FORTUNA METALS LTD — Capital/Financing Update 2009

Jul 26, 2009

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ADDRESS PHONE EMAIL PO Box 35 +61 (8) 9295 0388 info@frontierresources.com.au North Perth FAX WEBSITE WA 6906 Australia +61 (8) 9295 3480 www.frontierresources.com.au

ABN 96 095 684 389 ASX : FNT

ASX Limited Company Announcements Office

Announcement

27th July 2009

INDICATED AND INFERRED RESOURCE (GOLD AND BASE METALS) ESTIMATED FOR THE NARRAWA DEPOSIT, TASMANIA

Frontier Resources Ltd is pleased to announce the upgraded precious and base metal resource estimate for the Narrawa Deposit in central-northern Tasmania, Australia. The resource was estimated in accordance with the 2004 JORC code, based on all drilling and trenching to date.

• The Indicated and Inferred Resource at Narrawa contains 23,550 ounces of gold equivalent grading 3.5 g/t gold equivalent. This consists of 14,125 ounces of gold, plus 131,300 ounces of silver, 2,765 tonnes of lead and 2,335 tonnes of zinc (0.5g/t gold cut-off grade). The mineralisation is contained within 209,330 tonnes of rock grading 2.10 g/t gold, 19.5 g/t silver, 1.32% lead and 1.12% zinc.

• An Indicated Resource was estimated for the first time and it consists of 162,755 tonnes grading 3.61 g/t gold equivalent (2.11 g/t gold, 20.5 g/t silver, 1.42% lead and 1.2% zinc).

• Approximately 85% of the tonnage of the previous Inferred Resource at Narrawa was converted to Indicated Resource from the latest round of work.

• There was a 9% increase in tonnage of the total resource from the mid-late 2008 drilling program, however, the gold grade decreased by 23% due to the lower overall grade associated with infill drill holes.

• The Conceptual Mining Study is now being updated, utilising current and long term projected metal prices and it will recommend possible development paths forward in combination with the Stormont Deposit (Inferred Resource to be announced forthwith).

• Narrawa is a steeply dipping, on/near surface, stratabound/stratiform skarn deposit. Significant gold and base metal intersections have been demonstrated by Frontier’s drilling over the entire length of the deposit, with the Indicated and Inferred Resource being approximately to 220m long, 20m wide and 60m deep.

• There is good scope to continue to increase the Narrawa Resource along strike in both directions, within the fault offset dip component and in other relatively untested sectors of the project area. This will require additional drilling.

For instance, good potential exists along strike to the southeast, with additional mineralised drillholes yielding 3.7m of 1.11 g/t gold (NC016) and 1.35m of 0.19g/t gold + 42 g/t silver+ 2.0% lead + 1.46% zinc + 0.25% copper (also NC016) and 2.2m of 0.12g/t gold + 15 g/t silver+ 0.79% lead + 3.26% zinc + 0.25% copper associated with a UTEM anomaly (NC017).

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In addition, across strike in the 666 lode (not included in the estimation), there are mineralised holes that include 1.5m of 25.2 g/t gold (NC025), 2m of 14.98 g/t gold (NC035), 7m of 2.13 g/t gold and 4.5m of 3.26 g/t gold (NC036).

• The Narrawa Deposit is located 6.5km east of Frontier’s Stormont Deposit (Figure 1), where an Inferred Resource will be released forthwith.

Managing Director, Peter McNeil commented:

“Frontier has now delineated an Indicated and Inferred Mineral Resource at the Narrawa gold-base metal Deposit in northern Tasmania, to underpin its possible development. We now have much more confidence in the resource, which although currently modest in size and grade, has shown excellent metallurgical recoveries through conventional floatation.

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The deposit is in a very convenient location with respect to possible future development, being proximal to necessary infrastructure such as power and road access.

Frontier’s aim is to combine Narrawa with the Company’s resource at the nearby Stormont Deposit and create a potentially economic project for near-term development.

The resources at the Narrawa and Stormont Deposits position Frontier well with respect to gold. We expect to announce results of the maiden Stormont resource estimate and metallurgical testing in the near future.

DETAILS

Mineral exploration and resource estimation Consultant Mr. G. MacDonald was commissioned by Frontier Resources Ltd (Frontier) to complete a geostatistical resource estimate of the Narrawa Deposit, using all available drilling assays, the existing Geostat Services Surpac model and an improved understanding of the deposit geology.

