STRIKE RESOURCES LIMITED — Capital/Financing Update 2012

Aug 5, 2012

Monday, 6 August 2012

Market Announcement

Strike Makes AF Shoot-out Price Offer

Highlights

• Strike submits shoot-offer to acquire 50% interest in AF from D&C for total cash consideration of US\$3.2 million
• D&C has until 2 October 2012 to provide a counter-offer, which would include the repayment of Strike's loans to AF of approximately US\$33.8 million
• Focus at AF remains on establishing community relations programs at its key iron ore projects

Shoot-out offer price

Further to Strike's 18 May 2012 announcement, as part of the shoot-out process Strike has now submitted an offer to acquire the D&C Group's ("D&C") 50% interest in Apurimac Ferrum S.A. ("AF") and repay its loans to AF, for a total consideration of US\$3.2 million in cash (the "Offer").

Under the shoot-out process D&C has until 2 October 2012 to either accept the Offer or submit a counter-offer to Strike, which must at least include the repayment of Strike's loans to AF, plus interest, at that date. As at 31 July 2012 these loans, including interest, totalled approximately US\$33.8m.

The Offer implies that, if successful, Strike will move to 100% ownership of AF for a total contribution of approximately US\$37m (depending on AF cash calls between now and October 2012), representing the sum of the cash Offer to D&C (approximately US\$3.2m) plus the value of the loans provided by Strike to AF (approximately US\$33.8m). This is in contrast to the alternative recapitalisation plan which would have eventuated if Strike had not triggered the shoot-out process with D&C. Under that scenario, Strike was to capitalise its then approximately US\$33.8 million in loans to AF in exchange for only an additional (approximately) 18% equity interest in AF.

The Strike Board believes that the Offer to D&C represents a fair assessment of the underlying value of AF's Apurimac and Cusco Projects, particularly in light of the current economic environment and the on-going uncertain community and land access issues in Peru.

As previously noted, Rothschild has been appointed by the Strike Board to provide independent strategic advice in relation to the Offer.

In determining the final Offer price, the Strike Board considered the following key factors:

• Independent advice from Rothschild in relation to the value of AF;
• The timetable required to gain access to Apurimac in order to increase the scale and confidence of AF's JORC resource to the level required to support development of the project;
• The current uncertain macro-economic environment impacting the mining sector globally; and
• The cash management requirements of Strike and AF to continue activities that maximise the potential of AF's projects.

_____________________________________________________________

Commenting on the Offer, Strike's Chairman, Malcolm Richmond, said:

"Strike and D&C have had a long and successful relationship in building the foundation for a significant iron ore province in Peru. However, the time has now come to develop greater clarity on the ownership of AF in order to expedite exploration efforts and preserve the funding provided to AF by Strike to date. If Strike's Offer is successful, we look forward to progressing the key project milestones at Apurimac required to realise the value inherent in what is broadly recognised as one of the highest quality undeveloped magnetite iron ore projects globally."

Potential outcomes under the shoot-out Offer

Strike's Offer is accepted by D&C

If D&C does not submit a counter-offer, Strike will move to 100% control of AF by paying D&C US\$3.2m in cash. Under this scenario, Strike will continue to progress the Apurimac and Cusco iron ore projects with the primary focus on securing access to the Opaban concessions through continuing to pursue AF's community relations program. Given the challenges to date in achieving demonstrable progress at Opaban, Strike is reviewing AF's work activities to ensure that Strike's funding is being directed in the most optimal and efficient manner.

Strike will also seek to initiate a partnership process to introduce a strategic partner into AF to assist in the funding and development of the Apurimac project.

Strike's Offer is rejected by D&C

If D&C submits a counter-offer, Strike will receive total consideration of approximately US\$33.8m¹ , depending on the final amount of loans directed from Strike into AF. Under this scenario, Strike's primary assets following the shoot-out would consist of:

• Approximately US\$54.4m in cash;
• 100% interest in the Berau Thermal Coal Project, located in East Kalimantan, Indonesia² ; and
• Warrants entitling Strike to acquire up to 49% interest in Cuervo Resources, a Canadian listed iron ore company developing the Cerro Ccopane Iron Ore Project in Peru with JORC resources of approximately 178.6Mt at 48.2% Fe³ .

Timetable

Under the Settlement Agreement, D&C is required to either accept the Offer or provide a counter-offer by 2 October 2012. Final payment of the total cash consideration by the successful party under the shoot-out is required by 22 October 2012.

For further information:

Malcolm Richmond Ken Hellsten Chairman Managing Director T | +61 8 9324 7100 T | +61 8 9324 7100

¹ Net proceeds from the potential sale of AF are subject to final tax review.

² Strike is currently in discussions with its Indonesian partner regarding the resolution of a dispute regarding this project.

³ See the Schedule to this announcement for the Competent Person Statement and the breakdown of this Resource into JORC Code categories.

About Strike

Strike Resources is an Australian-listed resources company with two principal projects in the attractive bulk commodities market.

Strike's Apurimac and Cusco Iron-Ore Projects in Perú are large-scale iron ore projects, with Apurimac in the pre-feasibility study stage. Strike also holds warrants in Canadian-listed Peruvian explorer Cuervo Resources Inc (Cuervo) which, if exercised, would allow it to acquire up to 49% of Cuervo.

The Company is seeking to establish a 15 - 20 million tonne per annum (Mtpa) operation in Perú based on current iron ore mineral resources totalling 374Mt and potential access to additional resources of 178.6Mt held by Cuervo in Cusco, all with significant exploration upside⁴ .

Strike holds 100% of the rights to mine a coal concession near Berau, Indonesia, subject to a royalty to the concession owner. Negotiations aimed at settling a dispute with the concession owner continue.

⁴ The JORC-Code resource categories, grades and competent person statement are set out over the page.

Schedule

The following table shows the breakdown of Cuervo's resource of 178.6Mt at 48.2% Fe into JORC Code categories and grades in each category.

Zone	Inferred (Mt)	Indicated (Mt)	Measured (Mt)	Total	Head Fe (%)
Aurora South	7			7	49.7
Aurora North	9			9	49.0
Huillque	56			56	53.5
Orcopura			19.7	19.7	48.26
Orcopura		35.9		35.9	45.91
Orcopura	51			51	43.7
Total				178.6	48.2%

The Orcopura estimate was done using a wire-framed computer model using a 20% Fe lower cut with grades determined using the inverse distance squared estimation method. The resource estimate for tho the properties used a 30% Fe lower cut and the sectional polygonal resource estimation process. Accordingly, some care must be taken when quoting a global resource for the project area.

Full details of this resource are contained in Strike's ASX announcement dated 14 February 2012.

AF's 374Mt iron ore resource is comprised of a:

• 269Mt iron ore resource at the Apurimac Project, comprised of an indicated resource of 142.2 Mt at 57.84% Fe and an inferred resource of 127 Mt at 56.7% Fe; and
• 104 Mt inferred iron ore resource at Cusco at 32.6% Fe.

JORC Code Competent Person Statement

The information in this document which relates to Mineral Resources at the Apurimac, Cusco and Cerro Ccopane projects has been prepared by Mr K Hellsten, who is an employee of Strike Resources Ltd and is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Hellsten 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 Competent Persons as defined in the 2004 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves" (the JORC Code). Mr Hellsten consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.