TASMAN RESOURCES LTD — Interim / Quarterly Report 2004

Oct 28, 2004

TASMAN RESOURCES NL

ACN 009 253 187

Level 40, Exchange Plaza 2 The Esplanade, Perth, Western Australia 6000 Telephone: (08) 9282 5889 Facsimile: (08) 9282 5866

Website: www.tasmanresources.com.au

ASX QUARTERLY EXPLORATION REPORT FOR PERIOD ENDED 30TH SEPTEMBER 2004

HIGHLIGHTS

Minerals

• Drilling resumed late in the quarter at the Titan prospect, 30 km north of Olympic Dam in $\bullet$ South Australia. Two holes, T17 and T18 targeting high-grade copper-gold mineralisation based on geological modelling and strong geophysical anomalies are planned. Drilling had been delayed due to rig availability.
• Tasman has successfully obtained support funding for the drilling of TI8 under the Primary $\bullet$ Industries and Resources of South Australia (PIRSA) Drilling Partnership with Industry initiative.
• At Marathon South, Tasman has also been successful in obtaining drilling support funding $\bullet$ from PIRSA to enable the testing of a significant iron-oxide copper-gold exploration target, previously reported. Drilling will commence on completion of the two holes at Titan.
• Exploration Licence Applications were lodged over two areas on the Gawler Craton in South Australia considered prospective for gold and nickel mineralisation respectively.

Energy

• Seed capital raising for Eden Energy commenced, with \$120,000 raised, and negotiations $\bullet$ with a major overseas industrial group to take up the balance of the seed capital for Eden Energy are at an advanced stage.
• MOU signed for the conversion of 10,000 buses in Beijing to use Hythane® fuel. $\bullet$
• Preliminary Report of the South Wales coal bed, coalmine and natural gas projects completed. $\bullet$ The commercial and technical opportunity identified by Eden in South Wales has been confirmed. With UK gas prices anticipated to rise and the close proximity of potential customers to the gas sources the project has significant potential. A detailed, staged, programme to explore the gas potential of the tenement areas has been developed.
• Three Geothermal Exploration Licence applications granted in South Australia, with four ٠ more expected to be offered shortly, and a new application adjacent to the Geodynamics project has been made.

MINERAL EXPLORATION ACTIVITIES

Titan Prospect

Two holes, targeting high-grade copper-gold mineralisation commenced late in the quarter. These targets were identified from Tasman's geological modelling of the Titan system and from coincident, strong geophysical anomalies derived from several independent electrical geophysical techniques.

Hole TI7 is designed to follow up a zone of higher-grade mineralisation intersected near the top of TI6, where both AMT and MALM geophysical surveys have produced anomalous responses consistent with zones of conductive sulphides.

Hole TI8 will be drilled approximately 500m east of TI6, in a previously untested part of the Titan system, and test for high-grade copper-gold mineralisation, targeting:

• A large area of relatively dense, but non-magnetic rocks (potentially haematite-rich and ideal hosts for high-grade mineralisation in iron-oxide systems).
• A very strong and relatively wide AMT geophysical anomaly, indicating a zone of relative conductivity.
• A substantial complex IP anomaly, possibly indicative of disseminated sulphides, and
• MALM geophysical anomalies from surveys conducted within drill holes TI4 and TI6.

Tasman has successfully obtained support funding for the drilling of TI8 under the Primary Industries and Resources of South Australia (PIRSA) Drilling Partnership with Industry initiative. This Government support program recognises the considerable benefits that could flow to the State economy from a significant new mineral discovery, and is designed to encourage explorers to develop and apply new techniques for discovery under cover rocks.

Marathon South Prospect

On completion of the two holes at Titan, a single hole will be drilled at Marathon South. Previous geophysical surveys (gravity, magnetics and AMT) and regional geological interpretation has identified a prospective iron-oxide copper-gold target approximately 24km north of Olympic Dam. Basement is expected to be at a depth of around 450 to 500m, and has never been tested in this area.

Tasman has also been successful in obtaining drilling support funding from PIRSA to enable the testing of this new prospective area at Marathon South. The hole is will be completed in the next quarter.

