ROX RESOURCES LIMITED — Capital/Financing Update 2005

Sep 28, 2005

ASX AND MEDIA RELEASE 29 September 2005

ROX SECURES PORTFOLIO OF KIMBERLITES IN SOUTH AFRICA

HIGHLIGHTS

• Nine kimberlite pipes near Kimberley, South Africa secured $\bullet$
• Diamonds currently being mined on a small scale at one kimberlite (Cyrus) $\bullet$
• Indicator mineral sampling shows strong indication of diamonds at Smithsdale kimberlite
• Black Economic Empowerment (BEE) partner with kimberlite mining experience secured

Rox Resources (ASX: RXL) today announced that it has assembled a quality portfolio of kimberlite projects near Kimberley in South Africa.

The kimberlites are all located in the Barkly West area, approximately 30 kilometres north west of the diamond centre of Kimberley in South Africa (see Figure 1) and cover prospecting or mining permits with an overall area of 96 square kilometres:

Agreements include an option agreement to acquire an interest of up to 60% in the Cyrus deposit, currently being mined on a small scale.

There are eight other known kimberlites within the area covered by various agreements and an exploration application. Indicator mineral sampling of one of these kimberlites highlighted the likelihood that it is diamond bearing. The other kimberlites have not been sampled.

Rox has also secured a BEE agreement with Lute Mining and Diamonds over the bulk of the project. The current owner of the Cyrus project, Tswelelang Pty Ltd, will act as BEE partner for this project.

Commenting on the agreements, Rox Managing Director Mr Ian Mulholland said they represented a low cost entry into highly prospective kimberlite projects in one of the most prospective diamond exploration areas in the world. There is a history of alluvial and kimberlite diamond production from the area.

"This is an important milestone for Rox's diamond strategy in South Africa," said Mr Mulholland.

"We now have a few feathers in our cap - a strong portfolio of kimberlites, one with proven high quality diamonds and BEE agreements with partners who have kimberlite mining experience," he said.

"These agreements offer us the opportunity to evaluate and explore diamondiferous kimberlite as well as a number of known kimberlite pipes and targets in this highly endowed area, located only 30 kilometres from the diamond centre of Kimberley, with it's established infrastructure, mining culture and expertise." Mr Mulholland said,

"We have already received positive indicator mineral results from one pipe, with more left to sample, and we have numerous kimberlite targets on our ground holding of 96 square kilometres." said Mr Mulholland.

This portfolio offers Rox the opportunity to pursue its strategy of quickly achieving diamond production in South Africa. Production from a number of kimberlite pipes could provide feed for a significant operation. Rox has also signed a BEE agreement with Lute Mining and Diamonds in respect of its kimberlite projects.

Rox has retained the services of Mr Hugh Durey and Mr Ross Brown as consultants. Mr Durey and Mr Brown are well-regarded diamond experts in southern Africa with over 50 vears experience between them.

For a full description of the kimberlite projects, BEE agreements and other commercial terms see the Appendix.

FOR FURTHER INFORMATION CONTACT:

Ian Mulholland, Managing Director Tel: (08) 9486 4537

Ann Nahaiski, Porter Novelli Tel: (08) 9386 1233

Figure 1: Location of Barkly West Kimberlite Project and Pampoene Pan and Vlakfontein Alluvial Projects

APPENDIX

BARKLY WEST PROJECT

The Barkly West kimberlite province, 30 kilometres NW of Kimberley, hosts at least 60 known kimberlite occurrences (pipes, dykes, fissures and sills) and Rox believes that there is potential for additional discoveries and reopening of some of the historic mines. The district has been inadequately explored with modern technology particularly given the indicator mineral overprint from extensive alluvial cover, the strong structural control masking depohysical signatures and the lack of land access in the past. There are many vegetation. topographic and structural targets, indicative of underlying kimberlites that deserve investigation.

The district also hosts many alluvial diamond deposits associated with the evolution of the Vaal River, Local kimberlite mining has vielded high gem content and high diamond prices. Rox's properties are in close proximity to the kimberlite mines of Leicester (production grades of 22 cpht at US\$265 per carat) and Holsdam (production grades of 21 cpht at US\$160 per carat).

South Africa is the world's 4^th largest diamond producer by value and in 2004 De Beers' production alone amounted to 13.7 million carats. Rox is focused on the Kimberley region because of its established infrastructure, mining culture and diamond opportunities. The introduction of the new Mining and Petroleum Resources Development Act in 2004 has opened up areas under the 'use it or lose it' principle, dominated by major companies or landowners who held prospective ground without proactive exploration or development.

Cyrus Kimberlite Mine

Rox has secured an option to earn up to a 60% interest in the Cyrus kimberlite mine and surrounds by undertaking exploration, development and completion of a feasibility study. The mine is currently being operated on a small scale by local company, Tswelelang Pty Ltd. Tswelelang will become Rox's BEE partner for the project. The 15 square kilometre prospecting permit encompasses two other known kimberlite pipes and a high level Vaal River palaeochannel meander which is prospective for alluvial diamonds.

