Australian Mines

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14 July 2006

Blair Deeps Drilling Progress Report

Australian Mines (ASX:AUZ) is pleased to announce further progress results at the Blair Nickel Mine located 32 kms SE from Kalgoorlie. Follow up downhole electromagnetic (DHEM) probing has confirmed that the C01 shoot is strong below the 350m RL. The DHEM was part of the programme of diamond drilling that was announced in June to test the depth extensions of the C01 shoot.

(a) A set of 4 holes was drilled to test along the C01 surface at approximately 390m RL (50 m below the current workings). The best result was an intersection through massive ore on the C01 shoot announced on 22 June 2006 as : -

AMUG175: 9.25m @ 12.5% Ni from the C01 Surface.

(b) In addition diamond hole AMUG173 was drilled (166m in length) as a deep geophysics platform hole for subsequent DHEM probing. Results indicate that the C01 Shoot is strong below the 350 m RL (approximately 90 m below current workings). Geophysical analysis has also confirmed that the ore body is flattening below 438m RL, which will equate to more nickel ore tonnes per vertical metre.

(c) Further drilling of the main E03 Shoot at the 380m RL is in progress with results expected later in July.

(d) Planned exploration drilling below the Area 57 orebody will commence in August. The Area 57 orebody has been predominantly mined out however the potential remains for locating a down plunge ‘repeat’ ore body via diamond drilling from a drill site located near the previously unmined L01 shoot.

(e) The L01 shoot was accessed by an internal decline from the existing workings on the 923mRL in June 2006, and medium grade ore is currently being stoped. The mining of the new shoot is confirming initial ore reserve estimates.

The recent drilling results and the DHEM work on the C01 now being conducted are confirming that the main Blair ore bodies are potentially continuous at depth. The Company is reviewing the mine design to maximise output during this period of record nickel prices.

Figure 1: C01 shoot – geophysics and drill holes down to 350 m RL

Table 1: Blair Deeps – diamond intercepts June Quarter 2006

Hole Id	North (m)	East (m)	RL (m)	Azi deg	Dip deg	From (m)	To (m)	Intercept (m)	Grade (%Ni)
AMUG175	6,578,976	376,845	444.3	238	-34.6	88.1	97.35	9.25	12.5
AMUG177	6,578,976	376,845	444.3	240	-35.3	102	105.2	3.2	2.03
AMUG176	6,578,976	376,845	444.3	247	-35			Outside ore envelope	Outside ore envelope
AMUG180	6,578,976	376,845	444.3	225	-33.4			Outside ore envelope	Outside ore envelope

For further information contact:
Brett Young
Chief Operating Officer
Tel: 08 9481 5811

The information in this report that relates to Exploration Results is based on information compiled by Mr M Elias who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Elias is employed by CSA Australia Pty Ltd and is a Non-Executive Director of AUZ. Mr Elias has sufficient experience which is relevant to the style of mineralisation and type 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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