Regional Exploration and Project Generation - New Prospects

Evaluation of the recently released Geoscience Australia reflection seismic sections covering the Lake Torrens Project area has highlighted a number of zones where deep fracture zones transect the full thickness of the Neoproterozoic sedimentary package of the Stuart Shelf. The southernmost of these fault systems lies beneath Cambrian carbonate sediments and represents an excellent MVT-style target. The target concept being Delamerian basin inversion directing mineralised fluids from the Neoproterozoic sediments up the fault system into the carbonates. Other major fault zones recognised on the seismic section demonstrate deep, long lived structural zones which may have controlled fluid flow either syn-depositionally or during the Delamerian orogeny leading to the formation of sediment hosted mineralisation. Geochemical sampling to test these structural zones, both on the seismic lines and along the interpreted strike of the zones is planned before December 2004.

Two new exploration licence applications have been lodged over two areas in the central Gawler Craton in South Australia considered prospective for gold and nickel mineralisation respectively. Further details will be released as work progresses.

Review of open file data from areas where Tasman has made exploration licence applications for diamonds has revealed a number of untested significant gold-in-calcrete and copper-in-calcrete geochemical anomalies.

ENERGY ACTIVITIES

Eden Energy Ltd

Eden Energy Ltd ("Eden"), a Tasman subsidiary, was incorporated to acquire energy related assets. Since incorporation, Eden has acquired an exciting portfolio of assets comprising:

• Seven geothermal license applications in South Australia (three of which have now been $1₁$ granted). Geothermal power using deep hot rocks has the potential to supply significant quantities of low cost "green" energy. This energy supply would be suitable for base load electrical power and be able to produce both desalinated water and hydrogen for transport and power applications. Furthermore, the project would also lead to significant carbon credits.
• An agreement with Brehon Energy plc ("Brehon") to: $2.$
• a) subscribe for up to 20% of Brehon via the investment of up to US\$1M; and,
• b) establish a joint marketing company known as Brehon Far East Pty Ltd with Brehon in which Eden will hold up to 49%, to market Brehon's hydrogen related technology in the Asia/Pacific region.

Brehon controls patents and technology for:

• Hythane® equipment for blending the hydrogen and methane and an engine controller for adjusting operating parameters for engines burning Hythane;
• storage technology compressed, liquid and supercritical storage tanks for $\bullet$ Hythane®, hydrogen and methane; and,
• refuelling & reliquifaction systems for dealing with Hythane®, hydrogen and methane.
• New patents in respect of cryogenic storage of hydrogen and Hythane® have been lodged, and several other new patents are being developed for other areas including a new blending system for Hythane®.

Brehon proposes to secure patents over as many critical areas of the hydrogen process as possible, and to form very strong strategic commercial alliances with major industry players to commercialise its technology.

• 1. Two farm in joint ventures with Coastal Oil and Gas Ltd and UK Methane Ltd in the UK to farm into:
• a) a 230km² petroleum exploration and development license (PEDL 100) over part of the South Wales coalfields in respect of coal bed and coal mine methane to acquire a 50% interest; and,
• b) a deeper oil/natural gas target which is located beneath PEDL 100 to acquire a 50% interest (increasing to 60% if Eden expends more than $£1M$ ).

Seed Capital Raising

Eden is in the process of finalizing a seed capital raising seeking for up to A\$2m. These funds will be used, inter alia, to progress Eden towards a Stock Exchange listing. A total of \$120,000 has already been raised and discussions with a major overseas industrial group are at an advanced stage to provide the balance of the seed funds.

Hydrogen Projects

In respect of the investment by Eden into Brehon Energy plc ("Brehon") and Brehon Far East Pty Ltd, a significant level of activity is currently underway in both of these companies including:

• 1) Brehon is currently in negotiations with:
• a) a major contractor to the US Department of Energy in relation to trialling of Hythane® as part of the program to test and develop low emission alternative fuel systems in California;
• b) a consortium of major companies and governmental agencies from UK, France, Italy and Sweden in relation to submission of a joint proposal to secure European Union funding to establish a developmental "Hythane Highway" across UK, France and Italy as part of the European Union initiatives to move towards a hydrogen based economy.
• c) a major merchant gas company, a major fuel tank manufacturer and a major US infrastructure contractor in respect of collaborative marketing with each of these companies of services and products in relation to Hythane deployment and developmental projects in various parts of the world; and
• d) several major automobile manufacturers in relation to the design and supply of prototypes for cryogenic storage tanks and other ancillary equipment for hydrogen test vehicles being produced by those companies.
• $2.$ Brehon has been invited to attend meetings in India and Japan with major industrial companies in relation to possible collaboration on various Hythane® projects.
• 1. Brehon will deliver technical papers at the Western Australian government's conference on Hydrogen and Fuel Cell Futures in Perth in September 2004 and in New Delhi, India in October 2004 at the Fourth International Symposium of Fuels and Lubricants.
• $4.$ Brehon has applied for one new patent in relation to cryogenic storage vessels and is currently working on several other inventions with a view to lodging further patents to secure strategic intellectual property rights in respect of both the creation and use of Hythane, and the storage and use of cryogenic hydrogen.

