STRIKE RESOURCES LIMITED — Capital/Financing Update 2012

Jun 11, 2012

Market Announcement

Shootout Overview & Company Update

Announcement Highlights

	Shoot-out process initiated on 18 May 2012
	Two potential positive outcomes for Strike:
	Outcome #1: 100% interest in Apurimac Ferrum SA ("AF"), oro
	Outcome #2: Refund of Strike's loans to AF of approximately US$30omillion and AF shares sold on superior terms to Strike's bid price
	Notice provided to D&C for payment of US$1.9m for IAC "top-up"
	Drilling commences at Cuervo Resources' Bob 1 iron ore project
	AF field exploration programs up-date
	Appointment of Manager - Social Responsibility for AF

Overview of Shoot-Out Process and Outcomes

Under the AF Settlement Agreement Strike's loans to AF will be either matched by its Peruvian partner D&C in September 2012 or, more likely, recapitalised as AF shares. Recapitalisation would increase Strike's ownership of AF by approximately 18% (to ~68%) and deliver effective control of AF. However, Strike would still probably have to fund AF's activities and securing a funding partner would be very challenging, especially given current market conditions, due to the complexity of a 3 way partnership.

In addition, D&C has recently commenced a formal sale process for its shares in AF. This adds to the uncertainty regarding the likely ownership of AF moving forward.

The Shoot-out process enables Strike to avoid those outcomes and ensures that it will either move to 100% of AF and hence be well positioned to secure a funding partner or be repaid its loans to AF and paid market price for its AF shares. Both these alternatives are considered superior to the status quo option.

Rothschild's resources advisory team is working with the Strike board to ensure the best practical outcome for shareholders is achieved through this process.

Strike Resources Limited (ABN 94 088 488 724) Level 2, 160 St Georges Terrace, Perth, Western Australia 6000 Tel: +61 8 9324 7100 Fax: +61 8 9324 7199 Web: www.strikeresources.com.au Email: info@strikeresources.com.au

Shootout Timeline

18 May	Shoot-Out Initiated‐D & C group notified of Strike's intent to offer
3 August	Final Day to Make Offer‐Strike to provide offer to D&C group for its AF shares
2 October	Last Day for D&C to Accept Offer‐D&C must acceptStrike'soffer ormake a superior counter offer

Over the past 5 years Strike has funded AF to advance its iron ore assets in Peru. This has resulted in the delineation of high-quality iron ore resources at the Opaban prospect (Apurimac iron ore project) which formed the basis for an initial Pre-feasibility Study in 2008. This study, in combination with subsequent optimisation work and exploration, has confirmed the potential to establish a robust 15 – 20Mtpa iron ore business. Other key study outcomes include:

• Opaban is one of the highest grade, large magnetite resources in the world, with an average grade almost double that of most magnetite projects.
• The coarse-grained nature of the Opaban resource allows straightforward mineral processing with relatively low energy inputs to produce a high-quality product.
• Potential exists for direct shipping ore (DSO) and other low-cost, dry product alternatives.
• The combination of low stripping ratios, high "in-ground" grade and mass recoveries approximately double those of most other magnetite deposits ensure low operating costs (<US$20/t product).
• Transport and port infrastructure options are available and well understood.
• Competitive capital costs of US$150/Mtpa of product.
• Strike's Cuervo investment combined with AF's Cusco concessions provides potential for a further stand-alone iron ore project or long term feed for Apurimac.
• AF has a commanding tenement position in Apurimac with excellent potential to increase its iron ore base to more than the 500Mt required to support a 15 – 20 Mtpa operation. (The potential quantity of the target iron ore mineralisation is conceptual in nature. There has been insufficient exploration to define an additional Mineral Resource in relation to that target iron ore. It is uncertain whether further exploration will result in the determination of an additional Mineral Resource in relation to that target iron ore.)

Given the potential and scope of AF's iron projects, Strike believes a strong funding partner with the capacity to fully realise the potential of AF's assets is needed. Strike expects the shoot-out process will lead to it acquiring 100% of AF's shares by October 2012. Following this a structured partner search process, led by Rothschild, will be undertaken. Given the high quality of the resources and potential of the AF projects Strike anticipates significant interest from groups keen to establish high-quality iron ore production assets.

If D&C provides a superior bid for the AF shares in the Shoot-out process then Strike will receive repayment of its loans to AF (approximately US$30 million) in addition to the share acquisition price. In conjunction with current cash reserves this would provide a cash backing of at least $0.351 per Strike share, with the Company carrying no debt.

D&C Payment for IAC "Top-Up" Due

In September, 2011 D&C exercised its option to acquire half (6%) of the 12% AF shareholding and loans (US$5.245 million) which Strike acquired from IAC. Under that agreement D&C is required to pay Strike US$1.9 million upon certain regulatory requirements being met.

