JAMESON RESOURCES LIMITED — Capital/Financing Update 2008

Dec 18, 2008

==> picture [170 x 67] intentionally omitted <==

JAMESON SET TO ACQUIRE RIGHTS TO A LARGE CANADIAN THERMAL COAL MINE

Highlights:

• Jameson has entered into an agreement pursuant to which it has agreed to acquire all of the issued capital in NWPC Pty Ltd (“NWPC”). In addition, Jameson has assumed an option to acquire 100% of the development rights to the Basin Coal Mine Project.

ASX RELEASE

JAMESON RESOURCES LTD

79 Hay Street, Subiaco 6008 Western Australia Phone +61 8 9200 4473 Fax +61 8 9200 4463

CONTACT:

JOHN HOLMES

Executive Director john.holmes@jamesonresources.com.au

DAVID PRENTICE Non Executive Director david@redforkenergy.com.au

WEBSITE

www.jamesonresources.com.au

DIRECTORS:

Jeff Bennett (Non Exec. Chairman) John Holmes (Executive Director) David Prentice (Non Exec. Director) Stephen Anastos (Non Exec. Director)

ISSUED CAPITAL:

25,500,001 Ordinary Shares 5,500,000 Listed Options

ASX CODE:

JAL (Fully paid Ordinary Shares)

• The Basin Coal Mine Project is an existing coal mine in British Columbia, Canada and Jameson intends to complete a feasibility study for the expansion of the Basin Coal Mine to a 1mtpa clean coal mine.

• The Board of Jameson believes an operation if established on this resource could receive a cash margin of over US$20 per tonne over the life of mine based on current spot prices and similar open cut operating costs.

• Coal resource estimate of 19 million tonnes (Resource estimated to NI43-101 and JORC reporting standards) with a 17m seam (approximately 5 times the Australian average). NI 43-101 report indicates that an export quality clean coal can be achieved post-washing.

• The Basin Coal Mine is located close to existing infrastructure and ideally placed for export. The mine lies 90km by truck to existing rail and 130km by rail to port facilities with excess capacity.

• Significant exploration potential through down dip and along strike extensions of the resource.

• The Basin Coal Mine has potential to be recommissioned within 18 months.

• Canada is emerging as a leading alternative coal exporter due to its coal quality and available port capacity.

Jameson Resources Limited (“Jameson” or the “Company”) is pleased to announce that it has executed an agreement to acquire 100% of the issued capital of NWPC Pty Ltd (“NWPC”). The transaction is subject to completion of a number of conditions precedent, further details of which are set out below.

In addition, Jameson has assumed an option to acquire certain rights in the Basin Coal Mine in British Columbia, Canada from Compliance Energy Corporation (“CEC”). CEC holds an exclusive mining agreement to develop the Basin Coal Mine.

The Company intends to issue 1,666,667 fully paid ordinary shares in the capital of the Company (“Shares”) at a price of $0.12 each to raise $200,000 (before costs of the issue) (“First Capital Raising”) to fund the initial option payment. The placement will be conducted by Capital Investment Partners (“ CIP ”) with investors receiving one free attaching unlisted option (with an exercise price of $0.20 and an expiry date of 30 November 2010) for each Share subscribed for.

The Company has also engaged CIP as its Corporate Advisor in relation to a proposed placement of 12,500,000 Shares at $0.12 each (with one free attaching listed option with an exercise price of $0.20 and an expiry date of 30 April 2010) to raise $1,500,000 (before costs of the issue) (“Second Capital Raising”).

CIP will be entitled to receive a capital raising success fee of 1,000,000 unlisted options in Jameson exercisable at $0.20 on or before 30 November 2010, which will be issued by Jameson upon completion of the First and Second Capital Raising.

The placement, which is subject to shareholder approval, will take place in late January 2009. The placement will be allocated to sophisticated investors and will be offered without a prospectus and pursuant to exemptions available under the Corporations Act 2001 (Cth). The funds raised from the First Capital Raising and the Second Capital Raising will be used to facilitate the acquisition of the Basin Coal Mine and provide working capital for the Company.