Subsequent to the quarter, Brehon Energy plc has entered into an MOU with four leading Chinese groups to establish a project in China to replace 10,000 diesel buses in Beijing with very low emission Hythane® powered buses.

The Project, which is likely to be the first in a series to be undertaken in many major cities in China, will dramatically reduce atmospheric pollution and greenhouse gas emissions in Beijing. It will be the world's first rollout of hydrogen as a vehicle fuel on a major scale.

The other parties to the MOU comprise the following:

• 1. China Association for Hydrogen Energy (CAHE)
• 1. China Electronic Engineering Design Institute (CEEDI)
• 1. Tsinghua University, a leading Chinese university (Tsinghua)
• 1. Shougang Technology Research Institute (STRI). STRI is part of the giant Shougang Group of companies that includes Capital Steel Company, a major Chinese steel manufacturer that produces 8 million tonnes of steel per year and has available as a by-product a large quantity of hydrogen. This hydrogen will be used in the blending of Hythane® for the bus Project.

The first stage, which is planned to start in three months, will be a pilot project to develop and test 25 buses using a variety of engines and developing the necessary infrastructure for the Project. Upon successful completion of the first stage, which is expected to take approximately six months, the rest of the Project will be progressively undertaken on a timetable to be completed before the 2008 Olympic Games in Beijing.

The project has the preliminary approval of the Energy and Transportation Division of the Chinese Ministry of Science and Technology and will seek certification under the Clean Development Mechanism (CDM) under the Kyoto Protocol. It is expected to generate substantial tradeable carbon credits from the huge reduction in greenhouse gas emissions by replacing 10,000 diesel buses with Hythane® buses operating seven days per week in Beijing. These carbon credits are anticipated to form a significant part of the funding package for the project that is aimed to be secured within the next three months. During this time, the parties intend to finalize the full details of the Project and execute a formal contract.

This project will represent the first major use of hydrogen as a vehicle fuel and heralds the start of the much trumpeted global transition to a hydrogen economy.

South Wales CBM Gas Project

During the quarter, Eden engaged the services of a leading industry consultant to undertake a preliminary desktop review of the coal bed methane, coal mine methane and natural gas prospects and prepare a report on these assets for inclusion in a prospectus for Eden.

Subsequent to the quarter, the initial scoping report has been received by Eden and the preliminary findings of the review are favourable regarding the potential of the project to progress towards a commercial operation. The South Wales project is an early stage exploration play, with the review identifying a series of technical issues that require acquisition of new data to resolve, in order to support the commercial opportunity recognised by Eden.

The work programme will comprise two phases – an initial, essentially desktop, phase and a detailed follow-up phase, designed to:

• Increase the understanding of the CBM potential of the project;
• Progress the project in a risk minimising staged approach, and
• Ensure Eden meets all JV obligations, both commercial and regulatory.

Phase 1 of the programme will address target generation and include assessing quantity of coal, equipment options for gas content analysis, local gas market potential and preparation of detailed programmes and budgets for Phase 2.

Phase 2 will comprise acquisition of field data on the coal distribution, gas contents, saturation, permeability, gas production potential and other reservoir properties. Draft gas sales agreements will also be negotiated at this time.

The preliminary desktop review of the South Wales CBM project has supported the technical and commercial factors that initially attracted Eden to the project. The existing high gas prices in the UK (e.g. >USD\$4/mcf (thousand cubic feet) compared to only AUD\$2/mcf together with the likelihood of further prices rises as well as the close proximity to customers underpin the attractiveness of the project.

Work on the Phase 1 programme is planned to commence in November 2004.

