Metal Storm wins US funding of A$975,000 for munitions development

Sydney, Jan 17, 2006 (ABN Newswire) - Metal Storm Limited (ASX: MST) today announced that its subsidiary Metal Storm, Inc had been awarded a two year contract worth approximately A$975,000 from the US Army's Armament Research, Development and Engineering Center (ARDEC) for the design, prototyping and demonstration of Metal Storm less-than-lethal munitions. The company had advised the market on 21 November 2005 that this contract was expected.

Under the Phase II Small Business Innovation Research (SBIR) contract, Metal Storm will design and build prototype less-than-lethal munitions for demonstration to ARDEC of a range of crowd-control options. These munitions will be compatible with the Metal Storm 40mm launcher technology. Incorporated into the munitions will be "smart-round" capabilities, providing an improved level of safety and flexibility in the less-than-lethal spectrum of operations. The project effort, entitled "Metal Storm Crowd Control System", will extend over a 2 year period.

"The confirmation of this Phase II SBIR contract is very timely as much of our current engineering efforts are directly focused on the final development of our High Explosive (HE) munitions. Being able to expand our current efforts into specific less-lethal capabilities will fit nicely with our 2006 strategic plans." said Metal Storm's Chief Executive Officer, David Smith.

"We are extremely pleased to receive this award from the US Army in support of their efforts to provide broad war fighting versatility. Metal Storm systems have potential to add significant capability to operations requiring crowd control for the urban warfare environment while also having numerous applications and market opportunities in civil law enforcement scenarios."

"As advised to the market in September 2005, Metal Storm is also currently working under a Cooperative Research and Development Agreement with ARDEC in relation to the development of HE munitions. This critical business relationship will become even more advantageous as we add the less-lethal line of munitions to the already established framework for the rapid development, testing, and eventual certification of a range of 40mm munitions for use in Metal Storm weapons systems. We will continue to keep the market informed of our progress in this area", said Mr. Smith.

As announced on 2 December 2005, Metal Storm was also recently awarded a Phase II SBIR contract with the US Department of Defense worth approximately Au$1.32 million for the development and testing of a remotely operated weapon system.

See the footnotes below for further information regarding ARDEC, the SBIR program, and less-than-lethal systems.

About METAL STORM LIMITED

Metal Storm Limited is a multi-national defence technology company engaged in the development of electronically initiated ballistics systems using its unique "stacked projectile" technology. The company is headquartered in Brisbane, Australia and incorporated in Australia. Metal Storm Limited technology and products are represented in the USA by Metal Storm Inc., which has offices in Arlington Virginia.

Metal Storm is working with government agencies and departments, as well as industry, to develop a variety of systems utilising the Metal Storm non-mechanical, electronically fired stacked ammunition system.

Metal Storm's weapon technology uses computer-controlled electronic ignition and a system of stacked projectiles, to achieve a completely non-mechanical gun that is very lightweight and compact, providing a very high firepower to weight ratio. The Metal Storm weapons system utilizes multiple barrels mounted together on one platform which allows varying munitions types to be deployed in a single, low cost, lightweight weapon system. Firing the weapons by electronic ignition requires no moving parts, allowing reliable long term unattended weapon operation.