Nkomati optimisation increases reserves and provides a revised resource statement

African Rainbow Minerals Limited (ARM) (JSE : ‘ARI’) and LionOre Mining International Ltd (TSX/ASX: LIM; LSE: LOR; BSE: LIONORE), co-owners of the Nkomati nickel mine in South Africa, are pleased to announce an increase in Nkomati’s nickel reserves of 50% from 324,627 Ni tonnes to 485,377 Ni tonnes and a revised resource statement of 942,254 tonnes of nickel, from the previous statement of 674,735 tonnes of nickel. The byproduct reserves also increase significantly to 193,783 tonnes of copper, an increase of 43% and 4,181,015 ounces of Platinum Group Metals (PGM), an increase of 70%.

This follows completion of pit optimisation studies on a largescale expansion which included reducing the cutoff grade applied to portions of the Nkomati mineral resource. The investigation has confirmed that a significant portion of the lower grade disseminated mineral resource, previously categorized as waste, is economically extractable at the present market conditions, adding to the open pit mineral reserve.

Andr� Wilkens, CEO of ARM said: “These results reaffirm the ARM strategy of investing in long life quality assets. The ability to supplement the MMZ production with PCMZ proves the potential of this quality ore body. Adding the chromite to Nkomati’s already significant byproducts will continue to make Nkomati most competitive from a global perspective”.

Commenting on this exciting development, President and CEO of LionOre, Colin Steyn said: “The increase in Nkomati’s reserves, combined with the revised resource statement makes this mine a significant nickel sulphide deposit. In line with LionOre’s strategy of integrating brownfield mineral resource potential into sustainable metal production, Nkomati forms an integral part of LionOre’s longterm growth production profile. In addition, the byproduct potential of the chromitite within the PCMZ as well as the dramatic increase in PGM’s in both the PCMZ and MMZ now reporting to reserves, is very exciting and will enhance the economics of the Nkomati expansion”.

Nickel, copper, cobalt, chrome and platinum group metal (PGM) mineralisation at Nkomati occur in three distinct ore zones. Closest to surface is the Chromititic Peridotite Mineralised Zone (PCMZ) in the Chromititic Peridotite (PCR) unit. This overlies the Main Mineralised Zone (MMZ) which occurs above the Massive Sulphide Body (MSB), the focus of current mining activities.

Previous evaluation studies on a largescale expansion had resulted in the overlying PCMZ being categorised mainly as uneconomic due to the modifying factors. However, following LionOre’s 50% acquisition, the joint venture partners reexamined the expansion potential and commissioned the pit optimisation studies.

As part of these studies, samples of the PCMZ unit submitted to Mintek in South Africa for metallurgical testing have returned results that confirm economic base metal concentrate grades are obtainable at acceptable recovery rates. In addition, the test work at Mintek has confirmed that the chromite in the PCR unit can be upgraded to a saleable product. This coupled with improved base metal and byproduct price forecasts will enable the bulk mining of a larger portion of the PCMZ and facilitates the application of a lower reserve cutoff grade to optimise the previously published mineral resources in Table 1.

Lower Quartile Solutions (Pty) Limited (LQS) was appointed to carry out a revised open pit optimization of the resource using a 0.24% Ni cutoff for the MMZ and a 0.16% Ni cutoff for the PCMZ. The comparative mineral resources and reserves at lower cutoffs are tabulated in Table 2.

The reduction in cutoff from 0.30% to 0.16% Ni for the open pit PCMZ and from 0.35% to 0.24% Ni for the open pit MMZ has unlocked a significant part of the resource that was previously regarded as uneconomic. The main value added lies in the PCMZ. The optimised open pit reserve for the expansion had not previously included the PCMZ, so the 153,342 tonnes of contained nickel that is now available for extraction (Table 2), is additional to previously quoted contained nickel units for the deposit. The contained nickel available for extraction in the MMZ has also increased from 228,215 tonnes to 235,623 tonnes (Table 2).

On the basis of these positive results, LionOre and ARM have commissioned Hatch Africa (Pty) Limited in Johannesburg to proceed with the bankable feasibility study for a largescale open pit and underground operation to exploit the MMZ and PCMZ. This study will be completed by the end of June 2007.

In this analysis, the additional mineral resources available for potential underground extraction have not been considered in terms of cutoff optimisation as studies are still in progress to determine the optimal extraction methodology. As such the quoted mineral resources for the underground PCMZ and MMZ remain as disclosed below and in the latest ARM Annual Report.