Summary of the Basin Coal Mine

The Basin Coal Mine is located 30km northwest of Princeton, British Columbia. CEC has the right to develop and mine the coal on licences covering 2,172 ha. The mine tenements cover most of the Tulameen Syncline, of which the Province of British Columbia government has estimated the global resource to be 240Mt of coal.

==> picture [408 x 283] intentionally omitted <==

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

Basin Coal
Mine
----- End of picture text -----

Figure 1: Project location map showing proximity to existing infrastructure including rail and port

Mining at the Basin Coal Mine began in 2002, but was ceased in 2006 when the provincial government abolished the use of coal power plants in British Colombia. Infrastructure such as roads, a coal washing process plant and crushers were left behind.

After washing, the Basin Coal Mine product has highly favourable qualities and has already attracted interest from overseas and domestic buyers.

A Technical Report on the Basin Coal Mine was completed in 2001 and revised in 2002 by Robert McKnight. The coal resources of the Basin Coal Mine were calculated in accordance with the requirements of National Instrument 43-101 (JORC reporting standard) and the NI 34-101 Companion Policy that requires utilising the guidelines of Paper 88-21 of the Geological Survey of Canada : A Standardised Coal Resource/Reserve Reporting System for Canada . The report

noted that the main coal seam thickness over the drilled section of the property measures between 17m and 34m with dips ranging from 28 to 45 degrees. A further coal seam of 7m was found below the main coal seam which is not included in the coal resource estimates. Coal from the deposit is classed as a high volatile bituminous C thermal coal with low sulphur content, ideal for energy use.

NI43-101 Compliant Resource Table (McKnight Report)
Category	In-Situ Tonnes
Measured (Surface Mineable)	18,100,000
Indicated (Surface Mineable)	900,000
Measured and Indicated Resource	19,000,000

Currently, 1000m of the main coal seam is exposed. The initial pit development was designed to be 1.3km long and was drill tested over a 2.5km strike length. Significant exploration upside has been identified both down dip and along strike from the defined resource.

==> picture [382 x 283] intentionally omitted <==

Figure 2: Tulameen Syncline Outline and historical exploration

Based on pilot wash plant tests, it is anticipated that clean coal qualities (dry basis) are as follows;

==> picture [160 x 61] intentionally omitted <==

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

Calorific Value (cal/g) 6080
Ash (%) 19.1
Volatiles (%) 31.1
Moisture (%) 5.8
Sulphur (%) 0.44
Hardgrove Index 54
SG 1.64
----- End of picture text -----

==> picture [422 x 102] intentionally omitted <==

Figure 3 : Coal Mining on the Basin Coal Project (2005)

Transaction Details

Pursuant to an agreement between Jameson, NWPC and each of the Shareholders of NWPC (“Shareholders”), Jameson has agreed to acquire, and each of the Shareholders have agreed to sell, all of the fully paid ordinary shares in the capital of NWPC (“Acquisition”). Completion of the Acquisition is conditional upon the satisfaction of the following conditions precedent on or before 5 February 2009 (or such other date as may be agreed):

• a) completion of legal and technical due diligence by Jameson in respect of NWPC and the Basin Coal Mine Project and the results of such investigations being to the sole and absolute satisfaction of Jameson;

• b) Jameson completing a capital raising of not less than $1,500,000;

• c) Jameson obtaining all necessary shareholder approvals in accordance with the Corporations Act and ASX Listing Rules;

• d) Jameson obtaining any necessary regulatory and third party consents, waivers and approvals; and

• e) Jameson, NWPC and each of the Shareholders entering into a formal share sale agreement.

