RESOURCE INCREASED BY 75% TO 1.29 BILLION TONNES FOR GINDALBIE S KARARA MAGNETITE PROJECT

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1 STOCK EXCHANGE ANNOUNCEMENT 13 November 2006 RESOURCE INCREASED BY 75 TO 1.29 BILLION TONNES FOR GINDALBIE S KARARA MAGNETITE PROJECT Summary The Board of Gindalbie Metals Ltd (ASX Code: GBG) is pleased to announce a 75 increase in Resources on its Karara Magnetite Deposit to 1.29 billion tonnes grading 36.3 iron. The increased Resource follows the completion of over 37,000 metres of Resource Definition Drilling with the previous Inferred Resource being upgraded to an Indicated and Inferred Resource. The Indicated Resource is sufficient for the first 28 years of production based on the current design capacity of the Karara Concentrator Facility of 8 million tonnes per annum of iron concentrate. Assaying and metallurgical testwork results have also confirmed the Karara magnetite deposits premium quality with extensive Davis Tube Magnetic Separation analysis producing a concentrate grading 69 Fe, 3.9 SiO 2, 0.04 A1 2 O 3 and 0.01 P at a weight recovery of 40. Pelletizing testwork on concentrate produced from the deposit, and conducted by Metso in their North American design and test facilities, has confirmed the suitability of the concentrate for the proposed pellet making process and the high quality of the product for the Company s target blast furnace market. The Resource upgrade and concentrate testwork results are further evidence of Gindalbie s belief that the Karara project presents a source of premium quality concentrate and pellets for AnSteel, Gindalbie s 50 partner in the project, and the wider Asian steel industry. Page 1

2 Karara Magnetite Project Mineral Resources Figure1: Karara Iron Ore Project Aeromagnetic Image Exploration at the Karara Magnetite Project (Figure 1) commenced in May 2005 with the initial Inferred Resource of 737 million tonnes at 37.1 Fe, announced in March Further drilling and testwork programs have now allowed the Company to define a total Resource of 1,291 million tonnes at 36.3 Fe, of which the Indicated Resource component totals 569 million tonnes grading at 36.6 Fe (see Table 1 for Resource Summary). The Indicated Resource is sufficient for approximately 28 years of production at the design capacity of the Karara concentrator facility currently undergoing feasibility study. The upgraded Resource at Karara follows a step-out drilling program along the north extension of the deposit and infill drilling programs in the south and central areas of the initial Resource area. The latest Resource defines the magnetite rich BIF (Banded Iron Formation) unit that hosts the deposit over a strike length of 3.2 kilometres, a width of between metres and a depth of 300 metres below surface. See Figure 2 for a cross section of the Resource. The increased confidence in the estimate and proven geological continuity of the ore body will permit the development of pit optimisation, pit design and Ore Reserve calculations. This work is scheduled for completion between November 2006 and January Resource Classification Mt Fe SiO 2 Al 2 O 3 P LOI Indicated Inferred Subtotal 1, Table 1: Resource Summary In addition to the Resources defined above, the geological model remains open at depth and contains a large body of material located below the defined Resources. Refer Figure 2. Page 2

3 Figure 2: Cross Section of the Karara Ore Body Model showing drill holes and Resource Classifications This body of material is based on a number of deeper drill holes below the general level of drilling at 300 metres below surface and seeks to define the depth limitation of the mineralised BIF. This deeper drilling consisted of 8 diamond drill holes and shows the mineralisation to extend to at least 600 metres below surface. Resources are reported for the fresh rock component of the mineralisation only and exclude discrete internal sub grade and non BIF units (such as minor dolerite dykes discovered in the north extension drilling). The oxidised component of the BIF unit, which contains some areas of goethite-hematite enrichment and extends to a depth of 25 to 45 metres from surface, has been estimated separately and at this time is excluded from further consideration for the magnetite project. Fresh mineralisation extends from metres below surface to over 600 metres in depth, however, Resource estimation has been limited to a depth of 300 metres below surface. Drilling of the fresh BIF unit has been undertaken on an east-west or south east-north west oriented grid (see Figure 3) and provides a minimum drill spacing of 200 metres x 100 metres for Indicated Resources and 400 metres x 100 metres spacing for Inferred Resources. Further infill drilling is planned to increase drill density to at least 100 metre x 100 metre spacing within the southern portion of the Indicated Resource zone nominated for the first years of mine production. This drilling will provide valuable production scheduling data and a basis for Ore Reserves and pit design work. Page 3

4 Figure 3: All drill hole locations, Resource Model boundaries draped over Magnetic Image Davis Tube Recovery and Concentrate Grade In addition to the whole rock Resource Model discussed above, RSG Global has also developed a Concentrate Model based on the 35 drill holes containing 1,580 Davis Tube Recovery (DTR) and concentrate assays available at this time. See Figure 4 for DTR drill hole locations. As the Davis Tube testwork results are at a lower density than the whole rock assay data, the confidence level in the DTR and concentrate grade estimate is lower than for the Resource Model grade estimate. The results to date indicate a high quality concentrate can be produced from within the Resource model area. The DTR samples are 4 metre composite samples taken from generally 400 metres x 100 metres spaced drill holes and cover the Resource area as shown in Figure 4. Page 4

5 Assay results of the DTR concentrate are summarised in Table 3. Figure 4: Davis Tube Recovery drill hole locations and Resource model boundaries draped over Magnetic Image Zone DTR Fe SiO 2 Al 2 O 3 P LOI Ca MgO S Indicated Resource Area Inferred Resource Area Subtotal Table 3: Davis Tube Recovery within the Indicated Resource Zone Page 5

6 Further DTR tests are in progress on 200 metre x 100 metre drill holes and are planned for on infill drilling to provide a higher density of assay and recovery data and allow an increased level of confidence to be applied to the Concentrate Model. Resource Drilling Program Details The total Resource definition drilling at the Karara deposit used in this estimate is 37,289 metres consisting of: o o 20,317 metres of Reverse Circulation Drilling 16,966 metres of Diamond Drilling (HQ 63mm diameter). Diamond drilling consists of a number of lines of diamond drill holes with generally 60 metre deep precollars and a number of diamond tails from RC holes where the hole depth exceeded the capacity of the RC drill rig. Part of the Diamond Drilling consisted of NQ (53mm) diamond cores that were drilled to penetrate the deepest parts of the ore body between 300 metres and 600 metres deep. The Resource estimate was based on: o o 17,555 Whole Rock assays generally of 2 metre composite 1,580 DTR assays generally of 4 metre composite QA/QC Techniques Used to Support the Resource Estimation and Interpretation. To ensure sample integrity, all RC drilling has utilised face-sampling hammer techniques. Core recovery in diamond holes has been uniformly 100 The RC rig supervisors monitor the RC sample delivery system to ensure representative sample recovery. The rigs are fitted with a two tiered cyclone splitter providing both primary and secondary samples of about 3 kg every two metres. Comparisons of duplicate sample assay results indicate consistently good sample repeatability. Head grade assay quality control checks were performed routinely via regular repeat assays. Drill hole collar locations are surveyed by an on site surveyor. Drill hole orientation and dip is measured using down hole gyroscope. Bulk density is derived from diamond core determinations and down hole density measurements. Mineral Resource Estimating Techniques The grade estimation techniques employed for the Resource was Ordinary Kriging after Variography and search neighbourhood analysis. A thorough explanation of the detailed techniques employed is attached in the Karara Magnetite Project-Mineral Resource Report notes by RSG Global. For more information please contact: Mr George Jones or Mr Darren Gordon Executive Chairman Chief Financial Officer Ph: Fax: Page 6

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