All estimates of mineral resources and mineral reserves in the tables which follow have been prepared in accordance with the SAMREC and JORC code and such estimates would not be materially different if prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definitions applicable under National Instrument 43101.

Table 1: Mineral Resources and Reserves for the PCMZ/PCR and MMZ/LrPXT at Nkomati Mine as at 30 June 2006 (source African Rainbow Minerals (ARM) 2006 Annual Report).

Resource
Cut-off(Ni%) Tons Ni% Ni(t) Cu% Cu(t) 3PGM+Au(g/t) 3PGM+Au(oz)
Indicated
Area
Total MSB (L3+str) 0.35 44,100 2.12 935 1.08 476 4.8 6,806
MMZ underg 0.30 48,728,000 0.48 233,894 0.21 102,329 1.03 1,613,687
PCMZ underg 0.30 19,100,000 0.40 76,400 0.12 22,920 1.00 614,097
Total MMZ & PCMZ U/G 67,828,000 0.46 310,294 0.18 125,249 1.02 2,227,784
MMZ Pits 1&2 0.30 8,254,100 0.51 42,096 0.22 18,159 1.08 286,614
MMZ Pit 3 0.30 57,339,600 0.48 275,230 0.2 114,679 1.11 2,046,356
PCMZ openpit 0.30 8,161,600 0.40 32,646 0.12 9,794 1.00 262,409
Total Open Pit 73,755,300 0.47 349,972 0.19 142,632 1.09 2,595,379
Indicated
Area
Total MSB(L1) 0.35 295,000 2.58 7,611 1.48 4,366 8.63 81,853

MMZ underg 0.35 1,021,128 0.58 5,923 0.21 2,144 1.75 57,454

Reserves
Cut-off(Ni%) Tons Ni% Ni(t) Cu% Cu(t) 3PGM+Au(g/t) 3PGM+Au(oz)
Probable
Area
Total MSB (L3+str) 0.35 62,000 0.89 552 0.55 341 3.24 6,459
MMZ underg 0.35 for development 0.5 for stoping 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
PCMZ underg
Total MMZ & PCMZ U/G 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
MMZ Pits 1&2 0.35 6,060,000 0.53 32,118 0.23 13,938 1.15 224,065
MMZ Pit 3 0.35 49,611,900 0.46 228,215 0.19 94,263 1.12 1,786,518
PCMZ openpit
Total Open Pit 55,671,900 0.47 260,333 0.19 108,201 1.12 2,010,583
Proved
Area
Total MSB (L1) 0.35 386,000 1.98 7,643 1.27 4,902 8.37 103,876
MMZ underg 0.35 for development, 0.5 for stoping 330,000 0.59 1,947 0.24 792 1.25 13,263

Total Resource 142,943,528 0.47 674,735 0.19 274,868 1.08 4,969,277
66,295,900 0.49 324,627 0.20 134,912 1.16 2,463,409
Table 2: Revised Mineral Resources and Reserves for the PCMZ/PCR and MMZ/LrPXT based on calculated lower cutoff grades as at 30 June 2006. The areas focused on are highlighted in red.

Resource

Cut-off(Ni%) Tons Ni% Ni(t) Cu% Cu(t) 3PGM+Au(g/t) 3PGM+Au(oz)
Indicated
Area
Total MSB (L3+str) 0.35 44,100 2.12 935 1.08 476 4.8 6,806
MMZ underg 0.30 48,728,000 0.48 233,894 0.21 102,329 1.03 1,613,687
PCMZ underg 0.30 19,100,000 0.40 76,400 0.12 22,920 1.00 614,097
Total MMZ & PCMZ U/G 67,828,000 0.46 310,294 0.18 125,249 1.02 2,227,784

MMZ-Pits 1 & 2 0.24 9,762,620 0.48 46,490 0.22 21,041 1.02 319,957
MMZ Pit 3 0.24 79,105,150 0.43 327,252 0.19 144,600 1.1 2,691,599
PCMZ Open pit 0.20 91,842,625 0.27 243,749 0.08 76,779 0.76 2,243,896
Total Open Pit 1177,710,395 0.35 617,492 0.14 242,420 0.92 5,255452

Measured
Area
Total MSB (L1) 0.35 295,000 2.58 7,611 1.48 4,366 8.63 81,853
MMZ underg 0.35 1,021,128 0.58 5,923 0.21 2,144 1.75 57,454

