, i i niobium and rare earths industries www.alkane.com.au

Definitive Feasibility Study

TZ Minerals International Pty Ltd

Study managers: Steve Gilman and Gavin Diener

Marketing: Alister MacDonald (TCMS) and Dudley Kingsnorth (IMCOA) Engineering: EPMS and Mintrex

DPP Operations: ANSTO Minerals Group Bob Ring, Doug Collier, Karin Soldenoff, Des Levins, Adrian Manis, Chris Griffiths, Peter Fletcher, Prakash Rajalingam

Environmental Assessment: R W Corkery & Co Pty Ltd

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Disclaimer

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Disclaimer

This presentation 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 of implied by these forward looking statements depending on a variety of factors. Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities.

Competent Person

The information in this presentation that relates to mineral exploration, mineral resources and ore reserves is based on information compiled by 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 o f xp ora E l ti on esu R lt s, Mi nera esources an l R d re eserves. an O R I Ch a mers consen l t s o t th e nc us on n i l i i th e presentation of the matters based on his information in the form and context in which it appears.

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DZP – Resource / Reserve Statements

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Dubbo Zirconia Project – Mineral Resources

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.

Dubbo Zirconia Project – Ore Reserves

Toongi
Tonnage
ZrO2
HfO2
Nb2O5
Ta2O5
Y2O3
REO
Deposit
(Mt)
(%)
(%)
(%)
(%)
(%)
(%)
Proved
8.07
1.91
0.04
0.46
0.03
0.14
0.75

These Ore Reserves are based upon information compiled by Mr Terry Ransted MAusIMM (Alkane Chief Geologist) 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 . The reserves were calculated at a nominal 1 . 0% ZrO 2 cut off using costs derived from vendor quotes and revenue documented within the ASX Announcement 19 august 2011. 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

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