PARKER RANGE IRON ORE PROJECT, Yilgarn Iron Province

(CAZ 100%)

The Parker Range Project lies approximately 15 kilometres south-east of Marvel Loch and approximately 60 kilometres by road south of the Perth–Kalgoorlie railway.

The resource estimate for the Mount Caudan deposit at the project is currently 28.4mt @ 55.4% Fe. The resource contains two primary ore-types; a heamatite - goethite Banded Iron Formation (BIF) and smaller component of secondary Canga and Detrital ore. Magnetite mineralisation also occurs at depth below the resource. The ore has low levels of deleterious elements and is suitable for Direct Shipping Ore (DSO).

The project is currently undergoing feasibility studies into potentially developing a 2-4mtpa operation. Importantly the company has commenced rail access discussions with both the rail and port authorities for acces to their infrastructure where capacity for our requirements currently exists.

The deposit was modelled by independent mining consultancy group Runge Limited, using a nominal 50% Fe wireframe for BIF and 45% Fe for Canga material, resulting in a Global Indicated and Inferred resource as follows:

Global Resource: Mount Caudan Deposit Mineral Resource Estimate

(All material inside wireframes)

From this an Indicated and Inferred Resource estimate at a 52% Fe low cut resulted in the following:

Mount Caudan Deposit October 2009 Mineral Resource Estimate

(52%Fe Cut-off Grade)

The recent drilling focussed largely on infill drilling to raise the confidence level in the resource as part of the current Pre-Feasibility Study into mining. As such, 90% of the resource is now considered “Indicated”, a substantial improvement on the May ‘09 estimate.

Additionally, an approximate 20% increase in tonnes has been achieved through revised geological modelling and the addition of ore from the Rainmaker Prospect which covers the immediate southern extension of Mount Caudan. Phosphorous levels of around 0.02% are considered extremely low and enhance the marketability of the ore.

Project Potential

The Global resource estimate of over 40Mt highlights the potential to significantly increase resources throughout the project by way of upgrading of lower grade (<52% Fe) material. Preliminary metallurgical test work indicates that this lower grade material has the potential to be simply upgraded to marketable ore products. This test work includes, amongst others, simple washing and de-sliming. Test work is on-going and includes material from the Wrathchild Prospect where recent substantial intersections, including 27m @ 54.2% Fe, have been announced.

Primary magnetite mineralisation has now also been recognised beneath the oxide portion of the mineralised BIF at Mount Caudan. As most of the drilling to date has not drilled into the fresh unweathered ore only a small number of holes have intersected this magnetite mineralisation. Davis Tube metallurgical tests have commenced to determine the ability of the magnetite to be upgraded to a concentrate.

Drilling is on-going at Parker Range with an RC rig currently on-site testing further extensions to the ore body and the magnetite potential.

Regional Targets

Several other prospects identified in recent mapping along the 16km long extent of known mineralised BIF throughout the project. Of note is a new discovery at the Wrathchild Prospect located some 13km south of Mount Caudan. Significant results from Wrathchild include 27m @ 54.2% Fe and 13m @ 56.9% Fe. A large portion of the outcropping mineralisation at Wrathchild remains to be tested. Additionally a result of 13m @ 54.3% Fe was also returned from the Sanctuary Prospect located 7 km south of Mount Caudan and north of Wrathchild.

Results from a minor programme of regional drilling highlighted the potential of the Project to host additional resources. This was the first iron ore exploration away from the Mount Caudan Deposit, testing 14km of previously undrilled strike extensions and was highly successful in identifying widespread mineralisation.

Development Update

Following positive results from a Scoping Study the Company engaged Lycopodium Minerals Pty Ltd (“Lycopodium”) to conduct a Pre-Feasibility Study into the potential development of the project. The Company is looking at developing a 2-4mtpa operation within an indicative capital cost range of A$70-150m and an operating cost range of A$38-44 /t.

Lycopodium have a current background of iron ore projects in Western Australia, having recently completed numerous studies and projects in the industry. Lycopodium has compiled a highly experienced team to complete the study, with extensive process design, materials handling, road haulage, rail and port logistics capability.

Lycopodium’s current iron ore clients include Rio Tinto, Hancock Prospecting and Fortescue Metals Group.

Lycopodium has an excellent reputation within the engineering community both domestically and overseas. The Pre-Feasibility Study for the Parker Range Project is now well advanced with the preferred positive business case and study report due for completion by December 2009.

Metallurgical test work is continuing on samples from the Mount Caudan Deposit. Of particular interest is work on the potential to upgrade the lower grade ores within the project by way of a variety of methods including simple washing and de-sliming techniques. Positive results fron this work will greatly increase the amount of potentially marketable product from the project.

Indicative Product Options

Two Product Option

One Product Option

Environmental Studies

The Company has commissioned Keith Lindbeck and Associates to supervise all environmental studies at the Project. Cazaly has submitted a mining proposal to the EPA with a PER (Public Environmental Review) to be conducted. Environmental studies include flora and fauna surveys, ground water and soil characterisation are ongoing and are expected to continue through 2009 as part of the Company’s development strategy.