BRIGHTSTAR RESOURCES LIMITED — Management Reports 2006

Oct 15, 2006

16 October 2006

THE MANAGER COMPANY ANNOUNCEMENTS AUSTRALIAN STOCK EXCHANGE SYDNEY NSW 2000

Dear Sir / Madam,

AEGIS RESEARCH REPORT

The Directors of A1 Minerals Limited wish to advise that it recently commissioned Aegis Equities Research Pty Ltd to complete an extensive research and valuation report on the Company.

The report is attached for the information of shareholders, and can also be viewed in full on the Company's web site www.a1minerals.com.au.

John Williams B.Sc, MAusIMM Managing Director

The information in this report that relates to mineral resource is based on information compiled by Mr Tony Ryall, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Ryall is self employed and an Independent Geological Consultant and has sufficient experience 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 (JORC Code). Mr Ryall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Suite 34, 25 Walters Drive, Osborne Park WA 6017 Telephone (618) 9244 1400 Facsimile (618) 9244 1600 Email info@a1minerals.com.au Website www.a1minerals.com.au ABN 44 100 727 491

A1 Minerals Limited

Bloombera: AAM AU

Reuters: AAM.AX

13 October 2006 $$0.24$

Initiation of coverage - Feasibility study underway

# of Shares:	60M Market Cap:	\$14M Current Price:	\$0.24
1% All Ords:	$0.0\%$ $\%$ Sector:	$0.0\%$ Valuation (\$):	0.39

Yr to Jun	2005A	2006A	2007F	2008F
NPAT Rep (\$M)	(0.46)	0.42	(0.93)	3.96
NPAT 1 Adj (SM)	(0.45)	(0.60)	(0.93)	3.96
EPS(G)	(1.0)	(1.1)	(1.6)	6.6
DPS (c)	0.0	0.0	0.0	0.0
P/E(x)	(24.3)	(22.0)	(15.4)	3.6
Yield (%)	0.0	0.0	0.0	0.0
Franking (%)	0	o	0	0
EPS growth (%)	n/a	nla	n/a	n/a
Profit & EPS adjusted for options, goodwill, notional earnings and non recurring items.

TADI E 4/ CADMINICO OHMMADV

Event

Aegis Equities Research has undertaken commissioned research on A1 Minerals Limited (AAM), A1 Minerals is a gold exploration company with several gold bearing tenements in Western Australia's Eastern Goldfields. A Feasibility Study is being carried out on the BrightStar Gold Project following the positive outcomes of the recently completed Pre-Feasibility Study. A decision-to-mine is expected by the end of the year and mining is expected to start during mid-2007. The company has JORC compliant resources of 634,390oz of gold.

Implications

The management of A1 Minerals has actively explored and expanded the BrightStar Gold Project since identifying its potential in 2002. Over the past few years the company has established a record of continual resource expansion. The project is now at the point where equipment is being sourced to commence mining and milling operations in mid-2007. The studies conducted so far indicate the mine can be initiated with a small but profitable operation that would make the company cashflow positive. The Pre-Feasibility Study determined a pre-tax profit of \$12M to \$25M could be earned on the first 12 months' production at a gold price of A\$750/oz (US\$565/oz) depending on the final tonnage and gold grade. Once the mining operation commences, start up costs could be recouped in one to two years and the revenue stream would facilitate continued exploration of the highly prospective tenements. We have based our valuation of A1 Minerals on a combination of methodologies aimed at capturing the worth of the assets which are at various stages of development. Taking weighted averages of the valuations for each of the assets we found them to be worth \$23.28M, or 38.9 cents per share.

Investment Opinion

The research on this company has been commissioned and as such Aegis has received a fee for its initiation and ongoing research coverage.

We believe it is inappropriate and misleading to provide a recommendation, investment opinion and/or share price target. However, we provide a valuation and earnings forecasts, as well as other relevant information to assist investors to form a view on the investment prospects of this company.

