CASSIUS MINING LIMITED — Capital/Financing Update 2008

Apr 15, 2008

16 April 2008

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ASX ANNOUNCEMENT

Signs with Tanzania Port Authority on Mtwara Port Development Project

Highlights

• Signs Memorandum of Understanding (“MOU”) with Tanzania Ports Authority ("TPA")

• Determining potential of a public private partnership for the development, modernization and expansion of the Mtwara Sea Port, regulating the associated Export Processing Zones and Free Port facility(“the MSP Project”)

• The MSP Project forms part of the major Mtwara Infrastructure Corridor Development Initiative

Summary

The Directors of Gulf Resources Ltd (ASX:GLF; “Gulf”) are pleased to announce, that the company has entered into a MOU with the Tanzania Ports Authority to jointly determine the potential of a public private partnership for the development, modernization and expansion of the Mtwara Sea Port, including regulating the associated Export Processing Zones and Free Port facility.

The Mtwara Sea Port is part of the Mtwara Development Corridor, which includes projects identified under the Spatial Development Initiative including power generation and transmission, transport infrastructure, telecommunications, water, agriculture, mining (including iron ore and coal), tourism, forestry and fisheries (''the MSP Project").

Commentary

Scott Reid, Chairman of Gulf Resources, said, “This agreement is an important stepping stone for Gulf’s aim to participate in the development of Tanzania’s Mtwara corridor project”.

Mr Reid commented that “In partnership with the Tanzania Port Authority we will be assessing the technical and economic viability of developing the Mtwara Sea Port. The port is one of East Africa’s only natural deep sea ports, and forms the gateway to the development of all the Mtwara corridor projects. The key to the unlocking the projects is in the planning and development of the port itself”.

Further Details and Background Information

Under the MOU, Gulf and the TPA will:

• Cooperate exclusively and with equal interest at this stage to determine the potential of a public private partnership for the MSP Project

• Jointly assist in the definition of sources of capital and leverage funding for the projects

• Arrange completion of a conceptual technical and economic study in a timeous manner

The MOU is valid until the 9 July 2008 and is extendable my mutual consent until 9 October 2008.

It is envisaged, depending on the outcome of the conceptual study and agreement by both parties, another memorandum of understanding will be prepared detailing conditions, interest and obligations by each party prior to commencement of a feasibility study.

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About Tanzanian Port Authority

The Tanzanian Port Authority (TPA) is a statutory body incorporated to establish and coordinate Tanzania’s ports and harbours system and to provide services relating to ports and harbours facilities, including carrier, navigation, stevedore, wharfage and storage services. The TPA is also tasked with the construction and operation of ports and harbours. As an incorporated State entity, the TPA currently owns all the major ports and harbours in Tanzania, including Dar Es Salaam, Tanga, Mtwara and all lake ports in Tanzania.

About Gulf Resources

Gulf Resources is a resources development and investment company that crosses the divide between Africa and Asia. Gulf’s strategic position aims to maximise the natural development synergies that exist between Africa and Asia. Gulf operates at this new frontier of developed and developing markets in order to uplift shareholder value on a sustainable basis.

We seek Sustainable Success through:

• Partnerships for Prosperity

• Diversification of Assets

• Intellectual Expertise and Capital

With established bases in Tanzania and Vietnam, Gulf’s team of seasoned engineering, project management and resources specialists are set to develop projects of major significance to both the company and the countries in which Gulf operates.

Coupled with a strong investment bias, experienced finance division and high level partnership approach, the group is on a growth trajectory to become a major consolidated resource development and investment enterprise within five years.