RESOURCE ESTIMATION

Mineralisation

An Indicated and Inferred Resource was estimated geostatistically for Narrawa, using SURPAC resource estimation software. The Resource has been classified in accordance with the guidelines outlined in the “Australian Code for Reporting of Identified Mineral Resources and Ore Reserves” (JORC, 2004 edition). Assessment criteria include drillhole spacing, sample locations, sampling density, lode geometry, geological confidence and grade continuity.

The tonnes of mineralisation and associated grade of gold, silver, lead and zinc at various gold cutoff grades are shown in Table 1.

Lode	Indicated	Indicated	Indicated	Indicated	Indicated	Indicated	Inferred	Inferred	Inferred	Inferred	Inferred	Inferred	Total	Total	Total	Total	Total	Total
	Tonnes	Au (Eq g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (g/t)	Tonnes	Au (Eq g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (g/t)	Tonnes	Au (Eq g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (g/t)
100	100,443	4.28	2.51	1.73	1.39	23.1	14,025	5.21	4.58	0.06	0.04	9.1	114,469	4.39	2.77	0.16	0.13	21.4
200	21,807	2.75	2.19	0.47	0.47	8.4	1,422	3.12	2.48	0.05	0.06	8.1	23,229	2.77	2.21	0.05	0.05	8.4
300	40,503	2.41	1.06	1.17	1.14	20.6	26,039	2.33	1.08	0.11	0.10	18.8	66,542	2.38	1.07	0.11	0.11	19.9
400							5,088	1.37	0.08	0.13	0.08	23.0	5,088	1.37	0.08	0.13	0.08	23.0
Total	162,754	3.61	2.11	1.42	1.20	20.5	46,574	3.12	2.07	0.98	0.81	16.0	209,328	3.50	2.10	1.32	1.12	19.5

The mineralised zone in the estimate has been modelled as a moderate – steeply dipping, linear, stratiform/stratabound body up to approximately 220m long, 20m wide and 60m deep.

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Figure 2 shows gold grade versus contained tonnages for the various gold cut-off grades for all lodes (grade tonnage curve).

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----- Start of picture text -----

Grade-Tonnage Curve incorporating all Lodes, Narrawa Creek Deposit
9
(8)
8
(7)
7
(6)
(5)
6
(4)
5 (3)
(2.5)
(2)
4 (1.5)
(1)
(0.5)
3 (0)
2
1
0
0 50,000 100,000 150,000 200,000 250,000
Tonnage
Au-Equivalent Grade
----- End of picture text -----

Figure 3: Mineralised lodes at the Narrawa Deposit, separated by the NC05 fault (NNE trending blue plane).

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Cross sections that follow as Figures 4 - 9, show the downhole gold equivalent assays superimposed on colour coded block model slices from the block.

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Figure 4: Section 5887.5mE

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Figure 5: Section 5900mE

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Figure 6: Section 5912.5mE

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Figure 7: Section 5925mE

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Figure 8: Section 5937.5mE

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Figure 9: Section 5950mE

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Figure 10: Section 5975mE

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Geological Model

• The Narrawa Deposit is an intrusion-related gold-lead-zinc-silver skarn complex comprising a mixture of stratabound and fault/vein related lodes on the western limb of an anticline shallowly plunging to the north-west.

• The deposit comprises two main lodes (100 & 200) trending 120°, truncated from lode 300 by an interpreted north-east striking, south-east dipping late brittle fault intersected by NC05. The two main lodes dip steeply towards the north-east at -65 to -70°, and are terminated at depth by the NW-SE trending, SW moderate dipping brittle HGM Fault. The 300 lode exhibits a swing in strike from 120° to 105°, with a steep sub-vertical dip towards the north-north-east twisting to the south-south-west towards the ESE. The 400 lode comprises a minor zone of mineralisation parallel to the 100 and 200 lodes. The lodes extend over a distance of 220m along-strike, with a maximum down-dip extent of 60m.

• Four wireframes were delineated from sectional outlines to represent all mineralisation in the Narrawa Deposit. A combination of assays, lithology and structural interpretations from drill core were used to define these wireframe envelopes, with a cut-off of approximately 0.5 g/t gold-equivalent to separate mineralisation from waste within the broad skarn complex lithology.

• The wireframed lodes extend over a distance of 220m along-strike, with a maximum width of approximately 20m and a down-dip extent of 60m.

Statistics

• Log histograms and probability plots of all elements exhibit mixing of populations, likely caused by the presence of both stratabound and fault/vein related mineralisation.

