CONICO LTD — Interim / Quarterly Report 2008

Feb 2, 2009

ACN 119 057 457

(Second Quarter Activities Report amended to show separate JORC Inferred Resources and JORC Indicated Resources)

ASX QUARTERLY REPORT

FOR PERIOD ENDED 31ST DECEMBER 2008

HIGHLIGHTS

Mt Thirsty Ni Co Mn Project (WA)

• New study findings - Project has potential to deliver 3,700 tonnes of cobalt, 10,300 tonnes of nickel and 27,000 tonnes of manganese per annum during first 3 years of production to rank in the top 5 cobalt producers globally.

• Atmospheric leach extractions of 99% cobalt, 78% nickel and 98% manganese achieved during recent metallurgical test-work.

• Desktop study reveals NPV of A$450 million with an IRR of 27% calculated using US$10,000 per tonne nickel price and an exchange rate of 0.70 USD/AUD.

• Potential net cashflows for the life of mine after capital payback pegged at A$1.65 billion at US$4.54/lb nickel, US$16/lb cobalt and US$1,200/tonne manganese carbonate.

• Production profile targeting 2 million tonnes per annum plant feed rate.

• Proposed plant flow design is proven with no new technology.

Wynbring Uranium Project (SA)

• Infill drilling at the Pundinya prospect has yielded further significant assay results including 2m at 648ppm U3O8 in hole W123 from 50 to 52m and 11m at 374ppm from 41 to 52m in hole W126.

• Anomalous uranium assays up to 9m at 166ppm U3O8 intersected up to 3km down-channel from the Pundinya prospect.

• Broad spaced drilling to the south has defined palaeochannel sands for a further 9km down-channel to the tenement boundary.

Level 40, Exchange Plaza, 2 The Esplanade, Perth, Western Australia, 6000

Telephone: (08) 9282 5889 Facsimile: (08) 9282 5866

Email: mailroom@fissionenergy.com.au

Report for December Quarter 2008

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Mt Thirsty Project Location and Regional Geology

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Location of Wynbring Palaeochannel

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MT THIRSTY Ni-Co-Mn PROJECT (Fission 50%)

The Mt Thirsty Cobalt-Nickel Project covering an area of 45km[2] is located 20km north-northwest of Norseman. Fission through its wholly owned subsidiary Meteore Metals Limited owns 50% of the project in joint venture with Barra Resources Limited.

Mt Thirsty has the potential to emerge as the world’s fourth largest cobalt supplier according to the results of an ongoing metallurgical and engineering pre-feasibility study.

On conservative estimates for the first three years of production, the study found the project could immediately rank comfortably in the world’s top five cobalt producers (see Figure 1).

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World Annual Cobalt Production 2007
Total Supply 53,700t
13,500
12,000
10,500
9,000
7,500
6,000
4,500 3,700t
3,000
1,500
0
Tonnes Cobalt
CTT, Morocco Eramet, France ICCI, Canada Norilsk, Russia OMG, Finland Sumitomo, Japan Umicore, Belgium Vale Inco, Canada Xstrata, Norway China India Minara, Australia South Africa Brasil
3yrs)
BHP Billiton, Australia Mt Thirsty (Annual Production first
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Figure 1: – World annual cobalt production 2007 compared with Mt Thirsty’s forecast annual production rate for the first 3-4 years. (Sourced from the Cobalt Development Institute).

The findings are from an independent study by Simulus, a metallurgical and engineering consultancy firm, as part of ongoing pre-feasibility work on the project.

The metallurgical and engineering study found that, as a minimum, Mt Thirsty has the potential to support production of 3,700 tonnes of cobalt per annum (tpa) in its first three years (and about 2600tpa thereafter) at a throughput of 2 million tpa, ranking it around the top four or five such producers globally.

High cobalt throughput can be easily achieved early in the production schedule due to the majority of high grade ore sitting close to the surface, within 8 to 19 metres. The Joint Venture partners say this front-loads production, increases Net Present Value (NPV) and significantly shortens capital payback.

The Simulus study determined a project development strategy that builds an atmospheric acid leach plant at Mt Thirsty at a present day cost of approximately US$400 million to produce cobalt and nickel metal together with manganese carbonate concentrate for shipping to third party refineries. The plant is versatile and is easily expanded.

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Metallurgical testwork completed to date has returned impressive recoveries at low acid consumptions of between 150 and 330kg per tonne. Atmospheric leaching at moderate temperatures has returned 99% cobalt, 77.5% nickel and 98% manganese extractions at 329 kg per tonne of acid. Nickel extraction can be increased above 95% with higher acid addition. Overall recoveries were discounted to a more conservative level for financial modelling. Cobalt and manganese extractions used for modelling were 96% and 95% respectively. Nickel extraction was modelled at 90% using 450 kg/t based on extrapolated testwork data.

