Australian Mines

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28 November 2005

Company Announcements Office
Australian Stock Exchange Limited
10th Floor
20 Bond Street
SYDNEY NSW 2000

Dear Sir

Nickel Exploration Update
Blair South and BSA Prospects Electromagnetic Surveys

Australian Mines Limited (ASX: AUZ) is pleased to provide an update on exploration activities at the Blair South and BSA prospects, near Kalgoorlie, WA.

The company has recently completed electromagnetic (EM) surveys on the nickel and copper prospects, located some 3 kilometres south of the Blair Underground Nickel Mine on the same interpreted basalt - ultramafic contact and mining lease (see attached location plan).

The Blair South/BSA nickel and copper anomaly is approximately 3 kilometres long and contains extensive tonnages of shallow oxidised material grading 0.5 % nickel, which are located above the base of weathering along the full strike length of the anomaly.

Previous down hole EM and surface EM surveys have indicated a number of conductive bodies. However, this previous work was carried out over a number of years, and the Company’s geophysical contractors were commissioned to compile and re-interpret all of the existing raw data and produce a single, comprehensive interpretation and written report describing each target.

1. Contact Target (see attached diagram)

The geophysical report highlighted a large conductive plate plus a number of smaller plates which lie on the ultramafic – sediment contact.

The smaller conductors have been previously drilled and found to coincide with stringer and disseminated mineralisation in a fertile channel environment.
Best drill intercepts from previous drilling are tabled below:

Hole Id	From	To	Length	Nickel %
GOD 44	46.89m	147.38m	0.49m	1.45%
GOD 45	70.62m	72.42m	1.80m	2.30%
GOD 46	135.85m	136.5m	0.65m	1.05%
GOD 53	209.0m	210.0m	1.00m	1.54%
GOD 55A	254.85m	256.75m	1.90m	1.64%
GOD 56	224.0m	228.0m	4.00m	1.86%
GOD 57A	194.0m	196.0m	2.00m	1.72%

The geophysical contractor has modelled a large 200m by 200m untested conductive plate which lies immediately below the small conductors and coincides with a down-dip extension of a channel structure interpreted from the previous drilling mentioned above. This is considered by the Company to represent a high priority target for economic nickel mineralisation.

2. Hanging Wall Target

The geophysical contractor has interpreted a large conductive body which lies roughly parallel to the basalt - ultramafic contact, but some 60 metres into the hanging wall ultramafic. It is not unusual for Kambalda-style nickel orebodies to be located in the hanging wall at the base of the second or third komatite flow, and the conductive body could therefore possibly be due to nickel sulphide mineralisation.

3. Proposed Drill Programme

Initially a single RC hole will test the hanging wall conductor, and a RC pre-collar and diamond tail will test the deeper contact target. Down hole electromagnetic surveys are planned for each hole. Drilling is scheduled to commence in December 2005.

Yours faithfully

Brett Young
Executive Director
Australian Mines Limited

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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