CAZALY RESOURCES LIMITED — Capital/Financing Update 2004

Dec 14, 2004

15^th December 2004

ASX Release

KUNANALLING DRILLING RESULTS REGIONAL RC, RAB and CATHERWOOD

The Company has now received all results from a programme of Reverse Circulation and RAB drilling conducted over the Company's Castle Hill area, and from drilling at the Catherwood resource at the Kunanalling gold project. The Castle Hill area hosts the recently announced Outridge gold discovery and the Mick Adams and Wadi gold resources and lies along strike of the Catherwood gold resource.

Drilling at Castle Hill targeted several areas within a very extensive gold anomaly defined by anomalous soils, geology and previous drilling. The anomaly extends for several kilometres and hosts existing resources and several gold prospects (see attached figure). As well as the previously announced results from the Outridge prospect, RC drilling targeted the Piggyback, Picante and North Kiora prospects.

Results from the Castle Hill drilling have further highlighted the exploration potential of the area with several significant results including:

13m @ 1.60 g/t Au 5m @ 6.66 g/t Au 2m @ 10.70g/t Au 8m @ 1.51 g/t Au

RAB drilling focussed on prospects along the Eastern Tonalite Contact trend with results confirming that this is a well mineralised trend with good potential to focus gold mineralisation.

At North Kiora, 3 lines of RAB were drilled along strike of an historic intercept of 12m @ 1.53 g/t Au. Results were very positive and included 2m $@$ 10.70 g/t Au, 2m $@$ 2.85 and 3m $@$ 1.54 g/t Au with other intercepts finishing in mineralisation to the end of hole. The results again show

that much of the previous drilling in the region did not properly test the structure with most holes finishing at shallow depths within what is now thought to be the gold depletion zone. Much scope remains at North Kiora to further test this mineralisation.

Further north along the structure drilling at Picante, with previous results of 44m @ 1.32 g/t Au and 8m @ 3.23 g/t Au, has extended the known zone of mineralisation to the south. As at North Kiora mineralisation occurs along the tonalite – greenstone contact with results including: $11m$ @ 1.02 g/t Au and 3m @ 2.02 g/t Au.

Drilling further north again at Piggyback likewise extended and confirmed a contiguous zone of mineralisation with results including; 2m @ 9.06 g/t Au, 5m @ 2.81 g/t Au and 8m @ 1.51 g/t Au. All of these results, together with other significant historic intercepts occurring both to the north and south of these prospects, indicate that much scope remains to find economic gold resources in the area. The results from this work will enable a systematic RC drilling programme to commence to test these targets and the structure at depth. This is particularly relevant given the nature of gold depletion in the region and the fact that the structure has rarely been tested at depth. The Outridge discovery is an example of the possible significant increase in grade that could be expected in the area.

Results from the drilling are as follows;

									Intercept
				Hole
Prospect	HoleID	East	North	Depth	Azm	Dip	From	To	g/t Au
Piggyback	KNRB0342	311,300	6,611,630	53	270	-60	40	42	2	m@	9.06
	KNRB0344	311,350	6,611,630	63	270	$-60$	46	54	8	m @	1.51
						incl	51	53	2	m@	3.14
							57	63	6	$m$ $@$	0.39
Picante	KNRB0360	311.490	6,611,000	37	270	-60	21	33	12	m@	0.98
						incl	22	25	3	m @	2.02
Nth Kiora	KNRB0369	311,475	6,611,255	36	270	$-60$	23	25	2	m@	10.70
	KNRB0370	311.500	6,611,255	37	270	-60	36	37	1	m @	3.38	eoh
	KNRB0371	311,525	6,611,250	42	270	-60	28	30	2	$m$ $@$	2.85
							33	39	6	m @	0.29
	KNRB0374	311,450	6,611,050	33	270	$-60$	32	33	1	m@	0.90	eoh
	KNRB0377	311,525	6,611,050	26	270	$-60$	14	16	2	m @	0.63
							24	26	2	m@	0.95
	KNRB0378	311,540	6,611,050	29	270	$-60$	18	29	11	$m$ $@$	0.69	eoh

RAB DRILLING RESULTS

NB: Samples assayed by fire assay with an AAS finish. Samples taken as 1 metre samples, eoh = end of hole.

								Intercept
Prospect	HolelD	East	North	Azm	Dip.	From	To			g/t Au
Catherwood	KNRC0138	10,188	9,999	270	-60	3	6	3	$m$ $@$	1.43
	KNRC0139	10,185	10,050	180	$-60$	41	56	15	$m$ @	2.26
	KNRC0140	10,190	10,065	180	$-60$	63	69	6	m@	1.95
						75	76	1	$m$ @	9.31
	KNRC0141	10,173	10,080	270	$-60$	46	49	3	$m$ $@$	1.91
						57	58	1	m@	2.59
	KNRC0143	10,220	10,020	270	$-75$	76	79	3	$m$ @	1.27
	KNRC0144	10,254	9,987	270	$-75$	0	4	4	$m$ @	2.03
	KNRC0145	10,220	10,000	270	-45	0	4	4	$m$ $@$	4.48
						11	12	1	$m$ $@$	3.00
						44	47	3	m@	1.53
	KNRC0146	10,218	9,960	270	$-65$	15	23	8	$m$ $@$	1.68
						36	37	1	m@	2.35
						44	46	2	m $\omega$	2.46
	KNRC0147	10,227	9,899	270	$-60$	53	55	$\overline{c}$	$m$ $@$	3.67
						58	59	1	m@	2.23
						37	38	1	$m$ $Q$	2.77
Goulburn	KNRC0153	5.180	4,825	90	$-60$	4	8	4	m@	3.39
Mick Adam Sth	KNRC0156	4,607	4,002	90	-60	74	76	$\overline{c}$	$m$ @	1.82
						82	84	$\overline{2}$	$m$ $@$	1.26
	KNRC0157	4.647	4,002	90	$-60$	38	40	$\overline{2}$	m@	1.00
Wadi Sth	KNRC0158	4,520	3,500	270	$-60$	56	58	2	$m$ @	1.15
Piggyback (GDA)	KNRC0164	311,350	6,611,701	270	-60	53	58	5	$m$ $@$	2.81

RC DRILLING RESULTS

NB: Samples assayed by fire assay with an AAS finish. Samples taken as 1 metre samples.

The drilling has further highlighted the extensive nature of gold mineralisation throughout the project area which is focussed largely along the Kunanalling Shear and the Kintore tonalite intrusive. Several prospects have now been identified and several other areas remain to be tested also. It is planned to continue drilling these areas early in the New Year. Drilling will also include a programme of Diamond Core drilling at Outridge and at some of the other prospects.

The RC results from Catherwood have confirmed the existing interpretations of the mineralisation. Final geological modelling, mining studies and regulatory approvals are now underway.

Yours sincerely,

Clive Jones

Managing Director

Information in this report pertaining to mineral resources and exploration results was compiled by Mr Clive Jones who is a Member of the Aus.1.M.M with not less than 5 years experience in the relevant fields, and who consent to act as Competent Persons with regard to the reporting of the mineral resources in this document.