Cash operating costs for the project are estimated at approximately A$100 per tonne of ore. After cobalt credits, the cash operating cost is in the lowest quartile at approximately US$2.49 per pound of nickel.

A long-term free-on-board sulphur price of US$50 per tonne, based on long-term price forecasting, was applied during the study.

Potential net cash flows after capital payback but excluding capital depreciation, project loan interest, royalties and income tax for the life of the project, are estimated at A$1.65 billion.

Key findings of the study include:

• Project operating costs would be in the lower quartile – around US$2.49 per pound of nickel after cobalt credits.

• Total capital costs estimated at US$400 million.

• Quick 4 to 5 year capital payback with high grade ore being sourced for the first 3 years of production.

• The project ore is totally oxidised, negating the need for drilling and blasting.

• The shallow ore body is amenable to low cost, simple, conventional open pit mining.

• Acid consumption in processing would be low for atmospheric leach, at around 450kg per tonne.

While further pre-feasibility modelling remains to be completed, it is expected that the proceeds from Mt Thirsty’s nickel production would cover most if not all of the mine’s operating costs leaving the cobalt and manganese production credits delivering an undiluted revenue stream.

Mt Thirsty has a current JORC Inferred Resources of 14,800,000 tonnes at 0.14% Cobalt, 0.59% Nickel and 0.99% Manganese and a JORC Indicated Resource of 14,230,000 at 0.11% Cobalt, 0.52% Nickel and 0.77% Manganese over an apparent strike of 1.3 kilometres and a width of around 800 metres. This equates to a potential 22 year mine life at a throughput rate of 2 million tpa. The deposit remains open along strike with the potential to further increase resources significantly through further inexpensive aircore drilling.

Further Potential

There is sound potential to expand the resource further south along strike to the tenement boundary, a distance of some 600m, as mineralisation remains open beyond the 6,300N section.

Future

The joint venture partners are planning to initiate a bankable feasibility study shortly, pending funding arrangements. This study is expected to be completed within 12 to 18 months.

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URANIUM EXPLORATION (SOUTH AUSTRALIA)

Wynbring Project (Fission 100% uranium rights)

The Wynbring project is located within EL 3306 on the Gawler Craton approximately 100km west northwest of Tarcoola in South Australia. It covers a Tertiary palaeochannel 25km to the northwest of Toro Energy Ltd’s Warrior uranium deposit.

A 95 hole 4,829m air core drilling programme was completed during the quarter and involved both close spaced infill drilling at the Pundinya prospect and broad spaced step out drilling to more accurately define the continuation of the Wynbring palaeochannel southwards from the Pundinya prospect for approx. 9km to the tenement boundary (Figure 2).

Infill drilling was carried out on a 50 by 50m spacing around higher grade intersections at the Pundinya prospect where drilling in the June quarter returned a best intersection of 5m at 854ppm U3O8, including 1m at 3200ppm (0.32% U3O8). Best assay results from the latest 24 infill holes were 2m at 648ppm U3O8 in hole W123 from 50 to 52m, 11m at 374ppm from 41 to 52m in hole W126 and 7m at 368ppm from 47 to 54m in hole W120 (refer Table 1 and Figure 3). These latest results confirm the continuity of uranium mineralisation over the 400 by 250m area subjected to infill drilling. The uranium thickness - grade distribution (Figure 4) shows the higher-grade core developed on the eastern side of the channel adjacent to the redox boundary.

Step out drilling to the south, mostly on a broad 800m by 400m grid has defined the continuation of the Wynbring palaeochannel sands and the entry of a major tributary from the west (Figure 2). Anomalous downhole radiometrics and uranium assays were obtained in the fluvial channel sands for a further 3km to the south of the Pundinya prospect in the eastern tributary (Figure 5). The highest assays returned were 2m at 185ppm U3O8 in hole W143 from 39 to 41m and 9m at 166ppm in hole W167 from 37 to 46m. The strongly anomalous uranium assays which are mostly at and immediately below the weathering interface between oxidised and reduced channel sands may represent uranium leakage downchannel from the Pundinya prospect.

Hole W151 (Figures 2 & 5), drilled 2.5km SW of the Pundinya prospect, intersected totally oxidised channel sands in contrast to all of the other widely spaced holes drilled in this area which intersected reduced channel sands. Therefore, there is likely to be a redox front in the vicinity of W151 with the potential to host higher grade uranium mineralisation. Hole W167 referred to above is located a further 600m to the SE down-channel from W151. This area is a priority in-fill drilling target.

