AUSTRALIAN VANADIUM LIMITED — Capital/Financing Update 2011

Aug 23, 2011

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Yellow Rock Resources Limited ABN: 90 116 221 740

15 Colin Street West Perth WA 6005

Telephone: (08) 6460 0250 Facsimile: (08) 6460 0254 Email: info@yrr.com.au

24 August 2011

Companies Announcement Office

ASX Limited

20 Bridge St.

Sydney NSW 2000.

YELLOW ROCK RESOURCES LTD - GABANINTHA PROJECT UPDATE

EXPLORATION FOR COPPER, GOLD AND BASE METALS

Highlights:

Yellow
Rock
Resources
Ltd
(YRR)
announces
an
update
to
its
current
activities
including:

1. Electromagnetic survey and Soil sampling in areas prospective for Copper and Gold;

2. The engagement of Geologica Pty Ltd to carry out a major review of exploration activities to date including the current known V, Ti, Fe deposit and areas prospective for Copper and Gold;

3. The engagement of Fugro Airborne Services Pty Ltd to carry out a comprehensive HELITEM Electromagnetic survey of all of the Gabanintha and Nowthannna tenements using the latest helicopter carried equipment and technology to map areas prospective for Copper and Gold;

4. The engagement of Allegro Logistics to carry out a comprehensive soil sampling program of all of the Gabanintha and Nowthannna tenements with particular analysis relating to the presence of Copper and Gold;

5. Commencement of preparation for a Mining License application for the V, Ti, Fe deposit at Gabanintha;

6. Commencement of preparation of a scoping document for the commissioning of engineering, environmental and related studies to support the progress towards mining the V, Ti, Fe deposit.

Page 1 of 7

Executive Summary:

General Review of Exploration to Date

• Yellow Rock Resources Ltd (YRR) has engaged Geologica Pty Ltd to provide consulting services for a major review of exploration activities carried out to date and to develop an extensive exploration programme on its Gabanintha tenements.

• The review of operations will include examining the Mining, Metallurgical, Processing and Marketing options with the aim of advancing the current Concept Study towards a Bankable Feasibility Study for the Company’s High Quality Vanadium Project

Gabanintha Mining Review

• Recently completed review of metallurgical and treatment options has identified:

• Further metallurgical testing is required across the ore types (Oxide, Transition, Fresh for Scree, Main and Hangingwall ores)

• Further t drilling is required in Fresh ore material within the resource

• The density database is needs to be enlarged to provide for comprehensive gravity separation tests

• Previous metallurgical results confirmed that magnetic separation works well in Fresh material and that more Davis Tube Recovery tests are needed

• More gravity separation testing is required to provide more definite results.

Gabanintha and Nowthanna HELITEM Geophysical Survey

• A helicopter-borne Time Domain Electromagnetic and Magnetic Survey (HELITEM) has been commissioned across the Gabanintha and Nowthanna tenements.

• The HELITEM survey is being conducted by Fugro Airborne Services Pty Ltd and will comprise 537 line kilometres on flight paths 150 metres apart to cover the entirety of the YRR Gabanintha and Nowthanna tenements

• It is anticipated that this technique will enable identification of hidden sulphide-bearing orebodies and detailed structures under alluvial cover.

• This technique is reputed to be capable of providing deeper profiles of the known and potential ore bodies

- Gabanintha Copper Gold Exploration Program

• A comprehensive geochemical sampling program is planned for September-October

• This will involve approximately 508 line kilometres of sampling at 100 metre line spacing to collect 5080 samples for multi-element analysis

• The sampling work will be completed by Allegro Logistics

• In conjunction with geological mapping and compilation of geophysical data this major exploration program is expected to lead to the discovery of several gold and copper targets

Further Planning for Development of the Vanadium, Titanium, Iron Deposit

• YRR is preparing an application for a Mining License for the V, Ti Fe Deposit.

• YRR has commissioned Geologica to prepare a detailed scoping study for the engagement of relevant consultants to develop a full mining feasibility study.

• YRR is seeking engineering design consultants for the preparation of plans for development of the V, Ti, Fe deposit.

Page 2 of 7

• YRR is seeking interest from consultants to provide further design services including environmental and related studies necessary to move forward with the mining of the V, Ti, Fe deposit.

Update:

General Review of Exploration to Date

YRR has engaged Geologica Pty Ltd to provide consulting services for a major review of exploration to date and to conduct an extensive exploration programme on its Gabanintha tenements. The review of operations will include examining the Mining, Metallurgical, Processing and Marketing options with the aim of advancing the current Concept Study towards a Bankable Feasibility Study.

Gabanintha Mining Review

An initial review of metallurgical and treatment options was completed and several areas critical to the development of Gabanintha were identified.

Yellow Rock Resources announced a revised mineral resource estimate on 8 February 2011.

Further metallurgical testing is required across the ore types revealed in previous testing (Oxide, Transition, Fresh for Scree, Main and Hangingwall ores) See Figure 1 below:

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Figure
1
–
Schematic
profile
at
Gabanintha
showing
ore
types,
weathering
and
pit
shells

Page 3 of 7

Further
drilling
is
required
to
produce
sufficient
Fresh
ore
material
within
the
resource
to
confirm metallurgical
characteristics.
To
date
70%
of
the
ore
intersected
within
a
preliminary
pit
shell
is Oxide
or
Transition
and
located
in
the
upper
part
of
the
weathering
profile.
Thus
further
drilling
is required
to
obtain
Fresh
ore
for
testing
as
well
as
to
revise
the
resource
and
extend
the
pit
shell deeper.