A1 Minerals Ltd

Valuation (\$): 0.39

Company risk²: WWW.200

Share Price risk²: WOODOO

Ethical rating³: Andreaded

Year end Jun. All figures in A\$M
Profit & loss summary	2005A	2006A	2007F	2008F
Operating revenue	0.00	0.00	0.00	23.93
Invest & other income	0.00	0.00	0.00	0.00
EBITDA	(0.50)	(0.65)	(0.92)	9.34
Depreciation/Amort	(0.04)	(0.04)	(0.04)	(3.50)
EBIT	(0.54)	(0.69)	(0.96)	5.84
Net Interest	0.09	0.09	(0.19)	(0.18)
Pre-tax profit	(0.45)	(0.60)	(1.14)	5.66
Tax expense	0.00	0.00	0.21	(1.70)
Minorities/Assoc./Prefs	0.00	0.00	0.00	0.00
NPAT	(0.45)	(0.60)	(0.93)	3.96
Non recurring items	(0.01)	1.02	0.00	0.00
Reported profit	(0.46)	0.42	(0.93)	3.96
NPAT add Goodwill & Pref	0.00	0.00	0.00	0.00
Adjusted profit	(0.45)	(0.60)	(0.93)	3.96
Cashflow summary	2005A	2006A	2007F	2008F
EBITDA	(0.50)	(0.65)	(0.92)	9.34
Working capital changes	0.10	0.10	(0.43)	(0.66)
interest and tax	(0.01)	(0.01)	(0.19)	(0.93)
Other operating items	(0.01)	0.18	(0.04)	0.00
Operating cashflow	(0.42)	(0.38)	(1.57)	7.75
Required capex	(0.04)	(0.07)	(7.00)	(0.40)
Maintainable cashflow	(0.46)	(0.45)	(8.57)	7.35
Dividends	0.00	$0.00\,$	0.00	0.00
Acq/Disp	(1.88)	(1.71)	0.00	0.00
Other investing items	0.01	$0.00\,$	0.00	0.00
Free cashflow	(2.34)	(2.16)	(8.57)	7.35
Equity	1.69	2.32	0.00	0.00
Debt inc/(red'n)	0.00	0.01	8.57	(7.35)
Balance sheet	2005A	2006A	2007F	2008F
Cash & deposits	1.79	1.96	0.00	0.68
Inventories	0.00	0.00	0.00	0.66
Trade debtors	0.03	0.09	0.00	1.31
Other curr assets	0.02	0.00	0.00	0.00
Total current assets	1.85	2.05	0.00	2.64
Prop., plant & equip.	0.13	0.16	7.12	4.02
Non-curr intangibles	5.32	8.81	8.81	8.81
Non-curr investments	$0.00\,$	0.38	0.38	0.38
Other non-curr assets	$0.00\,$	0.16	0.37	0.37
Total assets	7.30	11.56	16.68	16.22
Trade creditors	$0.00\,$	0.52	$_{0.00}$	1.31
Curr borrowings	0.06	0.03	0.03	0.03
Other curr liabilities	0.05	0.04	0.00	0.95
Total current liab.	0.12	0.59	0.03	2.30
Borrowings	0.07	0.07	6.68	0.00
Other non-curr liabilities	0.00	0.00	$_{0.00}$	0.00
Total liabilities	0.19	0.66	6.71	2.30
Minorities/Convertibles	0.00	0.00	0.00	0.00
Shareholders equity	7.11	10.89	9.96	13.92

Ratio analysis			2005A 2006A 2007F 2008F
Revenue growth (%)		0.0	0.0	0.0	0.0
EBITDA growth (%)		n/a.	n/al	n/a	nía
EPS growth $(%)$		n/a	n/a	n/a	n/a
EBITDA/Sales margin (%)		0.0	$0.0^-$	0.0	39.0
EBIT/Sales margin (%)		0.0	$0.0 -$	0.0	24.4
Tax rate $(%)$		0.0	$0.0 -$	18.5	30.0
Net debt/equity (%)		(23.4)	(17.1)	67.4	(4.6)
Net debt/net debt + equity (%)		(30.5)	(20.6)	40.3	(4.8)
Net interest cover (x)		n/a	n/a l	(5.1)	32.8
Payout ratio (%)		0.0	0.0	0.0	0.0
Capex to deprec'n (%)		111.3	165.1	>1000	11.4
NTA per share (\$)		0.06	$0.03 -$	$0.02 -$	0.09
ROA (%)		(6.4)	(6.4)	(6.5)	35.1
ROE (%)		(6.7)	(6.8)	(8.9)	33.5
Multiple analysis		2005A	2006A	2007F	2008F
Market cap (M)			14
Net debt (\$M)			(1.86)
Peripheral assets (\$M)			(0.00)
Enterprise value (\$M)			12.21
EVIEBIT(x)		(22.5)	(17.6)	(12.8)	2.1
EV/EBITDA (x)		(24.2)	(18.7)	(13.3)	1.3
EV/EBITDA All Ind (x)		9.1
EV/EBITDA rel All Ind (x)		(2.7)	n/a	n/a	n/a
P/E (x)		(24.3)	(22.0)	(15.4)	3.6
P/E rel All Ind (x)		(1.3)	n/al	n/a	n/a
P/E rel All Ind ex banks (x)		(1.4)	n/a	n/a	n/a
$P/E$ sector $(x)$		16.3
$P/E$ rel sector $(x)$		(1.5)	n/a	n/a	n/a
Assumptions	2005A	2006A		2007F	2008F
Gold (US\$/oz)	428.75	543.19		600.00	635.00
US\$/A\$ (\$)	0.76	0.74		0.74	0.71
0	n/a		n/a.	n/a	n/a

Notes To Accounts

The AAM accounts were prepared under Australian equivalents to International Financial Reporting Standards.

Notes: 2. The risk ratings are on a 12 month perspective, where five stars denotes low risk and one star denotes high risk. Company risk takes into account expected
financial, strategic and execution risks associated with