Gulf’s current partners include:

• The National Development Corporation of Tanzania, an organization owned by the Government of the United Republic of Tanzania with a specific mandate to develop, coordinate and implement infrastructural and economic projects through Public Private Partnerships (PPP). Among other things, the Government of the United Republic of Tanzania has mandated NDC, on an exclusive basis, to co-ordinate and guide implementation of the various projects being undertaken in coordination with the Southern African Development Community (SADC) Regional Spatial Development Initiative. Projects identified for the NDC include power generation and transmission, transport infrastructure, telecommunications, water, agriculture, mining, tourism, forestry and fisheries and the development and regulation of Export Processing Zones and Free Ports in Tanzania.

• Hanoi General Export and Import Corporation, a member of the Hanoi General Export and Import Group (“Geleximco”), since its establishment in 1993 has become one of Vietnam’s largest private industrial conglomerates with substantial interests across a broad range of sectors including mining, finance, manufacturing, commodity trading, agricultural processing, energy and resources.

• The Tanzanian Port Authority (TPA) is a statutory body incorporated to establish and coordinate Tanzania’s ports and harbours system and to provide services relating to ports and harbours facilities, including carrier, navigation, stevedore, wharfage and storage services. The TPA is also tasked with the construction and operation of ports and harbours. As an incorporated State entity, the TPA currently owns all the major ports and harbours in Tanzania, including Dar Es Salaam, Tanga, Mtwara and all lake ports in Tanzania.

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About Mtwara Port

Mtwara port is one of the three major ports owned and managed by Tanzania Ports Authority. Others are Dar es Salaam and Tanga. The deep water port at Mtwara was built between 1948 and 1954.

The major import commodities are foodstuffs, i.e. maize flour, rice, beans, sugar, wheat/wheat flour, beer, cement and other general cargo. Principal export commodities are raw cashew nuts, cassava roots, sim sim and sisal.

The present under-utilisation of the port is essentially due to low economic performance of the hinterland of Mtwara coupled with poor access to that hinterland.

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Port Characteristics

The deep water quay is dredged to -9.8 metres chart datum. There are no tidal restrictions for vessels entering and leaving the harbour.

A sheltered anchorage exists in the inner bay (basin) with good holding ground of –20 metres. The basin can accommodate six vessels of 175 metres. The number of vessels can be increased if numerous shoal patches are removed.

Port Facilities

Quay Wall

The port has a quay wall of 385 metres which can accommodate two ships and one coastal vessel at a time. The draught is 9.85 metres and with the introduction of new navigational aids, the port will be accessible to ships on a 24 hour-a-day basis.

Equipment

Cargo handling equipment include 3 mobile cranes of 25 tonnes, 15 tonnes and 4 tonnes; 4 tractors, 18 trailers, 8 forklifts and 1 front loader of 7.5 tonnes which can be upgraded to 15 tonnes. Marine crafts available at the port are 1 pilot boat and 1 mooring boat. The port does not have specialized equipment for

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handling container traffic because the volume at present does not justify such investment.

Storage

There are four (4) transit sheds with a total storage capacity of about 15,000 tons.

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Present Capacity

Mtwara port can handle 400,000 metric tonnes (“MT”) of imports and exports per annum. The port is mainly designed to handle conventional cargo.

Upgraded Capacity:

The port of Mtwara can handle up to 750,000 MT with the same number of berths if additional equipment is put in place for handling containerised traffic.

Current Traffic Performance:

The average annual cargo throughput at Mtwara port for the past 5 years is 100,000 MT which is only 25% of its capacity of 400,000 MT. The annual figures are shown in the below:

	Year 1992/3 1993/4 1994/5 1995/6 1996/7	Dwt (deadweight tonne)
		Imports Exports Total 39,325 56,634 95,959 47,345 47,790 95,135 37,000 57,926 94,926 40,279 67,133 107,412 53,381 63,609 116,990

Future Expansion Programme

The current Mtwara Port Master Plan envisages expansion of the quay wall Westwards by 400 metres and Eastwards by another 400 metres. This expansion would in effect double the number of berths from this current number to five berths. The total area reserved for expansion is 200 acres. Besides the area of 200 acres reserved for port expansion, there is also an area of 60 acres which is reserved for port related development activities. This may be used as an EPZ and distribution centre.

