XSTATE RESOURCES LIMITED — Interim / Quarterly Report 2007

Oct 30, 2007

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XState Resources Limited

ABN 96 009 217 154

Registered office Postal address Level 2 PO Box 985 45 Stirling Highway Nedlands WA 6909 Nedlands WA 6009 Tel: +61 8 9389 8799 Website Fax: +61 8 9389 8327 www.xstate.com.au

31 October 2007

ASX LIMITED

Dear Sir / Madam

The following summarises the exploration activity for the quarter ended 30 September 2007:

ELLE URANIUM JOINT VENTURE – ARIZONA USA (XSTATE 50%)

The Elle Joint Venture is owned 50% by XState and 50% by US listed Liberty Star Uranium and Metals Inc (“Liberty Star”). The joint venture area comprises 22 square miles (57km[2] ). Within this area, there are 17 prospective uranium targets of which three have been allocated to the joint venture and the balance are subject to a first right of refusal.

The joint venture area of mutual interest is strategically located within a large uranium bearing breccia pipe terrain which occurs on the Arizona Strip lying just south of the Utah border. Eight mines were brought into production during the 1970s and early 1980s on deposits discovered within the immediate area.

The uranium bearing pipes which were mined are the second highest grade uranium mineral deposits in the world and the highest grade in the United States. Previously mined mineralisation in these pipes has graded about 0.6% to 0.7% uranium or about 12 to 14 pounds per tonne. In addition to uranium they are known to contain copper, zinc, silver, vanadium, cobalt, nickel, molybdenum, gallium, germanium and other metals. Past producers have recovered copper, silver and vanadium as by-products of uranium mining.

The joint venture area hosts numerous visible collapsed features, and the joint venture partners are assessing complementary geophysical, geochemical and geological techniques to locate breccia pipes within the collapsed features. A number of other companies exploring along the Arizona Strip are utilising a number of geophysical techniques including the techniques trialled above with some encouraging reported results.

In late June 2007 Liberty Star announced the scheduled commencement of a geochemical exploration program over three circular features that form part of the Elle joint venture.

Over the proceeding 6 months Liberty Star had conducted a number of geochemical orientation surveys over 12 existing circular features. The majority of these circular features were located within the Elle joint venture area of mutual interest.

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In addition, Liberty Star had reviewed soil geochemical programs conducted by the United States Geological Survey (“USGS”) over 50 collapsed features during the 1970’s and 1980’s. This work included three mineralised pipes. The work conducted by the USGS suggests that geochemical sampling is a useful tool for assisting exploration for mineralised breccia pipes. Results indicate that mineralised pipes are often enriched in a number of varied elements against a background of sedimentary rocks.

During the September 2007 quarter a multi phased geochemical soil survey was completed, with phase 1 consisting of an east-west and a north-south traverse over the circular features with samples collected every 50 metres. The collected samples have been sent for multi-elemental analysis using 4 acid digest and ICP-MS analysis. Assay results are expected by the end of November.

On 27 September 2007 Liberty Star transferred a 50% interest in four standard federal lode mining claims, an area of about 83 acres, which cover the Loreto breccia pipe target (Pipe) to XState. The Loreto Pipe lies about five miles southeast and along trend of the Hazel-ElleHermina northwest-southeast alignment. It lies within the Liberty Star-XState Elle joint venture area of mutual interest (AMI). Surface examination to date suggests it has three breccia centres but this observation is subject to further work and drilling. Silicification and boxwork openings after mineral pyrite (iron sulphide) in the southern feature are encouraging for stronger mineralisation at depth. Detailed grid sampling has been completed and assays have recently been received. They are currently undergoing evaluation and compilation with other Geotechnical studies. As these studies and interpretations are completed the results will be released.

Future Exploration

It is expected that a successful soil survey program will be followed by detailed drilling determined in conjunction with XStates technical team. Previous drilling by explorers in the region have used shallow drilling to confirm the surface expression of the collapsed feature, locate the breccia pipe within the collapsed feature and analyse the pipe and surrounds for anomalous uranium and base metals that distinguish the mineralised pipes.

Corporate

Given the availability of significant cash reserves within the Company, the directors continue to assess possible investment opportunities for the Company.

Yours faithfully

XSTATE RESOURCES LIMITED

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DAVID McARTHUR

Director

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information provided by Liberty Star Uranium and Metals Corp and compiled by Mr R Grivas, MAIG, MAusIMM an employee of Goodheart Pty Ltd. Mr Grivas has sufficient experience that 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 Exploration Results, Mineral Resources and Ore Reserves. Mr Grivas consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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