EXECUTIVE SUMMARY

• Since listing in 2003, A1 Minerals has steadily grown through well planned exploration and strategic acquisitions.
• The company's short-term goal is to complete the BrightStar Gold Project Feasibility Study and commence production mid-2007. Currently a decision to mine is expected by the end of the year.
• Using a mobile mill, the company plans to initially produce 25,000oz of gold per year, enough to make the operation cashflow positive and facilitate its expansion goals.
• The Pre-Feasibility Study, concluded in the June quarter of 2006, indicated a pre-tax profit of \$12M to \$25M could be earned on the first 12 months of production at a gold price of A\$750/oz (US\$565/oz) depending on the final tonnage and gold grade.
• At the end of the financial year, A1 Minerals had \$1,96M in cash and minimal debt. Additional funds of \$5M-\$7M will be required to bring the operation into production, however, once the mining begins, A1 Minerals should be cashflow positive and self-funding. Currently we anticpate debt funding we be used to provide the start up funds.
• The plan to switch from Toll Treating to an A1 Minerals owned and operated mobile milling operation will provide the company with greater control over the milling of its ore, increase the flexibility of the mine planning and provide improved profitability.
• A1 Minerals has already established JORC resources of 634,390oz. The long-term goal is to realise the exploration potential of the company's tenements and establish a multi-million ounce resource.
• The deposits north of Laverton lie on a continuation of the structures and greenstones which host the multi-million ounce Sunrise Dam and Wallaby Gold mines.
• The nearby Sunrise Dam mine had similar origins to the BrightStar Gold Project. It was founded on a reserve of less than 400 koz and, initially, was only expected to run for a few years.
• $\bullet$ The Project Management team has been selected based on experience and knowledge of operations and geology near or similar to A1 Minerals' gold prospects.
• Being an unhedged single commodity producer, A1 Minerals' profitability will be highly sensitive to variations in the gold price and gold production. The gold production is dependent on both grade and mill throughout. However, being unhedged will allow A1 Minerals to fully benefit from any upside in the gold price movement.
• The low number of shares issued to date has minimised dilution of shareholder value. The relatively low number of options generated and the fact they have reasonable exercise prices is also positive.
• A1 Minerals has a low Enterprise Value to Resource ratio compared to peer companies operating in the region, indicating the company is under-valued.
• We have based our valuation of A1 Minerals on a combination of methodologies aimed at capturing the worth of the assets, which are at various stages of development. The combined assets were determined to be worth \$34.18M, or 57.1 cents per share, in the high value scenario, and \$13.59M, or 22.7 cents per share, in the low value scenario. Taking weighted averages of the valuations for each of the assets, we found them to be worth \$23.28M, or 38.9 cents per share

VALUATION

We have based our valuation of A1 Minerals on a combination of methodologies. We are of the view that the decision-to-mine due by the end of the year will give the operation the green light, and have used the Pre-Feasibility figures as a starting point to create a financial model of the company.

The BrightStar assets with imminent production have been valued using a Net Present Value calculation. The low value scenario is based upon a steady annual production of 25kozpa. It is assumed there is sufficient exploration success to carry on mining beyond the initial Pre-Feasibility Study reserves. The gold generates revenue based upon the Aegis gold price forecast (see section 'Gold Sector Outlook') as there is no hedging in place. At a discount rate of 15.2% the low value scenario Discounted Cash Flow is \$9.66M. The high value scenario is based upon increasing production, following additional reserves being established. The same gold prices and discount rates are used, resulting in a discounted cash flow of \$23.44M.

The BrightStar assets which are expected to be future producers have been valued using a Multiple of Exploration Expenditure calculation, whereby we have assessed the appropriate multiple to be applied to the historical and planned exploration expenditure incurred or to be incurred. The multiples range from 0.9, the low case for Eta, to 3.2, the high case for Epsilon.

The Narnoo Exploration Project valuation was based upon an estimated Sale Price Range using recent industry transactions as a guide.

The combined assets were determined to be worth \$34,18M, or 57.1 cents per share, in the high value scenario, and \$13,59M, or 22.7 cents per share, in the low value scenario. Taking weighted averages of the valuations for each of the assets we found them to be worth \$23.28M, or 38.9 cents per share.

TABLE 2: TABULATION OF VALUE CALCULATIONS

Project	Deposits	High	Low	Weighted Mean	Method
BrightStar Gold Project	Alpha-Beta	23.94	9.66	15.91	NPV
BrightStar Gold Project	Delta-Epsilon-Eta-Zeta	8.24	3.18	6.12	MEE
Namoo Exploration Project		2.00	0.75	1.25	SP
Total A\$M		34.18	13.59	23.28
Cents per share		57.7	22.7	38.9
Roumer Aerie Frailies.

rce: Aegis Equ

Potential

We have taken a relatively conservative view of the company given that it is still completing the Feasibility Study. However, provided the operations come into production on schedule and budget, and perform as expected, some simple metrics quickly illustrate the potential of the company.

Using the forecast FY08 Free Cashflow of \$6.57M, a cashflow multiple of 6 times, and a fully diluted share base of 71.01M shares $(59.86M$ shares $+$ 11.15M options) the following calculation can be made:

Cashflow valuation = $(7.35 \times 6)/71.01 = $0.62$ share price

Alternatively, using the forecast FY08 NPAT of \$3.96M, a fully diluted share base of 71.01M shares and a nominal PE ratio of 9 times, the following calculation can be made:

Earnings valuation = $(3.96 / 71.01) \times 9 = $0.50$ share price

TABLE 3: CONDENSED FINANCIAL FORECASTS

item	Units	FY06A	FY07	FY08	FY09
Production	OZ	$\mathbf{r}$	$\overline{r}$	25,000	31,250
Gold Price	US\$/oz	596.54	600.00	670.00	630.00
USD:AUD		0.74	0.73	0.70	0.70
Gold Price	A\$/oz	801.60	827.59	957.14	900.00
Total Costs per oz	A\$/oz	0.00	0.00	(539.29)	(579.00)
Sales Revenue	ASM	0.00	0.00	23.93	28.13
EBITDA	ASM	(0.65)	(0.92)	9.34	8.92
Tax	ASM	0.00	0.21	(1.70)	(2.22)
NPAT	asm	(0.60)	(0.93)	3.96	5.17
Free cashflow	ASM	(2.16)	(8.57)	7.35	6.57
Deht	ASM	0.00	(6.61)	0.00	0.00
Cash Balance	ASM	1.96	0.00	0.68	7.25

Source: Aegis Equities

Sensitivity

Being an unhedged, single-commodity producer, the A1 Minerals valuation is highly sensitive to variations in the gold price and gold production. The gold production is dependent on both grade and mill throughout. Table 3 shows the impact of a 10% increase or decrease and gold price and gold production over the first two years of operations.

