BALAMA WEST HIGH GRADE ZONE EXTENDED BY DRILLING

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1 29 August September 2012 BALAMA WEST HIGH GRADE ZONE EXTENDED BY DRILLING INCLUDING 19.1% TGC & 0.57% V 2 O 5 Highlights: Results from 3 drill holes at Balama West have been received with the best result in BMDD0007: 16.7% Total Graphitic Carbon (TGC) & 0.46% V 2 O 5 including 19.1% TGC & 0.57% V 2 O 5. All intersections are very close to true width Diamond holes BMDD0007 and BMDD0008 have extended the high grade graphite zone at Balama West by a further 400 metres to the west, while BMDD0003 extended the zone to the east Four 200 metre spaced drill holes and a 100 metre spaced hole (BMDD0003) have now intersected this zone of mineralisation at Balama West with the following results starting from the west: o BMDD % TGC & 0.30% V 2 O 5 o BMDD % TGC & 0.46% V 2 O 5 o BMDD % TGC & 0.41% V 2 O 5 * o BMDD % TGC & 0.31% V 2 O 5 * o BMDD % TGC & 0.25% V 2 O 5 *BMDD0006 and 0001 have been reported previously Additional, large, high grade zones of mineralisation have been visually logged by geologists in the other 10 drill holes at Balama West that have not yet been assayed. In addition Syrah has now completed 25 diamond drill holes at Balama East, most of which have intersected thick mineralised sequences starting from surface Metallurgical testing of large samples of core at the Mintek labs in Johannesburg is getting under way with the objective of improving on the excellent past metallurgical results (ASX Release - 1 March 2012) and to help in designing the production processes which will form part of the Scoping/ Feasibility Studies Syrah Resources (ASX: SYR) is pleased to announce assays from diamond drill holes BMDD0003, BMDD0007 and BMDD0008 at its 100% owned Balama Graphite Project in northern Mozambique. Assays are being announced in the same sequence as received from the laboratory. ASX Code SYR Current Corporate Structure Ordinary Shares Issued Shares: 126,723,021 Options Exercisable at $0.26: 17,000,000 Exercisable at $2.21: 500,000 Major Shareholders Basapa PL 11.13% Copper Strike Ltd 8.68% Gasmere PL 8.42% Kitara Investments PL 8.06% Board of Directors Mr Tom Eadie Non-Executive Chairman Mr Paul Kehoe Managing Director Mr Alistair Campbell Non-Executive Director Mr Mike Chester Non-Executive Director Ms Melanie Leydin Company Secretary Key Projects Balama Graphite and Vanadium Project (Mozambique) and Nachingwea Graphite Project (Tanzania) Potentially high tonnage, high grade, flake graphite projects. Balama is mainly medium to coarse flake and Nachingwea is fine to coarse flake. Balama is also highly anomalous in vanadium with sample grades up to 1.25%. Tanzania Mineral Sands A very prospective portfolio of mineral sands licence areas, some of which have drill results up to 28% heavy minerals with high zircon. Website 1

2 INTRODUCTION At Syrah s 100% owned Balama Graphite and Vanadium Project in northern Mozambique, 40 diamond drill holes have been completed in two zones, Balama West and Balama East (see Figure 1). These two zones comprise a small portion of the overall Balama Project, most of which remains lightly explored. The graphitic unit is open to the north, west and south with additional areas that are unexplored to date. Results from BMDD0001 have been released on 30 August; BMDD0006 on 5 September; and BMDD0003, BMDD007 and BMDD0008 in this announcement. Assay results from all of the holes in Balama West (BMDD0001 to BMDD0015) are expected within approximately one month. Resource estimates for both Balama West and Balama East are expected by the end of Figure 1: Overview of the Balama Project showing 1) the 300 metre high hill that is composed at surface of graphitic units 2) the location of the two prospect areas within the large strike extent of the outcropping mineralisation and 3) all completed drill holes with the reported holes highlighted. The central area of the deposit is only lightly explored. The deposit remains open to the north and west under cover, and also to the south. BALAMA WEST - DRILL HOLES BMDD0003, BMDD0007 and BMDD0008 ASSAYS As can be seen in Figures 1 and 2, BMDD0007 and BMDD0008 were drilled to the west of previously announced drillholes, BMDD0001 and BMDD0006, while BMDD0003 was drilled to the east of these holes. Both Holes 7 and 8 returned excellent results and have extended the zone a further 400 metres to the west, leaving it open in this direction. 2

