MAGNETITE MINES LIMITED. — Capital/Financing Update 2012

Jun 14, 2012

ASX Announcement: ROY 15 June 2012

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EXPLORATION DRILLING COMMENCES AT DRAGON’S HEAD

Key Points:

• Drilling has begun to evaluate the magnetite potential of the Dragon’s Head Prospect in the Razorback Iron Project

• Geophysical imaging and geological mapping indicates a thick sequence of Braemar Iron Formation in excess of 5km in strike length

• Work continuing on Resource upgrades at both Razorback Ridge and Ironback Hill

Exploration drilling has commenced at the Dragon’s Head Prospect, Red Dragon tenement EL3997, within the Razorback Iron Project. Located approximately 14km north east of the Razorback Ridge Resource (Figure 1), the prospect displays high potential for significant magnetite - iron ore mineralisation within the Braemar Iron Formation. Drilling will consist of a single fence line of drillholes, with the intent to test the entire thickness of the magnetic sequence (Figure 2).

Figure 1. Razorback Iron Project prospect map, with red box depicting the Dragon’s Head

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Registered Office: Level 3, 1060 Hay Street, West Perth, 6005 PO Box 7525, Cloisters Square, Perth 6850, Western Australia Phone : + 61 8 9322 8542 Fax : + 61 8 9322 6577 Email: info@royalresources.com.au www.royalresources.com.au

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Data modelled from Royal’s high resolution aeromagnetic survey flown in early 2010 indicates an area of approximately 5 km strike length in a fold hinge zone that contains multiple magnetite rich beds to a combined thickness of up to 800 metres. The magnetic intensity of this zone is one of the highest seen in the Razorback Iron Project. Once drilling is completed and assays received, Royal will assess the Dragon’s Head area for possible resource definition.

Figure 2. TMI magnetic image of the Dragon’s Head, with planned drilling traverse (green line); grid is GDA94, Zone 54.

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While this exploration is in progress, Royal continues work on the Razorback Ridge Resource upgrade and Prefeasibility Study. Royal recently announced to the ASX (4 June 2012) an interim JORC-compliant Resource of 845 Million Tonnes at 23% Fe. In addition, Royal is working towards a further upgrade of its Ironback Hill JORC-compliant Inferred Resource, within the Pualco Project which currently stands at 677 Million Tonnes at 23.6 % Fe (refer to the announcement to the ASX on 22 May 2012).

The Razorback Iron Ore Project currently has a total Inferred plus Indicated Mineral Resource of 1.52 Billion tonnes at 23.3% Fe, including 437 Million tonnes at 30.0% Fe.

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Registered Office: Level 3, 1060 Hay Street, West Perth, 6005 PO Box 7525, Cloisters Square, Perth 6850, Western Australia Phone : + 61 8 9322 8542 Fax : + 61 8 9322 6577 Email: info@royalresources.com.au www.royalresources.com.au

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About Razorback

The Razorback Iron Ore Project is a very large magnetite deposit located 240km NNE of Adelaide, South Australia. It is owned 100% by Royal. The project has an exploration target size of 4,800 to 8,000 Million tonnes at grades of 18 to 45% Fe[1] occurring in an infrastructure rich area that has access to nearby existing open user rail, port, power, gas, heavy engineering and dormitory towns.

The Razorback Project is divided into two sub-projects: the northern Red Dragon Project that covers the Razorback Ridge magnetite deposit, and the southern Pualco Project that had never been tested for iron mineralisation. Collectively, the two areas cover over 1,450 square kilometres of exploration tenement. This area contains in excess of 110 strike kilometres of the host Braemar Iron Formation.

The project was acquired in November 2009 and by August 2010, a maiden, JORC compliant Inferred Resource was declared. The current resource at Razorback Ridge deposit now stands at 568.6 Million tonnes at 25.6% Fe, including 437.1 Million tonnes at 26% Fe in the Indicated Resource category. Royal is targeting a resource of 1,000 to 1,200 million tonnes of resources at similar grades[1] to support a Pre-feasibility Study on Razorback Ridge. This is expected to be finalised by the end of Q3, 2012.

In May 2012, a maiden, JORC compliant Inferred Resource of 677.2Mt at 23.6% Fe was announced for the Ironback Hill Prospect. Only 65% of the completed drilling programme was incorporated into that resource estimate. An expanded resource will be announced once all pending assays are received.

Currently, the Razorback Iron Project hosts 1.52 Billion tonnes at 23.3% Fe, including 437 Million tonnes at 30% Fe.

The Razorback mineralisation style is a bedded magnetite. It is significantly softer than banded iron formation ores. As a result, this outcropping resource will be low cost to mine and beneficiate which, together with the available infrastructure, means a low capital cost compared to its peers.

The ore produces a low contaminant, high iron content (>68% Fe) magnetite concentrate at grind sizes of 75µm or less and will likely attract a premium to the reference haematite fines price.

About Royal Resources Limited	About Royal Resources Limited	Share Capital
RoyalResources	Limitedisamineral	Issued Capital (ROY)	305.8M
exploration company	exploring for iron ore in	Listed Options (ROYOA)	34.7M (12c,Oct ‘13)
South Australia and	Western Australia and for	Unlisted Options	33M (8c- 50c)
uranium in the Northern Territory.		Fully Diluted	373.6M
Directors
Philip CrabbMarcus FlisFrank DeMarte	ChairmanManaging DirectorNon-executive Director	Share price rangeAnnual turnover	$0.09 - $0.2017.4%
Brian Richardson	Non-executive Director	Director’s Shareholdings	10%
Malcolm Randall	Non-executive Director	Top 20 shareholders	51%

The details contained in this report that pertains to ore and mineralisation is based upon information compiled by Mr Marcus Flis, BSc (Hons), MSc, a full-time employee of the Royal Resources Limited and Mr Lynn Widenbar BSc(Hons), MSc, DIC, Principal Consultant Widenbar and Associates Pty Ltd . Mr Flis is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Widenbar is a Member of the AusIMM. Both have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Persons as defined in the December 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Flis and Mr Widenbar consents to the inclusion in this report of the matters based upon their information in the form and context in which it appears.

For further information contact : Marcus Flis +61 8 9322 8542 Managing Director

1 The potential quantity and grade of the exploration target is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Resource. The estimate of an exploration target tonnage should not be construed as an estimate of Mineral Resource. 2 ASX Release 12[th] August 2011

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Registered Office: Level 3, 1060 Hay Street, West Perth, 6005 PO Box 7525, Cloisters Square, Perth 6850, Western Australia Phone : + 61 8 9322 8542 Fax : + 61 8 9322 6577 Email: info@royalresources.com.au www.royalresources.com.au