Gold price	Movement	Valuation
	$+10%$	$+16%$
	$-10%$	$-8%$
Production	Variation	Valuation
	$+10%$	$+13%$
	$-10%$	$-6%$
Source: Aegis Equities

$\overline{a}$ and $\overline{a}$ are constructed and $\overline{a}$ .

PEER COMPARISON

There are several mining companies producing or exploring for gold in the Kalgoorlie/Laverton region. A selection of them has been used for a peer group comparison.

A1 Minerals Limited - AAM - Market Capitalisation \$15M - Exploring for gold around Laverton. Feasibility study underway with production likely in mid 2007 at 25kozpa. Significant potential for additional resources at multiple deposits.

Navigator Resources Limited - NAV - Market Capitalisation \$31M - Exploring for gold around Leonora/Laverton, Exploration work to date suggests a 1Moz resource could be established in the near term. Production of 100kozpa is being targeted. NAV also has interests in nickel exploration.

Integra Mining Limited - IGR - Market Capitalisation \$31M - Exploring for gold around Kalgoorlie. Pre-Feasibility Study shows the proposed operation to have good economics and a four year mine life at 155kozpa.

Reed Resources Limited - RDR - Market Capitalisation \$40M - Producing gold near Kalgoorlie. The small operation has a 3.5yr mine life but it is likely to be extended. RDR has iron ore and vanadium projects also.

St Barbara Mines Limited - SBM - Market Capitalisation \$360M - Producing and exploring for gold around Kalgoorlie/Leonora. The operations are producing 160 kozpa and the company has significant resources.

FIGURE 2: GOLD RESOURCE COMPARISON

FIGURE 3: EV/OZ RATIO COMPARISON

Source: Aegis Equities

Source: Aegis Equities

A1 Minerals' resources of 634koz are significant considering the relatively short period of time the company has been in operation. The resource size compares well to peer group. The Enterprise Value (EV) is the market capitalisation plus net debt. When the EV is divided by the total of the Measured, Indicated and Inferred resource ounces it provides a ratio that can be used to compare peer companies regardless of each company's size. A1 Minerals EV/oz is lowest of the group indicating it is undervalued relative to its peers. The industry average is around \$50/0z. In this example it is worth noting the majority of RDR's resources are in the 'Measured' category which is why its EV/oz value is so high. Definitions of the resource categories are provided in the Glossary.

SWOT ANALYSIS

Strenaths

• Gold production is to commence by the middle of 2007. This should provide A1 Minerals with sufficient cashflow to continue its exploration work.
• The good gold grades at the various deposits are expected to allow A1 Minerals to establish a profitable mining operation on relatively small mining tonnages.
• The mobile milling plant provides a great degree of flexibility to the mine planning.
• A1 Minerals has established a good record of exploration and acquisition success, quickly growing its resource base over the past three years. The number of deposits held with known gold mineralisation suggests A1 Minerals' exploration success will continue.
• The Project area has excellent roads, water supply and infrastructure.
• The low number of shares issued to date has minimised dilution of shareholder value. The relatively low number of options generated and the fact they have reasonable exercise prices is also positive.
• With numerous directors, key employees and their associates as top twenty shareholders, the company is unlikely to be cheaply acquired by an opportunistic bidder.

Weaknesses

• While the Pre-Feasibility Study showed the potential of the operations and the current Feasibility Study is progressing well, until gold production commences, the possibility remains for delays and cost overruns.
• Although the ball mill has been secured with a deposit, several pieces of plant and equipment remain to be sourced.
• Once the Feasibility Study is completed one last fund raising will be required to bring the operation into production.
• There may be challenges sourcing employees for a small operation such as this one.

Opportunity

• Being unhedged will allow A1 Minerals to fully benefit from any upside in the gold price movement.
• The mobile mill provides A1 Minerals with the ability to bulk sample mineralised zones. This will enable the company to achieve a much better evaluation of prospective deposits.
• The company has established a record of continued exploration success and the tenements held have the potential for significant additions to the gold resource.
• The relatively small gold production is unlikely to draw the attention of takeover offers, allowing the company time to develop its operations organically and demonstrate value growth.

Threats

• Swings in the gold price will have a significant impact on the profitability of A1 Minerals. The recent weeks have shown how volatile the gold price can be over short periods of time.
• Patches of low grade material can rapidly negate the profitability of a small gold producer. Detailed knowledge of the orebody though exploration and study is required to ensure the grade distribution is understood.
• While the region is host to large gold deposits, there is no certainty that this will be the case on the A1 Minerals tenements.

