ST BARBARA LIMITED — Capital/Financing Update 2004

May 24, 2004

25 May 2004

ASX ANNOUNCEMENT

No. of Pages: 2

CUE JOINT VENTURE - COUGAR TO RETAIN 80% INTEREST

Cougar Metals NL (ASX Code: CGM) is pleased to announce that it will retain an 80% interest in the Cue Joint Venture following the receipt of a notice of intent from joint venture partner St Barbara Mines Limited (St Barbara). Cougar now has the opportunity to capitalise upon its significant interest in the exciting gold prospects located on the Cue Joint Venture ground at the Cue Goldfield Project in Western Australia.

Under the Cue Joint Venture agreement, Cougar increased its interest in the joint venture from 49% to 80% by contributing \$250,000 to joint venture expenditure by April 2004, subject to St Barbara having the right to claw-back to a $40\%$ interest in the Cue Joint Venture by spending \$650.000 on exploration in the 18 month period following Cougar's expenditure of \$250,000 (Clawback). On 22 March 2004 Cougar advised St Barbara that it had met the \$250,000 joint venture expenditure requirement.

Cougar has subsequently been notified by St Barbara of its decision not to undertake the Clawback but instead to contribute to Cue Joint Venture expenditure for the next quarter in proportion to its joint venture interest (20%). Should either party not contribute to Cue Joint Venture expenditure in proportion to their respective joint venture interests, their interest will be diluted in accordance with the joint venture agreement.

The Cue Joint Venture ground contains the majority of the 50 plus historic workings found at the Cue Goldfield Project in Western Australia, where historical production totalled in excess of 240,000 ounces averaging in excess of 20 g/t gold. RC drilling at the Light of Asia Prospect has identified a significant high-grade zone of mineralisation with a known strike length of 400m, remaining open to the north, and a down dip extent to as much as 150m on several sections. In all main sections, this mineralisation remains open at depth. Better intersections include 23m @ 5.4g/t, 4m @ 15.6g/t, 3m @ 12.6g/t, 6m @ 3.4g/t, 3m @ 12.3g/t, 1m @ 67.6g/t and 2m @ 10.8g/t.

The directors believe that the new Light of Asia Prospect has the potential to develop into the single largest resource discovered to date in the Cue Goldfield. In addition, Cougar has identified a number of other exciting targets located on the Cue Joint Venture ground that require further drill testing as a result of the December 2003 RC drilling program undertaken by the Company.

As part of the next phase of evaluation of the Cue Joint Venture ground, up to 12 RC drillholes are planned to test both the continuing down dip and northern strike extension of the high-grade gold mineralisation at the Light of Asia Prospect, both of which remain open. In addition, four drillholes with diamond core tails will be drilled through the mineralised zone to gain an insight into the distribution of the gold and the nature and orientation of all of the gold bearing veins within this system.

A low-level, high-resolution aeromagnetic survey is currently being flown over all of the tenements comprising the Cue Goldfield Project. RAB and aircore drilling is expected to commence in the following quarter as part of the initial evaluation of some of the structural targets identified by this survey. It is anticipated that the aeromagnetic survey will highlight numerous targets, many of which have not been identified by any previous work and others which relate to known gold mineralisation in the Cue Goldfield. Exploration of these new targets has the potential to result in the discovery of new bodies of shallow but non-outcropping mineralisation.

Yours sincerely

Randal Swich

RANDAL SWICK MANAGING DIRECTOR

The information in this report as it relates to geology and mineralisation was compiled by the Technical Director of Cougar Metals NL, Mr Ian Herbison, who is a member of the Australian Institute of Geoscientists. Mr Herbison qualifies as a competent person in the field of activity being reported on and consents to the inclusion of this information in the form and context in which it appears in this report.