AUSQUEST LIMITED — Capital/Financing Update 2012

Oct 3, 2012

ASX Release

October 4[th] , 2012

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CLIFFS TO PURCHASE INTEREST IN STANLEY MANGANESE FOR SELECTIVE BUY-BACK OF AUSQUEST SHARES

AusQuest Limited (“AusQuest”) is pleased to announce that it has reached an in-principle, non legally binding agreement with its major shareholder, Cliffs Australia Holdings Pty Ltd (Cliffs), to sell a 70 per cent interest in its Stanley Manganese Project in Western Australia to Cliffs in exchange for the buy-back and cancellation of its approximately 29 per cent shareholding in AusQuest.

The Company will retain up to 30% interest in the Stanley Project, and exposure to any upside value from work to be carried out under the joint venture.

The proposed transaction will result in the reduction in the number of AusQuest shares on issue, meaning that each remaining shareholder will have an increased percentage ownership in the Company, while at the same time, the Company will retain a strong and important working relationship with Cliffs via project joint ventures.

The proposed consideration for the sale of the interest in the Stanley Project is the buy-back of up to approximately 68 million AusQuest shares currently owned by Cliffs, comprising approximately 29% of AusQuest’s issued capital.

As part of the proposed agreement AusQuest will sole fund exploration expenditure of up to $1 million over a 2 year period on the Stanley Project following the sale, at which point Cliffs may elect to sole fund up to $3 million to earn an additional 10% interest in the project before forming an exploration joint venture with AusQuest.

More information will be announced in due course once AusQuest reviews an independent expert’s report which is currently being prepared and AusQuest and Cliffs execute a legally binding heads of agreement in respect of the transaction.

The sale will be subject to shareholder approval under Listing Rule 10.1 and the selective buy back provisions of the Corporations Act, with such approvals possibly to be sought at the AusQuest 2012 Annual General Meeting.

Cliff’s representative on the AusQuest Board, Craig Moulton, will resign from the Board immediately, to ensure the AusQuest Board is free of conflict constraints during the negotiations.

AusQuest’s Managing Director Graeme Drew said: “ both parties would continue to value their relationship in Australia and in Peru, where an active joint venture is already in place, but at a project level rather than corporate level as is the case at present. ”

Graeme Drew

Managing Director

AusQuest Limited 8 Kearns Crescent Ardross WA 6153 (T): 08 9364 3866 (F): 08 9364 4892 www.ausquest.com.au