MAGNETITE MINES LIMITED. — Capital/Financing Update 2012

May 8, 2012

ASX Announcement: ROY 9 May, 2012

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ROYAL CONCLUDES WARRIEDAR GOLD JV SALE

Further to an announcement on the 14[th] July, 2011, Royal Resources Limited is pleased to announce that the sale of the Warriedar Gold Joint Venture (WGJV) to Minjar Gold Pty Ltd has been completed for a cash consideration of A$1,000,000, excluding GST.

The sale of Royal’s 40% interest in the WGJV follows the divestment of Royal’s 40% interest in the Warriedar Iron Ore Joint Venture to Gindalbie Metals Limited as announced on 25[th] November, 2011. Gindalbie made an offer of $8 million cash for both JV’s. Minjar, having a 60% interest in the WGJV, exercised its pre-emptive right to take up the 40% held by Royal The WGJV was allocated a value of $1 million of Gindalbie’s $8 million bid, so reducing Gindalbie’s payment to $7 million.

The sale was conditional on Minjar obtaining FIRB approval and Ministerial consent, both of which have now been provided.

This sale concludes Royal’s exit from the Warriedar area, leaving it only with the Fields Find group of tenements. It is Royal’s intent to exit the Mid-West completely as the Company’s focus intensifies on the Razorback Iron Project in South Australia.

Commenting on the Sale Agreement, Marcus Flis, Managing Director of Royal said: “The Warriedar Gold Joint Venture was not core to Royal’s exploration and development activities. It had been a nonperforming JV so I am pleased it is now off our books. The funds raised will be directed towards the continued resource definition drilling at Razorback and the delivery of the Pre- Feasibility Study. This is a good outcome for our Company.”

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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 through either outright ownership (EL4267 and ELA313/10) or an exclusive option over the iron rights (EL3927 and EL3997). 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 Q2, 2012.

Initial exploration drilling on the Ironback Hill prospect in the Pualco Project has indicated the presence of substantial thicknesses of magnetite at similar grades to those seen at Razorback Ridge and has validated the exploration target. A resource definition drilling campaign is now underway at Ironback Hill.

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 so will be readily marketable at a premium to the reference haematite fines price.

About Royal Resources LimitedRoyalResourcesLimitedisamineralexploration company exploring for iron ore inSouth Australia and Western Australia and foruranium in the Northern Territory.DirectorsPhilip CrabbChairmanMarcus FlisManaging DirectorFrank DeMarteNon-executive DirectorBrian RichardsonNon-executive DirectorMalcolm RandallNon-executiveDirector	Share CapitalIssued Capital (ROY)305.8MListed Options (ROYOA)34.7M (12c,Oct ‘13)Unlisted Options33M (8c- 50c)Fully Diluted373.6MShare price range$0.125 - $0.20Annual turnover17.4%Director’s Shareholdings10%Top 20 shareholders51%

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. Mr Flis is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and 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 December 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Flis consents to the inclusion in this report of the matters based upon his information in the form and context in which it appears.

For further information contact : Jaxon Crabb +61 8 9322 8542 Investor Relations

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.

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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