Geothermal Exploration

During the quarter, Eden commenced discussions with a number of consultants to secure their services in progressing Eden's geothermal exploration activities.

Eden has identified four areas in South Australia to assess for hot rocks and geothermal power:

1) In the Olympic Dam/Roxby Downs area - the West Well and Mulgaria targets;

• 2) West of Moomba on the Birdsville Track at Mungeranie;
• 3) In the Renmark area; and,
• 4) South of Moomba the Bollard's Lagoon target.

A total of seven geothermal exploration licence applications (GELAs) were made to cover the target areas. Geothermal Exploration Licences (GELs) have been granted for three applications at Mulgaria, part of West Well and Mungeranie. Grant of the remaining four GELAs is expected in the near future.

Additionally, Eden has applied for a new GELA adjacent to the Geodynamics tenement north of Moomba.

Data compilation for the various projects has commenced and Eden is preparing work programmes and budgets to undertake assessments of the relative prospectivity of each of the target areas. Geophysical modelling of the basement depths and possible hot pluton parameters, review of past seismic data and open file well completion reports, and, preliminary economic analysis is planned to commence during the December 2004 Quarter.

CORPORATE

Share Placement

During the quarter, Tasman raised \$832,500 by way of placement of 11,100,000 shares at 7.5¢ each. One placement also included one free attaching option (exercisable on or before 28 February 2006 at 20 cents) for each of 6,100,000 shares applied for.

Finance

At 30th September 2004 Tasman had cash reserves of \$584,000.

Guy T. Le Page DIRECTOR

The interpretations and conclusions reached in this report are based on current geological theory and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for complete certainty. Any economic decisions that might be taken on the basis of interpretations or conclusions contained in this report will therefore carry an element of risk.

South Australian Mineral Exploration - Lake Torrens Project

Figure 1: South Australia - Lake Torrens Project Location and tenement map, showing granted Tasman exploration licences (Green) and Tasman licence applications (Pink).

South Wales - Energy Projects Farm-in Area

Figure 2: South Wales Project Location and tenement map; PEDL covers Coal Bed/Coal Mine Methane and conventional hydrocarbon plays

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

TASMAN RESOURCES NL

ABN

85 009 253 187

Quarter ended ("current quarter") 30 September 2004

Consolidated statement of cash flows

	Cash flows related to operating activities	Current quarter \$A'000	Year to date (3 months) \$A'000
1.1	Receipts from product sales and related debtors	$\Omega$	$\Omega$
1.2	Payments for (a) exploration and evaluation (b) development (c) production (d) administration	(161) (174)	(161) (174)
1.3	Dividends received	0	0
1.4	Interest and other items of a similar nature received	5	5
1.5	Interest and other costs of finance paid	$\Omega$	$\mathbf 0$
1.6	Income taxes paid - GST Paid	(27)	(27)
	Income Taxes - GST Refunds Received	14	14
1.7	Other (provide details if material)	0	$\Omega$
	Net Operating Cash Flows	(343)	(343)
	Cash flows related to investing activities
1.8	Payment for purchases of: (a)prospects (b) equity investments (c)other fixed assets	$\Omega$ (435) (1)	$\Omega$ (435) (1)
1.9	Proceeds from sale of: (a) prospects	0	0
	(b)equity investments (c) other fixed assets	0 $\Omega$	0 $\pmb{0}$
1.10	Loans to other entities	0	$\boldsymbol{0}$
1.11	Loans repaid by other entities	0	$\theta$
1.12	Other (provide details if material)	$\Omega$	$\Omega$
	Net investing cash flows	(436)	(436)
1.13	Total operating and investing cash flows (carried forward)	(785)	(785)

1.13 Total operating and investing cash flows (brought) forward)	(785)	(785).
Cash flows related to financing activities Proceeds from issues of shares, options, etc. 1.14 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Share Issue Costs	952 0 0 0 0 (40)	952 0 0 0 0 (40)
Net financing cash flows	912	912
Net increase (decrease) in cash held	127	127
1.20 Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20 1.21	457 0	457 0
1.22 Cash at end of quarter	584	584

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

		Current quarter \$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	102
1.24	Aggregate amount of loans to the parties included in item 1.10

$1.25$ Explanation necessary for an understanding of the transactions

Management Fees, as per agreement, were paid during the quarter to a company of which Mr GH Solomon and Mr DH Solomon are directors.

