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Yilgarn Iron Ore Project

The Yilgarn Iron Ore Project (YIOP) encompasses approximately 1,000km² of mining tenements 50km north of Koolyanobbing in Western Australia, most of the tenements are held 100% by Polaris. It benefits significantly from proximity to existing rail leading to port infrastructure, which will permit a relatively rapid development for a moderate capital cost.

Central Yilgarn Projects

The project consists of five prospects spread over 50km, with significant direct shipping ore (DSO) grade iron mineralisation. Some 80-90Mt were established by previous explorers’ drilling (e.g. Bungalbin East, J4 and J5), with new prospects (Carina, and Chamaeleon) found by Polaris.
Independent consultants have recently re-estimated the mineralisation in the YIOP. Quoted at a 55%Fe cut-off grade, the estimates resulted in Inferred Mineral Resources of:

YIOP Inferred Mineral Resource Statement

Prospect

Cut-off Fe%

Tonnes(Million)

Fe(%)

SiO2(%)

Al2O3(%)

P (%)

LOI(%)

Carina

55

27.8

58.6

3.7

1.3

0.09

10.1

J4

55

4.8

57.4

3.9

1.8

0.14

10.9

J5

55

10

59.0

5.8

1.2

0.24

7.5

TOTAL

55

42.6

58.6

4.2

1.3

0.13

9.6

LOI = loss on ignition

With a target potential of 100-150Mt, the Company believes the Yilgarn Project is capable of sustaining exports of 5Mt of iron ore annually for up to 20 years, subject to securing environmental approvals.

Recent drilling has focussed on the Carina and Chamaeleon prospects as these prospects are more likely to be developed in the near future. The 12km long corridor including these two deposits is planned to form the basis for a Stage 1 development of the project with a target potential of 30-40Mt at 58-59% Fe.

YIOP – Stage 1

The Carina deposit is extensively drilled and the current JORC resource stands at 28Mt at 58.6% Fe. The Chamaeleon deposit is less well defined and although no JORC compliant resource has been completed as yet for this deposit drilling to date indicates the potential for 2-5Mt of mineralisation.

Yilgarn Iron Ore Project

Reconnaissance mapping between the two key prospects has revealed surface outcrop of goethite haematite ores and there is strong potential for an additional 5-10Mt of mineralisation. The mineralisation defined to date is goethite-hematite outcroping as a low ridge. The mineralisation forms a steeply west dipping isoclinally folded synform over 1.6 kilometres in strike length to a maximum depth of 220 metres below surface with widths averaging approximately 40-50 metres. Drilling to date has not yet fully defined the depth extent of the mineralisation.

A resource estimate was completed for the Carina deposit in December 2008 by resource estimation consultants Hellman and Schofield Pty Ltd:

Carina Inferred Mineral Resource

Cut-off Fe%

Tonnes
(Million)

Fe(%)

SiO2(%)

Al2O3(%)

P(%)

S(%)

LOI(%)

55

27.8

58.6

3.7

1.3

0.09

0.08

10.1

LOI – loss on ignition

A total of 182 holes for 22,400m of drilling was completed at Carina with analyses for only 72 holes returned at the time of resource estimation. Completion of analyses including the check sample data will enable a further resource estimate is to be completed. Polaris anticipates that this will result in an upgrade of substantial portions of the resource to an Indicated or Measured Resource classification.

An external Prefeasibility Study completed in mid 2008 indicated the viability of the project and projected strong cash flows. The study assumed as a base case mining the deposit at 2.5Mtpa, trucking to a rail heading 60km to the south and then railing to the Port of Fremantle’s Kwinana Operations south of Perth.

No further formal feasibility studies have been completed to update the existing PFS but it is likely that the capital and operating costs to either port will be similar and that the recent world economic shocks have not significantly changed the project economics.

Further work suggests that the Port of Esperance is a better option for export given the existence of a suitable berth, a larger ship capacity and more rapid land side infrastructure development.

The environmental approval process has commenced and it is anticipated that approval to mine Carina will be given in the December quarter 2009.

Polaris intends to secure further funding with the aim of completing a Definitive Feasibility Study (DFS) in 2009 and finalising the port and infrastructure requirements and commitments so that mining can commence in 2011. Studies relating to environmental approvals, port optimisation, metallurgical properties along with collecting and assessing other data required for the DFS.

YIOP – Stage 2

The J4, J5 and Bungalbin East mineralisation lies on the Helena-Aurora Range which is the considered to have high conservation values. As a consequence the processes to gain approvals for drilling are thorough and time consuming. Flora and fauna surveys continue over these areas aimed at gaining ensure a comprehensive understanding of the environment, leading to the formulation of impact mitigation and management plans as a prerequisite for obtaining exploration and subsequently mining approvals.

A mythological site claim was recently lodged over the range. This has necessitated further investigation and the processes are in train to work through the issue and gain approval to drill at these deposits. Due to this mythological site claim it is possible that drill access to these three prospects will be delayed until late 2009.

Bungalbin Reserves

Independent consultants have re-estimated the mineralisation in the YIOP – Stage 2. Quoted at a 55%Fe cut-off grade, the estimates resulted in Inferred Mineral Resources of:

YIOP Stage 2 Inferred Mineral Resource Statement

Prospect

Cut-off Fe%

Tonnes
(Million)

Fe(%)

SiO2(%)

Al2O3(%)

P (%)

LOI(%)

J4

55

4.8

57.4

3.9

1.8

0.14

10.9

J5

55

10.0

59.0

5.8

1.2

0.24

7.5

TOTAL

55

14.8

58.5

5.2

1.4

0.20

8.6

LOI = loss on ignition

A previous resource estimate exists for Bungalbin East, which was discovered by BHP in the 1960s. The Independent Geologist’s Report and Valuation prepared for Polaris in July 2006 states a target resource of 59Mt with 57.9% Fe, 0.15% P, 2.0% Al2O3, 4.6% SiO2 and 9.8% LOI. This estimate was not reported in accordance with the 2004 JORC Code.

The potential size and grade of Bungalbin East make development a key objective for Polaris and efforts are ongoing on a number of fronts to secure access.

In December 2007, the WA State Government report on the Banded Iron Formation of the Yilgarn, the Helena-Aurora Range was identified as an area the Government was predisposed to preserve. However the Government specifically exempted any action on the Bungalbin East prospect for three years – on account of its high potential economic benefits for both the State and local stakeholders. The boundaries of the Bungalbin East prospect have not yet been defined in any detail by regulatory authorities.

Polaris is undertaking active consultation with the regulators to mitigate the potential effects of these proposals and is meeting with government to ensure that the Company’s interests are properly presented and that government fully understands the exceptional economic potential of the region.

In common with its peers in the mining industry, Polaris recognises the importance of biodiversity conservation and adheres strictly to environmental regulations as well as Aboriginal heritage protection regulations. The Company is well aware of environmental management guidelines of the Department of Minerals and Petroleum (“DMP”) and Department of the Environment and Conservation (“DEC”) as regards operating in environmentally sensitive areas.

The potential mineralisation for the Stage 2 development exceeds 80Mt and Polaris continues to work towards gaining access for exploration and subsequently extraction. Once approval is obtained the region could potentially support production of 5-10Mtpa total for Polaris. Given the environmental and regulatory issues this process will take several years and mining is not anticipated before 2012.