KORAB RESOURCES LIMITED — Capital/Financing Update 2013

Mar 6, 2013

==> picture [80 x 73] intentionally omitted <==

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

®
----- End of picture text -----

KORAB RESOURCES LIMITED KORAB HOUSE

www.korab.com.au

7 March 2013

EXCEPTIONAL ECONOMICS OF BOBRIKOVO GOLD PROJECT

HIGHLIGHTS

• Stage 1 Extraction Circuit CAPEX and OPEX

• Gross profit estimated at $11.5 million per annum (equivalent to 7,670 ounces Au per annum)

• Production estimated at 11,730 ounces Au in concentrate per annum

• Gravity processing costs estimated at $295/ounce Au (equivalent to 2,300 ounces Au per annum)

• Mining costs for the first 16 months of the Stage 1 plant operation already expensed

• Discounts on sale of concentrate, transport of concentrate, etc. at 15% of value of gold contained are estimated at $225/ounce Au (equivalent to 1,760 ounces Au per annum)

• Profit margin estimated at $980/ounce Au

• CAPEX estimated at $700,000 (equivalent to 470 ounces Au)

• Grade of ore fed to the plant is estimated at 3.04g/t Au and, plant is rated at 20 tonnes per hour (240,000 tpa assuming two 10 hour shifts and 5 day workweek), base case assumes gold price of $1,500 per ounce.

• Over $5 million spent to date by Korab on exploration, evaluation and development of Bobrikovo

• Mineral resource increased to 2+ million ounces Au over 2 years (see Appendix A for detail)

• 330 thousand tonnes of ore mined and stockpiled by Korab ready for processing

• All permits and approvals for development of oxide zone and gravity extraction have been secured and are in hand

• Korab has commenced construction of the processing plant and the ancillary infrastructure including lab, mechanical workshops and the administration building.

ISSUED CAPITAL 134 Mln shares 44 Mln options

ASX CODES KOR KORO

MARKET CAPITALISATION $10 Mln

BOBRIKOVO PROJECT STAGE 1 CAPITAL AND OPERATING COSTS

Korab Resources Limited (“ Korab ” or “the Company ”) (ASX: KOR) is pleased to provide this update regarding the estimated capital and operating cost for Stage 1 of the development of the Bobrikovo gold project.

Bobrikovo gold project is located in Ukraine and contains 2.04 million ounces of gold estimated in accordance with the JORC Code (see appendix A for detail). This mineral resource is currently undergoing upgrade to the resource estimate. The results of the update will be released to the market when available.

Korab has been selectively mining and stockpiling the oxide ore at Bobrikovo project on a campaign basis for several years. The stockpiled ore is segregated into high-grade, medium-grade and low-grade ores and is ready for processing using gravity based extraction circuit. The Company has all required permits to commence the processing and extraction of gold into concentrate.

The estimated cost of processing the oxide ore into concentrate is $295 per ounce of gold contained, with the base-case scenario assuming recovery of 50% of gold to concentrate. Mineralogical and metallurgical studies

==> picture [66 x 66] intentionally omitted <==

LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL +61 (8) 9288 4467 FAX +61 (8) 9288 4476 ACN 082 140 252

PAGE 1 OF 4

®

KORAB RESOURCES LIMITED KORAB HOUSE

www.korab.com.au

completed on the ore mined from Bobrikovo suggest that recovery of gold to concentrate will be in range of 50%65% using the Stage 1 second hand gravity circuit. The plant will be fed a blend of high grade and medium grade ore grading on average 3.04 g/t Au. Ore is soft and brittle and proportion of coarse gold in oxide rock is high making this ore highly suitable for gravity gold extraction to concentrate. The tailings from the Stage 1 processing will be reprocessed when the Stage 2 and Stage 3 processing plants are operational.

The Stage 1 processing plant will use diesel generator as power supply. Crushing and milling will be run on contract basis and these costs have been included in the processing costs listed above.

As previously advised, in the long run, Korab plans to build on site a purpose-designed extraction plant (Stage 2) which has an estimated gold recovery of around 79%. The cost of the purpose designed processing plant is approximately $4 million. However, Korab has located suitable second-hand gravity circuits which could be acquired, refurbished, transported to site and commissioned for between approximately $700,000 (less than 460oz of gold at current gold price, 470oz of gold at base case gold price ). These circuits can process up to 20,000 tonnes per month which translates into a production profile of approximately 11,730 ounces of gold per annum for an annual profit of $11.5 million (net of processing cost and selling discounts). This offers an attractive additional revenue stream at a relatively low capital cost. It also offers an opportunity to commence production from the ore already stockpiled on site and to generate early cash flow from sales of gold concentrate well in advance of the completion of the construction of the purpose-designed plant. The costs of mining the ore stockpiled on site have already been absorbed and therefore are not included in the estimated processing costs for the first 12 month of operations.

