STRIKE RESOURCES LIMITED — Interim / Quarterly Report 2006

Oct 31, 2006

Appendix 5B Mining Exploration Entity Quarterly Report

Name of entity

STRIKE RESOURCES LIMITED and controlled entities

ACN or ARBN

Quarter Ended 088 488 724 30 September 2006 Consolidated statement of cash flows Consolidated Current Quarter Year to Date Sept 2006 3 months $'000 $$^{\circ}000$ Cash flows related to operating activities $1.1,$ Receipts from from product sales and related debtors $1.2$ Payments for (a) exploration and evaluation $(203)$ $(203)$ (b) development $\overline{a}$ (c) production (d) administration $(227)$ $(227)$ Dividends received 21 1.3 21 Interest and other items of a similar nature received 1.4 $1.5$ Interest and other costs of finance paid 1.6 Income taxes paid $1.7$ Other (provide details if material) (a) Professional fees (b) Legal and settlement costs Net operating cash flows $(409)$ $(409)$

			Consolidated
		Current Quarter	Year to Date
		Sept 2006	3 months
		$'000	$$^{\circ}000$
1.8	Net operating cash flows (carried forward)	(409)	(409)
	Cash flows related to investing activities
1.9	Payment for purchases of:
	prospects(a)
	(b)equity investments
	other fixed assets(c)
1.10	Proceeds from sale of:
	(a)prospects
	(b)equity investments	65	65
	other fixed assets(c)
1.11	Loans to other entities
1.12	Loans repaid by other entities	35	35
1.13	Other (provide details if material)
	Contribution towards development costs
	Proceeds from return of capital
	Net investing cash flows	100	100
1.14	Total operating and investing cash flows	(309)	(309)
	Cash flows related to financing activities
1.15	Proceeds from issues of shares, options, etc.	107	107
1.16	Proceeds from sale of forfeited shares
1.17	Proceeds from borrowings
1.18	Repayment of borrowings
1.19	Dividends paid
1.20	Other (provide details if material)
	Payment for share issue and options costs	(36)	(36)
	Net financing cash flows	71	71
	Net increase (decrease) in cash held	(238)	(238)
1.21	Cash at beginning of quarter/year to date	1,294	1,294
1.22	Exchange rate adjustments to item 1.20
1.23	Cash at end of quarter	1,056	1,056

Current Quarter

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Sept 2006$ 000
1.24	Aggregate amount of payments to the parties included in item 1.2	71
1.25	Aggregate amount of loans to the parties included in item 1.10

• 1.26 Explanation necessary for an understanding of the transactions
  • $(1)$ $71,289 Directors' fees, salaries and superannuation for the quarter.

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

None.

Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has $2.2$ an interest

None.

Financing facilities available		Amount available$'000	Amount used$000
3.1	Loan facilities
3.2	Credit standby arrangements	$\blacksquare$	$\sim$

$\overline{a}$

Estimated cash outflows for next quarter	Next Quarter$000
4.1	Exploration and evaluation	787
4.2	Development	$\blacksquare$
	Total	787

Note that 4.1 includes an estimated $0.467 million investment into Apurimac Ferrum S.A (the Peruvian company which holds the Apurimac and Cuzco Iron-Ore Projects). The funds invested into Apurimac Ferrum will be applied towards exploration and evaluation expenses on the projects.

	Reconciliation of cash	Consolidated
	Reconciliation of cash at the end of the month (as shown in the consolidated statementof cash flows) to the related items in the accounts is as follows	CurrentQuarter$'000	PreviousOuarter$'000
5.1	Cash on hand and at bank	1.056	1.294
5.2	Deposits at call
5.3	Bank overdraft
5.4	Other (Bank Bills)
	Total: cash at end of quarter (item 1.22)	1.056	1.294

Changes in interests in mining tenements

		Tenement	Nature of interest	Interest at beginning of	Interest at end of
		reference	(note(4))	quarter	quarter
6.1	Interests in mining tenementsrelinquished, reduced orlapsed
6.2	Interests in mining tenementsacquired or increased	ELA 53/1259	Tenement application	Nil	100%
		(Mt Lawrence Wells Project, East Murchison, Western Australia)
		By agreement dated 2 July 2006 between the Company and Peruvian companies,
		Apurimac Ferrum S.A (AF), Minera los Andes y el Pacífico S.A. (MAPSA) and D&C Group
		S.A.C (D&C), the Company has secured the right to earn a 51% (or greater) interest in the
		Apurimac Project or the Cuzco Project or both (at the Company's election) through a
		progressive investment in AF (which will hold the projects) within a 5 year period.

	л.
				Issue price per security	Amount paid up per
		Total number	Number quoted	(see note 5) (cents)	security (see note 5)
7.1	Preference securities+	n/a
7.2	Changes during quarter
	(a) Increases through issues
	(b) Decreases through returns of
	capital, buy-backs,
	redemptions
7.3	Ordinary securities+	48,392,558	46,609,224
7.4	Changes during quarter
	(a) Increases through issues	556,857	556,857	20 cents	N/A
	(b) Decreases through returns of
	capital, buy-backs
7.5	Convertible debt securities+
7.6	Changes during quarter
	(a) Increases through issues
	(b) Decreases through securities
	matured, converted
7.7	Options			Exercise price	Expiry date
		1,833,333		20 cents	9 February 2011
		1,666,667		30 cents	9 February 2011
		22,812,284	22,812,284	20 cents	30 June 2008
7.8	Issued during quarter	4,600,000	4,600,000	96 cents	21 July 2011
		500,000	500,000	96 cents	13 September 2011
7.9	Exercised during quarter	556,857		20 cents	30 June 2008
7.10	Expired during quarter
7.11	Debentures (totals only)
7.12	Unsecured notes

Issued and quoted securities at end of current quarter

Compliance statement

This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations $\mathbf{I}$ Act or other standards acceptable to ASX (see note 4).

$\bar{2}$ This statement does give a true and fair view of the matters disclosed.

31 October 2006

Victor Ho Company Secretary

• See Chapter 19 for defined terms

NOTES

1. The Company currently holds the following share investments:

	29-Sep-06
Company	No Shares	$\mathcal{D}_{\mathcal{O}}$	Last Bid Price	Market Value
Orion Equities Limited (OEQ)	505,026	2.8%	$0.955	$482,300
Queste Communications Ltd (QUE)	826.950	2.9%	$0.245	$202,603
Sofcom Limited (SOF)	12,420,439	27.8%	suspended
Total				$684.903

Share investments are regarded as liquid assets to supplement the Company's cash reserves.

The Company is the largest shareholder in SOF which is currently suspended awaiting a potential recapitalisation and re-admission to ASX. SRK is in discussions regarding a sale of its interest in SOF.

• 1. During the September 2006 quarter, 556,857 listed 20 cent (30 June 2008) options were exercised, raising $111,371 for the Company.
• 1. On 24 October 2006, the Company announced two fund raising initiatives:

(a) The completion of a $3 million share placement to institutional, professional and sophisticated investors; and

(b) The implementation of a $5 million Share Purchase Plan (SPP) to allow shareholders the opportunity to also subscribe for shares at the same price ($1.30 per share). Under the SPP, shareholders registered as at 7 November 2006 (the Record Date) will be eligible to apply for either $1,000, $3,000 or $5,000 of shares at an issue price of $1.30 per share.

• 1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note
• 1. The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent
• 1. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
• 1. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.
• 1. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.