CORPORATE INFORMATION

• The company was incorporated in May 2002 as A1 Minerals Ltd.
• A1 Minerals was listed on the Australian Stock Exchange on 3 December 2003. The company issued 17.5M shares at 20 cents to raise \$3.5M. This brought the total issued shares to 21.46M. The funds allowed A1 Minerals to conduct exploration work on the BrightStar Gold Project.
• A1 Minerals has a total of 59.86M fully paid shares on issue. Of these only 600,000 are held in voluntary escrow, the rest are tradable on the exchange. There are 9.5M unlisted options with a 30 cents per share exercise price. There are a further 1.65M unlisted options with a 40 cents per share exercise price.
• The largest shareholder is John Dennis Williams (the Managing Director), he has 6.416,666 shares, or 10.72% of total shares on issue. Debbie Lynne Williams (married to John Williams) is the second largest shareholder, with 3,750,000 shares, or 6.26% of total shares on issue.
• As at 4 October 2006, the top 20 shareholders held 42.5% of the total shares on issue. The majority of these shareholders are A1 Minerals employees or associates of the employees.
• On a 12-month rolling basis, A1 Minerals has recorded a share turnover of 37.88M shares with a value of \$799.750 per month and a trading range of 18 to 36.5 cents per share.

CORPORATE OBJECTIVES AND STRATEGIES

A1 Minerals' short-term goals are to complete its Feasibility Study of the BrightStar Gold Project and bring it into production. Using a mobile mill with a 200,000tpa the company will initially aim to produce 25,000oz of gold per year. This will make the company cashflow positive and allow it to further its exploration goals.

The company has assembled a collection of highly prospective tenements in a region known to host several multi-million ounce gold deposits. The long-term goal is to realise the exploration potential of the company's tenements and establish a multi-million ounce resource. A1 Minerals has already established JORC resources of 634,900oz.

The immediate goals are:

• Source further plant and equipment to complement the ball mill that has been secured.
• Complete the Feasibility Study.
• Raise the funds required to bring the operation into production.
• Commence mining and milling operations by mid-2007.

FINANCIAL POSITION

• At the end of the 2006 financial year A1 Minerals had \$1.96M in cash and minimal debt.
• The FY06 Net Profit After Tax was \$416,118, compared to a net loss of \$462,352 in FY05. Profits of \$858,000 on the sale of prospects contributed significantly to the net profit.
• Additional funds will be required to bring the operation into production but once the mining begins, A1 Minerals will be cashflow positive and self-funding
• In the June quarter, the company had an operating cash outflow of \$0.40M, the bulk of which was exploration costs.

BOARD OF DIRECTORS AND KEY EMPLOYEES

PROJECT MANAGEMENT TEAM

The project management team has been selected based on experience and knowledge of operations and geology near or similar to A1 Minerals' gold prospects.

GENERAL MANGER - OPERATIONS David Hamlyn B.App Sc, MAUSIMM

Mr David Hamlyn has been General Manager - Operations since 1 July 2006. Mr Hamlyn has extensive mining experience and regional knowledge having held key roles in several Western Australian mining operations. He was the Resident Manager of Centaur Mining and Exploration Limited's gold operations in the Kalgoorlie region from 1992 to 1999, and General Manager of New Hampton Goldfields Limited's Jubilee Gold Operations to 2001. Mr Hamlyn will oversee A1 Minerals' transition from exploration to production. He has a key role to play in finalising the Feasibility Study and ore processing methodology. Mr Hamlyn possess first hand knowledge of tenements north of Laverton, recently acquired from West Australian Metals Ltd (WME), after serving as Executive Director WME between February 2002 and May 2006.

EXPLORATION MANAGER Tony Ryall BA, Geology (Hons), MAUSIMM

Mr Tony Ryall is Exploration Manager and has more than 20 years experience with gold explorers and producers such as Barrack Mines and Delta Gold. Mr Ryall previously managed the large Laverton Joint Venture for Aurion/PlacerDome, during the time of the growth of the Sunrise deposit and the Wallaby discovery. The familiarity with Sunrise Dam should be highly beneficial given its close proximity to the Alpha and Beta Deposits.

PRINCIPAL GEOLOGIST Mark Hronsky

Mr Hronsky has extensive exploration experience and a proven record in the identification of large gold anomalies. He has worked for over 30 years in exploration in Western Australia including 14 years with Billiton (Shell). Mr Hronsky was directly involved with the discovery of gold deposits of the calibre of Sunrise Dam, Butcher Well and, most recently, the BrightStar Gold Project. The experience Mr Hronsky possesses will be valuable as A1 Minerals aims to increase its Measured and Indicated Resources several fold over the coming years.

BOARD

Non-executive Chairman Michael Hunt BA, LLB (Hons) - age 59, appointed October 2003

Mr Hunt is an experienced commercial lawyer and has Australian and international experience in mining law, the development of mining projects and the resolution of native title issues. Mr Hunt has provided advice on mining and petroleum law to local and overseas companies and governments. He is a partner in Hunt & Humphry Project Lawyers in Perth. Mr Hunt is also a non executive Director of Red Back Mining Inc (listed on the Toronto Stock Exchange); gold production at its Chirano Project in Ghana commenced in October 2005. Mr Hunt was the founding Chairman of Red Back Mining NL (formerly ASX listed) and in that role, over a period of 9 years, helped take that company from junior Australian explorer to listing on the TSX and subsequent gold production.

Managing Director John Williams B.Sc, MAusIMM - age 46, appointed May 2002

Mr Williams has 20 years experience as a geologist in Australia and overseas. This experience ranges through the spectrum of activities from exploration, feasibility studies, mine geology (open pit and underground) and mine management. He was instrumental in the discovery of a number of deposits that include the BrightStar Gold Project. Wendy Gully and the Attilla Deposit at Yamarna in Western Australia. Mr Williams was involved with the mine management of gold mines at Lady Bountiful, Broads Dam and Burbanks. Whilst having responsibility for mine geology he has also acted as the statutory Mine Manager in some open pit operations. Before joining A1 Minerals, Mr Williams operated as a mining consultant to Australian and Canadian firms in business development, involving project acquisition, financial analysis and contract negotiation.