A
resource
definition
diamond
drill
programme
is
planned
to
be
completed
during
the
next
quarter. Further
density
sampling
data
is
required
to
provide
robust
measurements
for
comprehensive
heavy media
separation
tests.
Therefore
a
measurement
campaign
on
existing
RC
chips
and
core
is
planned to
upgrade
the
knowledge
of
density
changes
with
ore
type.

Initial
analysis
of
geochemical
data
shows
that
some
elements
are
significantly
different
in
Fresh material
compared
to
Oxide
or
Transition.
E.g. Fresh
material
has

Lower
Aluminium
(by
3.5%) Higher
Iron
(by
10%) Higher
MgO
(by
1.7%) Lower
Silica
(by
8.9%) Higher
Titanium
(by
2.3%) Higher
Vanadium
(by
0.3%)

Previous
metallurgical
test
results
confirmed
that
magnetic
separation
works
well
in
Fresh
and Transition
material,
although
tests
on
Oxide
ore
were
inconclusive.
A
10%
loss
of
volume
to
waste was
achieved
(90%
recovery)
when
Fresh
and
Transition
ore
was
passed
through
magnetic separation.
These
same
tests
confirmed
that
up
to
8%
of
the
silica
content
is
also
reduced.
Further tests
are
required
to
validate
the
behaviour
of
bulk
materials
through
a
magnetic
separation
plant. Preliminary
results
from
sizing
tests
indicate
that
grind
size
will
assist
the
concentration
of
iron, titanium
and
vanadium
and
that
silica
and
aluminium
are
increased
in
the
fines
fraction.

Initial
gravity
separation
tests
proved
inconclusive
and
insufficient
data
is
available
to
draw
valid conclusions.
More
tests
are
planned.

**Gabanintha

Copper-­‐Gold
Exploration
Programme**

A
comprehensive
geochemical
sampling
programme
has
been
commissioned
for
September-­‐October 2011.

This
will
involve
approximately
508
line
kilometres
of
sampling
at
100
metre
line
spacing
to
collect 5080
samples
for
multi-­‐element
analysis.

The
field
campaign
will
begin
in
the
northern
part
of
the
tenements
adjacent
to
the
historical Gabanintha
Gold
Mine
and
nearby
gold
and
copper
occurrences.

The
sampling
work
will
be
completed
by
Allegro
Logistics
and
is
expected
to
take
several
weeks
to complete.

Page 4 of 7

Along
with
continuing
geological
mapping
and
compilation
of
geophysical
data
this
major exploration
program
is
expected
to
lead
to
the
discovery
of
several
gold
and
copper
targets.

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Figure
2
–
Proposed
Geochemical
Transect
Lines

**Gabanintha

Geophysical
Survey**

A
helicopter-­‐borne
Time
Domain
Electromagnetic
and
Magnetic
Survey
(HELITEM)
is
in
progress
at Gabanintha.
This
survey
is
utilizing
the
expert
services
of
Fugro
Airborne
Services
Pty
Ltd
and
will involve
the
use
of
a
HELITEM
magnetometer
system
towed
behind
the
helicopter
at
a
minimum height
of
35
metres
above
the
terrain.

The
electro-­‐magnetic
signals
transmitted
and
received
from
the
Scintrex
CS3
magnetometer
are stored
as
raw
data
as
well
as
being
processed
throughout
the
flight
and
through
the
differential
GPS and
altimeter
instrumentation.
The
resulting
time-­‐domain
responses
are
processed
by
computer
at base
to
derive
precise,
calibrated
magnetic
as
well
as
location
data
for
mineral
exploration
maps.

Page 5 of 7

The
HELITEM
survey
comprises
537
line
kilometres
on
flight
paths
150
metres
apart
across
all
the YRR
Gabanintha
tenements.

The
HELITEM
method
is
particularly
useful
for
identification
of
deeper
or
hidden
sulphide-­‐bearing orebodies
and
detailed
structures
under
alluvial
cover.
The
precision
of
the
technique
is
several times
higher
than
conventional
airborne
magnetic
surveys.

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Figure
3
-­‐
HELITEM
Flight
Paths

The
information
in
this
statement
that
relates
to
Exploration
Results,
Mineral
Resources
or
Ore Reserves
is
based
on
information
compiled
by
independent
consulting
geologist
Brian
Davis
B.Sc (hons),
Dip.Ed.

Brian
Davis
is
a
Member
of
The
Australian
Institute
of
Mining
and
Metallurgy
and
the
Australian Institute
of
Geoscientists.
Brian
Davis
is
employed
by
Geologica
Pty
Ltd.

Brian
Davis
has
sufficient
experience
which
is
relevant
to
the
style
of
mineralization
and
type
of deposit
under
consideration
and
to
the
activity
which
is
undertaken
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’.

Page 6 of 7

Mr.
Davis
consents
to
the
inclusion
in
the
report
of
the
matters
based
on
the
information
made available
to
them,
in
the
form
and
context
in
which
it
appears”.

Brian
Davis
BSc,
DipEd,
RPGeo,
MAusIMM,
GAA Principal
Consultant GEOLOGICA
PTY
LTD

August
23
2011

Page 7 of 7