CARNAVALE RESOURCES LIMITED — Capital/Financing Update 2008

Jun 16, 2008

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17 June 2008 ASX Announcement

The Manager ASX Ltd Level 4, 20 Bridge Street Sydney, NSW 2000

Carnavale announces first drilling results on Frei Martinho Molybdenum Project and the acquisition of new properties in Brazil

Australian-based exploration company Carnavale Resources Limited (ASX: CAV, Frankfurt: A0MJ31) (“Carnavale” or “the Company”) announces the first drilling results on its 100%-owned Frei Martinho Molybdenum Project located in the northeast region of Brazil. The 2,000-metre Phase 1 diamond drilling program was concluded in February 2008, with 2,046 metres drilled on 18 diamond drill holes. Fourteen drill holes were drilled along the main Mo-bearing skarn horizon along a strike length of 750 metres. This announcement includes the assays currently available for 10 of the total 18 drill holes. Highlight intersections include;

• 0.226% Mo over 2.67 metres on hole FMD-009-07, from 89.98 metres depth,

• 0.019% Mo over 62.40 metres on hole FMD-006-07, from 8.00 metres depth.

• Assays available to date indicate that molybdenum mineralisatiion is more widespread than originally expected and not just restricted to the skarn zone. Disseminated molybdenum mineralization is open along the strike and dip, as well as, on the hanging-wall and footwall country rocks.

Based on the initial concept that molybdenum mineralization was restricted to the skarn zones, only these intervals were sent for immediate analysis using the ME-XRF07 method provided by ALS-Chemex. The results of these intervals returned with insignificant values which indicated that the level of confidence of the ME-XRF07 method was not appropriate.

Re-analysis was undertaken using a more precise method, ME-XRF-12. Assays from ME-XRF12 analysis reported grade, on average, around 0.02% Mo. Concurrently, detailed logging identified that molybdenum also occurs disseminated within the host biotite-quartz schist and the re-analysis using the ME-XRF12 method was extended into the hosted rock.

In addition to that, inconsistent analyses were detected by the QA/QC control and several samples were submitted for duplicate checking. All of these steps generated a delay on the announcement of the first drilling results, but the Company is now confident in the analytical methodology used and believes that further results should be available in a more timely manner in the future.

Drill intersections are presented in table.2. These results indicate the potential for a bulk tonnage low grade deposit with respect to the areas thus far tested. All the intercepts presented in this announcement are open on both directions (hanging-wall and footwall) and complementary analyses are required. It is anticipated that highgrade zones exist along the thick mineralized package and exploration efforts are being carried out to identify these zones along strike and at depth.

Table.1 – Drill hole locations and dips from Frei Martinho Molybdenum Project.

HOLE ID	EASTING	NORTHING	RL(m)	EoH (m)	DIP(°)	Azimuth.	Assays
FMD-001-07	775887	9286813	418	70.00	90	0	Received
FMD-002-07	775858	9286677	426	70.40	90	0	Received
FMD-003-07	775912	9286937	420	70.50	90	0	Received
FMD-004-07	775921	9287107	429	70.40	90	0	Received
FMD-005-07	775957	9287285	422	100.40	90	0	Received
FMD-006-07	775812	9286547	434	70.40	90	0	Received
FMD-007-07	775936	9286644	410	121.40	90	0	Received
FMD-008-07	776011	9286526	421	151.40	90	0	Pending
FMD-009-07	775998	9286799	425	112.40	90	0	Received
FMD-010-07	776030	9286904	398	121.40	90	0	Pending
FMD-011-07	775926	9286894	422	121.40	90	0	Received
FMD-012-07	775936	9286555	423	154.40	60	290	Pending
FMD-013-07	775791	9286565	419	91.40	90	0	Received
FMD-014-07	775834	9286376	421	100.10	60	290	Pending
FMD-015-08	776794	9287157	399	160.40	60	290	Pending
FMD-016-08	775901	9288109	435	109.40	60	290	Pending
FMD-017-08	777456	9288069	394	100.40	90	0	Pending
FMD-018-08	776825	9288762	430	250.40	60	290	Pending

Table.2 – Preliminary drill hole intersections from Frei Martinho Molybdenum Project.

Hole	From (metres)	To (metres)	Width (metres)**	Mo *(%)
FMD-001-07	38.00	51.00	13.00*	0.019
FMD-002-07	37.00	55.00	18.00*	0.019
FMD-003-07	32.00	46.00	14.00*	0.017
FMD-004-07	23.00 51.00	37.00 59.00	14.00 8.00	0.019 0.017
FMD-005-07	12.00 42.00	31.00 51.00	19.00 9.00	0.017 0.020
FMD-006-07	8.00	70.40	62.40*	0.019
FMD-007-07	73.00	91.00	18.00*	0.019
FMD-009-07	89.98	92.65	2.67*	0.226
FMD-011-07	46.20	57.30	11.10*	0.019
FMD-013-07	26.65	40.60	13.95*	0.020

• open in both directions

** widths are drill intersected and do not represent true widths

• *** Results calculated at + 0.01% Mo cut-off grade.

