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1 Malachite Resources Limited ABN ASX Announcement ASX Code: MAR 12 March 2012 LORENA GOLD PROJECT - UPDATE Summary Malachite s commitment to establish a gold mining and production plant at Lorena has received strong encouragement from recent feasibility studies. An open pit mine design study and production metallurgy study have jointly confirmed that moving forward with the development plans is warranted. The studies indicate that a gold mining operation at Lorena would generate cash flow and provide funding for the Company to pursue the additional gold discoveries expected within the Lorena tenements, thereby extending the mine life. INTRODUCTION Malachite Resources Limited (ASX: MAR; Malachite or the Company ) is pleased to provide an update on recent work at its wholly owned Lorena Gold Project, located near Cloncurry in northwest Queensland, together with an outline of its plans for Lorena over the next few months. In recent months the Company and its consultants have been busy initiating feasibility work aimed at accelerating Malachite s plans to generate cash flow by commencing gold production at Lorena as soon as possible. Gold exploration is also continuing at Lorena and the Company believes that this will lead to further growth in the mineral resource inventory in due course. At this time, it is important to emphasise that, because the existing resource at Lorena is of such attractive grade (especially for an open pit mine), a healthy cash flow can be generated in the short term by establishing gold production. MINING STUDIES In late 2011 Malachite engaged GEOS Mining Mineral Consultants ( GEOS ) to carry out a revised mineral resource estimate, with particular emphasis on the creation of a 3D block model that could be used as a basis for open pit mine design. The work carried out by GEOS confirmed a resource of 203,200 tonnes at 8.7 g/t Au, for a contained gold content of 56,730 ounces of gold at a 2 g/t cut off. The 3D block model was supplied to the Company s mining consultants, AMDAD, to enable them to generate a number of preliminary pit shells that would optimise extraction of the existing resource. The initial results from AMDAD s work have been very positive, with a high proportion of resource being able to be mined from a pit approximately 70m deep and assuming pit slopes of 40 o (Fig. 1). Preliminary economic modelling suggests a strong cash flow can be generated. Suite 1502, Tower B, 799 Pacific Highway, Chatswood NSW 2067 P O Box 5218, West Chatswood NSW 1515 Tel. (02) Fax (02)

2 LORENA PROJECT UPDATE 2 Encouraged by these preliminary results, the Company has forged ahead with more comprehensive feasibility studies, including metallurgy, geotechnical evaluation and environmental assessment. METALLURGY A substantial amount of metallurgical work has already been carried out on Lorena ore samples and that has allowed the Company and its metallurgical consultant to refine the process route to maximise gold recovery and minimise start up capital costs. This has led to a proposed processing route that would generate two saleable products. In essence, ore would first be subject to crushing and grinding, before being treated in a conventional small sulphide flotation plant. Two concentrates would be produced by this process, one of which would be a gold rich copper concentrate, containing most of the chalcopyrite. That concentrate would be saleable, generating an immediate financial return. The second concentrate would be a gold bearing pyrite/ arsenopyrite concentrate that would be treated by conventional cyanidation, whose efficacy will have been enhanced by the prior removal (into the first concentrate) of cyanide consuming chalcopyrite. On present indications, gold recovery into both concentrates would exceed 90% and final recovery of gold into doré bars from the second concentrate would net out at around 80%. Following on from those results, the Company is currently carrying out elution and cyanide detoxification tests on the gold bearing pyrite/arsenopyrite concentrate. Before final process design and capital and operating costs can be determined it will be necessary to carry out some further metallurgical work. Three diamond drill holes will be completed as part of the current planned drill program, providing sample material to assess ore variability and ore crushing and grinding characteristics. GEOTECHNICAL EVALUATION Malachite has engaged consultants Pells Sullivan Meyninck ( PSM ) to undertake the geotechnical engineering required for final pit design. To aid this analysis, several diamond drill holes will soon be drilled specifically for geotechnical purposes. The Company does not envisage any geotechnical concerns for an open cut operation. ENVIRONMENTAL ASSESSMENT The Company has engaged Environmental Earth Sciences ( EES ) as environmental consultants. EES will shortly be commencing an Initial Advice Statement ( IAS ) that should address initial government environmental requirements. EES will also provide input into the designs of the waste rock dump and tailings dam. As part of its on going obligations under environmental regulations and mining lease conditions, the Company recently relocated an old run of mine ( ROM ) stockpile, containing about 15,000 tonnes of ore (Fig. 2). The former ROM pad site is now available and well suited for potential use as the plant site for a mining operation.

3 LORENA PROJECT UPDATE 3 EXPLORATION Malachite believes the Lorena area to be highly prospective for additional gold discovery and exploration and to that end the Company is actively continuing its exploration program. Late in 2011 a soil geochemical survey was completed, highlighting several very attractive gold in soil anomalies for follow up. The largest and most appealing of these is located only 200m south of the existing ore body, in an area of little or no outcrop (Fig. 3). Other anomalies, associated with gossan outcrops, have been detected along strike to the west, up to about 1km from the current Lorena mine site. No new exploration work was conducted over the wet season period, but new field work is now underway. The first activity, to begin this week, will be a geophysical survey ( SAM technique) over the area covered by the soil geochemistry. The results of that program, in conjunction with the soil geochemical anomalies previously identified, are expected to provide attractive targets for future exploration drilling. The Company has commenced a program of four exploration diamond drill holes (two of which will comprise deepening of existing reverse circulation percussion holes) at Lorena. These holes, which are down plunge and down dip from the existing resource (Fig. 4), have been planned for down hole geophysics ( EM technique) to be employed in searching for nearby sulphide bodies like that in the open pit resource. Each hole will have an effective radius of influence for the down hole EM survey of approximately 100m. As shown in Figure 4, that will provide an overlap of coverage and help pinpoint any new conductors identified as targets for future drilling within the main Lorena structure or potential repetitions. Funding for two of these holes will be provided in part by a grant from the Queensland Government, pursuant to its exploration drilling initiative. CONCLUSION The recent feasibility work has reinforced Malachite s confidence in the ability to pursue an open cut mining operation at Lorena in the not too distant future. The completion of a 3D resources block model, preliminary pit shell designs and positive metallurgy results support the decision to continue advanced feasibility studies and this will be the Company s priority over the next couple of months. ENDS Malachite Resources Ltd For further information, please contact the Company on (02) or by at info@malachite.com.au or visit the Company s website at COMPETENT PERSON STATEMENT: The information in this report that relates to Exploration Results is based on information compiled by Dr Garry Lowder, who is non executive Chairman of the Company and a former full time employee. Dr Lowder is a Fellow of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of

4 LORENA PROJECT UPDATE 4 mineralisation and type of deposits under consideration and to the activities which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Lowder consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. Note: A separate Competent Person Statement in relation to Resources at the Company s Lorena Gold Project is contained in the Statement of Resources by Geos Mining, which was released to the ASX on 27 January 2012.

5 LORENA PROJECT UPDATE 5 BLODE ALODE Figure 1: Oblique view looking NE of Preliminary Pit Shell for Lorena Gold Project

6 Movement of ROM material Final clean up of ROM Old ROM pad suitable for new plant location ROM material relocated onto old heap leach Figure 2: Relocation of old ROM stockpile

7 ML90193 For personal use only ML90196 ML90192 ML7147 Au ppb in Soil < to to to to to 50.0 >= Soil Sample Location Figure 3: Gold in Soil Assays, Lorena Project Gridded Au ppb, Lorena Mining Leases 0 100m

8 Figure 4 A Lode Longitudinal Section four drill holes for downhole EM