KORAB RESOURCES LIMITED — Capital/Financing Update 2005

Oct 13, 2005

14 October 2005

Australian Stock Exchange Company Announcements Exchange Plaza 2 The Esplanade Perth WA 6000

KORAB TO BEGIN INFILL DRILLING PROGRAM AT MELROSE GOLD PROJECT IN WA

As outlined in Korab's Prospectus 2005, the Directors have been evaluating various options for the development of the Melrose gold project in Western Australia. Following this evaluation. Directors of Korab Resources Limited are pleased to announce that a 30 hole, 1,800 metre program of Reverse Circulation infill drilling will commence at Melrose Project in the first week of November. The aim of the program is to enable calculation of the resource available for toll treatment at Bronzewing. On 31 August 2005, Korab has announced an agreement with View Resources Limited to toll treat the ore from Korab's 100% owned Melrose Project at View's Bronzewing processing plant. The plant has a processing capacity of 2.3 Mln tones per annum.

1 Relative Location of Melrose Project

Bungarra deposit is part of the Melrose Project and is located 45 km due east of the Bronzewing processing plant (see diagram 1 above). Bungarra lies within the area of the recently granted mining lease M37/1167 (see diagram 3 on page 3). Bungarra's resource has been interpreted to be within two shallowly dipping supergene bodies over an area of 400m by 180m with relatively shallow mineralisation between 30 and 60 meters below surface (see diagram 2 on page 2)

The infill drilling program should take 10-15 days to complete. The objective of the program is to convert the existing JORC compliant inferred resource of 1.66 million tones grading 1.64 g/tone gold to an ore reserve. This information will be used to design a pit and to establish parameters of the toll treating operation. Korab is targeting between 600,000 and 800,000 tonnes of material grading up to 2.5 g/tone gold. Metallurgical test work will also be undertaken to determine gold recovery, reagent consumption and throughput rate. Korab plans to truck the ore to Bronzewing for toll milling while any low grade material which could be suitable for leaching will be stockpiled on site for potential treatment at a later date.

Subject to the tonnages of ore and grades being in line with Korab's expectations it is envisaged that a decision to mine will be made by the end of December 2005. However, it is important to stress that the above statement regarding the potential quantity of ore and its targeted grade is conceptual in nature and that there has been insufficient exploration to date to define what proportion of the Bungarra's Inferred Mineral Resource of 1.655 Min tones grading 1.64 g of gold

per tone could be converted to an Ore Reserve. It is also uncertain if further exploration will result in the determination of an Ore Reserve.

A recent commissioned report published by Strachan Corporate (available from Korab's website at www.korabresources.com.au ) contains an assessment of potential tonnages, grades, costs and cash flows calculated using industry benchmark costing for mining, transport and processing. Strachan Corporate's model indicates that a gold head grade of 1.65g/t would be required for the project to break even. According to the report, this benchmarking work indicates the potential to produce about 49.700 oz of gold over a 4-5 month operating period at a cash cost of approximately A\$422/oz. generating an operating cash flow of \$7m at a gold price of A\$578/oz. Its calculations are based on 700,000 tonnes of ore grading 2.4g/t at a 4:1 waste to ore ratio. Strachan Corporate model's results are broadly in line with the results of modelling performed by Korab Resources

LOCAL GEOLOGY OF MELROSE PROJECT

Melrose Project is located in the Eastern Goldfields within the Archaean Yilgarn Craton. The project is part of the Wanganoo greenstone belt, a narrow 5-12km wide, northwest trending greenstone terrain that extends from Banjiwarn Station in the south to the Gunbarrel Highway in the north. Metrose lies in the southern portion of the belt and is bounded to the east by the North Bania Batholith and to the west by the Mt Blackburn Batholith.

3 Local Geology

The greenstone stratigraphy is folded about a broad anticlinal axis that passes through the centre of the Melrose tenements striking north northwest and which contains the main gold prospects. Metamorphic grade varies from amphibolite facies along the margins of the belt to Upper Greenschist facies toward the centre.

Within the project area, a northwest to north northwest trending open antiform contains a core of deeply weathered felsic volcanogenic rock units, consisting of subagueous flows and sediments. Synvolcanic and late-stage granitoid stocks and porphyry bodies locally intrude the felsic sequence. Along the axis of the antiform at the Boundary, Hurleys Reward and Bungarra deposits and prospect, granitoids and the enclosing felsic rocks act as favourable hosts to gold mineralization.

The boundary between the felsic/metasedimentary sequence and the overlying mafic package is marked by a BIF unit, which forms distinct ridges over a strike length of 9km. This BIF is locally mineralized with gold. The uppermost section of the greenstone package consists of a thick sequence of tholeiitic and high magnesium basalts, narrow dolerite or porphyry bodies and thin pelitic metasediments. East-west Proterozoic dolerite dykes, late stage porphyries and granitoids intrude the Archaean basement. A series of mapped and interpreted strike-parallel and northeast to near east-west trending oblique shears transect the greenstone package.

Rock types have undergone intense silicification and weathering with silicified outcrops common in most parts of the project. These silicified saprock exposures form prominent hills and ridges. There are few areas of intact laterite exposed within the project. The dominant regolith setting is a stripped lateritic profile with a remaining thin veneer of colluvium/alluvium. This cover is hardpan to a large extent.

Substantial Tertiary palaeochannels exist in most parts of the project but particularly in the Freemans/Red Cloud area. These often cut across present day drainage systems and are evident in drilling as well as from the aeromagnetic data sets. Regolith mapping has not been undertaken over the project but reconnaissance drilling has indicated that there are significant areas of transported cover present.

The depth of weathering at Melrose varies according to lithological type, intensity of shearing and extent of erosion. Preferential weathering and the development of oxide mineralization has occurred over the fractures and faults within the sediment and volcanoclastic units where the depth of weathering is typically 50 to 75m but exceeding 90m in places. The typical profile developed over the host units is (from the base of oxidation) saprock (5 to 10m thick), saprolite (10 to 15m), limonitic oxide clays (I0 to 15m), mottled zone (5 to 15m) and alluvium or transported laterite soils (2 to 5m). The weathering profile is commonly truncated with colluvium and alluvium consisting of calcareous red clay soils, iron nodules and fragments of ferruginous saprolite, directly overlying the clay zone.

Much of the Bungarra inferred resource of 1.66 million tones grading 1.64 g/t for a total of 87,000 ounces of gold has been interpreted to be within two shallowly dipping supergene bodies over an area of 400m by 180m. It is located approximately 4.6km south east of Boundary on the fold axis. Rock types are similar to Boundary, but at least two separate pyrite rich granodiorite intrusions are recognised; a grey granodiorite and a melanocratic granite.

The weathering profile at Bungarra, averages between 50m and 60m depth. However, supergene gold horizons within the saprolite are well developed and preserved. Primary mineralization has been intersected in a few deeper RC and diamond holes, but portions of the oxide mineralization are potentially more steeply dipping and reflect primary orientations, rather than supergene processes. Where recorded, quartz-pyrite veins are steeply dipping to the west with individual metre grades of up to 86 g/t gold. They appear to be aligned north-northwest, but this is not conclusive from the drilling to date.

Competent Person Statement

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Malcolm Castle, who is a Member of The Australasian Institute of Mining and Metallurgy. Malcolm Castle is the Principal Geologist of Agricola Consultants. Malcolm Castle 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'. Malcolm Castle consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

For immediate release Media contact: Andrej K. Karpinski, Executive Chairman Tel: (08) 9322 4553 Mob: 0401 747 131