The Hinterland

The immediate hinterland of the Mtwara port comprises the regions of Mtwara, Lindi and Ruvuma. These are agriculturally rich areas famous for cashew nuts, coffee, tobacco and sim sim farming.

Beyond these regions, and provided a good inland transport network is put in place, the port may also be able to cater for neighbouring countries of Malawi, Mozambique and Zambia. The port is geographically well located to be further utilised as a transhipment port for cargoes originating from and destined to the Indian Ocean Islands of Mauritius, Seychelles, Comoro, and Madagascar.

Major Projects

The Government of Tanzania has already identified a number of projects which would directly or indirectly increase the throughput of Mtwara port. Among them are the following:

• The Liganga Iron Ore Project ;

• The Mchuchuma Coal Project ;

• Songosongo and Mnazi Bay Gas Projects’;

• Agriculture, Livestock, Fisheries and Forestry Projects;

• Mtwara-Mbamba Bay Road;

• Railway lines linking Mtwara port to iron and coal deposits of Liganga and Mchuma;

• Telecommunications Project

• Export Processing Zone

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Other Facilities

Mtwara town has the basic requirements for broader commercial activities, including:

• an airport with a runway capable of landing Boeing 737-sized aircraft;

• a telecommunications network;

• banking services;

• potential power from the natural gas field of nearby Songosongo Island.

Source: http://www.tanzaniaports.com/mtwara.htm

Background Information on Tanzania

Demographics and Geographic Setting

Located in Eastern Africa, bordering the Indian Ocean, between Kenya and Mozambique, Tanzania is naturally endowed with abundant mineral resources.

Mining, Resources and Infrastructure

Mining is one of the fastest-growing economic sectors in Tanzania and contributes roughly half of its foreign exchange and around 3.5 per cent of GDP.

Tanzania is now the third largest producer of gold in Africa after South Africa and Ghana. The value of output in the mining sector grew by nearly 16% in 2005 after rising by 15% in 2004. From 2000 to 2005, the value of output in the mining sector grew by an average of per year because of substantial increases in gold production.

In recent years, the mineral industry of Tanzania has

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produced copper, gold, silver, and rolled steel products, and such industrial minerals as calcite, diamond and other gemstones, gypsum, phosphate rock, and salt. The country has also produced coal, natural gas, and such building materials as cement, gravel, limestone and sand. Deposits of cobalt, iron ore, nickel, and titanium are also known to occur in Tanzania.

Tanzania’s two railway networks connect 14 out of 20 cities and the neighbouring country of Zambia. There are several international and domestic airports linking Tanzania to the world and three major ports: Dar es Salaam, Tanga and Mtwara, which function as hubs for traffic emanating from, and destined to the land locked neighbouring countries of Uganda, Burundi, Rwanda, Zambia, Malawi, and Democratic Republic of Congo. There is a sustained programme for building good quality roads. Nonetheless, infrastructure is one of the key investment drivers which Tanzania is struggling to improve.

Financial Setting

On the wider economic front, Tanzania has been carrying out successful economic and structural reforms that have improved economic performance and sustained growth. These achievements are based on solid foundations of political and economic reform undertaken by the Government since 1986, placing Tanzania in a position where a prolonged period of high GDP growth rates is expected. In 2005, Tanzania’s nominal gross domestic product (GDP) amounted to $27.1 billion. In addition, Tanzania has a stable fiscal regime with sustainable level of inflation. Under its economic recovery program, Tanzania increased revenue streams and substantially reduced spending. Continuous decline in the rate of inflation is mainly the result of prudent fiscal and monetary policies. With a Government determined to promote a stable, long term sustainable resources industry as the economic powerhouse of the future, Tanzania provides a highly favourable environment to commit significant investment.

Sources: USGS - Tanzania Country Profile 2006; CIA World Fact Book - Tanzania

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