ASX Company Announcement

Admiralty Resources NL
ACN 010 195 972

Level 6, 150 Queen Street

Melbourne VIC 3000

[t] +61-3-9642 3535

[f] +61-3-9670 8965
[w] www.ady.com.au

11 November 2005

Company Announcements Office

Australian Stock Exchange Limited
20 Bridge Street
SYDNEY NSW 2000

Interview with Aegis Equities Research

Please find attached the transcript of a Corporate Insights interview done with Brendan Fitzpatrick of
Aegis Equities Research on the 3 November 2005. This interview will be published shortly on the Aegis
website www.aer.com.au .

Yours sincerely,

Phillip Thomas
Managing Director
Admiralty Resources NL

[t] +61-3-9642 3535

[f] +61-3-9670 8965
[e] pthomas@ady.com.au

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 ASX ADY
Bloomberg ADY.AU
Reuters ADY.AX
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3 November 2005

Admiralty Resources NL Sector: Materials

The following is a transcript of an interview conducted by an Aegis analyst.

For more on Admiralty Resources NL (ADY) see our blue book series at
http:www.aer.com.au or go to the ADY website at www.ady.com.au

Aegis Analyst such as batteries and other associated appliances. So

Perhaps, we could start with an overview of that’s our other key focus.
Admiralty’s projects. Admiralty has several projects
that are pursuing various minerals in several different
Clearly, the Philippines was uneconomic and we’ve
countries, such as the Cia Minera Santa Barbara Joint
decided not to pursue any other opportunities there. Our
Venture an iron ore project in Chile; the Rincon Salar
Bulman project is interesting. It has been pretty well
project in Argentina producing lithium, potassium,
explored previously but still needs to have a fairly sizable
sodium sulphate and boric acid; Ilocos Sur, an iron
drilling project to prove up the geology. Pykes Hill has
titano-magnetite project in the Philippines that was
recently been drilled and we’re just contemplating which
recently evaluated as uneconomic; the Bulman
direction we’ll move there when the Cougar option expires
Project, a lead zinc project in the Northern Territory
shortly.
which is waiting for an exploration license; and the
Pykes Hill project, a nickel exploration play in Western
Aegis Analyst
Australia. Which of these projects offer the most
upside to Admiralty and which are the areas of focus Moving on to look at the financial position of the
for the company at the moment? company: in the September quarterly cash flow report,
the cash reserves stood at $12,000, however cash
Admiralty Resources MD – Phillip Thomas
outflows for the December quarter, are around $1
million. You currently have a loan facility of $6 million
The two key projects are the Cia Minera Santa Barbara
with Perolin Investments and just over $6 million to
Joint Venture iron ore project which is basically nine iron
come from MTM Holdings converting their unlisted
ore mines of which we’ll be exploiting four of those almost
options. Could you comment on Admiralty’s
straight away. In fact, we expect to be shipping and
expenditure plans and whether there will be any need
producing iron ore in early 2006 and that’s a short term
for future capital raisings?
play for us. We know that we’ve got fairly substantial
reserves there and we’re just finishing our proven and
Admiralty Resources MD – Phillip Thomas
probable reserve calculations at the moment. That’s our
There won’t be any need for further capital raisings, and as
key point of focus in the short term. In the two to three
you quite rightly pointed out, we’ve run a fairly lean and
year horizon, it’s the lithium, potassium project in the
mean ship and so we utilise our cash resources very, very
Rincon Salar and we’ve noted that lithium chloride sales,
prudently. We haven’t a need to draw down on that
certainly in the spot market, has been as high as
Perolin credit line, but we will be in November. We actually
US$5,000 per tonne and so clearly producing 12,000
have something like $8.75 million options available out of
tonnes would mean $60 million of revenue per annum. So
MTM Holdings and Leverage Capital also has indicated,
the Rincon has a substantial upside for us both in the
they may convert some of their options. So we’ve got
medium term and the long term as demand for energy
about $8.75 million available there if they deem to convert
related industrial minerals continues to increase and
them and currently they are about 4 cents in the money so
lithium, it continues to be the mainstay of stationary energy