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• Top-cuts were applied to all elements within lodes in order to constrain extreme values and reduce their impact on estimated grades. Upper inflexion points in probability distribution plots and a high coefficient of variation were used as a guide to determining top-cuts for these wireframes.

• Mineralisation was extrapolated halfway between associated drillholes on strike and down dip or 12.5m if unconstrained.

Variography

• Variography analysis using traditional and lognormal variograms was completed on combined composites to supply variogram parameters for grade interpolation.

• A strike of 120° was interpreted for all elements, with a dip of -65° to -70° towards 030°. No plunge was detected, with minor directions of mineralisation continuity attributed to structural features associated with mineralisation.

• Low to moderate nugget effects are inherent, ranging from 10% to 37% of the total variability, indicating good reproducibility of sampling methods.

• Maximum spatial continuity ranges indicate a range of continuity of up to 32m along-strike and 26m down-dip. Downhole variograms are well-structured, and indicate a downhole lode width of up to 9m. Quality of down-dip variograms are poor, and illustrate the need for some infill drilling in this direction.

Block model

• A block model of parent cell size 5m (N) x 10m (E) x 5m (RL) subcelled to 1.25m x 2.5m x 1.25m was constructed for the Narrawa Deposit. Grades were estimated using ordinary kriging interpolation for all lodes. A minimum of 3 composites and a maximum of 20 composites were used in interpolation of grades into blocks. Search ellipses for initial interpolation of grades comprised 30m x 22m x 10m. A second subsequent interpolation pass was employed with expanded search ellipses in order to fill blocks in areas of sparse drill density within the lodes.

• A classified mineral resource for the Narrawa Deposit was estimated (0.5g/t gold cut-off grade) to total 23,550 ounces of gold equivalent grading 3.5 g/t gold equivalent, within 209,330 tonnes of rock grading 2.10 g/t gold, 19.5 g/t silver, 1.32% lead and 1.12% zinc, consisting of 14,125 ounces of gold, plus 131,300 ounces of silver, 2,765 tonnes of lead and 2,335 tonnes of zinc.

• An Indicated Resource was estimated for the first time and it consists of 162,755 tonnes grading 3.61 g/t gold equivalent (2.11 g/t gold, 20.5 g/t silver, 1.42% lead and 1.2% zinc).

• Classification of the resource involved several criteria, including drillhole spacing, sampling density, sampling locations, kriging variance, lode geometry and confidence in grade continuity. Lodes were classified as Indicated and Inferred on the basis of the above criteria. A density of 2.96t/m[3] was used to estimate resource block tonnage for all lodes.

Recommendations

• Infill drilling was recommended on existing sections to populate the uninformed area in the upper section of the lodes, and provide more composites for interpolation. This would improve the down-dip variography and enable a possible upgrade of the resource to Measured status.

• A formal survey of the drill collars and current Higgs pit plus all underground workings.

• Additional specific gravity values be obtained with the planned infill drilling to provide coverage of the upper portion of the lodes.

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A summary assessment of the Narrawa Resource is provided in Table 2 below.