Reserves

Cut-off(Ni%) Tons Ni% Ni(t) Cu% Cu(t) 3PGM+Au(g/t) 3PGM+Au(oz)
Probable
Area
Total MSB (L3+str) 0.35 62,000 0.89 552 0.55 341 3.24 6,459
MMZ underg 0.35 for develoment, 0.5 for stoping 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228
PCMZ underg
Total MMZ & PCMZ U/G 9,846,000 0.55 54,153 0.21 20,677 1.04 329,228

MMZ – Pit 1 & 2 0.35 6,060,000 0.53 32,118 0.23 13,938 1.15 224,065
MMZ – Pit 3 0.24 56,369,084 0.42 235,623 0.19 104,846 1.10 1,993,597
PCMZ – Pit 3 0.16 65,251,839 0.24 153,342 0.07 48,286 0.72 1,510,528
Total Open Pit 127,680,923 0.33 421,083 0.13 167,071 0.92 3,728,190

Proved
Area
Total MSB (L1) 0.35 386,000 1.98 7,643 1.27 4,902 8.37 103,876
MMZ underg 0.35 for development, 0.5 for stoping 330,000 0.59 1,947 0.24 792 1.25 13,263

Total Resource 246,898,623 0.38 942,254 0.15 374,655 0.96 7,629,349
Total Reserve 138,304,923 0.35 485,377 0.14 193,783 0.94 4,181,015
Note 1: Tonnes have been rounded to nearest 10t and grade has been rounded to two decimal places. Contained Ni metal calculated on rounded numbers.
Note 2: Mineral Resources based on June 2006 resource model. Previously published resources for same area based on 2001/2004 resource model.
Note 3: 3PGM means platinum+palladium+rhodium
Note 4: Resources are inclusive of reserves
The above Mineral Resources and Mineral Reserves were compiled by Jonathan Woolfe (a full time employee of ARM Limited,) Mark Davidson and Hannes Vermeulen (both full time employees of Nkomati Mine) and Mr Pierre Fourie (Managing Director of Lower Quartile Solutions),all Qualified Persons as listed in the LionOre Annual Technical Statement and Annual Report. All have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity undertaken to qualify as a Competent Person as defined in the 2004 Edition of the JORC �Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves� and The SAMREC Code (South African Code for Reporting Mineral Resources and Mineral Reserves) and are Qualified Persons as defined in the Canadian National Instrument 43101 (Standards of Disclosure for Mineral Projects).

For more information please contact:
African Rainbow Minerals, www.arm.co.za
Pieter Rörich
Executive Director: Investor relations
Tel: +27 (0) 11 779 1476
E-mail: pieter.rorich@arm.co.za

Stompie Shiels
Operations Executive:
Tel: +27 (0) 11 779 1232

LionOre
Colin Steyn
President & CEO:
Tel: +44 (0)20 7590 8888

Peter Breese
Group Chief Operating Officer:
Tel: +27 (0)11 463 4223

About Nkomati
The Nkomati mine is situated in the Mpumalanga province in the northeast of South Africa, 300 km east of Johannesburg. LionOre acquired a 50% interest in Nkomati from ARM in June 2005. The mine is currently mining the highergrade massive sulphide body (MSB), which is one of the lowest cost nickel mines in the world, with cash costs (net of byproducts) for the year to June 2006 at a negative US$0.36/lb.

In February 2006, the joint venture partners announced approval of the Interim Expansion Project which will extend nickel operations at an estimated capital cost of R384 million (US$62 million). The Interim Expansion Project anticipates mining the disseminated Main Mineralised Zone (MMZ) orebody with commissioning planned for September 2007 and full production, at an annualised rate of 5,000 tonnes of payable nickel, expected by the end of 2007. The expected life of mine is 10 years.

The objective of the Interim Expansion Project is to bridge the gap between the depletion of the MSB and the proposed Expansion Project, planned for 2010. The Expansion Project, envisaged to include an Activox� Refinery, is currently under evaluation by the joint venture partners and the Feasibility Study is expected to be completed during 2007.

Forward Looking Statements
Certain statements in this presentation constitute �forward looking statements� within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934.

Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied by such forward looking statements. Such risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa; decreases in the market price of commodities; hazards associated with underground and surface mining; labor disruptions; changes in government regulations, particularly environmental regulations; changes in exchange rates; currency devaluations; inflation and other macroeconomic factors; and the impact of the AIDS crisis in South Africa. These forward looking statements speak only as of the date of publication of these pages.

The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of publication of these pages or to reflect the occurrence of unanticipated events.