Aegis Equities Research Pty Ltd ACN 085 293 910 AFSL no. 225072 Level 6, 33 York Street Sydney NSW 2000 Australia
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Page 2 of 5
that may happen before the end of the year and they’ve
given us notice that they may do that.
The other aspect is the loan, that will give us $6 million.
So we’re talking about A$14 million that we can access.
We believe our expenditure is only going to be in the
vicinity of about $7 million up until the next tranche from
the converting loan which gives us another $10 million. So
we don’t have any further plans to raise capital. If
anything, we’d be looking to debt, so we don’t dilute
earnings per share. We try to be as conservative as we
possibly can in issuing capital.
Aegis Analyst
Looking into another aspect of the company’s
operations, you recently had your American
Depository Receipts approved for trading. Could you
describe the strategy behind creating these receipts?
Admiralty Resources MD – Phillip Thomas
The strategy had two legs to it. The first leg was that
American investors understand South American assets
and they are used to investing in them. There are a
number of substantial mineral projects that have been
floated in South America, both in Chile and Argentina and
in Peru and so forth. We felt that it would be easy to
market it at an institutional level and at a retail level. Not so
much to market it but to get investors familiar with it so we
can create some further demand for the stock. The
second leg of it was that US institutions sometimes are
constrained to only be able to deal in US securities and
this was a fairly simple way to satisfy their criteria to invest
in a US based security.
Aegis Analyst
Perhaps we could look a little more closely at the
Chilean iron ore project. You were discussing it at the
start of the interview and giving us some insight into
the schedule. Would you like to provide a bit more
detail on the schedule and particularly the capital
costs for these projects?
Aegis Equities Research Pty Ltd ACN 085 293 910 AFSL no. 225072 Level 6, 33 York Street Sydney NSW 2000 Australia
Phone +61 2 8296 1100 Fax +61 2 9299 3777 Email mail@aer.com.au Web www.aer.com.au
Admiralty Resources MD – Phillip Thomas
Certainly. Our capital expenditure is going to be in the
order of US$8 million in total. We’ve spent about US$2.5
million so far, so we’re looking to put in about another
US$5.5 million.
We’ve recently undertaken a fairly substantial engineering
project and decided to upscale the plant in terms of
acquisition of more high speed drums, doubling the
capacity of our magnetic separator and changing the
configuration of the plant to access the iron ore from the
four mines that are located close to each other which we
call the Japonesa Group of Mines. Once we’ve got that
implemented, we’ve also been working with the port at
Huasco and another port to the north and we believe we
have basically cut a deal with that second port which will
be of a major benefit to us and so we’ve chosen to defer
production from what was October now ‘til early New Year.
Aegis Analyst
Looking at the type of material being produced, I
understand there’s, maybe, one to two years worth of
fines material which were stockpiled from previous
operations which could quite easily be separated and
prepared for shipping and then perhaps 15 years of
mining operation. Perhaps, the focus will be using the
fines materials as a start up and then moving into a
mining operation. Was any consideration given to
starting the mining operation and then using the fines
as a medium for achieving an overall required volume
of production?
Admiralty Resources MD – Phillip Thomas
The fines are there as a waste material from a lump
operation in the 1970s. We’ve got a good idea of what is
there in terms of size and we’ve actually put a number of
drill holes down through the piles recently to determine
what the concentration is. We’re actually finding that
we’ve got higher percentage content of iron in the
magnetite that has formed on the surface and we don’t
have any over burden to extract when we start mining the
Page 3 of 5
alluvial material. So, what we’re doing is basically taking
apart those stock piles in terms of five by five by five
metre blocks and determine what the iron content is. So,
we know exactly what we’ve got where. From our drill
hole work and from a mining engineering point of view,
we’ve been able to determine which is the most cost
efficient and which has got the richest blocks and what we
need to take out.
We’re targeting 63.5% iron as our final product with about
a 6.35 mm fine which we can take down to 2 mm if we
need to. We will be able to produce coarse fines if there’s
such a word, up to 35 millimetres and in some areas, we
actually have more coarser material than that if there’s a
demand for lump material, but we’re really focusing on
that 6.35 millimetre, 63.5% Fe product to start off with.
Aegis Analyst
In the June Quarterly report, there was reference to
increasing the reserves. You have recently added two
tenements to the area, Pampa Tololo and Cerro Varilla.
What’s the plans for expanding the output of the
operation? And just touching on something you were
talking about there, the iron content, there was also a
mention of perhaps blending the output. Is there a
significant concern or interest in mixing the products
in the various locations?
Admiralty Resources MD – Phillip Thomas
We’ve had some interest for 65% and 66% iron from
Cometals through some of their clients and from them
individually. What we’re looking at doing is we have some
very, very high Fe content in some of the magnetite, in
some of the alluvial areas, and obviously at Pampa Tololo
and Cerro Varilla, we’re getting very, very high anomalies
on the basic geophysics work that we’ve done so far.
Now, we’ll probably start a short drilling program to