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Acquisition of New Properties

The geological knowledge acquired during the Phase 1 diamond drilling program, in conjunction with the regional fieldwork led to a decision by the Company to acquire an additional land package which includes six exploration licenses in the region and applications for five exploration leases which increased the project size from 12,790 hectares to 34,607 hectares . Three mineral occurrences were identified within this new property and all of them show a metal association that can be correlated with a granite intrusive-related style, as indicated in table.3. An aggressive exploration program will be immediately developed in order to delineate new drill targets on these properties.

Table.3 – Assays from rock grab samples collected within the recently acquired properties.

Sample_ID	Cu (%)	Au (ppb)	Ag (ppm)	Bi (ppm)	Mo (ppm)	W (ppm)
ADC-011	1.80	219	34	2,705	530	154
ADC-007	2.90	403	87	4,831	<1.0	<10
ADC-009	2.80	300	69	4,500	587	1,950
VILROCK004	0.82	245	<3	387	<3	<20
VILROCK005	>1.00	3,256	51	>10,000	4	<20

Terms of the Agreement

Under the terms of the agreement, Carnavale has paid 40,000 Reals, approximately AUD $26,000. In addition to this Carnavale will also make instalment payments as follows:

• Four months following the execution of the definitive agreement, Carnavale shall pay 20,000 Reals, approximately AUD $13,000,

• Six months following the execution of the definitive agreement, Carnavale shall pay 100,000 Reals, approximately AUD $65,000,

• Twelve months following the execution of the definitive agreement, Carnavale shall pay 300,000 Reals, approximately AUD $195,000; and

• On the commencement of mining activities, Carnavale shall pay a royalty of 1% net smelter return. The net smelter return can be exchanged by payment by Carnavale of US$1,000,000.

Carnavale reserves the right to, at its sole discretion, end this agreement at any time, provided that a written notice is delivered to the other party.

Ron Gajewski Director

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Quality Assurance/Quality Control and Competent Person

Drill holes were detailed logged by Carnavale geologists in the field with the help of an ultraviolet lamp to identify powellite and scheelite-bearing zones. Carnavale employs a systematic QA/QC program including duplicates and blanks.

Core samples were prepared at ALS Chemex preparation site located in Belo Horizonte (Minas Gerais State), Brazil. Samples were crushed to 70% passing thru 10 mesh, split to 250 grams and pulverized to 90% passing thru 200 mesh. A 10-gram aliquote was then sent to ALS Chemex laboratory in Perth, Australia, where molybdenum and tungsten assays were carried out. First analysis used the X-Ray ME-XRF07 method, which proved to be inappropriate to the style of mineralization. Core samples were subsequently re-analyzed by an X-Ray ME-XRF12 method. Inconsistent results were submitted to a recheck analyses by the same laboratory. In addition, ALS Chemex inserts its own standards and blanks into each sample batch. ALS Chemex is an ISO 9001-2000 certified laboratory and independent of Carnavale.

Selected representative pulverized sample duplicates are being submitted for referee analyses to SGS-Geosol laboratory based in Belo Horizonte, Minas Gerais State, Brazil. Lakefield is an ISO14001 and ISO 9001:2000 accredited laboratory which is independent of Carnavale.

Scientific or technical information in this release has been prepared under the supervision of Mr. Paulo I. de Brito, a consultant to the Company and a member of The Australasian Institute of Mining and Metallurgy (“AusIMM”). Mr de Brito has sufficient experience which is relevant to the style of mineralisation 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 Exploration Results, Mineral Resources and Ore Reserves (“the JORC Code”). Mr de Brito consents to the inclusion in this report of the information, in the form and context in which it appears.

For further information in respect of Carnavale please contact:

Ron Gajewski	Klaus Eckhof	David Tasker	David Tasker
Director	Director	Media / Investor Relations
Tel:+61 8 9240 6876	Tel:+61 411148209	Tel:+61 8 9388 0944
Email: gajewskir@crcpl.com.au	Email: eckhofk@crcpl.com.au	Email: dtaske	r@pprwa.com.au
Carnavale Resources website:www.carnavaleresources.com.au

Carnavale Resources website: www.carnavaleresources.com.au

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Location of Drill Holes on Frei Martinho Project Diamond Drilling Programme

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New properties acquired X Original properties

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