Korab is currently reconciling the additional ore mined in late 2012 and early 2013 and will provide the results to the market when available. It is expected that the ore grade reconciliation for this recently mined ore will be completed next week.

It is important to note that the Stage 1 second-hand plant is not an alternative to the purpose-designed plant but is an additional processing capacity which offers dual benefits. The first benefit is an early cash flow, well in advance of the completion of the construction and commissioning of the purpose–designed plant. The second benefit is the ability to run the second-hand plant in parallel with the purpose–designed plant thus doubling the production rate at a relatively low capital cost.

Korab is pleased to advise that it has commenced construction of the processing plant and the ancillary infrastructure including lab, mechanical workshops and the administration building at the mine site. It is expected that once the Stage 1 processing plant is acquired, it will take approximately 3-4 months to decommission, refurbish, ship to site and recommission.

GOLD DIVIDEND

ISSUED CAPITAL 134 Mln shares 44 Mln options

ASX CODES KOR KORO

MARKET CAPITALISATION $10 Mln

As announced on 7 February 2013, if and when Korab declares a dividend in the future, shareholders may elect to receive the dividend in gold. Korab shareholders who are eligible to receive a dividend and who make the election would receive the gold in a Perth Mint depositary account opened on behalf of each electing shareholder for this purpose. The elections to receive gold will be capped at 5% of the gold produced by Korab in any financial year, and payment of the dividend in gold will be conditional on electing shareholders agreeing to be bound by the terms of Perth Mint depository accounts. This will essentially amount to shareholders receiving a 5% “royalty” on gold produced by the Company. Where the elections to receive gold exceed this 5% of the gold produced in any one financial year, the dividend payments in gold would be scaled back on a pro rata basis and electing shareholders would receive a combined gold and cash dividend payment. This may happen for example if the aggregate amount of the dividends to be paid out in any one financial year exceeds the value of 5% of the gold produced in that year. This right to receive declared dividends in gold or in cash remains subject to the Korab Board’s powers to pay a dividend under Part 2H.5 of the Corporations Act. The Perth Mint operates a Depository business unit which currently holds over $3.5 billion worth of precious metals. Out of the Depository’s 24,000 clients, 46% are Australian (11,000 clients) with 39% from the United States and 10% in Europe. Depository clients can hold gold on an unallocated basis recorded down to units of one thousandth of an ounce (0.001oz), or

==> picture [66 x 66] intentionally omitted <==

LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL +61 (8) 9288 4467 FAX +61 (8) 9288 4476 ACN 082 140 252

PAGE 2 OF 4

®

www.korab.com.au

KORAB RESOURCES LIMITED KORAB HOUSE

circa $1.58. This small unit of measure means that all but the smallest of dividend payments would be able to be processed as a credit to the shareholder’s Perth Mint Depository metal account.

SHARE PURCHASE PLAN (SPP)

Korab has delayed despatch of the documentation for the SPP offer announced on 22 February 2013 until after the capital and operating costs data for the Stage 1 development of the Bobrikovo project and the results of the reconciliation of ore grades have been released to the market.

-ENDS-

FOR FURTHER INFORMATION, CONTACT:

Andrej Karpinski Executive Chairman + 61 (8) 9288 4467

Competent Person: The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Andrew Hawker, who is an independent geological consultant 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.

APPENDIX A

ISSUED CAPITAL 134 Mln shares 44 Mln options

ASX CODES KOR KORO

MARKET CAPITALISATION $10 Mln

- BOBRIKOVO MINERAL RESOURCE STATEMENT (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

- BOBRIKOVO MINERAL RESOURCE STATEMENT (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

==> picture [66 x 66] intentionally omitted <==

LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL +61 (8) 9288 4467 FAX +61 (8) 9288 4476 ACN 082 140 252

PAGE 3 OF 4

®

KORAB RESOURCES LIMITED

KORAB HOUSE

www.korab.com.au

==> picture [409 x 225] intentionally omitted <==

Pit operations and mining of oxide ore at Bobrikovo

==> picture [408 x 164] intentionally omitted <==

Close up of pit floor after high grade veins have been extracted and prior to start of mining of lower grade ore

ISSUED CAPITAL 134 Mln shares 44 Mln options

ASX CODES KOR KORO

MARKET CAPITALISATION $10 Mln

==> picture [66 x 66] intentionally omitted <==

LEVEL 18, CENTRAL PARK, 152-158 ST. GEORGE’S TERRACE, WA, 6000, AUSTRALIA PO BOX Z5447, PERTH, WA, 6831 AUSTRALIA TEL +61 (8) 9288 4467 FAX +61 (8) 9288 4476 ACN 082 140 252

PAGE 4 OF 4