The Cyrus kimberlite was discovered around 1900 and was mined during the 1940s. Mining records from limited underground development, via an 80 metre deep shaft, are unavailable. Two shallow open pits have been excavated into weathered kimberlite over a strike length of 210 metres. From the larger of the two pits, Tswelelang has been extracting kimberlite for processing by two 8 foot rotary pans on site for the past four months. The 1.313 carats recovered have included an 11 carat stone sold for US\$400 per carat and a 4 carat stone sold for US\$3,300 per carat.

The size of the Cyrus kimberlite is unknown. The open pits extend over a 0.7 hectare area but the kimberlite is open to the east and north.

Rox plans to begin an exploration programme immediately including ground gravity surveys. drilling and bulk sampling to determine the size, shape, geological complexity, grade and diamond value of this diamond deposit. Exploration over the remainder of the property will investigate the two other known kimberlites and delineate and test additional targets.

The agreement with Tswelelang provides Rox with a 19 month option period. Rox is required to make staged payments of 677,000 rand (A\$135,000) over this period to acquire a 51% interest. Rox can earn a further 9% interest by completion of a feasibility study (making 60% in total).

Figure 2: Barkly West Kimberlite Project

Smithsdale and Harrisdale

Rox has secured 18 month options to explore for kimberlites on the Smithsdale and Harrisdale farms. There are three known kimberlite pipes on the Smithsdale farm, with one exposed in a shallow 15 metre deep pit. Indicator mineral analyses for this kimberlite confirm its diamond potential and indicate potential for a grade similar to the Cyrus mine.

A ground EM survey defined the pipe as one hectare in area with possible extensions to the east. The remaining kimberlites on Smithsdale have yet to be sampled for indicator mineral content or have their size delineated.

At Harrisdale there is one known kimberlite and numerous vegetation and topographic targets along prospective structural zones. Harrisdale has been intensively mined for its high level rooikoppie gravels.

The terms of the two option agreements require Rox to pay 25,000 rand (A\$5,000) after 6 months to extend the option to 12 months, to pay another 25,000 rand after 12 months to extend each option to 18 months. To exercise each option Rox must pay 100,000 rand (A\$20,000) and a 5% gross revenue royalty to the mining right holders.

Williamstown

The Company has applied for a prospecting right over the Williamstown Farm (adjacent to Harrisdale, Figure 2). The tenement contains two known kimberlites, a number of prospective topographic anomalies and its favourable structural setting. With approval of the required environmental management plan and payment of the environmental guarantee, it is expected that the application will be granted shortly.

BLACK ECONOMIC EMPOWERMENT AGREEMENT

Rox has concluded a Black Economic Empowerment ("BEE") agreement with Lute Mining and Diamonds ("LMD") which will apply to the Smithsdale, Harrisdale and Williamstown projects. LMD is a Kimberley based company with specialised professional engineering experience in kimberlite mining in South Africa and LMD will be actively involved as a jointventure partner in the selected projects.

The general terms of the BEE agreement with LMD include:

• An immediate 26% interest in appropriate projects, with LMD having the option to either 1. contribute funds pro-rata, or to have their 26% interest loan carried to completion of a positive bankable feasibility study.
• $2.$ The loan would be repavable out of profits from production at 2.5 times 26% of that spent by Rox plus interest at the prime rate prevailing at the time.
• $\mathcal{S}$ LMD can contribute earlier at reduced loan repayment terms:
• Commencement of bulk sampling 1.5 times 26% of Rox's expenditure, or a)
• Commencement of bankable feasibility study 2.0 times 26% of Rox's b) expenditure.
• At the completion of a positive bankable feasibility study LMD has a once only right to $4₁$ increase its interest by 25% to 51% by paying 30% of the project NPV (at 5% discount rate) as defined in the bankable feasibility study.

$5₁$ LMD must retain its BEE status and ownership equity for purposes of the BEE Scorecard.

OTHER COMMERCIAL TERMS

In consideration for the securing of the option agreements, Rox will issue Rox shares and options, subject to shareholder approval (if required pursuant to ASX listing rules), to its consultants, as follows:

• 250,000 ordinary shares and 250,000 options (exercisable at 20 cents each on or before 30 June) on securing the option agreements,
• 500,000 ordinary shares on demonstration of positive economic potential on any one kimberlite pipe, and
• 1,500,000 ordinary shares and \$500,000 cash on a decision to mine at the first project.

ABOUT ROX

Rox is a Perth-based exploration company with a portfolio of projects in Laos. South Africa and Australia.

In Laos, Rox is exploring the Pha Luang zinc-lead project and has first right of refusal over a number of other prospective resource projects there. In South Africa. Rox has a number of alluvial and kimberlite diamond projects. Current resources at the historic million ounce Menzies gold project in Western Australia total 170,900 ounces grading 2.5 g/t gold.

Rox has set about to expand its project portfolio and is actively looking at projects worldwide to become a multi-national multi-commodity resource company.

The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr lan Mulholland B.Sc (Hons), M.Sc., F.Aus.I.M.M., F.A.I.G., F.S.E.G., who is a Fellow of The Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute of Geoscientists. Mr Mulholland 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 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Mulholland is a full time employee of the Company and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.