METALS AUSTRALIA LTD — Capital/Financing Update 2004

Oct 19, 2004

AUSTRALIAN UNITED GOLD LTD

ACN 008 982 474

1st Floor, 8 Parliament Place West Perth WA 6005 PO Box 1618 West Perth WA 6872 Tel: (08) 9481-7833 Fax: (08) 9481-7835 Email: aul@austunitedaold.com Website: www.austunitedgold.com

20^th October 2004

Australian Stock Exchange Companies Announcement Office 20 Bond Street SYDNEY NSW 2000

SHERLOCK BAY EXTENDED PROJECT ACQUISITION AND SHARE AND OPTION PLACEMENT

The Company (ASX code: AUL) is pleased to announce that it has reached a heads of agreement with Fox Resources Limited (ASX code: FXR) to earn up to 70% of the Sherlock Bay Extended Project ("SBEP") which covers over 450 km² (45,000 ha) of prospective exploration ground.

This project abuts and surrounds the advanced name sake Sherlock Bay Nickel Corporation Limited's (SHN) tenure which secures 3.4km². The Project is located between Roebourne and Whim Creek in the Pilbara region, of northwestern Western Australia.

AUL's mineral exploration property acquisitions will make the Company the largest land owner in the entire Sherlock Bay district. The corporate philosophy is to become a Nickel Sulphide/Copper Producer.

Current reports from SHN show that it anticipates producing nickel and copper from this region in the near future with quoted resource in excess of 8 million tonnes at 0.42% Nickel and 0.1% Copper. SHN are seeking to produce concentrates using the proprietary "Bio Heap" leach extraction method.

Existing facilities within the AUL's tenure include the sealed Northwest Highway, grid electricity supply and the gas pipeline infrastructure.

Past explorers Texas Gulf and Poseidon explored the general Sherlock Bay area for nickel and copper some 30 years ago. The region is still highly under-explored and has high potential for further new discoveries.

Mineralisation studies show that the potential for gold, platinum group elements ("PGE") and cobalt exists and still remains untested on the SBEP.

Favourable preliminary metallurgical test work in the adjacent area was reported in 1973, with greater than 80% nickel and copper recoveries into a marketable concentrate (8-12% Ni content).

The SBEP consists of three applications for Exploration Licences E47/1226, E47/1227 and E47/1251 with a combined area of about 450 km² (see map attached).

AUL has the right to purchase 50% for the sum of \$250,000.00 and the right to earn a further 20% by expending \$500,000 over the next 3 years. FXR will retain a 1% net smelter royalty ('NSR').

One of the many commercial aspects of the SBEP to AUL, is that its neighbour. SHN, has conducted most of the environmental impact studies, metallurgical test works and engineering studies for their proposed operations, including extraction of nickel from complex nickel/copper sulphides using some of the world's latest technologies.

BACKGROUND INFORMATION:

The geology of the Sherlock Bay Complex is described as a series of mafic-ultramafic bodies Iving along the periphery of the Caines Well Granite, located about 42 km east of Roebourne.

Along the northern margin of the granite is a steeply dipping lenticular Archaean volcanic belt. This belt extends under cover for at least 12 km southeast of the SHN leases into the AUL/FXR project area

Numerous aeromagnetic targets have been identified along strike and within other strong features associated with highly dislocated ultramafic/mafic bodies near the Scholl Shear Zone. These are shown on the accompanying imagery with priority targeting interpreted by our geophysical consultants.

Two nickel occurrences within E47/1227 have no obvious aeromagnetic signatures and may represent a new exploration target type not recognized in the past.

Lithologies within the Sherlock Bay Complex and associated rocks are diverse and include basalt, andesite, rhyolite, greywacke and lithic crystal tuffs. Near the Sherlock Bay Cu - Ni deposit the enclosing lithologies are quartz-magnetite- amphibole schist which resembles in outcrop, a sheared iron-formation.

Some of the prominent aeromagnetic targets shown will be investigated as expressions of further such prospective rock associations.

A comprehensive review has been conducted of all available open file data which includes many geophysical and geological targets that were not tested by previous exploration companies.

New technologies associated with sophisticated geophysical and remote sensing imagery techniques will greatly enhance the interpretation of the prospectivity of the SBEP.

Regional geology, LandSat Imagery and Regional Magnetic Imagery are presented with this report to highlight the exploration potential of the SBEP Base Metal, Nickel, PGE and Gold Project.

SHARE AND OPTION PLACEMENT

The Directors wish to advise they have placed 30,00,000 ordinary fully paid shares at an issue price of \$0.01 (1.0 cent) each together with, subject to shareholder approval, 15,000,000 free attaching options expiring 30 June 2006, exercisable at 2 cents each to clients and associates of Westar Capital Limited.

The funds raised (\$300,000) will be used to fund the acquisition of the Sherlock Bay Extended Project and working capital.

Yours faithfully,

D N ZUKERMAN Director

Competent Person Declaration

Sherlock Bay Exploration Licence Applications Image displays 500K GSWA Regional Geology

Sherlock Bay Exploration Licence Applications
Image displays 742 Landsat Satelite Image

Sherlock Bay Exploration Licence Applications Image displays Aeromagnetic data - 100m LS

Sherlock Bay Exploration Licence Applications Image displays Aeromagnetics with Target Zones

Sherlock Bay Exploration Licence Applications Image Displays Landsat 742 and Major Roads