In consideration of the Acquisition, Jameson has agreed to issue the following securities to the Shareholders:

• a) 5 million fully paid ordinary shares in the capital of Jameson (“Shares”);

• b) subject to the receipt of ASX approval to the terms of the performance shares, 15 million performance shares, which shall convert to fully paid ordinary shares in the capital of Jameson on a one for one basis upon the achievement of the following milestones:

• (i) 5 million will convert upon the completion of a positive bankable feasibility study on or before 31 May 2010;

• (ii) 5 million will convert upon the commencement of commercial production on the Basin Coal Mine Project on or before 31 May 2012; and

• (iii) 5 million will convert upon the earlier of the production of 500,000 tonnes of saleable coal on the Basin Coal Mine Project on or before 31 March 2013.

In the event that the milestones set out above are not achieved by the applicable date, the performance shares shall lapse.

Jameson has also assumed an exclusive option to acquire 100% of CEC’s rights in the Basin Coal Mine Project (“Option”). The Option is exercisable by:

• a) the payment of C$150,000 in cash by 15 December 2008 (which has been paid by the Company);

• b) a further payment of C$1,000,000 in cash (“Initial Option Payment”) and the issue of 7,407,408 Shares by 6 February 2009 (“First Tranche”);

• c) the payment of C$3,100,000 cash and the issue of a further 7,407,408 Shares upon the earlier of the completion of a positive bankable feasibility study on the Basin Coal Mine project or 31 May 2010 (“Second Tranche”); and

• d) the issue of 7,407,408 Shares upon the earlier of the commencement of commercial coal production or 31 May 2012 (“Third Tranche”).

Prior to the Exercise Date (which is the date that Jameson exercises the Option by completing the payments and issuing the securities as set out above), the Option can be terminated and, in which case, Jameson will have no rights in the Basin Coal Mine Project. The Option will also terminate in the event that any of the payments or issues of securities is not completed as set out above.

At all times during the option period and until the Exercise Date, Jameson is also required to maintain the Basin Coal Mine Project in good standing by the payment of all lease, licence and assessment fees to the government of British Colombian, as well as any required advance royalty payments, so that the Basin Coal Mine Project can be returned to the Optionor in good standing in the event that the Option is not exercised.

Anticipated Timetable

Jameson’s anticipated timetable is set out below:

Anticipated Timetable1
Notice of Meeting to be sent out to shareholders	24 December 2008
Jameson Extraordinary Meeting to be held	31 January 2009
Completion of Acquisition	6 February 2009
1) Please note that these dates are indicative only and subject to change.

Capital Structure

The capital structure of the Company immediately following completion of the Acquisition, exercise of the Option and completion of the First Capital Raising and Second Capital Raising and both before and after conversion of the performance shares:

Securities issued (prior to conversion of Performance Shares)	Shares Listed Options (ex. $0.20 and exp. 30/04/10) Unlisted Options (ex. $0.20 and exp. 30/11/10) Converting Performance Shares	Shares Listed Options (ex. $0.20 and exp. 30/04/10) Unlisted Options (ex. $0.20 and exp. 30/11/10) Converting Performance Shares	Shares Listed Options (ex. $0.20 and exp. 30/04/10) Unlisted Options (ex. $0.20 and exp. 30/11/10) Converting Performance Shares	Shares Listed Options (ex. $0.20 and exp. 30/04/10) Unlisted Options (ex. $0.20 and exp. 30/11/10) Converting Performance Shares
	Shares $0.20 and exp. 30/04/10) $0.20 and exp. 30/11/10)
Shares currently on issue Shares issued to NWPC Shareholders in consideration of the Acquisition First Tranche of Shares issued to exercise the option to acquire rights in the Basin Coal Mine Project Shares issued pursuant to First Capital Raising Shares issued pursuant to Second Capital Raising to raise funds to complete Acquisition CIP Capital Raising Fee Total	25,500,001 5,000,000 7,407,408 1,666,667 12,500,000 52,074,076	12,500,000 12,500,000	5,500,000 1,666,667 1,000,000 8,166,667	15,000,000 15,000,000

