HAMMER METALS LIMITED — Capital/Financing Update 2012

Feb 19, 2012

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ASX Announcement ASX Code: MDS ABN 87 095 092 158

Fortitude Project - Development Update

20 February, 2012

Company Facts

Diversified mining and metals company Midas Resources (ASX: MDS ) is a gold focussed company with significant gold projects at Lake Carey, south of Laverton, and in the Leonora-Kookynie area. The Company also has a significant tenement position in the multimetal Paterson Province.

Key Projects:

• Lake Carey (100%)

• Leonora Gold Project (100%)

• Paterson Province (100%)

• West Pilbara Iron Ore (100%)

Highlights:

• Evaluation of amenability of Fortitude ore to heap leach processing is proceeding

• Options for trucking and CIL treatment of high-grade ore at other facilities also to be evaluated

• Estimation of in-pit Mineral Resources completed for use in scoping studies

Resources developer, Midas Resources Limited (“Midas” or “the Company”) (ASX:MDS), is pleased to provide an update on its Fortitude gold project:

LAKE CAREY GOLD PROJECT (Midas 100%)

Corporate Structure

Shares on issue	493.4m
Listed Options	48.0m
Performance Options	4.05m
52 week high	A$0.07
52 week low	A$0.011
Cash in bank	A$2.0m

Company Directors

John Hopkins Chairman

Geoff Balfe Managing Director

The Company has appointed international group Kappes, Cassidy & Associates to manage an investigation into the amenability of Fortitude to treatment by heap leach. The study involves an initial program of metallurgical testwork to establish leach recovery data followed by scoping level financial modelling of a mining and heap leach processing operation.

Metallurgical testwork is already underway at AMMTEC laboratories in Perth and results are expected by the end of the current Quarter. The current testwork is based on Intermittent Bottle Roll Tests (IBRT) carried out on composites of Fortitude RC drill samples. Based on the results of the testwork and the financial modelling the Company will make a decision to carry out a more comprehensive testwork program into the feasibility of heap leach, including the necessary environmental, hydrology and geotechnical inputs required for a full feasibility study.

Terry Streeter Non-Executive Director

Company Secretary Mark Pitts

ABN 87 095 092 158

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In parallel with the investigation into heap leach amenability the Company will continue evaluation of alternatives for CIL treatment of higher grade ore, including treatment at Sunrise Dam, and construction of a multi-user facility. This will enable the Company to evaluate all reasonable development options before making any development decision.

IN PIT MINERAL RESOURCE ESTIMATE

In line with the current investigation into heap leach metallurgy and development options the Company has carried out an in-house estimation of in-pit Mineral Resources at a range of gold cut off grades for use in scoping studies.

The estimates are derived by processing of the global Mineral Resource block model produced by Runge Limited and released to ASX in May 2010. The in-pit estimates are based on selected optimised Whittle pit shells also produced by Runge in 2010. The estimation work was carried out in-house, and it does not include any pit design, mining dilution or mining recovery factors.

Mineral Resource estimates, for a range of lower gold cut-off grades, are presented in the tables below, constrained to $1,500/oz Au and $1,800/oz optimised pit shells. These estimates conform to the Indicated and Inferred categories, as defined in the JORC code (2004).

Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s $1,500 AUD optimised pit shell.

Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,500 AUD optimisedpit shell.	Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,500 AUD optimisedpit shell.	Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,500 AUD optimisedpit shell.	Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,500 AUD optimisedpit shell.
Lower- Cut Au g/t	Indicated	Inferred	Total
	Tonnes Au g/t Au Ounces	Tonnes Au g/t Au Ounces	Tonnes Au g/t Au Ounces
0.5 1.0 1.5 2.0	1,292,000 1.9 80,000 1,155,000 2.1 76,000 810,000 2.4 62,000 473,000 2.9 44,000	149,000 2.2 10,000 144,000 2.2 10,000 119,000 2.4 9,000 72,000 2.8 7,000	1,441,000 2.0 90,000 1,299,000 2.1 86,000 929,000 2.4 71,000 545,000 2.9 51,000

Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s $1,800 AUD optimised pit shell.

Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,800 AUD optimisedpit shell.	Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,800 AUD optimisedpit shell.	Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,800 AUD optimisedpit shell.	Preliminary undiluted in-pit Mineral Resource estimates at a range of gold cut-off grades, cut to Runge’s$1,800 AUD optimisedpit shell.
Lower-Cut Aug/t	Indicated	Inferred	Total
	Tonnes Au g/t Au Ounces	Tonnes Au g/t Au Ounces	Tonnes Au g/t Au Ounces
0.5 1.0 1.5 2.0	1,600,000 1.9 97,000 1,404,000 2.0 92,000 970,000 2.4 74,000 567,000 2.8 52,000	163,000 2.1 11,000 155,000 2.2 11,000 124,000 2.4 9,000 72,000 2.8 7,000	1,763,000 1.9 108,000 1,559,000 2.0 103,000 1,094,000 2.4 83,000 639,000 2.8 59,000

