KORAB RESOURCES LIMITED — Capital/Financing Update 2012

Oct 14, 2012

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KORAB RESOURCES LIMITED KORAB HOUSE

www.korab.com.au

15 October 2012

MINED GRADE RECONCILIATION GOLD OPERATIONS UPDATE

Highlights

• Mined grade from oxide cap at Bobrikovo mine has 38% higher gold content than estimated by JORC resource block model;

• Bobrikovo drilling program to test for extensions to mineralisation under the open pit fully permitted and ready to go;

• Drilling in‐fill program along strike is in final planning stages and nearing submission for work permits;

ISSUED CAPITAL 110 MLN shares 37 MLN options

JORC COMPLIANT GOLD RESOURCE 2.06 MLN ounces

• Multiple historical metallurgical tests show excellent gold recoveries.

Mined Grade Reconciliation

Korab Resources (“ Korab ” or “ Company ”) is pleased to advise that grade reconciliation work completed on the mineral resource mined at the Company’s Bobrikovo open pit gold mine in Ukraine has shown the actual overall gold grades of material mined at Bobrikovo exceed gold grades predicted by the block model by 38%. This variation is even higher for what was considered to be the low grade zone of the resource mined.

Grade reconciliation work conducted by the Company on the material mined from open pit levels 1 and 2 has shown that the mined grade of the low grade rock is approximately 2.60 g/t Au which is 62% higher than the 1.6 g/t Au grade predicted by the block model.

This variation is due to the extremely conservative model adopted for the estimation of the mineral resource (released to the market on 8 October 2012). The model used ID4 (inverse distance to the power of 4) and consequently generated an extremely conservative resource estimate by not allowing smoothing of the data. As a result, this would have underestimated the total ounces contained when compared to a model using a lower power interpolation method.

Grade reconciliation work also confirmed the mined grade of high grade rock is approximately 4.8 g/t Au which is consistent with gold grades predicted by the block model.

These grade variations were not taken into account in the mineral resource upgrade released to the market on 8 October 2012 when the Bobrikovo project’s mineral resource was updated to over 2 million ounces of gold (see Appendix A for detailed mineral resource statement).

Drilling Programs to Test for Extensions of Mineral Resource

ACN 082 140 252 Level 1, Suite 6 100 Mill Point Rd, South Perth, WA, 6151 Australia PO Box 195, South Perth, WA, 6951 Australia Tel (08) 9474 6166 Fax (08) 9474 6266

Korab is pleased to advise that it has completed the planning of a drilling program, to test for extensions of the mineralisation below the open pit. The mineralisation remains open at depth. This program is fully permitted and Korab is currently in the process of securing drill rigs.

The Company is also in the final stages of planning a second drilling program to test the gaps in the known mineralisation where no holes were drilled to date but where geochemical anomalies and geophysical analyses suggest the potential for continuity of the gold mineralisation (see

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diagram below for drill targets). Planning and design of this second program is nearing completion and when completed it will be submitted for government approval.

ISSUED CAPITAL 110 MLN shares 37 MLN options

JORC COMPLIANT GOLD RESOURCE 2.06 MLN ounces

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Drill Targets (Blue Arrows).
Contour of Oxide
Pit Design
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Metallurgical Test Results

Following enquiries from numerous shareholders, Korab is pleased to re‐state the results of the extensive metallurgical testing completed between 1975 and 2005 on oxide and fresh rock samples from Bobrikovo. These tests (which have been previously reported by Korab on 29 March 2010) were completed by independent accredited laboratories and by various processing plants.

Test sample sizes ranged up to 10,000 tonnes of ore. All tests have shown very good recoveries of gold to concentrate, or dore bars. A summary of the test results is listed below in chronological order:

Year	Metallurgical Laboratory or Processing Plant	Type of extraction	Gold recovery %
1975	GNIGRI (Moscow)	Hydrocyclone extraction.	72‐79
1992	VNIIKhT (Moscow)	Gravitational separation.	62

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ISSUED CAPITAL 110 MLN shares 37 MLN options

JORC COMPLIANT GOLD RESOURCE 2.06 MLN ounces

Year	Metallurgical Laboratory or Processing Plant	Type of extraction	Gold recovery %
1992	VNIIKhT (Moscow)	Hydrometallurgical extraction with autoclave oxidation.	97‐98
1995	UkrGIMIR (Symferopol)	Gravitational concentrate gold recovery 46% from low grade ore and 81% gold recovery from high grade ore. Average gravitational recovery was 60%; chemical processing of tailings had gold recovery of 90%. Total gold recovery after gravitational and chemical processing was 94‐98%.	94‐98
1996	PKhZ (Dniprodzershynsk)	Chemical leaching of test sample of 10,000 tonnes of mixed ore was processed to extract 40kg of gold.	92
2001	PGMZ (Dniprodzershynsk)	Heap leaching.	92
2003	Muzhevo Processing Plant	Concentrate obtained by KNELSON thickener using mixed low and high grade oxide ores.	77
2004	“Krokus”	Gravity tables	63‐76
2005	Intertech Corp.	Concentrate obtained by KNELSON thickener; gold recovery from low grade ores 40‐50%, gold recovery from high grade ores 90%. Combined gravitational processing and chemical leaching of tailings had gold recovery of 90‐95%.	90‐95

