AusQuest raises $2m through Hamersley Holdings

Rio Tinto subsidiary Hamersley Holdings has increased its interest in AusQuest to 6.9 per cent following the exercise of five million options at 40 cents per share.

The exercise of options has allowed AusQuest to acquire $2 million in funds, which will increase its exploration activities for manganese, gold and iron ore.

Full announcement below:

Further to its release of 1 May 2008, AusQuest Limited is pleased to welcome
Hamersley Holdings Limited, a wholly-owned subsidiary of Rio Tinto Limited, as a
substantial shareholder in the Company following the exercise of 5 million 2008 options
exercisable at 40 cents.
The exercise of the options has realised $2 million in additional funds, further
strengthening the Company's cash position and enabling it to further increase its exploration
activities for manganese (Table Hill - WA), gold (Diamantina - QLD) and iron ore (Tom
Price-Paraburdoo - WA).
As a result of the option exercise, Hamersley Holdings has increased its interest in AusQuest
from 3.74per cent previously to 6.9per cent. The Company reported cash reserves of approximately $8 million as at 31 March 2008.

Drilling at the Company's 100%-owned Table Hill Manganese Project, which is located
200km east of Newman in Western Australia, is due to commence in the second half of May
2008 following minor delays in drill rig availability. The Company has been advised that the
drill rig should mobilise from Perth the week commencing 19th May, with drilling to start
around the end of that week.
The drilling programme will comprise approximately 15 widely spaced drill-holes (~1,200m
x 800m), and has been designed to test the grade, thickness and continuity of the high-grade
manganese mineralisation (3.9m @ 47.5% Mn) intersected in November 2007. The original
drill-hole (THD01) was sited to test a laterally extensive (18km²) electromagnetic target
outlined by an airborne GEOTEM survey.
Drilling at AusQuest's Diamantina iron-oxide copper-gold (IOCG) project, which is
located approximately 450km south of Mt Isa in west Queensland, is scheduled to commence
in mid May 2008. It is estimated that the pre-collar (~800 to 1,000 metres) for the first drillhole
will take approximately 3 to 4 weeks to complete with diamond drilling of the target
zone scheduled to start in the second half of June 2008.
Drilling is targeting strong coincident gravity/magnetic anomalies which the Company
believes are consistent with large-scale IOCG systems known elsewhere in Australia to
contain copper, gold and uranium mineralisation (eg, Olympic Dam and Ernest Henry).
In addition, exploration for iron ore in the Tom Price-Paraburdoo region of WA will be
increased following a review by the Company's consultants. Drill programmes are planned
for the second half of 2008 (pending drill rig availability) to test for iron ore associated with buried Marra Mamba Iron Formation within the Company's Nameless Project and channel
iron close to infrastructure at Tom Price and Paraburdoo.
Beneficiation test-work on drill core from the Rocklea channel iron prospect, located 40km
west of Tom Price, has also provided encouragement for continued evaluation of this
prospect. Results showed a calcined (ex LOI) product grading approximately 64.4per cent Fe, 4.1per cent
SiO2, and 2.1per cent Al2O3 can be produced by a combination of raw analysis, and wet tumbling
and screening of the materials.
The Board of AusQuest is looking forward to the commencement of the 2008 drilling
programme and reporting the results as they become available.