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W 151
W 167
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Figure 2

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Figure 3

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Figure 4

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Table 1: Wynbring Project Air Core Drilling - Uranium Assay Results*

HoleNo	East	North	Total Depth	From	To	U3O8	Thickness
	m	m	m	m	m	ppm	m
W107	379351	6634497	54	51	52	149	1
W108	379299	6634499	5 7	50	54	178	4
W109	379253	6634497	54	48	52	138	4
W110	379199	6634504	54	50	51	201	1
W111	379251	6634449	54	52	53	209	1
W112	379302	6634458	45	50	52	143	2
W113	379352	6634450	54	48	52	376	4
W114	379392	6634452	53	49	50	160	1
W116	379302	6634547	54	49	50	105	1
				51	52	246	1
W117	379253	6634555	54	48	50	175	2
W118	379446	6634455	51	46	48	144	2
W119	379372	6634406	55	50	53	155	3
W120	379350	6634404	57	47	54	368	7
W121	379321	6634402	57	49	53	360	4
W122	379304	6634349	57	49	52	150	3
W123	379353	6634351	57	46	47	121	1
				50	52	649	2
W124	379401	6634352	57	49	52	301	3
W125	379447	6634349	57	44	48	241	4
W126	379401	6634253	57	38	39	115	1
				41	52	374	11
W127	379349	6634248	57	43	44	168	1
W127				47	52	139	5
W128	379298	6634251	57	48	51	178	3
W129	378808	6633804	54	43	45	135	2
W130	378896	6633796	53	45	46	111	1
W131	379002	6633811	54	43	44	100	1
				45	46	126	1
W132	379118	6633812	57	42	46	133	4
				48	49	102	1
W136	378497	6633812	48	40	41	129	1
W138	378798	6633601	54	40	41	179	1
				42	43	103	1
W141	378592	6633592	51	44	45	106	1

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HoleNo	East	North	Total Depth	From	To	U3O8	Thickness
	m	m	m	m	m	ppm	m
W143	378201	6633591	45	39	41	185	2
W145	378192	6633194	54	46	47	119	1
W146	378406	6633192	54	42	43	113	1
W148	377852	6633209	54	40	41	110	1
W167	376800	6632018	57	37	46	166	9
W168	377010	6632203	57	51	52	104	1
W192	379371	6634430	54	47	53	375	6
W193	379317	6634433	57	49	53	205	4
W194	379448	6634552	54	47	51	136	4
W196	379508	6634550	54	33	34	108	1
W197	379502	6634498	51	33	34	161	1
W198	379497	6634450	54	32	33	212	1
W199	379507	6634399	48	24	26	165	2
W201	379501	6634596	57	34	35	142	1

Based on 100ppm U3O8 cut off over a minimum down hole thickness of 1m. All holes drilled vertical and selected portions sampled in 1m intervals for assay.

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W 167
9m@166 ppm U3O8
Figure 5
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Parkinson Dam Project (Fission 100% uranium rights, Mega Hindmarsh earning 51%)

Fission has a joint venture with Mega - Hindmarsh Ltd, a wholly owned subsidiary of Mega Uranium Ltd of Canada to explore the Parkinson Dam Project (ELs 3307 & 3739) for uranium. The Parkinson Dam tenements, located 60 km west of Port Augusta in South Australia are held by Tasman Resources NL (ASX: TAS), and Fission Energy has the uranium rights. Tasman is currently exploring these tenements for epithermal gold mineralisation.

The area is considered prospective for unconformity - associated uranium deposits close to the contact between the Mesoproterozoic Corunna Conglomerate and the underlying Palaeoproterozoic metasedimentary rocks. Outcropping uraninite (uranium oxide) mineralisation discovered in EL 3307 by an earlier explorer was reported by Tasman in 2006.

Mega Hindmarsh is currently interpreting results from a recent airborne EM survey with a view to defining uranium drilling targets.

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Greg Solomon Executive Chairman

The interpretations and conclusions reached in this report are based on current geological theory and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for complete certainty. Any economic decisions that might be taken on the basis of interpretations or conclusions contained in this report will therefore carry an element of risk.

The information in this announcement, insofar as it relates to Mineral Exploration activities, is based on information compiled by Guy T LePage (Mt Thirsty) who is a member of the Australian Institute of Mining and Metallurgy and Michael J. Glasson (Uranium), who is a member of the Australian Institute of Geoscientists, both of whom have more than five years experience in the field of activity being reported on. Mr LePage is a Director of the Company and Mr Glasson is a consultant. Mr LePage and Mr Glasson have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Le Page, and Mr Glasson consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

It should not be assumed that the reported Exploration Results will result, with further exploration, in the definition of a Mineral Resource.

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