The receipt of final documentation from the Peruvian authorities on 30 May enabled Strike to serve D&C with notice that it is required to make this payment before 23 June, 2012.

Bob 1 Drilling Campaign

In addition to activities at AF Strike has also announced a significant milestone with the commencement of drilling at Cerro Ccopane iron ore project close to AF's Cusco project in southern Peru.

Strike's partner Cuervo Resources has commenced its diamond drilling program at the exciting Bob 1 prospect. Bob 1 is considered highly prospective for iron ore with over 3 kilometres of magnetite outcrops coincident with very strong magnetic and gravity anomalies. This is the largest outcropping magnetite zone identified at the Cerro Ccopane property to date and rock samples at the Bob1 prospect average more than 63% Fe.

Cuervo expects to have up to 3 drilling rigs operating at Bob 1 over the next 3 months to complete a 4500 metre program, designed as an initial test of the extent of the magnetite iron ore at depth. An initial resource estimate is expected during the December quarter with drilling results flowing from July 2012.

AF Exploration Update

Following the cessation of the wet season and securing of access AF has commenced field programs at its Apurimac and Cusco projects.

At Cusco a regional IP survey has commenced to test for buried copper/gold mineralisation over the target area of around 10 square kilometres. The target comprises a large circular feature which resembles other late-stage copper-bearing intrusives seen throughout the Andean copper belt. Previous shallow drilling for iron ore has intersected broad zones of anomalous copper with the best result to date of 16 metres at 1%Cu from 28 metres depth and there are significant shallow gold mining activities on adjacent concessions. The project area lies within one of the best copper belts in the world, with the Tintaya operation and US$4.5 billion Las Bambas project lying along strike. The Company is confident the IP survey will generate targets for deeper drilling.

In addition, field activities for environmental approvals for drilling at Cusco have been completed and the formal consultation and approvals processes have commenced.

1 Based on present cash reserves of US$20 million and the assumption of a shootout offer of $0 for the AF shares.

Re-logging of drill core at Cusco and several Apurimac project areas is nearing completion, with several zones of interest identified which have not been assayed. Sampling of these drill intervals is underway and this data will be used to finalise drill targets at Cusco and elsewhere.

An internal dispute within the Colcabamba community led to the resignation of the Mayor. The new leadership has demanded payment of a significant additional amount outside the terms of the recently signed exploration agreement. AF has reiterated its commitment to the current agreement but refused to make any additional payments. As this project area is a satellite to the main project area, drilling has been suspended along with all community programs. It is hoped that the community leadership will reconsider its position and honour the agreement but, in the interim, AF will focus its efforts elsewhere in its concessions.

Appointment of Manager - Social Responsibility for AF

AF has made significant progress over the past 18 months in its community relations programs, which has led to access for exploration to a number of target areas within both the Apurimac and Cusco iron ore projects. In addition it has developed strong, positive relationships with a wide range of other stakeholders and authorities as part of reestablishing its credentials as a responsible and progressive exploration and mining company in Peru. However, progress on approvals at the Apurimac project in particular has been slow and addressing this will be the key focus for AF over the remainder of 2012.

Accordingly AF has established a Social Responsibility department which will combine the community relations programs with the broader liaison and approvals efforts with local, regional and federal authorities. Luis Romero, a very experienced and highly credentialed professional, has been appointed as Manager Social Responsibility and given a wideranging mandate to ensure material progress is made during 2012, while enhancing AF's ability to establish and maintain constructive long-term relationships with all stakeholders.

Over the past 2 years AF has established leading-practice social responsibility programs. These include assistance with the preparation of Community Development Plans, which enable communities to not only determine their priorities for working with AF but also potentially enable them to access existing government and other programs and assistance.

The strong working relationship with D&C has enabled AF to develop community programs with its related Camposol agricultural business. Camposol is a world-class business, which uses leading practice water management, productivity and pest control processes to produce a wide range of commercial crops in northern Peru. Site visits to Camposol have been keenly appreciated by the community leadership and attendees, as they enable them to understand and implement improved farm management practices and also gain access to expert advice. AF and Camposol are in the process of formalising their cooperative relationship to ensure these activities can continue long term.

The Company will keep shareholders updated on material developments in the shoot-out process along with the AF and Cuervo work programs.

JORC Code Competent Person Statement

The information in this document which relates to exploration results has been compiled by Mr Ian Cullen, B.Sc. (Geology), who is an employee of Strike Resources Ltd and is a member of the Australasian Institute of Mining and Metallurgy. Mr Cullen 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 Mineral Resources and Ore Reserves" (the JORC Code). Mr Cullen consents to the inclusion in this document of the matters based on this information in the form and context in which it appears.

For further information:

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