Murchison Metals Ltd announced it has received feasibility studies from its 50% owned Crosslands Resources Ltd iron ore mining business and OPR infrastructure business in the mid-west region of Western Australia.

Murchison’s joint venture partner in both businesses is Mitsubishi Development Pty Ltd.

In receiving the studies Trevor Matthews, Chief Operating Officer of Murchison Metals, said: “The delivery of these studies by Crosslands and OPR represents a significant milestone in the ongoing development of the mid-west as a major iron ore producing region, and Murchison looks forward to progressing both projects to the next stage of development. The effort of both joint venture teams is reflected in the high standard of work seen in the studies, and I would like to thank all of those involved.”

Highlights:

• Crosslands and Oakajee Port and Rail have delivered feasibility studies which indicate commercial, technical and operational viability, subject to OPR reaching agreement with potential foundation customers

• The results reflect nearly four years of intensive work and over A$400 million of expenditure by the respective project teams and mark a major milestone toward project execution

• Crosslands’ feasibility study on its Jack Hills Expansion Project is based on:

1. Average production of 23.4 million wet tonnes per annum for the first 10 years, comprising 22 Mwtpa of high purity iron concentrate products and 1.35 Mwtpa of direct ship products, with a total estimated mine life of 39 years, supplying the key Chinese, Japanese and Korean markets
2. Average operating costs of approximately A$33.66 per wet tonne of product, excluding royalties and before infrastructure charges
3. Capital cost of A$3.7 billion, inclusive of owners’ costs during construction (A$254 million)

• OPR’s feasibility study is based on:

1. Development of an integrated port and rail supply chain with engineered capacity of 45 Mwtpa, with a planned contracted throughput of 42 Mwtpa o Average operating costs of A$5.45/wt of throughput
2. Capital cost of A$5.94 billion, inclusive of owners’ costs during construction (A$508 million)
3. Direct capital costs (before owners’ costs) of A$5.43 billion, versus A$5.24 billion for November 2010 Budget and Engineering indicative estimate (before owners’ costs)

• Material approvals for both projects are well advanced

• While the Supply Chain Agreement process between OPR and its potential foundation customers is incomplete, Murchison expects that all parties will ultimately reach agreement around commercial arrangements that are required to unlock the value of all of the projects in the region

• The studies assume Project Go Ahead in the March Quarter 2012 with first shipping through Oakajee targeted for 2015. Murchison considers that this schedule is dependent on the timing of completion of SCAs and related milestones

• Murchison continues to review its funding options and opportunities

• Following the release of the feasibility studies, Murchison will continue with a strategic review that was commenced to maximise shareholder value

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