Project Description

Korab currently has interest in 84.3% of the project and has reached agreement to purchase the remaining 15.7% interest it does to already own subject to the Company having the capacity to issue Korab shares under listing rule 7.1 in payment of the purchase price. When completion of that transaction occurs in due course, Korab will own 100% of the deposit through its wholly owned subsidiary.

The deposit is located in eastern Ukraine, within Nagolny Ridge, a part of a large intra‐ continental geological structure that extends from southern Europe east to Central Asia. This structure hosts several world‐class gold mining operations including 170 million ounces Muruntau gold deposit as well as Vysokovoltnoe, and Bakirchic gold deposits. The style of mineralisation at Bobrikovo is similar to Muruntau deposit in Uzbekistan and to Sukhoi Log (57 million ounces of gold) deposit in Russia.

The deposit occurs on the intersection of deep fault zones. Mineralisation is controlled by NW‐ NNW trending anticline hinge, and occurs as concordant and discordant quartz‐carbonate tension veins and stockworks. Host rocks of the Nagolny Kryazh comprise two structural stages: the lower, Precambrian, and the upper, Phanerozoic. The lower structure comprises deformed sequence of gneisses and crystalline schists. Precambrian basement is overlapped by 3 km‐thick sedimentary rock sequence. Mineralised zone is 2.5‐3 km long and 0.9 – 1 km wide.

-ENDS-

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FOR FURTHER INFORMATION, CONTACT:

Andrej Karpinski Executive Chairman (08) 9474 6166

APPENDIX A

Bobrikovo Mineral Resource Statement at Various Cut‐Off Grades

- CURRENT MINERAL RESOURCE AT BOBRIKOVO PROJECT (ABOVE 0.5 G/T AU CUT OFF GRADE)

Resource by category	Resource by category
At 0.5 g/t Au cut-off	VOLUME	ORE_MASS	AU_CONTENT	AU_MASS	AU_MASS
	[1000m3]	[1000t]	[g/t]	[t]	[Mln oz.]
Measured	664.130	1,660.321	2.053	3.409	0.110
Indicated	2,909.636	7,274.089	2.792	20.313	0.653
Inferred	11,263.358	28,158.399	1.412	39.749	1.278
Total	14,837.124	37,092.809	1.711	63.471	2.041

Totals may differ due to rounding

- CURRENT MINERAL RESOURCE AT BOBRIKOVO PROJECT (ABOVE 1 G/T AU CUT OFF GRADE)

ISSUED CAPITAL 110 MLN shares 37 MLN options

JORC COMPLIANT GOLD RESOURCE 2.06 MLN ounces

Resource by category
At 1 g/t Au cut-off	VOLUME	ORE_MASS	AU_CONTENT	AU_MASS	AU_MASS
	[1000m3]	[1000t]	[g/t]	[t]	[Mln oz.]
Measured	382.132	955.331	3.046	2.910	0.094
Indicated	2,909.636	7,274.089	2.792	20.313	0.653
Inferred	3,878.147	9,695.367	2.778	26.929	0.866
Total	7,169.915	17,924.786	2.798	50.152	1.612

Totals may differ due to rounding

- CURRENT MINERAL RESOURCE AT BOBRIKOVO PROJECT (ABOVE 2 G/T AU CUT OFF GRADE)

Resource by category	Resource by category
At 2 g/t Au cut-off	VOLUME	ORE_MASS	AU_CONTENT	AU_MASS	AU_MASS
	[1000m3]	[1000t]	[g/t]	[t]	[Mln oz.]
Measured	188.577	471.443	4.720	2.225	0.072
Indicated	1,289.213	3,223.033	4.559	14.694	0.472
Inferred	1,409.386	3,523.466	5.118	18.034	0.580
Total	2,887.177	7,217.942	4.843	34.953	1.124

Totals may differ due to rounding

Competent Person: The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled and reviewed by Andrew Hawker, who is a principal geological consultant for HGS Australia Exploration Services and is a member of The Australasian Institute of Mining and Metallurgy. Andrew Hawker has in excess of 5 years’ 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’. Andrew Hawker 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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