Non-executive Director Peter Thomas CPA - Age 63, appointed April 2003

Mr Thomas is a CPA with Taxation and Auditing qualifications. He has wide-ranging experience in the mining industry, including lengthy employment at a senior level with a consortium of large multi-national corporations and has an extensive background in Commercial and Public Accounting. Mr Thomas brings considerable experience in exploration and mining company administration.

OPERATIONS

Laverton

Laverton is located 120 km east of Leonora and about 400 km north of Kalgoorlie in Western Australia. Established as a gold mining town more than a century ago it has a long history of gold production. Laverton is situated in the Eastern Goldfields of Western Australia, within the Archaean greenstone belts. Geological outcrop in the area is sparse and the region is dominated by extensive ephemeral salt lake systems. Most of the area is covered by laterite, colluvium and alluvium deposits. The Laverton basin is an Archaean granite-greenstone terrain, dominated by basic volcanic rocks and granit sedimentary units providing critical hosts for gold mineralisation. All of the economic gold deposits throughout the region are associated with faults, and the A1 Mineral deposits are primarily associated with the Duketon Fault. Advanced exploration techniques and equipment have allowed 20 million ounces of gold to be discovered in the Laverton district over the past twenty years. The tenements held by A1 Minerals are in close proximity to the Wallaby Gold and Sunrise Dam operations; both operations produce several hundred thousand ounces of gold each year.

Below is a satellite image of the southern portion of Western Australia. It shows the location of the BrightStar deposits relative to the mining centres of Laverton, Leonora and Kalgoorlie.

FIGURE 4: SATELLITE IMAGE OF WESTERN AUSTRALIA

Source: Google/Aegis Equities

AMT ikano ri Albourdi

FIGURE 5: SATELLITE IMAGE OF WESTERN AUSTRALIA'S EASTERN GOLDFIELDS

Source: Google/Aegis Equities

BrightStar Gold Project

The BrightStar Gold Project comprises several deposits located both to the south and north of Laverton. The total area of the holdings is 500 sq km and total JORC resources are currently 634,390 ounces of gold. The project was only 30 sq km in size when the company listed in May 2003. Since then it has steadily grown through well planned exploration and strategic acquisitions. The potential for the deposits to be combined into a successful project was first identified by the Managing Director, John Williams, in 2002.

The Pre-Feasibility Study was concluded in the June quarter of 2006. It indicated a pre-tax profit of \$12M to \$25M could be earned on the first 12 months of production, without including the high grade silver component of the resource. The Feasibility Study is underway and should be completed shortly. A decision to mine is expected before the end of the year. Additional funds of \$5M-\$7M will be required to bring the operation into production, however, once the mining begins, A1 Minerals should be cashflow positive and self-funding. Currently we anticpate debt funding we be used to provide the start up funds.

Sunrise Dam had similar origins to the BrightStar Gold Project. It was founded on a reserve of less than 400 koz and initially was only expected to run for a few years. However once the operation was established and cash flow enabled further exploration to be carried out the resource size grew to more than 5Moz, and with it the mining operation. Several of the A1 Minerals team had significant roles in the discovery and growth of Sunrise Dam. To date, A1 Minerals has averaged a discovery rate of 250kozpa of gold over the past few years. Based on current studies, the BrightStar Project will be cashflow positive by the end of 2007.

Source: A1 Minerals

Mining and Milling considerations

Mining of the Alpha and Beta deposits should recoup all the up-front expenditure. Once this is done lower grade deposits will then be economically viable, extending the mining opportunities. Open pit mining at the Beta deposit was conducted by Deep Yellow Limited before the company experienced cashflow issues and ceased operations. The company then when into administration. The administrators established the operation had only encountered a small patch of low grade material and the high grade gold, which the Feasibility Study was based upon, was present. Some underground stoping of the Beta deposit has occurred in the past but the majority of the ore remains in place.

The plan to switch from Toll Treating to an A1 Minerals owned and operated mobile Carbon-in-Pulp (CIP) milling operation will provide the company with greater control over the milling of its ore, increase the flexibility of the mine planning and provide improved profitability. Toll treating requires the company to pay an operator of a mill to process its ore. Not only does this reduce the profitability of the operation but also results in the operations' cashflow becoming dependant on the availability of the mill. The mobile CIP plant can be relocated from one site to another in only a few weeks. Early plans would have it positioned at Alpha-Beta for the first three years, then at Delta-Epsilon for the next three years. Having the mill located at the mining site will reduce ore trucking requirements and increase operational efficiencies. Another positive aspect is that while there are three established mills south of Laverton, there are none to the north. Therefore A1 Minerals' mobile mill will enable it to pursue targets north of Laverton that other companies could not.

FIGURE 7: CROSS-SECTION OF THE BETA DEPOSIT SHOWING THE PREVIOUS OWNERS' EXCAVATION

Source: A1 Minerals

Throughput and grade

The company has secured a ball mill, used to grind ore after it is crushed, and continues to source other essential equipment. Mining should commence in the middle of 2007 with the company targeting 25,000oz per year of gold production. The mill has a throughout rate of 200kt per year. At full capacity the average grade of the ore processed needs to be 3.9q/t for A1 Minerals to produce the 25,000ozpa it is targeting. The Pre Development Study has a mine plan optimisation showing Alpha as having 0.071Mt @ 4.3q/t for 9.800oz and Beta as having 1.004Mt @ 3.2q/t for 102.000oz. However the Feasibility Study should be able to refine the mine plans further and ensure the average grade is 3.9q/t or better.

