28 March 2007

MARRIOTT’S NICKEL PROJECT UPDATE

Promising results from latest diamond drilling programme

Australian Mines Limited (ASX:AUZ) is pleased to provide an update on the latest diamond drilling programme at Marriott’s Nickel Project, W.A.

Marriott’s, located less than 70 km from BHP’s Leinster Operations by sealed highway, currently contains an Inferred Resource of 550,000 tonnes at 1.4% Ni for 7,500 contained nickel tonnes (using a 0.5% nickel grade cut off).

A 1,200 metre surface diamond drilling campaign commenced in November 2006, and has provided the following highlights:
  • Nickel mineralisation extends up dip of the known Inferred Resource.
  • Confirms (and generally up-grades) previous drilling results achieved by WMC from 1969 to 1972.

Australian Mines’ Chairman, Mr Neil Warburton said, “We are very excited to be advancing a project of the calibre of Marriott’s at a time of such high demand and tight supply for nickel.

“The latest drilling certainly highlights the upside potential to boost Marriott’s resource. Besides finding more nickel, we also plan to commence a new diamond drilling campaign in the next quarter to better define the resource to Indicated status. Subject to a successful infill drilling program and satisfactory metallurgical testwork results, we expect initial project scoping studies to commence later this year.

“We anticipate reporting on the initial metallurgical results from BHP Billiton’s Leinster Nickel Operation within the next month and further drill results as they become available.”

Australian Mines has previously secured an off-take agreement for production at Marriott’s with BHP Billiton at the Leinster operations.

Current and Proposed Work.

The following work is planned over the forthcoming quarter for Marriott’s Nickel Project:

1. Initial metallurgical testwork at BHP Billiton’s Leinster treatment facility including flotation tests is currently underway.

2. The Marriott’s deposit is currently drilled on a 40 metre by 40 metre grid pattern. During the June Quarter, a new 2,700 metre programme of diamond holes will commence, to drill to a 40 metre by 20 metre grid pattern to increase the category of the known Resource from Inferred to Indicated.

3. Additional geological understanding and interpretation of the deposit shows potential exists for the deposit to extend down plunge. Drill testing will also be undertaken in the June Quarter to test for extensions.

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 that relates to Exploration Results and Mineral Resources 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.’

 
Figure 1. The image compares the AUZ drilling with the historical WMC drilling as well as extending the nickel mineralistion up dip
 
Figure 2 shows how AMMD008 has extended mineralisation up-dip.
 
The table below includes significant intercepts from the 9 hole (1200m) diamond drilling programme completed by Australian Mines Limited:
Hole ID MGA North MGA East RL Azi Dip Hole Depth From To Interval Ni Grade
  (m) (m) (m) (mag)   (m) (m) (m) (m) (%)
AMMD001 6851037 303398 446 0 -90 168.5 30 38 8 0.41
AMMD002 6851011 303373 436 0 -90 54.4 1 4 3 0.40
AMMD003 6851066 303372 441 0 -90 144 8 14 6 0.35
AMMD004 6851034 303343 442.2 0 -90 92 9 18 9 0.36
              29 33 4 0.33
AMMD005 6851192 303370 438.2 0 -90 175.7 76 77 1 1.23
              88 95 7 1.02
            includes 88 92.1 4.1 1.3
              104 109 5 0.86
            includes 106 107 1 1.94
              132.1 133.6 1.5 1.2
              138.7 139.1 0.4 1.28
 AMMD006 6851156 303338 438.9 0 -90 146 68 75 7 1.05
   
      includes 72 74
2
2.05
              81
97
17
0.91
            includes
89
91
2
1.33
              101
107
6
1.79
AMMD007
6851122
303303
441.3
0
-90
167
30
33
3
0.60
              37
39
2
0.61
              41
48
7
0.95
            includes
42
46
4
1.23
AMMD008
6851093
303365
444.0
0
-90
134.7
23
35
12
0.83
            includes
26
30
4
1.23
              41
50
9
0.78
            includes
41
 43
3
1.18
              65
68
3
0.88
            includes
65
66
1
1.13
AMMD009
6851099.5
303277.4
  0
-90
115
5
6
1
0.88
              11
14
3
0.53
              20 21 1 0.64

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