KORAB RESOURCES LIMITED — Capital/Financing Update 2011

May 22, 2011

www.korab.com.au

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KORAB RESOURCES LIMITED KORAB HOUSE

Monday, 23 May 2011

OPERATIONS UPDATE

LUGANSK GOLD STRATEGIC INVESTOR

Korab wishes to inform the market that it has been advised by Lugansk Gold Ltd (an Australian public company where Korab holds approximately 69% equity interest) that the proposed transaction between Lugansk Gold Ltd and a strategic investor (signing of Letter of Intent announced on 29 November 2010) will not proceed.

Under the Letter of Intent, strategic investor was intending to invest AU$20 million in the issued capital of Lugansk Gold Ltd via a private pre-IPO placement. The Letter of Intent provided the strategic investor with a right of first refusal to underwrite any future capital risings undertaken by Lugansk Gold Ltd and with a top-up facility in case of any placements made by Lugansk Gold Ltd to parties other than strategic investor or in case of non-pro-rata issues. Investment was subject to regulatory and ASX approvals.

During the negotiations following the execution of the letter of intent, potential investor requested that Lugansk Gold Ltd amends its constitution and corporate governance manual to provide the investor with right of veto over most of the decisions which normally are the prerogative of the board of directors, or of shareholders of the company acting in general meeting. In the opinion of legal advisors of Lugansk Gold Ltd such changes would in all likelihood make Lugansk unsuitable for listing on ASX and potentially could also make it difficult for it’s directors to comply with the Corporations Act and ASX listing rules. Lugansk advised Korab that various compromise solutions were discussed during the negotiations but no agreement could be reached and consequently, this proposed pre-IPO private placement transaction will not proceed.

Notwithstanding the proposed pre-IPO private placement not proceeding, Lugansk Gold Ltd advised Korab that it still intends to conduct its IPO to seek to raise approximately $50 million by way of an IPO under an IPO prospectus and that it will advise Korab regarding its progress when appropriate.

ABOUT KORAB RESOURCES LIMITED

ASX KOR Last price AU¢ 22

BERLIN C6S.BE Last price € 0.17

Korab Resources Ltd is an Australian mining and exploration company based in Perth. Korab’s quarrying and mining projects include rock phosphate and magnesium. The company also manages exploration projects in Western Australia and the Northern Territory. More information about Korab’s projects can be sourced from our website at www.korabresources.com.au Korab’s shares are listed on Australian Securities Exchange (ASX) and trade on Australian Securities Exchange (ASX) and on the Berlin Stock Exchange (Berliner Börse).

CONTACT

Andrej K. Karpinski - Executive Chairman, in Australia: (08) 9474 6166, International: +61 8 9474 6166

Issued capital 88 million shares

Market capitalisation AU$ 19 million € 15 million

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LEVEL 1, SUITE 6, 100 MILL POINT ROAD, SOUTH PERTH, WA, 6151 AUSTRALIA PO BOX 195, SOUTH PERTH, WA, 6951 AUSTRALIA TEL (08) 9474 6166 FAX (08) 9474 6266 ACN 082 140 252

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