Operating costs

The only cost estimates available to date from A1 Minerals is a Processing cost of \$27 to \$30 per tonne, or \$256 to \$285 per ounce. We have derived a total production cost from the combination of a fixed cost and a tonnage based variable cost. Our production cost estimate usually equates to about 60% of the gold price.

The mining and milling operations would require about 30 personnel. The core of this group is already employed and being utilised on the exploration program. It would be expected that the mill would be operated on a day-shift only basis initially.

Deposit		Measured			Indicated			Inferred			Total
	kt	g/t	koz	kt	qit	koz	kt	git	koz	kt	git	koz
Alpha	179	3.81	22	312	2.68	27	631	4.20	85	1,122	3.72	134
Beta	69	4.00	9	629	3.85	78	1.065	5.24	180	1,763	4.52	266
Delta		$\blacksquare$		108	2.70	9	134	3.00	13	243	2.84	23
Epsilon		$\mathbf{r}$	$\overline{ }$	.386	1.85	82	1.333	2.28	98	2.720	2.06	180
Eta		$\blacksquare$				$\overline{r}$	239	2.80	22	239	2.80	22
Zeta		$\blacksquare$		76	3.40	8	5	9.00		81	3.70	10
TOTAL	248	3.86	31	2.512	2.54	205	3.408	3.64	399	6.168	3.20	634

Source: Aegis Equilies

Exploration

A1 Minerals is targeting combined resources of five million ounces from several sites in a geological corridor near Kalgoorlie known to host several significant gold reserves. Ongoing exploration will be a major focus for the company.

FIGURE 8: GOLD BEARING REGION WITH LARGE OREBODIES

Source: A1 Minerals

A1 Minerals has acquired several important gold assets for the BrightStar Gold Project which provide it with multiple targets to explore once initial operations are established at the Alpha and Beta deposits. The deposits north of Laverton, Delta, Epsilon, Eta and Zeta, are on a continuation of the structures and greenstones which host the multi-million ounce Sunrise Dam and Wallaby Gold mines.

FIGURE 9: MAP SHOWING THE CONVERGENCE OF FAULTS

BRIGHTSTAR GOLD PROJECT NORTH LAVERTON Regional Geology and Deposits

PIGURE E

Source: A1Minerals

Prospectivity

The Delta and Epsilon deposits lie on a convergence of multiple faults making the ground highly prospective for gold. Preliminary rock-chip samples at Epsilon have confirmed the presence of high grade mineralisation and RC drilling recorded an intersection of 43m $@$ 2.0g/t only 100m below the surface. The exploration work has confirmed the validity of A1 Minerals' geological model. The deposit has the potential to host a good sized orebody. Drilling at Delta has encountered several good intersections, including 15m @ 4.4g/t. The exploration to date suggests the ore bearing intersections become wider at depth. There is the potential for both open pit and underground mining operations to be implemented at Delta.

The two cross-sections below show some of the significant drilling intercepts from the Delta and Epsilon deposits. These zones have not been included in the feasibility studies as the exploration work is still ongoing. The cashflow from the Alpha and Beta deposits will fund the ongoing work at the deposits north of Laverton.

Source: A1 Minerals

Narnoo Exploration Project

Narnoo Uranium covers 2,000 sq km and is located 200km to the South East of BrightStar. The preliminary exploration work to date has vielded some interesting results and there are indications it could be similar to AngloGold Ashanti's Tropicana deposit. Several uranium anomalies have also been recorded over the area and the Mulga Rocks Uranium Deposits are located nearby. The ground is not an immediate focus for the company but it does have the potential to be a stand alone operation.

GOLD SECTOR OUTLOOK

Gold Comments

Two of the world's leading gold-producing countries (Australia and South Africa) posted significant declines in production over the last financial year. Year-on-year production fell 6.4% in South Africa and 5% in Australia. Australia's gold production was 251t, the lowest in a decade.

Exploration expenditure for cold remains low because. although the gold price has risen, so too has the price of other commodities, driving exploration in different directions. Gold majors are more likely to 'buy' production than search for it.

The gold price has been consolidating since the correction in mid-May. The general market view over the near term is for jewellery and investor demand to
increase. The easing price of gold over recent months also allowed purchasers to become has more comfortable with a higher price for gold.

In recent weeks the gold price has fallen with a declining oil price. Gold exposure is traditionally seen as a hedge against inflation and a lower oil price has reduced the market's inflation concerns.

We believe the gold price will remain strong over the next few years. A weakening US dollar should lead to increased investment in physical assets, such as gold. Energy prices should remain high, leading to a return of inflation concerns. Coupled with falling mine output. these factors are expected to produce a steady gold price in 2007.

FIGURE 12: GOLD PRICE AND GOLD FUTURES COMPARISON

The difference between the six month and one month forward prices has eased in recent months but remains wide. indicating support for the gold price going forward.