3 The average grade of the entire length of BMDD0007 (317.6m) is 12.5% Total Graphitic Carbon (TGC) and 0.32% V 2 O 5. The intersection included a zone of 16.7% TGC and 0.46% V 2 O 5 from 131m to 317.6m. Within this higher grade zone is an intersection of 19.1% TGC and 0.57% V 2 O 5 from 203m to 297m. The average grade of the entire length of BMDD0008 (311.5m) is 10.2% TGC and 0.21% V 2 O 5. The intersection included a zone of 13.1% TGC and 0.30% V 2 O 5 from 108 to 293m. The best intersection in BMDD003 was 10.3% TGC and 0.25% V 2 O 5. Full results for all holes are shown in the Appendix. As can be seen in Figure 2, BMDD001 is drilled under Trench T5, while BMDD006 is under Trench T9, BMDD007 is under Trench T10 and BMDD0008 is under Trench T11. Figure 2 Balama West map showing location of trenches and completed drill holes. The drill holes with assay results are BMDD0001, BMDD0003, BMDD0006, BMDD0007 and BMDD0008. The results from T5 were released to the ASX several months ago and were similar to those in the hole (BMDD0001) drilled beneath it. Results from Trench T5 included: 18.3% TGC and 0.43% V 2 O 5 including 20.1% TGC and 0.46% V 2 O 5. Assay results from the other trenches, T9, T10 and T11, are not yet available. However, visual estimates indicate that significant thicknesses of graphitic mineralisation were also encountered in these trenches at surface that appear to correlate with the assay results in BMDD0006, 0007 and This is important as it highlights that on these sections, as 3

4 well as on the section with BMDD0001 / Trench T5 shown in the 30 August ASX release, that thick, impressive mineralisation outcrops at surface and will be available for early mining with virtually no strip ratio. A schematic illustration of Syrah s interpretation of the drilling results and trench visual observations is shown in Figure 3. Figure 3 Schematic interpretation of the 5 drill holes with assays received to date and the extension of mineralisation to surface as interpreted by assays in Trench T5 and visual estimations in T9, T10 and T11. This high grade, thick, sub-zone of Balama West is now at least 800m long and still open. 4

5 Figure 4 View of section of BMDD0007 under the microscope. The bronze coloured mineral shown is graphite. Gangue minerals shown are mostly quartz and calcite. The field of view is 2mm across indicating that almost all graphite flakes shown are coarse (>177 microns) to very coarse in size (many graphite grains are >1000 microns) METALLURGY UPDATE The Mintek laboratory in Johannesburg will conduct test work on shallow core (0 to 60m deep) from 6 holes at Balama. The work is currently being planned and will begin later in September. The objectives of these tests are: 1) to improve further on the original successful testwork that Syrah conducted earlier this year (summarised below) and 2) to make an important first step in designing production processes which will form part of the Scoping / Feasibility Studies. The original metallurgical testwork was performed by Mintek (ASX Release - 1 March 2012) on a single composited trench sample from the edge of the Balama deposit. This sample was from an early trench and is not from a particularly high grade or coarse-grained area. This sample assayed 11.2% total carbon and 0.1% vanadium, and exhibited a degree of weathering. Metallurgical testwork focussed on achieving the highest graphite grade possible whilst maximising recoveries. 5

