Independent economic study confirms Yilgarn potential

Polaris Metals NL has announced today the results of Prodemas consultants independent economic evaluation study of the Yilgarn Iron Ore project which finds a potential resource inventory of 150-200Mt and a project life of 10-20 years.

The Yilgarn Iron Ore Project comprises more than 1,000km2 of granted exploration licences, miningleases and mining lease applications owned 100% by Polaris and centred approximately 60km north of Koolyanobbing in Western Australia. The mining tenements include iron ore deposits in the Helena and Aurora Ranges which were explored and drilled by BHP between 1960 and 1972.

Specific extensions to the Mount Manning Nature Reserve, and an upgrade to A Class, are recommended by the EPA to protect areas deemed to have high conservation value.

The recommendations impact on parts of the potential resource base for the Yilgarn Iron Ore Project. Resolution of the final boundaries of any Nature Reserve by the State Government is required sot hat the Yilgarn Iron Ore Project, can be developed.

Announcement pasted below:

The Directors of Polaris Metals NL (ASX: POL) are pleased to release the results of an independent economicevaluation study of the Yilgarn Iron Ore Project by consultants Project Development & Management Services("Prodemas"). The Yilgarn Iron Ore Project comprises more than 1,000km2of granted exploration licences, miningleases and mining lease applications owned 100% by Polaris and centred approximately 60km north ofKoolyanobbing in Western Australia. The mining tenements include iron ore deposits in the Helena and AuroraRanges which were explored and drilled by BHP between 1960 and 1972.

The largestdeposit, Bungalbin Eastern,with a strike length of approximately 2.5km and an average width of approximately 150m, was estimated (pre theJORC code) to contain iron ore mineralisation in the order of 60Mt at 58% Fe. The Project also covers the newCarina, Chamaeleon and Vela prospects recently discovered by Polaris, and announced as having target potential of 40-60Mt. With the inclusion of other known iron ore deposits in the Helenaand Aurora Ranges the Yilgarn

Iron Ore Project area is stated to have a target potential of 100-125Mt of direct shipping iron ore
("DSO"). Results of current exploration by Polaris indicate that this target potential is likely to
increase significantly.

Key Findings of the Economic Evaluation Study The economic evaluation study assumed an expected potential resource inventory of 150-200Mt and a project life of 10-20 years, based on the currently assessed target potential and the exploration potential of such a large regional land-holding.

The Prodemas report strongly recommends commencement of a feasibility study in expectation of the development of an export operation of between 5Mtpa and 10Mtpa DSO. A development of this magnitude would generate a significant return for Polaris shareholders, as well as royalties for the WA Government of between $23 million and $47 million per annum, qualifying as a Major Resource Project.

It would also have significant economic and social benefits for localcommunities, notably the Shires of Yilgarn, Menzies and Coolgardie. Subject to feasibility outcomes, productioncould commence as early as 2010. It is envisaged that iron ore would be sourced from a number of open cut pits, trucked for up to 40km to a centrally-located crushing, stockpiling and train load-out site, and then railed to an expanded Kwinana port and shipped to Southeast Asia.

The independent economic evaluation study of 5.0 Mtpaand 10.0 Mtpa operations gave indicative Proposal by EPA a Key Project Risk Whilst the Project has manageable technical risk, the key Project risk at the present time is a proposal by the Western Australian Environmental Protection Agency ("EPA") to extend the Mount Manning Nature Reserve ("MMNR"). In a general outline of a key environmental issue in the region, the EPA contends that banded ironstone ranges, which are the focus of mining and mineral prospectivity, particularly for iron ore, are also a focus for rare and endemic flora and plant communities.

Specific extensions to the MMNR, and an upgrade to A Class, are recommended by the EPA to protect areasdeemed to have high conservation value.

The recommendations impact on parts of the potential resource base for the Yilgarn Iron Ore Project. Resolution of the final boundaries of any Nature Reserve by the State Government is required sot hat the Yilgarn Iron Ore Project, as a Major Resource Project, can be developed with certainty of tenure.

Whilst Bungalbin Eastern and Vela deposits falls within the area proposed by the EPA to be upgraded to A ClassNature Reserve status, the Carina and Chamaeleon deposits occur in areas of subdued topography outside the priority area recommended by the EPA. They are relatively distant from the more prominent ridges of banded ironstones in the area, and manifest as eroded, lateritised, and in the case of Chamaeleon, partly soil-coveredoutcrops and sub-crops.

A comprehensive Environmental Approvals Process, for the proposed development ofBungalbin Eastern and the satellite deposits of Carina, Chamaeleon and Vela, is intended immediately with environmental specialists Enesar Consulting retained. The process will include high level State Government interface in respect to the possible excising of the Project's potential resource areas from any proposed extension to the MMNR.