Legal Fees paid during the quarter to a firm of which Mr GH Solomon and Mr DH Solomon are partners.

Commissions and fees paid during the quarter to a company of which Mr GT Le Page is a director.

Bona-fide reimbursement of expenses for the period to 30 September 2004.

Directors Fees and Superannuation paid during the period.

Non-cash financing and investing activities

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

Nil

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

Not applicable

Financing facilities available
Add notes as necessary for an understanding of the position.

		Amount available \$A'000	Amount used \$A'000
3.1	Loan facilities	Nil	Nil
3.2	Credit standby arrangements	Nil	Nil

Estimated cash outflows for next quarter

		\$A'000
4.1	Exploration and evaluation	400
4.2	Development
	Total	400

Subsequent to end of quarter additional capital has been raised to fund part of this expenditure.

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current quarter \$A'000	Previous quarter \$A'000
5.1	Cash on hand and at bank	484	107
5.2	Deposits at call	100	350
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	584	457

Changes in interests in mining tenements

		Tenement	Nature of interest	Interest at	Interest at
		reference	(note (2))	beginning	end of
				of quarter	quarter
6.1	Interests in mining
	tenements relinquished, reduced or lapsed
		EL 2642		100%
6.2	Interests in mining		(formerly)
	tenements acquired or	EL 2988	Licence granted (EL 2339)	100%	100%
	increased	EL 2989	Licence granted (EL 2340)	100%	100%
		EL 3123	Licence granted (EL 2507)	100%	100%
		EL 3140	Licence granted (EL 2543)	100%	100%
		EL 2733	Licence granted	100%	100%
		EL 2772	Licence granted	100%	100%
		EL 2832	Licence granted	100%	100%
		EL 3006	Licence granted	100%	100%
		EL 3007	Licence granted	100%	100%
		EL 3109	Licence granted	100%	100%
		EL 3174	Licence granted	100%	100%
		EL 3175	Licence granted	100%	100%
		EL 3176	Licence granted	100%	100%
		EL 3177	Licence granted	100%	100%
		EL 3209	Licence granted (EL 2594)	100%	100%
		EL 3254	Licence granted	100%	100%
		EL 3260	Licence granted	100%	100%
		EL 3261	Licence granted	100%	100%
		GEL 166	Licence granted	100%	100%
		GEL 167	Licence granted	100%	100%
		GEL 177	Licence granted	100%	100%
		Outstanding Applications:
		ELA 62/04, ELA 63/04, ELA 64/04, ELA 65/04, ELA 66/04, ELA 204/04, ELA 205/04,
		GELA 167, GELA 169, GELA 175, GELA 176,
		New Applications this quarter:
		GELA 185, ELA 682/04, ELA 685/04

Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price per	Amount paid up per
				security (see	security (see note 3)
				note 3) (cents)	(cents)
7.1	Preference	NOT
	curities	APPLICABLE
	scription )
7.2	Changes during arter
	(a) Increases
	bugh issues
	(b) Decreases bugh returns of
	ital, buy-backs,
	emptions
7.3	*Ordinary	77,852,515	77,852,515
7.4	securities Changes during
	quarter
	(a) Increases
	through issues (b) Decreases	11,100,000	11,000,000
	through returns
	of capital, buy-
7.5	backs *Convertible	NOT
	debt	APPLICABLE
	securities
	(description)
7.6	Changes during
	quarter (a) Increases
	through issues
	(b) Decreases
	through securities
	matured,
7.7	converted Options			Exercise price	Expiry date
		40,730,849	40,730,849	20 cents	28 Feb 2006
7.8	Issued during quarter	6,100,000	6,100,000
7.9	Exercised	NIL	NIL
	during quarter
7.10	Expired during
7.11	quarter Debentures	NIL NOT	NIL
	(totals only)	APPLICABLE
7.12	Unsecured	NOT
	notes (totals	APPLICABLE
	only)

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

RAYMOND FRANCIS BUSCALL - COMPANY SECRETARY 29 OCTOBER 2004 Date:

Notes

• $\mathbf{1}$ 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 or notes attached to this report.
• $\overline{2}$ 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 which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
• 3 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.
• The definitions in, and provisions of, AASB 1022: Accounting for Extractive $\overline{4}$ Industries and AASB 1026: Statement of Cash Flows apply to this report.
• 5 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.

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