CRITERIA	COMMENTS
Sampling Techniques and Data
Drilling	Diamond drillholes NC01-NC017 by Jervois using NQ core. Diamond drillholes NC018-NC053 by Frontier using NQ & HQ core. Channel holes NCSS01-NCSS13 alongcross-cuts byGoldfields.
Data spacing and distribution	A total of 53 diamond holes drilled on an approximate 12.5m grid along-strike, with fan drilling on oblique cross-sections. Channel holes sampled along cross- cuts perpendicular to lodes. 1,981 samples in total, with samples collected at ~1m intervals.
Logging	Systematic loggingdescribingthe drillhole lithology,veiningand structure.
Sampling and Sample Preparations	All Frontier diamond core was cut and half-core submitted for analysis. Samples were oven-dried and crushed, with the entire sample being fine pulverised to ensure a representative split. Base metal analysis was via AAS with gold determined by fire assay from a 50g charge at Burnie Research Laboratories.
Quality of Sampling and Assaying	QAQC was adequate and was assessed via submission of known standards approximately every 20 to 25 samples / metres downhole. Laboratory quality control reported very good repeatability for in-house standards, as well as for duplicate drill core analysis.
Location of Data Points	Collar positions surveyed by tape and compass covering all holes between NC05 and NC08 on SW side of Narrawa Creek to within ± 0.5m accuracy. Drillholes along access track (between NC22 and NC34) are to within ± 2m accuracy. Collars on NW side of creek re-adjusted to tape and compass survey data from 2005. These holes require re-surveying. NC18 collar location placed from spatial relationships to tape and compass surveyed locations of other holes. Other holes were transposed onto a digital terrain model constructed from 1:25000 digital contours (subcelled to 0.25m), incorporating known survey points and other georeferenced landmarks. Downhole surveys conducted byEastman camera.
Geological Knowledge
Geology	Quite good understanding of the deposit and structural controls on mineralisation. Interpreted as an intrusion-related gold-lead-zinc-silver complex with the main mineralised area striking broadly NW-SE. Lodes terminated at depth and to the SE by late brittle faults, delineated in drill core.
Estimation and Reporting of Mineral Resources
Database Integrity	Reasonable database quality. A few missing silver assays from lost drill core in NC20.
Geological interpretation	Structural interpretations based on long core axis bedding, vein and fault orientations from diamond core, orientated diamond core and outcrops. 2D sectional mineralisation envelopes generated using interpreted stratabound & structural controls and an approximate 0.5g/t gold equivalent cut-off. 3D wireframes created by linking these 2D sectional envelopes for use in the resource model.
Estimation and modelling techniques	Ordinary kriging used for interpolation of lead, zinc, silver and gold grades into 5m x 10m x 5m parent blocks subcelled to 1.25m x 2.5m x 1.25m. Grade capping utilised for all elements. Hard boundaries employed between lodes. Search dimensions based on variography ranges. Model validated globally and locally,and compared toprevious resource estimates.
Bulk Density	Average density of 2.96t/m~~3~~used from 160 SG determinations within the lodes. SG values determined bywax-encapsulation method.
Classification	Classification on basis of drill data density, kriging variance, geological controls and confidence in mineralisation continuity. Kriging variance used as a guide to differentiate Indicated and Inferred resources, with specific areas downgraded to Inferred on the basis of the above criteria.

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Table 3 below lists the Narrawa Drillholes used in the Indicated and Inferred Resource

	DIAMOND DRILLHOLES	DIAMOND DRILLHOLES	DIAMOND DRILLHOLES	DIAMOND DRILLHOLES	DIAMOND DRILLHOLES	DIAMOND DRILLHOLES
Hole ID	Easting (m)	Northing (m)	RL (m)	Azimuth (degrees)	Dip (degrees)	Depth (m)
NC01	425496.9	5406724.8	512.0	33	-45	20.1
NC06	425471.3	5406685.5	524.0	213	-45	42.3
NC07	425451.1	5406698.9	525.0	213	-45	27.8
NC08	425434.2	5406709.5	526.0	213	-45	21.3
NC12	425491.9	5406679.9	521.0	213	-45	40.7
NC18	425521.6	5406681.0	519.0	213	-50	61
NC19	425499.2	5406693.9	517.0	213	-60	71
NC20	425476.9	5406694.2	518.0	213	-70	81.5
NC22	425514.0	5406619.0	543.0	345	-45	81
NC23	425620.0	5406655.0	534.0	215	-45	111
NC27	425514.0	5406619.0	543.0	35	-45	83.8
NC28	425514.0	5406619.0	543.0	55	-45	82.5
NC29	425514.0	5406618.9	543.0	35	-54.5	79.5
NC32	425538.0	5406615.0	545.0	35	-55	54
NC34	425573.0	5406633.0	536.0	215	-70	57.1
NC36	425496.0	5406731.0	516.0	142	-50	38.8
NC37	425495.9	5406731.2	516.0	142	-85	18
NC43	425483.2	5406685.9	521.3	213	-45	61.1
NC44	425483.2	5406685.9	521.3	213	-60	66.6
NC45	425483.2	5406685.9	521.3	213	-75	81.1
NC46	425484.6	5406688.0	521.3	33	-60	59.9
NC47	425460.5	5406693.0	521.9	213	-45	100.6
NC48	425460.6	5406693.1	521.9	213	-60	40.3
NC49	425460.6	5406693.2	521.9	213	-75	75.1
NC50	425509.9	5406677.8	525.0	213	-45	49.0
NC51	425509.9	5406677.8	525.0	213	-60	71.9
NC52	425509.9	5406677.8	525.0	213	-75	82.7
	CHANNEL SAMPLE			HOLES
NCCS2	425507.8	5406635.9	535.0	-	-	5
NCCS3	425496.8	5406647.4	533.0	-	-	3.1
NCCS4	425501.8	5406644.4	533.5	-	-	31.3
NCCS9	425466.4	5406657.8	538.0	-	-	2.3
NCCS10	425471.7	5406654.0	538.0	-	-	4.1
NCCS12	425453.0	5406693.5	528.0	-	-	8
NCCS13	425447.9	5406688.4	526.0	-	-	20

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PREVIOUS RESOURCE ESTIMATIONS

Historically, the deposit was also drilled by previous owners, Jervois and TasGold (Frontier prior to name change). Jervois compiled a primitive resource estimate, based on weighted average grades from two diamond drillholes. The TasGold resource estimate was calculated on a sectional basis, using MapInfo and Discover, which uses a two-dimensional inverse distance weighted interpolator to produce a grid of interpolated values within the boundary defined for the resource, with a total of 16 diamond drillholes drilled by these companies.