TABLE 5: AEGIS EQUITIES RESEARCH SPOT GOLD FORECAST

	Actual	Aegis Forecasts
	CY05	CY06	CY 07	CY08	Long-term
Gold US\$/lb	462.5	595.6	600.0	670.0	630.0

Source: Aegis Equities

Glossary

oz - Ounce, equivalent to 31.1 grams koz - Thousand ounces kozpa - Thousand ounces per annum Moz - Million ounces $t$ - Tonne kt - Thousand tonnes tpa - Tonne per annum $m - matter$ km - kilometre sq km - square kilometre a/t - grams per tonne

Diamond Drill Hole (DDH) - Uses a diamond drill bit and produces the highest quality sample (a physical rock core). Most expensive drilling type. Can drill very deep holes.

Mapping - Producing a geological map of an area based on outcrop rocks.

Plant - An industry term used to refer to equipment or machinery used in the mining or milling processes.

Soil Sampling - Collecting a soil sample (a few kilograms worth) from a shallow hole.

Stoping - Underground mining method where ore is drilled, blasted and removed. The remaining cavern is usually left as is.

RAB drilling - The lowest quality drilling method. Cheap, and used for shallow holes. Assay results can be sourious.

Rock Chip - Collecting a sample of an exposed rock

RC/Percussion drilling - Same sample quality as that of RAB drilling. Uses an air hammer drill bit. Can drill deep holes.

Resource definition

The JORC Code - Joint Ore Reserve Committee of AUSIMM, AIG and AMIC - the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves.

Measured Resource - That part of a Mineral Resource for which tonnage, density, geology, grade and mineral content can be estimated with a high degree of confidence. This is based on detailed exploration and sampling spaced closely enough that geological and grade continuity can be confirmed.

Indicated Resource - That part of a Mineral Resource where tonnage, density, geology, grade and mineral content can be estimated with a moderate degree of confidence. It is based on exploration and sampling that is too widely spaced to ensure geological and grade continuity, but close enough to give a reasonable indication of continuity.

Inferred Resource - That part of a Mineral Resource for which tonnage, density, geology, grade and mineral content can be estimated with a low degree of confidence. It is based on geological evidence, gathered through limited or unreliable exploration, where geological and grade continuity has not yet been verified.

Peter Leodaritsis Managing Director Phone: 61 2 8296 1100 peter.leodaritsis@aer.com.au

Peter Rae Head of Model Portfolios Phone: 61 2 8296 1151 neter rae@aer com au

RESEARCH

RESOURCES

Nicholas Raffan Phone: 61 2 8296 1167 nicholas.raffan@aer.com.au

Brendan Fitzpatrick Phone: 61 2 8296 1157 brendan.fitzpatrick@aer.com.au

David Cotterell Phone: 61 2 8296 1159 david.cotterell@aer.com.au

INDUSTRIALS

Robert Gregory Phone: 61 2 8296 1119 robert.gregory@aer.com.au

Anthony Farnham Phone: 61 2 8296 1150 tony.farnham@aer.com.au

John Deniz Phone: 61 2 8296 1123 john.deniz@aer.com.au

Sandeen Gunta Phone: 61 2 8296 1133 sandeep.gupta@aer.com.au Tony Baddour Group Executive Finance, Admin. & Compliance Phone: 61 2 8296 1113 tony.baddour@aer.com.au

John Kessell Group Executive Investment Research Phone: 61 2 8296 1152 john.kessell@aer.com.au

FINANCIALS

Peter Rae Phone: 61 2 8296 1151 neter.rae@aer.com.au

Peter Leodaritsis Phone: 61 2 8296 1101 peter.leodaritsis@aer.com.au

Ravi Reddy Phone: 61 2 8296 1165 ravi.reddy@aer.com.au

David Filis Phone: 61 2 8296 1115 david.ellis@aer.com.au

PROPERTY TRUSTS

Rebecca Ratcliffe Phone: 61 2 8296 1100 rebecca.ratcliffe@aer.com.au

Radek Zeleny Phone: 61 2 8296 1168 radek.zeleny@aer.com.au

Peter Ruszkowski Phone: 61 2 8296 1153 peter.ruszkowski@aer.com.au

David Heather Group Executive Operations Phone: 61 2 8296 1108 david.heather@aer.com.au

Damien Klassen Head of Managed Investments Phone: 61 2 8296 1104 damien klassen@aer.com au

HEALTHCARE

John Kessell Phone: 61 2 8296 1152 iohn.kessell@aer.com.au

Dane Roberts Phone: 61 2 8296 1170 dane.roberts@aer.com.au

STRUCTURED PRODUCTS

Andrew Wong Phone: 61 2 8296 1138 andrew.wong@aer.com.au

Rodney Lav Phone: 61 2 8296 1106 rodney.lay@aer.com.au

Harold Legaspi Phone: 61 2 8296 1162 harold.legaspi@aer.com.au

Claire Aitchison Phone: 61 2 8296 1163 claire.aitchison@aer.com.au

Max Caprarelli Group Executive Sales & Marketing Phone: 61 2 8296 1130 max.caprarelli@aer.com.au

TELECOMMUNICATIONS. MEDIA & TECHNOLOGY

Rodney Lay Phone: 61 2 8296 1106 rodney.lay@aer.com.au

EMERGING COMPANIES

Nathan Lim Phone: 61 2 8296 1137 nathan.lim@aer.com.au

Sharon Loaiza Phone: 61 2 8296 1131 sharon.loaiza@aer.com.au

Dane Roberts Phone: 61 2 8296 1170 dane.roberts@aer.com.au

DATA SERVICES

Radek Zelenv Phone: 61 2 8296 1168 radek.zeleny@aer.com.au

Disclaimer & Disclosure of Interest

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