MAGNETITE MINES LIMITED. — Management Reports 2012

Nov 25, 2012

NO. 1, VOLUME 1: NOVEMBER 2012

ROYAL RESOURCES LIMITED

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Razorback

PreFeasibility Study advances

Studies on the giant Razorback Premium Iron Project are progressing . Started in 2011, the PFS has put mining methods, beneficiation flow sheets, transport routes, and port facilities under the microscope. The result is that Royal has identified a number of realistic options for each of those areas of operations. This is in stark contrast to many magnetite projects in Australia, and elsewhere – both in Australia and around the world – that often have very few or no practical solutions.

A case in point is access to electricity. The proposed mine site at Razorback is within 50 kilometres of both the state electricity grid and the Moonta to Adelaide natural gas pipeline. The project has the choice of taking power off the grid, and therefore able to buy power from anywhere on the eastern seaboard, or build its own gas-fired power station near site. Both options deliver significantly lower power costs than those imposed by the diesel generated power that is required in remote locations.

MagFax

Around 60% of magnetite beneficiation costs are power costs. Reduced crushing and grinding requirements from soft ores and access to cheap power, both of which are found at Razorback, significantly reduce operating costs compared to BIF-sourced magnetite.

The softness of Razorback ore, compared to the much harder banded iron formation ores, will deliver lower operating costs in the beneficiation plant, easily nulling out the effects of our lower ore grades and delivering a well priced product.

One of the most exciting options we are pursuing is an unique magnetite concentrate transport and ship loading system.

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Rather than being limited by the small ships that Port Pirie can take, Royal is looking at loading our magnetite at sea using magnetite slurry. This entails laying a seafloor pipeline to a permanently moored large size vessel that not only dewaters the slurry, but stores it for future transfer to the transport vessel. Water is returned to the mine. The “floating stockpile” will store around 140,000 tonnes of product, about the same as that of the transport vessel. Whilst unknown in Australia, this method is widely used elsewhere.

This system can deliver significant cost savings and operational benefits when compared to standard land based stockpiles and port based ship loading operations.

Completing the last round of resource definition drilling in August, the project now boasts sufficient resources to see a mine life in excess of the notional 25 year life of the beneficiation plant.

If the life of the plant is to be extended or operation’s output increased in the future, there are more than sufficient exploration targets to meet that demand.

Important Dates

4 – 6 November

Royal attends China Mining and Investor one-on-ones, Beijing 14 – 21 November London road show

27 November

AGM at the Celtic Club, West Perth 24 December to 1 January

Offices closed for Christmas – New Year

Royal in the spotlight

Next Top Mining Shares, A.Trench and D.Packey, 2012

Mining Chronicle, July, 2012

The Recorder, 24 Nov, 2011

Australian Mining Prospect Awards “Explorer of the Year, 2011”

Diggers & dealers Industry Awards “Best Emergent Company, 2010”

Contacts

Royal Resources Limited PO Box 7525, Cloisters Square,WA, 6850. P +61 (0)8 9322 8542 F +61 (0)8 9322 6577 E info@royalresources.com.au W royalresources.com.au ASX Code: ROY

Keep up to date with the company’s ASX announcements by joining our mailing list on our website.

DEFINING AND DEVELOPING A NEW IRON ORE PROVINCE IN AUSTRALIA

NO. 1, VOLUME 1: NOVEMBER 2012

ROYAL RESOURCES LIMITED

Royal in the community

positive results for the region.

Royal Resources is committed to meaningful community engagement.

Whether it’s the site of crops dying through lack of rain, the poor returns for fat lambs or the age old debate about wet sheep and dry sheep, farming certainly can be mentally challenging. In response to this the first project is about raising awareness of rural mental health and wellbeing through a calendar which educates on some of the conditions and services available for those in need.

A core value of Royal Resources is to develop open and lasting relationships of mutual understanding and respect with all communities and stakeholders within the areas in which we operate. You could say we “want to be a good neighbour”, and like any good neighbour not just think about ourselves but also broader community economic and social issues. As such, even though we haven’t been around that long, we are involved in a number of initiatives aimed at supporting regional health and well being. These projects go beyond donations (which, by the way, are still very important), to a more “hands on” approach.

Did you know……

Royal Resource’s camp at Razorback donates all its drink can deposits to help keep the Yunta public swimming pool operating?

There are very few areas untouched by weeds in South Australia, from our vast dry deserts to our populated coastline. Weeds affect everyone from primary producers to backyard gardeners. Therefore our second project focusses on eradicating problem weeds and trees. As a starting point Royal will undertake a trial to remove box thorn and pepper trees from a waterway; a local school will also be involved in data collection.

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The final project is directed at training and employment in the region – see box below.

Royal is partnering with organisations to focus on three community-based projects. Federal, state, and local government, together with community based groups, academic institutions and representatives of the pastoral sector are being engaged to deliver

And why all this? It can be summed up in a phrase by Henry Ford:

Coming together is a beginning, Keeping together is progress, Working together is success.

Marcus’

Musings

Marcus Flis Managing Director

Welcome to our

first newsletter ! Royal has over 2,500 shareholders that live around Australia and the world. Keeping shareholders up to date on the activities and achievements of their company is a priority; one not well achieved through the rigidness of an ASX announcement. This newsletter will go some way to filling the information gap and addresses items of interest that are not normally included in “market sensitive” announcements. I intend to publish this newsletter on a quarterly basis, countercyclical to the Quarterly reports.

A lot has been said in the media about the state of the mining boom. A recent decrease in iron ore pricing seemed to confirm it. The rebound in the iron price to around $110/t showed that reports of the death of the boom were greatly exaggerated. Weakness in the China economy will be shortlived. The Communist Party's 18th Congress in November saw a once-in-ten year leadership change that installed Mr Xi Jinping as General Secretary of the Party.

The new leadership will stamp its authority on China’s economy and will move quickly to announce a raft of stimuli to put GDP growth at the targeted 7.5 to 8.5%. However, due to intransigence caused by the Chinese New Year break, I do not see anything definitive coming out of China until about March 2013. An iron price of around $120/t should be expected after that.

I encourage you to let me know aspects of the company you would like most to hear about. I invite you to email your comments and questions to:

info@royalresources.com.au

All Aboard Rural Train 2013

Youth unemployment rates in regional South Australia are nearly double that of the state as a whole. The Department of Education, Employment and Workplace Relations indicates regional centres, such as Peterborough and Pt Pirie, may be rich sources for the labour required to build and operate Royal’s proposed mine at Razorback. Together with a number of pastoral companies, State and Federal Government and Community Groups (with a special thanks to Liz Parnell of the Peterborough Community Action Network) Royal is developing a training and employment program to encourage people who want to work “back on the land”. The Rural Train course is aimed at providing meaningful training and work experience for those interested in working in the pastoral and resources sector.

A quality pool of candidates will be drawn from the region, with the added benefit that there are clear pathways into employment for those that do well.

“This is very much an early-mover opportunity for Royal”, observed Royal’s Stakeholder Engagement Officer, Mr Jamie Love. “It will form the groundwork to the Razorback Premium Iron Project attracting a local, committed workforce once the project is slated for start-up”. Advertising in regional newspapers and information sessions are set to commence in late November 2012.

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The Rural Train Project is a first in which pastoral companies and a resource company have come together and collaborated on a training and employment model in SA. The project may form a model for the Razorback Premium Iron Project’s labour needs.