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The process undertaken to arrive at the in-pit Mineral Resource estimates is summarized as follows:

In May 2010 Runge Limited produced a JORC-compliant Ordinary Kriged (OK) Mineral Resource estimate for Midas’ Fortitude gold deposit which was released to ASX on May 5, 2010:

Fortitude OK Mineral Resource Estimate (1.0g/t Au cut-off):

Fortitude OK Mineral Resource Estimate (1.0g/t Au cut-off):	Fortitude OK Mineral Resource Estimate (1.0g/t Au cut-off):	Fortitude OK Mineral Resource Estimate (1.0g/t Au cut-off):
Fortitude OK Mineral Resource Estimate(1.0g/t Au cut-off):
Zone	Indicated	Inferred	Total
	Tonnes Au g/t Au Ounces	Tonnes Au g/t Au Ounces	Tonnes Au g/t Au Ounces
Oxide Transitional Fresh	572,800 2.1 38,700 150,900 1.8 8,700 2,034,700 1.9 124,900	221,000 1.9 13,500 148,200 1.9 9,100 3,161,200 1.9 190,900	794,000 2.0 51,400 299,000 1.9 18,000 5,196,000 1.9 315,800
Total	2,758,000 1.9 172,000	3,530,000 1.9 213,300	6,289,000 1.9 385,300

Runge subsequently produced a pit optimisation study for a range of gold prices up to $1,500/oz, with pit shells generated up to $2,000/oz.

In November 2011, Midas commissioned CSA Global Pty Ltd (CSA) to complete a change of support modelling exercise in order to determine whether Runge’s Resource modelling was appropriate for calculating grade-tonnage curves at a range of higher gold cut-off grades. The conclusions of the geostatistical study were as follows:

• Runge’s OK block model and variography are statistically unbiased and can be accepted as appropriate for use in estimating grade tonnage curves at a range of higher gold cut-off grades.

• Recovered grades at Fortitude could be expected to be higher than those indicated by the OK block model, because it is a smoothed bulk-estimate.

• The deposit is relatively robust, with only modest grade-increases as progressively smaller selective mining units (SMU’s) are applied.

Midas used CSA Global’s findings as justification to produce a preliminary undiluted in-pit Mineral Resource estimate through filtering and averaging of Runge’s 2010 global OK block model dataset at a range of cut-off gold grades. Runge’s 2010 Whittle optimised pit shells, at gold prices of $1,500/oz and $1,800/oz, were used to constrain the Resource data. No pit design or mining dilution or recovery factors were used in the estimates. These are preliminary undiluted in-pit Mineral Resource estimates calculated in-house using simple filtering of the global Resource block model dataset. The process applied is summarised below:

• Blocks and sub-blocks in Runge’s Resource model that fall within a specified optimised pit shell (such as $1500/oz shell) were selected.

• From the filtered dataset, blocks and sub-blocks with a top-cut gold grade above a specified lower cut-off grade (such as 1.5g/t gold) were selected.

ABN 87 095 092 158

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• Tonnes and grade estimates of the selected dataset were derived by averaging block data, weighted by block volume.

The estimate is based on a sub-set of Runge’s JORC-compliant Mineral Resource block model. The estimate of in-pit Mineral Resources complies with recommendations in the Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004) by the Joint Ore Reserves Committee (JORC). Therefore it is suitable for public reporting.

COMMENT

Commenting on the work to-date CEO Geoff Balfe said that the metallurgical testwork was moving ahead quickly and was on schedule. The results of the in-pit Resource estimation were encouraging, and supported the view that the deposit was well constrained by the geological model. The Company was now in a position to use the results for modeling of different mining and treatment scenarios including:

• On site heap leach treatment of low grade ores and treatment of highgrade ores at a nearby CIL plant such as Sunrise Dam or other multi user facility.

• Heap leach treatment of the entire deposit.

• Selective mining of the high grade portion of the deposit and treatment at a CIL plant, either existing or to be constructed.

Based on the results of the scoping study, which is expected to be completed early in the June Quarter, the Company would then decide ton the scope of feasibility work necessary for a development decision. Commenting on the possibility of building a CIL plant at Fortitude Mr Balfe said that a multi-user facility would be in a position to treat ore from a number of deposits within trucking distance of Fortitude and that the Company was open to discussion with other companies along these lines.

For and on behalf of the Board of Midas Resources Limited,

G D Balfe

Managing Director/CEO

Any reference to “ore” is as a generic term and implies no economic significance as defined in the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004 edition (the JORC Code).

Competent Person’s Statement:

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The information in this report as it relates to estimation of the in-pit Mineral Resources was compiled by Mr John Downing, who is a Member of the Australasian Institute of Geoscientists and a full time employee of the Company. Mr Downing has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Downing consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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Media and Investor queries: Warrick Hazeldine/Karen Oswald Purple Communications +61 8 6314 6300

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ABN 87 095 092 158