MGX RESOURCES LIMITED — Capital/Financing Update 2005

Aug 29, 2005

VIA: WWW.ASX.ONLINE.COM

Mount Gibson Iron Limited

ABN 87 008 670 817

First Floor, 7 Havelock Street West Perth 6005, Western Australia

PO Box 55, West Perth WA 6872

Telephone: 61-8-9485 2355 Facsimile: 61-8-9485 2305 E-mail: admin@mtgibsoniron.com.au

30 August 2005

No. Pages $=$ $\overline{2}$

The Manager Company Announcements Australian Stock Exchange Limited Level 10, 20 Bond Street SYDNEY NSW 2000

MOUNT GIBSON IRON LIMITED INCREASES SHAREHOLDING IN ASIA IRON HOLDINGS LIMITED TO 76%

Mr Brian Johnson, Managing Director of Mount Gibson Iron Limited (ASX Code "MGX"), announced today that the Company has agreed to acquire 12.5 million shares in Asia Iron Holdings Limited ("Asia Iron") from Sinom Investments Limited, at a cost of HK\$1.50 per share.

The acquisition, which is scheduled for completion on or before 30 September 2005, will cost A\$3.2 million and be satisfied by a cash payment of A\$1.7 million and the issue of 2.0 million MGX shares at A\$0.75 each.

The acquisition does not require Shareholder approval.

Mount Gibson Iron will also subscribe A\$5.1 million for a further 20 million shares in Asia Iron on the same date and at the same price, with the two transactions increasing the Company's shareholding in Asia Iron from 63% to 76.2%. Mount Gibson Iron has previously stated it intends to increase its shareholding in Asia Iron to a minimum of 80%.

Funds subscribed by Mount Gibson Iron will be used by Asia Iron for completion of the Bankable Feasibility Study of its Extension Hill Magnetite Project which is being undertaken by Cleveland based Midland Standard Inc, and a group of specialist Australian consultants.

Midland Standard, who are internationally recognised experts in the production of magnetite concentrate and pelletisation, expect to finish the study by the end of October 2005.

Mr Johnson said, "This increase demonstrates our confidence in, and our commitment to, the development of a major new iron ore project in the Mid West region of Western Australia, and to the production of pellets in China."

Yours sincerely MOUNT GIBSON IRON LIMITED

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Angela Dent Company Secretary

Enquiries: Brian Johnson, Managing Director Alan Rule. Finance Director Telephone: +61-8-9426-7500 Email: admin@mtgibsoniron.com.au

Media: Tony Dawe Linc Integrated $+61-8-6363-7000$