MATSA RESOURCES LIMITED — Capital/Financing Update 2011

Dec 12, 2011

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Matsa Resources Limited – December 2011
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LIMITED

ABN 48 106 732 487

ASX Announcement

13[th] December 2011

Binding Terms Sheet Signed for Farm-in and Development of Matsa’s Dundas Iron Ore Project

HIGHLIGHTS

CORPORATE SUMMARY

• Development milestone for immediate commencement of exploration and feasibility work at Dundas Iron Ore Project

• The investor to take placement of up to 4 million shares at a minimum of 26 cents

• Immediately proceed to Formal Agreement with development options, subject to statutory and shareholder approval if any

• Payment of $1.95 million to Matsa upon successful completion of due diligence

• $7 million project exploration programme to proceed

• $20 million Definitive Feasibility to be undertaken upon completion of successful evaluation programme

Executive Chairman

Paul Poli

Director

Frank Sibbel

Director & Company Secretary Andrew Chapman

Shares on Issue 127.3 million

Unlisted Options 19.35 million @ 27.3c + Top 20 shareholders

Hold 58%

INTRODUCTION

Share Price on 12 December 2011

Matsa Resources (ASX: MAT) ("Matsa" or the "Company") is pleased to announce an important development in its strategy to develop its Dundas Iron Ore Project following agreement with Haina Resources Pty Ltd (“Haina”) a subsidiary of Haina International Trading HK Limited a controlled entity of

20.5 cents

Market Capitalisation $26 million

Tel : +61 8 9230 3555 Fax: +61 8 9227 0370 Tel: +61 8 9021 7200 Fax: +61 8 9021 7277 Tel : +66 0 2653 0258 Fax : +66 0 2653 0258

Head Office: Suite 11, 139 Newcastle Street, Perth Western Australia 6000 Kalgoorlie Office: Suite 1, Vosper House, 31-33 Dugan Street, Kalgoorlie 6430 Bangkok Office: Unit 1808, Pacific Place 2, Sukhumvit Road, Klongtoey, Bangkok reception@matsa.com.au www.matsa.com.au

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Matsa Resources Limited – December 2011
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Shandong Shanshi International Trading Co., Ltd (“Shanshi”) that paves the way for a Formal Agreement.

Matsa Executive Chairman Paul Poli said “the terms sheet with Haina is an important milestone in the Company's on-going commitment to develop its Dundas Iron Ore Project for shareholder benefit.

• $7 million to Matsa for exploration and evaluation purposes to earn 60% of the project. Matsa will manage the evaluation study at all times.

• Haina to fund and complete an approximate $20 million Feasibility Study within 2 years after completion of the evaluation study to increase its interest to 76%.

We are only interested in partnering with potential investors with capacity to develop our projects and this agreement with Haina provides a range of development options to fast track Dundas Iron Ore into production," Mr Poli said.

"The agreement with Haina provides Matsa with the means to develop our Dundas Iron Ore Project.

The information that can be gathered with the feasibility will also substantially assist Matsa in developing the Norseman Gold Magnetite byproduct project”.

Key features of the agreement between Matsa and Haina include:

• Haina to fund up to commencement of production to earn a maximum of 80% in the project, with Matsa’s share being free carried.

"As always, all discussions with potential investors are aimed at getting the best possible outcome for our shareholders, and Haina agrees with Matsa that the Dundas Iron Ore Project has significant upside potential with the opportunity to generate strong cash flows." Mr Poli said.

"Despite the turmoil on international and local markets and knock on effects to commodity prices we remain confident that demand for iron ore will continue to be high."

• Haina to take a placement of 4 million shares at a minimum of 26 cents in Matsa, with the first tranche of $286,000 already received.

• 90 day Due Diligence period to commence immediately in which the Formal Agreement is to be finalised.

ABOUT DUNDAS IRON ORE PROJECT

Matsa's Dundas Iron Ore Project tenements contain typical Western Australian banded iron formation (BIF), which has an exploration target[*1] of between 350 to 700 million tonnes of magnetite resource.

• Haina to pay $1.95 million to Matsa upon successful completion of stage 2 of the proposed evaluation study which is to commence within 90 days.

• Range of flexible development options, including Haina to spend $7 million on exploration and evaluation costs within 18 months of Formal Agreement, or transfer

Drilling and Davis Tube Recovery (DTR) results have shown significant zones in these BIF units that can produce magnetite concentrates containing high Fe (<69%) and low silica (<8% SiO2).

Matsa is committed to further drilling and exploration to target these BIF units and define a JORC-compliant resource.

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Matsa Resources Limited – December 2011
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Significant key benefits of the project are:

• Access to extensive existing infrastructure;

• Esperance Port only 170km by rail;

• Only 3km from heavy haulage railway line;

• Highway runs through the project;

• Existing gas pipeline through the project.

BACKGROUND

About Shandong Shanshi International Trading Co., Ltd:

Haina International Trading HK Limited is a controlled subsidiary of Shandong Shanshi International Trade Co., Ltd which itself is a diversified trading company located in the Iron Ore import city of Rizhao in the Shandong Province in North East China. The company conducts international trade which includes Iron Ore, Coal, other metal ores, building materials, timber and decorative materials.

The company has extensive iron ore and coal processing, sorting and treatment facilities which have been inspected by Matsa at a recent trip to Rizhao. The facilities were centrally located to port and end users.

The company is based on solid strength and good reputation with a sound sales network and after sales service. They have long-term stable cooperative business partners and affiliates throughout the world and are highly praised by customers domestically and abroad.

Shandong Shanshi International Trade Co., Ltd is a supplier to domestic steel mills specialising in plant raw material and agents. It also has Government approval to trade in Iron Ore and Coal.

Currently, the company imports approximately 2 million tonnes of iron ore mainly from India, Australia, Brazil and Indonesia, and seeks to expand their operations to direct investments in Iron Ore and coal mines.

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Matsa Resources Limited – December 2011
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For further Information please contact:

Paul Poli Frank Sibbel Executive Chairman Executive Director

Phone +61 8 9230 3555 Fax +61 8 9227 0370 Email reception@matsa.com.au Web www.matsa.com.au

Exploration Target[*1]

Under Clause 18 of the JORC Code the exploration targets outlined in this report are conceptual in nature as there has been insufficient exploration to define additional mineral resources; it is uncertain if further exploration will result in the determination of any additional mineral resources.

Exploration results

The information in this report that relates to Exploration Results, is based on information compiled by David Fielding, who is a Fellow of the Australasian Institute of Mining and Metallurgy. David Fielding is a full time employee of Matsa Resources Limited. David Fielding has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and 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. David Fielding 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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