An Inferred Resource was estimated by Geostat in March 2008, based on an inverse-distanced squared model and utilising 3D wireframes. Density values were calculated for samples within each lode and averaged to provide an overall mean density of 2.96 t/m[3] for the resource.

Previous resources released by former owners and Frontier are tabulated below in Table 4. These estimates relied on an assumed density of 2.8 in the absence of bulk dry density information.

Table 4 Previous Resources of the Narrawa Deposit

Author/Model Date	Tonnes	Gold g/t	Lead %	Zinc %	Silver g/t	Method
McKenna Model (2003)	215,000	3.50	1.50	1.30	23	Weight average of NC6 & 12
TasGold Model (2005)	205,000	2.70	1.38	1.07	41	2D sectional resource
Geostat Model (2008)	190,100	2.74	1.59	1.21	22	3D ID2resource

See the ASX releases dated 29/1/09, 19/11/08, 1/10/08, 5/9/08 and 19/8/08 and the Conceptual Mining Study dated 27/10/2008 for further information on the Narrawa Deposit. For additional information relating to Frontier Resources and its projects, please visit our website at www.frontierresources.com.au or feel free contact me.

FRONTIER RESOURCES LTD

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P.A.McNeil, M.Sc. MANAGING DIRECTOR

The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by, or compiled under the supervision of Peter A. McNeil - Member of the Aust. Inst. of Geoscientists. Peter McNeil is the Managing Director of Frontier Resources, who consults to the Company. Peter McNeil has sufficient experience which is relevant to the type of mineralisation and type of deposit under consideration to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code of Reporting Exploration Results, Mineral Resources and Ore Resources. Peter McNeil consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.

About Frontier Resources

• Frontier is focused on exploring for and developing mineral deposits in the highly mineralised Pacific ‘Rim of Fire’ in Papua New Guinea and the highly prospective Dolcoath Granite and Mt Read Volcanics of Tasmania.

• Frontier has a 100% interest in 5 Exploration Licences covering approx. 1,987 km[²] in PNG (EL 1596 is currently being sold for A$300,000 cash) and 1 Exploration Licence + 2 Retention Licences covering 18 km[²] in Tasmania.

• The portfolio offers excellent mineral deposit potential, with primary targets being World Class gold/silver epithermal, gold– base metal skarn, copper-gold-molybdenum porphyry and polymetallic VMS (zinc-lead-silvergold) deposits.

• The projects all have high-grade exploration results in rock, trenches and/or drill hole and are in the same or similar geological terranes as existing World Class and/or major mines.

• Frontier’s Directors have more than 150 years combined experience in PNG and Australia to serve the interests of the Company and its shareholders.

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• Frontier operates with a general policy of ‘DRILLING’ our quality projects using our purpose built and self manufactured, cost effective, environmentally friendly, man-portable diamond core rig.

• The Company is an ASX listed junior mineral explorer whose shares also trade on the Frankfurt, Berlin and Munich Stock Exchanges.

Notes:

• The gold equivalent formula used to calculate the gold equivalent values is as follows: gold Equivalent (g/t) = gold g/t + (lead% x 0.46269) + (zinc% x 0.4644) + (silver g/t x 0.01386)

• This formula is based on metal prices obtained on 7th April 2009, these being US$884/oz gold, US$0.5965/lb lead, US$0.5987/lb zinc and US$12.26/oz silver.

• Skarn gold– silver -basemetal deposits such as the Narrawa Deposit typically recover contained gold, silver and basemetals if in sufficient quantities (subject to metallurgical characteristics and prevailing metal prices).

• The ASX requires metallurgical recovery be specified for each metal and they are: 96.7% for gold, 98.5% for zinc, 95.6% for lead and 92.4% for silver.

• It is the Company’s opinion that each of the elements included in the Narrawa metal equivalent calculations have a reasonable potential to be recovered if the project proceeds to mining.

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