Securities Issued (after conversion of Performance Shares)	Shares Listed Options (ex. $0.20 and exp. 30/04/10) Unlisted Options (ex. $0.20 and exp. 30/11/10) Converting Performance Shares
Shares currently on issue Shares issued to NWPC Shareholders in consideration of the Acquisition First Tranche of Shares issued to exercise the option to acquire rights in the Basin Coal Mine Project Shares issued pursuant to First Capital Raising Shares issued pursuant to Second Capital Raising to raise funds to complete Acquisition CIP Capital Raising Fee Shares issued upon Conversion of Performance Shares Second Tranche of Shares issued to exercise the option to acquire rights in the Basin Coal Mine Project Third Tranche of Shares issued to exercise the option to acquire rights in the Basin Coal Mine Project Total	25,500,001 5,000,000 7,407,408 1,666,667 12,500,000 15,000,000 7,407,408 7,407,408 81,888,892	12,500,000 12,500,000	5,500,000 1,666,667 1,000,000 - 8,166,667 -

Notes:

1. Assumes that 1,666,667 Shares are subscribed for pursuant to the initial proposed capital raising and 12,500,000 Shares (and 12,500,000 free attaching options) are subscribed for pursuant to the second proposed capital raising.

2. Assumes that no other Options on issue are exercised.

3. Assumes that no other Shares are issued by the Company.

4. It should be noted that the Converting Performance Shares will not be converted unless the Milestones are achieved which includes completion of a positive bankable feasibility study. Prior to the Company completing a bankable feasibility study it will need to raise capital in the Company through the issue of additional securities. Accordingly, it is likely that additional Shares will have been issued by the Company by the time the Converting Performance Shares are converted into Shares.

Use of Funds

Jameson’s estimated use of funds raised pursuant to the First Capital Raising and Second Capital Raising is set out below:

Use of Funds Full Subscription A$	Use of Funds Full Subscription A$
Cash at Bank Capital Raised Total funds available Capital Raising Fee Initial Option Payment1 Working Capital Total Funds Applied 1) Based on an exchange rate of 1CND=1.25AUD	2,240,000 1,700,000 3,940,000 102,000 1,437,500 2,400,500 3,940,000

Canadian Coal Market

Canada is emerging as an alternative supplier for high quality thermal coal with its available port capacity. In 2007, Canada produced 72.5mt of thermal and metallurgical coal. Approximately 44% of Canadian coal produced in 2007 was exported with estimates for 2008 rising to 47%. Metallurgical coal accounts for the majority of Canada’s coal exports (90%) with the remainder being thermal coal. The biggest buyer in Canada’s coal export market is Asia which accounts for 59% with smaller buyers coming from Europe, the UK and the US. 2008 estimates show Asia importing approximately 18.5 million tonnes of coal from Canada which is 500,000 tonnes up from 2007. In 2007, Japan and South Korea were the two leading buyers of Canadian coal with 10.6 million tonnes and 6.1 million tonnes respectively. Both countries have increased their import of Canadian coal over the years with Japan now taking 35% of Canada’s coal, up from 21% in 2004 and South Korea which now accounts for 21%, up from 14% in 2004. With Canada’s coal export trade known for its stability and reliability, international coal buyers are increasingly looking to countries like Canada to diversify their sources of coal and secure supply.

Summary

The Jameson Board believes that the acquisition of NWPC and the subsequent exercise by NWPC of its option to acquire rights in the Basin Coal Mine Project, which has the potential to develop into a +1mtpa coal operation, should deliver significant upside for Jameson shareholders. The Basin Coal Mine project has a proven resource of high quality thermal coal with room for further resource upgrades. The Company is aiming to begin coal production within 18 months with the aim of exporting quality thermal coal.

Any inquiries regarding this announcement should be directed to Jameson’s Executive Director, John Holmes.

The information pertaining to the technical content of this report has been reviewed by Mr John Holmes, who is a member of the Australian Institute of Geoscientists. Mr. Holmes is employed by Jameson Resources Ltd and 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. Holmes consents to the inclusion in the report of the technical information in the form and context in which it appears.

Consent for the inclusion of the resource has been provided by Mr Robert T. McKnight. Mr McKnight has completed the Resource Estimation to NI43-101 and JORC reporting standards. Mr McKnight 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’.