determine the depth and concentration and get a better
understanding of what the geology looks like and what’s
actually happening, so then we can take it further.
Aegis Equities Research Pty Ltd ACN 085 293 910 AFSL no. 225072 Level 6, 33 York Street Sydney NSW 2000 Australia
Phone +61 2 8296 1100 Fax +61 2 9299 3777 Email mail@aer.com.au Web www.aer.com.au
In terms of blending, we’re really blending because we
have these pockets of very high concentration of iron ore
and clearly 4%, 5% and 6% higher than the market
requires. So we’ll utilise that material to supplement some
of the lower grade material to come up with an iron ore
content and a sulphur content that suits particular buyers.
We’ve got very, very low or even non-existent sulphur in
some of our iron ores which is in demand by some steel
mills.
Aegis Analyst
Just looking to the transportation issue associated
with the production. There has been some talk in
recent announcements that there are discussions
under way with the government to increase the
capacity. Are there currently any issues that need to
be resolved?
Admiralty Resources MD – Phillip Thomas
No, in fact we were given approval by the nine
representatives of the nine government bodies that
manage and guide and regulate this particular area. And
so we’ve got approval now to mine one and half million
tonnes from the Japonesa area, and that is really just the
start. We will seek approvals for some of the other areas
and build that up to three million plus tonnes from the
environmental approval point of view.
In Chile, the environmental permit process goes from
digging it out all the way to shipping it. It’s not just at the
mine site. So we have approval to stockpile 600,000
tonnes of iron ore at any one point in time at the mine site
and we just finished negotiations with one of the major
subcontractors where we’re actually subcontracting out the
iron ore extraction process but we couldn’t do that until we
got our environmental permit which we received last week.
Aegis Analyst
Perhaps moving on to look at the Rincon Salar
projects in the salt lakes of Argentina. The current
Page 4 of 5
schedule is to begin production in early 2006, is this
still the plan?
Admiralty Resources MD – Phillip Thomas
It’s 2006 for the potassium chloride and June 2007 for the
lithium chloride and that’s because the second phase of
the evaporation is to evaporate our potassium chloride
once we’ve taken out around 90% or 92% of the sodium
chloride -- we actually concentrate the brine the first time
around.
Aegis Analyst
Looking at the production, the 40,000 tonnes per
annum of potassium chloride, there’s an agreement
recently reached with Rheochem where they will take
3,500 to 10,000 tonnes per annum, and then act as an
agent for sale of another 30,000 tonnes per annum.
How reliant are you on Rheochem to secure these
sales and what contingency plans do you have if
Rheochem can’t take the 40,000 tonnes per annum.
Admiralty Resources MD – Phillip Thomas
There’s a worldwide shortage of potash at the moment
because of its consumption in the drilling industry, in
agriculture. In fact, we know from some of the trends we’ve
seen from some of the major manufacturers, potash
corporations and others that we will very easily be able to
place that at prices that we entered into or used as a basis
of a memorandum of understanding with Rheochem.
We’re very confident that we can market that potash at a
reasonable profit given that it’s almost a by-product of our
lithium operation.
Aegis Analyst
Given there is such demand for the product at the
moment and in the current JORC compliant resource
estimates there is around 100 years of lithium chloride
production and 200 years of potassium chloride
production. Has any consideration been given to
increasing the production volumes?
Aegis Equities Research Pty Ltd ACN 085 293 910 AFSL no. 225072 Level 6, 33 York Street Sydney NSW 2000 Australia
Phone +61 2 8296 1100 Fax +61 2 9299 3777 Email mail@aer.com.au Web www.aer.com.au
Admiralty Resources MD – Phillip Thomas
Look, we have, but we’ve really designed the plant as the
front end to the lithium chloride production facility. So
12,000 tonnes of lithium chloride roughly equates to
around 40,000 to 45,000 tonnes of potassium chloride.
Clearly, we have enormous resources available and
possibly one approach might be to secure another major
contract and use that as a basis to upscale the front end
plant. We’ve designed the lithium chloride facility in two
stages. So, one stage is not totally dependent on
another, but it just means that we’ll have more feed stock
available for the lithium chloride that we can stockpile, so
to speak, in ponds, because we have got 250 square
kilometres. We’ve got plenty of space to stockpile it.
Aegis Analyst
One final question; Admiralty is aiming to acquire the
Rapé Mine that is currently registered to Graciela
Comas. A court resolution requested amongst other
things that the cadastral survey and the pegging of the
mine was to be carried out by the end of September
this year and the inscription of the mine in the
provincial registrar of the mining producers by the end
of August this year. Graciela Comas has requested an
extension to these deadlines. Could you clarify this
situation and is Graciela Comas working with or in
opposition to Admiralty on this issue.
Admiralty Resources MD – Phillip Thomas
They work very closely with us and we actually acquired
the mine and have had that inscribed in ADY Resources’
name and we settled on that mine in late August. So, we
actually completed before 31 August. So those issues
became not relevant to the acquisition so we’re now in the
process of engineering and looking at the design of the
plant and looking at the supply of the various components.
Aegis Analyst
A follow up question; everything seems to be
progressing, so how will the Rapé Mine fit in with the
other operations that have been planned?
Page 5 of 5

