Kagara Limited announced an update on its exploration programs in North Queensland which are continuing to ramp up and deliver encouraging results on a number of fronts providing strong support for the resource growth targets outlined in the Company's recently announced 5 year growth strategy.

The 5 year strategy presentation which was released in Chillagoe on September 21 established firm targets and guidance for planned exploration expenditure as well as drilling meters and resource growth targets from this significant exploration commitment.

As outlined in the September 2011 Quarterly Report, drilling meters for Q1 FY2012 were 13,000 m below guidance due to the late arrival of the Reverse Circulation rig at Chillagoe and late commencement of drilling at Lounge Lizard. The Company is on track to make up this shortfall with a steady increase in meters drilled during Q2 FY 2012 to over 14,000 meters for the month of November as shown below:

This substantial exploration push reflects Kagara's confidence in the exploration potential of its North Queensland assets and its overall commitment to the North Queensland region as a core focus for its operations and projects over the coming years.

The principal objective of the AUD 50 million exploration program for FY 2012 and FY 2013 was to develop and increase the resource base from the Company's three operating regions in North Queensland in order sustain increased zinc and copper production targets of 120 kilo tonne per annum zinc and 30 kilo tonne per annum copper for at least 8 years to 12 years.

Beyond FY 2013, the focus of exploration and resource development will be to increase mineral resources to sustain increased production levels for 15+ years. In the strategy release of September 21st 2011, Kagara advised the market that it would be updating its resource inventory at the end of January 2012.

The Company and the market clearly acknowledge that Kagara's current growth strategy is directly linked to its exploration success. This release is provided as a progress update towards achieving the Company's strategic resource development goals, consistent with the Company's commitment to more frequent and transparent reporting to the market.

Kagara also notes that its tenement holding in the very prospective North Queensland region has increased by 45% to 2,858 square kilometers over the past 6 months. This increase results from the Strategic Alliance with Monto Minerals Limited and the acquisition of the Einasleigh Copper Project from Copper Strike Limited and provides the Company with a deep pipeline of future exploration targets and opportunities once it achieves the initial resource growth objectives outlined in the 5 year strategy presentation.

As outlined in the Company's strategic plan released in late September 2011, the aim of exploration drilling in the Northern Chillagoe Region in particular is to define sufficient resources and reserves to justify the completion of the Mungana concentrator an extremely important milestone in the Company's strategy to underpin sustained zinc production growth targets.

Diamond drilling is also continuing at the Company's Lounge Lizard Nickel Project in Western Australia and is due to be completed before Christmas. The results of this drilling will be reported separately once they become available.

A program of in fill and extensional drilling has been undertaken at King Vol since August 2011 which has returned some spectacular zinc intersections. The aim of the drilling program was twofold:
1. To test for extensions to the known resource at depth and along strike; and
2. To in fill the current resource on 25 meters centers to assist with mine planning to improve the integrity of the current resource and reserve prior to mining, consistent with the improved governance processes implemented recently by the Company for Mineral Resource and Ore Reserve delineation and management.

Drilling is still underway and a large number of assays are yet to be received; however, close spaced drilling indicates that the King Vol probable Ore Reserve will host a significant tonnage of very high grade zinc mineralization associated with the Eastern Zone Mineralization Replacement and the Eastern Zone Mineralization Contact.

This is considered to be a very positive development as the presence of this very high grade mineralization is likely to enhance the economics of a future mine development at King Vol.

Shareholders are cautioned that assays are needed to confirm these results but the intersections up and down dip indicate the presence of a significant zone of high-grade mineralization.

Deeper drilling of the deposit has indicated that the same style of mineralization is present at depth. The drill out of King Vol Deeps to upgrade the current Inferred Resource of 1.9 million tonnes at 14% zinc and 0.8% copper to Indicated status is budgeted for Q4 FY2012. Kagara is currently reviewing the technical and economic merits of drilling from surface compared with continuing the in fill drilling from underground.

In addition to the EZMC and the EZMR, the King Vol deposit has several other significant zones of mineralization. More importantly, there is a significant difference in the host mineralogy between waste and ore. Previous beneficiation test work carried out by the Company produced results showing recoveries of more than 90% of contained metal for over 50% rejection of waste.

Further testwork capitalizing on more recent developments in ore sorting is planned, as this technique has obvious applications to this style of deposit and may open up the possibility of using more efficient bulk mining techniques at King Vol.

The published probable Ore Reserve for King Vol stands at 1.3 million tonnes at 11.2% zinc and 0.8% copper. This was calculated in 2007 at a 4% zinc cut-off grade. The Company's understanding and geological interpretation of the King Vol deposit continues to evolve as the influence of this high grade core is more fully understood.

The current phase of the drilling program is scheduled for completion in late December and, once all assays have been received, the Mineral Resource will be updated to incorporate the latest data. However it is clear that King Vol will form an integral part of Kagara's future mining inventory in the northern Chillagoe region.

The Redcap Project comprises the Victoria, Queenslander and Morrisons lodes or mineralized structures. At Victoria an Inferred Resource of 3.4 million tonnes at 5.1% zinc and 1% copper was outlined from drilling completed in 2008. To date there has been no resource estimate completed for the Queenslander or Morrisons lodes.

Like King Vol recent resource development exploration at Morrisons and Queenslander has been highly successful and, during the current field season, drilling has been concentrated along the highly mineralized Redcap Thrust.

The mineralization at Morrisons and Queenslander is hosted in a magnetite pyrhotite skarn assemblage that is remarkably consistent and predictable in its location and geology. Mineralization occurs at the faulted contact between a limestone unit and volcanic unit. Mineralization is typically zinc dominated with associated significant copper, silver and more rarely lead.

The mineralization dips to the south west at approximately 50 degrees as a result, drilled width approximates true width in most cases. Estimation of a JORC compliant resource for the Morrisons and Queenslander lodes is planned for mid-December 2011 and as previously advised, scheduled for release at the end of January 2012.

Noting again that there is no JORC resource estimate for Morrisons or Queenslander, the current Exploration Target1 for these lodes is 2 million to 3 million tonnes at a grade range of 6% to 10% zinc and 0.5% to 1% copper. The potential to find extensions to, and repeats of, this style of mineralization throughout the Redcap Thrust is believed to be excellent, as evidenced by the very large and strong zinc in soils anomaly located over Redcap.

As a result, Kagara has committed to continue drilling the system over the coming months with the aim of adding substantially to the resource inventory at Redcap. In addition, a second drill rig will be commissioned in January 2012 focusing on increasing the integrity of the Victoria resource in general and, in particular, to in fill and extend the Victoria high grade Inferred Resource of 948,000 tonnes at 7.3% zinc, 1.6 % copper and 30 gram per tonne silver.

The drilling will also test for extensions to the Victoria resource, which has only had one hole drilled in it since 2008. The drilling to date at Redcap has been very encouraging and an increase in the resource base is expected at the end of January 2012, when the initial resource statement for the Morrisons and Queenslander lodes will combined with an updated Victoria resource.