6 Figure 5 Photograph on left: Crushed sample of Balama graphitic schist used for the initial metallurgical testing. Photograph on right: 95%+ graphite concentrate produced from crushed sample Results indicated the ability to produce a very high grade graphite product at a medium to large flake size (>177 micron by industry definition). Excellent recoveries were achieved from this one bulk sample via conventional flotation processes using standard reagents. Mineralogical examination of a final flotation concentrate produced in the laboratory revealed the graphite particle lengths up to ~568 microns and an average length of 159 microns. The examination also indicated that less than 3% of gangue material was still present in the concentrate. Concentrate grades in excess of 95%C were achieved at recoveries up to 87% of the total carbon. This grade has the potential to be further enhanced into a very high grade product in excess of 97% carbon. As the high grades of vanadium create a significant by/co-product, metallurgical test work has been initiated on producing a high grade vanadium concentrate. FUTURE WORK As previously announced, the Balama Graphite and Vanadium Project is very large with over 7km of strike distance and up to 2km of surface width of outcropping graphite and vanadium mineralisation. Figure 1 shows the Balama Graphite and Vanadium Project looking from the north. As can be seen, the Balama West and Balama East areas represent relatively small sections of the north side of Mount Nassilala, the host of the graphitic schists. Based on field mapping it is known that the graphitic schists are present over the entire mountain. It is also known that the graphite extends under cover to the north based on graphite observed in pits dug by local artisans prospecting for tourmaline up to several hundred metres from the base of the mountain. The graphite may also extend under cover to the south. It is considered very likely that further high grade zones will be discovered near surface with further exploration. A Reverse Circulation (RC) drill rig is due to arrive on site in late September. The RC rig will scout drill to identify such areas. 6

7 Figure 6 High grade drill core from BMDD0022 at Balama East ABOUT BALAMA Balama is a 106km 2 granted prospecting licence located within the Cabo Delgado province in the district of Namuno in northern Mozambique. The project is approximately 265km by road west of the port town of Pemba. Pemba Port is a deep-water container port, and the third largest in Mozambique. The Balama project site is accessible by a sealed, main road, running directly from the airport and Pemba port. This main road is located 1km from the project. ABOUT SYRAH Syrah Resources (ASX code: SYR) is an Australian resource company with a diversified exploration portfolio located in southeast Africa. The Company is rapidly progressing its core Balama Graphite and Vanadium Project in Mozambique, with the aim of establishing an initial mineral resource in the December quarter, Syrah's exploration portfolio also includes a strategic mineral sands project in Tanzania, comprising eight tenement areas, some with high grade historic heavy mineral intersections, and the recently acquired Nachingwea graphite project in Tanzania. The information in this report as it relates to geology, geochemical, geophysical and exploration results was compiled by Mr. Tom Eadie, FAusIMM, who is a Competent Person and Chairman of Syrah Resources Limited. Mr. Eadie has more than 20 years experience in the activities being reported on and has sufficient expertise which is relevant to the style of mineralisation and type of deposit under consideration. He consents to the inclusion of this information in the form and context in which it appears in this report. Paul Kehoe Managing Director Syrah Resources Ltd Mobile contact: p.kehoe@syrahresources.com.au 7

8 APPENDIX BMDD0003 RESULTS TGC >20% IN RED, 10-20% IN MAUVE, <10% IN BLACK V >0.35% IN RED, % IN MAUVE, <0.17% IN BLACK From (m) To (m) TGC (%) V (%)

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11 BMDD0007 RESULTS TGC >20% IN RED, 10-20% IN MAUVE, <10% IN BLACK V >0.35% IN RED, % IN MAUVE, <0.17% IN BLACK From (m) To (m) TGC (%) V (%)

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15 BMDD0008 RESULTS TGC >20% IN RED, 10-20% IN MAUVE, <10% IN BLACK V >0.35% IN RED, % IN MAUVE, <0.17% IN BLACK From (m) To (m) TGC (%) V (%)

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