Admiralty Resources MD – Phillip Thomas
It’s kind of a separate operation in its own right. It’s really
a toe in the water, because 6,000 tonnes of boric acid a
year is really only pilot plant stage. For example, there is
350,000 tonnes of boric acid sold in Brazil, our next door
neighbour. There’s a smaller consumption in Argentina.
Dow Corning and those that make high temperature / high
strength glasses are the major consumers of it, as well as
various other applications. From our point of view, it was
really an easy way to buy what was a relatively well priced
boric acid opportunity to generate some cash flows right
away to help us. But also we have about 220 parts per
million of boron in the Rincon Salar so that if we manage to
capture a large market share, then we can look at very
substantial resource sitting in the Rincon Salar, prove that
up and produce boric acid from the Salar.

END OF INTERVIEW

Aegis Equities Research Pty Ltd (Aegis) has taken reasonable care in publishing the information contained in this Corporate Insight Release. This
information is provided in summary form only, and Aegis does not provide any warranties as to its completeness or accuracy. The information is not
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Aegis Equities Research Pty Ltd ACN 085 293 910 AFSL no. 225072 Level 6, 33 York Street Sydney NSW 2000 Australia
Phone +61 2 8296 1100 Fax +61 2 9299 3777 Email mail@aer.com.au Web www.aer.com.au