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7 September 2006

EXPLORATION UPDATE: BLAIR NICKEL MINE

Significant diamond drill results from Blair Deeps and Area 57 orebodies

Australian Mines Limited (ASX: AUZ) is pleased to announce the results of the August underground diamond drilling campaigns at the Blair Mine.

General Background

The Blair Nickel Mine is currently producing ore from 3 sources, namely the;

Blair Deeps,
L01C surface, and
Area 57 orebody.

The company has recently completed drilling at each of these areas and an update is presented below:

Blair Deeps
Best results include:

3.0m @ 4.52 % Ni on the open contact west of the E03C Shoot and has opened up new ore potential on this surface,
19.6 m @ 3.62 % Ni % on the C01C Shoot

Hole Number	Northing (m)	Easting (m)	RL (m)	Depth (m)	From (m)	To (m)	Length (m)	Ni (%)
AMUG182A	6578944	376848.6	441.1	140.5	99.4	101.72	2.32	3.81
AMUG183	6578943.7	376848.5	441.1	172.5	29.5	32.8	3.3	2.94
					38	57.6	19.6	3.62
					99	102	3	4.52

Table 1 – Blair Deeps , August 2006 diamond drill intercepts

L01C Shoot

Diamond drilling from the 1048 Area 57 access drive has found possible extensions to the L01 shoot. The potential extensions are approximately 130 metres above current workings.

Best intercepts are tabled below:

Hole Number	Northing (m)	Easting (m)	RL (m)	Depth (m)	From (m)	To (m)	Length (m)	Ni (%)
AMUG186	6579108.7	377066.9	1053.5	11.5	5.4	6.0	0.6	3.9
AMUG190	6579115.9	377062.9	1053.8	12.6	7.0	7.7	0.7	2.65

Table 2 – L01C Shoot , August 2006 diamond drill intercepts

Area 57 Depth Extensions

Two stratigraphic holes were drilled from the 911 decline access to test for hangingwall and open contact ore some 200 metres below the current Area 57 orebody. Although both holes failed to intercept nickel grade mineralisation, down hole electro magnetic probing (DHEM) was completed on both holes with the following positive result:

AMUG185 has a large and complex signal of conductance (5000 Siemens) from 149 metres down hole that has been modelled as an offhole 100 metre by 100 metre conductive plate.
AMUG187 returned a signal of 5000 siemens conductance from 210m down hole, which has been modelled as a 100 x 100m plate mostly below and south east of the drill hole.

This indicates potential nickel mineralisation that will be tested by further drilling.

Area 57 Hanging Wall Extensions:

Three holes have now been drilled approximately 20 metres above the 1033 sub level on the Area 57 hanging wall lode and although multiple intercepts of massive sulphides have been logged the core has yet to be assayed. Results will be released in the September Quarterly.

For further information contact:

Brett Young
Chief Operating Officer
Australian Mines Limited
Tel: 08 9481 5811

For media enquiries contact:
Robert Williams
Farrington National
Tel: 02 9332 4448

The information in this report is based on work compiled by Mr E. Poole, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Poole is employed as the Geology Manager of Australian Mines Limited. Mr Poole has sufficient experience which is relevant to the style of mineralisation and types of deposits 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’.

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