CAZALY RESOURCES LIMITED — Capital/Financing Update 2004

Sep 28, 2004

29^th September 2004

ASX Release

CATHERWOOD RESOURCE UPGRADE and OPTIMISATION KUNANALLING PROJECT

Following the successful results from recent drilling at the Company's Kunanalling project a reestimation and interim optimisation for mining of the Catherwood resource has been completed.

Resource

The work has resulted in an increase in the previously announced resource at Catherwood and indicates that the orebody can potentially be profitably mined. The resource now stands at:

574,000T @ 2.4 g/t Au cut (44,700 ozs. Au)

The result represents an increase of 43% in contained gold from the previously announced resource for Catherwood of 332,000 t @ 2.9 g/t Au. The resource represents part of the total resources estimated for the Kunanalling project of: 5.1 Mt @ 1.9 g/t Au (308,000 oz Au).

Zone	Inferred			Indicated			TOTAL
	Tonnes	g/t Αu	Oz Au	Tonnes	g/t Αu	Oz Au	Tonnes	g/t Au	Oz Au
Hanging Wall	21,000	3.1	2,100	247,000	1.9	15,100	268,000	2.0	17,200
l Main Lode	68.000	2.8	6,200	238,000	2.8	21.300	306.000	2.8	27,500
TOTAL	89,000	2.9	8,300	485.000	2.3	36,400	574,000	2.4	44,700

			Table 1: MINERAL RESOURCES - CATHERWOOD
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The resource was modelled using 1 g/t Au grade envelopes with 2m internal dilution and 1m external dilution. The resource is reported from model blocks using a 1 g/t cut-off grade. Grade estimation used top cuts of 25 g/t Au (Main Lode) and 20g/t Au (HW) and SG values were assigned by RL over 4 domains and are based on data measured from core.

Additional low grade material, comprising material 0.5 to 0.99 g/t Au from the oxide and transition zones only, exists within the mineralised envelopes at Catherwood. These comprise Indicated Resources of 115,000 t @ 0.80 g/t Au and Inferred resources of 36,000 t @ 0.77 g/t Au for a total low grade resource of 151,000 t $@$ 0.80 $q/t$ Au. Cazaly considers that these resources could be stockpiled during mining operations and could potentially comprise ore feed to a large heap leaching operation in the Kunanalling Project area.

Resource Optimisation

An optimisation study of the updated resource for Catherwood was carried out by Golder Associates. Two separate milling scenarios were run, incorporating variable toll milling, trucking, mining and administration costs and using AUD gold prices of \$550, \$575 and \$600. Using the \$575 gold price and a total operational cost of \$29/t, then the Catherwood resource would produce: 97,000T @ 4.0 g/t Au (11,330 oz Au) for a revenue of A\$1.8M

A summary all material within the optimal pit shells is presented below in Table 2.

Operational Cost	Gold Price A\$/oz	Rock kŧ	Waste kt	Strip t/t	Tonnes kt	Grade g/t Au	Recov. Metal Au oz	Revenue A\$m	Net Revenue A\$m
\$19/t	550	2,120	1,910	9.0	212	3.1	19,300	10.33	2.82
	575	2.180	1.950	8.8	222	3.1	19,800	11.09	3.30
	600	2,480	2,240	9.3	240	3.0	21,300	12.46	3.81
	550	1,010	920	10.8	85	4.2	10,600	5.67	1.54
\$29/t	575	1.060	960	10.0	97	4.0	11,300	6.35	1.81
	600	1,100	990	9.7	102	3.9	11,700	6.86	2.09

Table 2: Summary of Catherwood Resource within optimisation shells

The resources reflect what could be expected to be mined once pit design and scheduling were completed. The results are only to be considered as scoping study level as further drilling is required to upgrade the status of the resource and mine planning has yet to be conducted.

It should be noted that the resource lies within a granted Mining Lease and is adiacent to major haul roads which access several mills in the region. Preliminary planning for statutory approvals to mine has also begun. Development work will be ongoing in conjunction with the assessment of the other resources within the Kunanalling project.

Yours sincerely,

Clive Jones

Managing Director

Information in this report pertaining to mineral resources and exploration results was compiled by Mr Clive Jones and Mr Mike Young who are Members of the Aus.i.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. Open pit optimisations were completed by Mike Apfel, Golder Associates who is a Member of the Aus.I.M.M and has sufficient relevant experience in the reported field of activity and who consents to appearing in the document and context in which it appears.