Adelaide, Dec 15, 2006 (ABN Newswire) - Barra Resources advise that it is in advanced negotiations to establish a joint venture with private company Select Minerals Pty Ltd ("Select"), holder of the high grade Mt Thirsty Cobalt-Nickel Deposit, strategically located 20 kilometres north-northwest of Norseman, Western Australia.

Project Highlights

- Shallow resource already established

- High grade component totalling 700,000 tonnes grading 0.50% cobalt and 1.20% nickel within existing indicated resource

- Larger inferred and indicated resource envelope of 8.4 million tonnes grading 0.20% cobalt and 0.65% nickel open along strike

- Mineralogical characteristics allow for rapid leaching at room temperature and atmospheric pressure

- Relatively low capital cost for mine development and low strip ratio

- Close to existing infrastructure

Under the proposed agreement, Barra is to provide initial project funding of $780,000 to participate equally with Select to develop the project. These funds will be applied primarily towards the undertaking of independent metallurgical studies to verify the metal extraction process.

Barra's attraction to the Project is:

- The high grade presence of cobalt is up to 8 times greater than other nickel-cobalt operations where cobalt is a co-product.

- The mineralogy of the deposit allows high leaching recoveries at ambient temperatures and pressures.

- Low mining costs are anticipated due to the soft nature of the deposit, its thin overburden and shallow depth.

- Relatively low capital costs.

- All metallurgical operations envisaged within the treatment process exist and have been operating in other processes worldwide over many years. No new technology is required; a combination of time-proven technologies will form the basis of the treatment plant.

- The end concentrate is a simple product highly amenable to world smelters.

- Existing resource is currently open along strike with scope for significant expansion.

- Current demand for cobalt is high with the commodity currently trading at decade high prices.

The Company has established a level of comfort on the current resource and its potential for expansion as Dean Goodwin, Barra's Managing Director, was involved in exploration and resource delineation at Mt Thirsty prior to joining Barra. He is also a shareholder of Select.

The majority of the proposed work program at Mt Thirsty will be carried out by consultants while Barra's fundamental focus will be expanding the Company's Burbanks gold operation.

The Project contains an existing JORC compliant internal high grade indicated cobalt and nickel oxide resource of 700,000 tonnes grading 0.50% cobalt and 1.20% nickel within a much larger inferred and indicated envelope of 8.4 million tonnes grading 0.20% cobalt and 0.65% nickel.

Extraction Process

The mineralogical characteristics of the deposit allow for a rapid leaching technique at room temperature and normal atmospheric pressure utilizing an extraction process using acidic reagents.

The extraction process relies on a sulphite leaching process able to extract nickel, cobalt and manganese metals from highly oxidized limonites at atmospheric temperature and pressure. These processes are extensively used in the electrolytic manganese dioxide industry and have been specifically refined by Select's Managing Director, Mr Jack Andreazza (BSc FAusIMM) in conjunction with Murdoch University and CSIRO to be used on ore from the Mt Thirsty deposit. The envisaged extraction process is also similar to two successful oxide cobalt and nickel mining operations in Southern Africa.

Current preliminary sighter metallurgical testwork conducted by CSIRO and Murdoch University indicate recoveries of 80% cobalt and 50% nickel at coarse sizings. More advanced testwork at various finer grind sizes, due to begin shortly, is expected to increase nickel recoveries significantly. Another important aspect of the process is the leaching of cobalt and nickel is achieved without significant uptake of iron, substantially reducing both capital and operating costs.

Preliminary estimates of capital costs to construct an appropriate treatment plant are between $60 and $80 million. This relatively low capital cost is primarily due to cobalt and nickel being contained in completely oxidized powdery cryptomelane based clays as distinct from harder saprolitic laterite type nickel deposits which require expensive high pressure and high temperature leaching.

Based upon preliminary test recovery rates, the total inferred and indicated resource produces approximately 13,000 tonnes of cobalt metal and 27,000 tonnes of nickel metal recovered.

Extent of Current Resource

Resources are currently open along strike. Infill drilling is required to upgrade these resources to measured status. The soft nature of the ore profile renders conversion of inferred and indicated resources to mineable reserves at relatively low cost.

The total resource measures 1 kilometre long by 250 metres wide at an average depth of 20 metres below surface with a 15 metre average thickness (see cross-section, figure 3). Current drill spacings vary from 25 metre spaced holes on 50 metre spaced sections within the indicated area and 40 metre spaced holes on 200 metre spaced sections within the inferred area (see drillhole location plan, figure 4). A total of 178 aircore holes have been drilled to date throughout the resource area with holes intersecting little or no water providing clean dry uncontaminated samples. The resource exhibits good geological and grade continuity both between holes and between sections.

Due to the cobalt-nickel ores unique powdery oxide clay nature, shallow depth and distinct lack of secondary silica banding the majority of the ore and thin overburden will not require drill and blast, resulting in lower mining costs.

It is proposed that advanced metallurgical testwork will be conducted and supervised by Metplant Engineering Pty Ltd, a recognized metallurgical consultancy group, utilizing existing pilot treatment facilities at Murdoch University, Western Australia.

Barra's Chairman Gary Berrell stated "The project is extremely exciting with potential to rapidly move into production at a time when cobalt and nickel are both trading at decade high prices."

"We believe that our involvement in Mt Thirsty will add to our portfolio of gold and nickel projects where we are focusing on advanced stage projects with strong cashflow and short term payback."

The Project is within 4 kilometres of existing infrastructure including road, rail, water and gas pipelines with ready access to the deep sea export port of Esperance.

Following completion of initial project funding, Barra and Select will comprehensively review all options to develop the project under the best corporate structure to give maximum return to both Barra and Select shareholders. Proposed terms of the agreement allow for a 50/50 joint venture or the raising of fresh capital via a listing of Select on the Australian Stock Exchange. Should a listing be pursued, Barra will retain a substantial equity interest in Select.

Preliminary scoping studies indicate this exciting new project exhibits important attributes of low capital and operating costs and a relatively short payback period while also having the potential to provide significant cash flows over a long term mine life.

The Company expects to be in a position to finalise negotiations and execute a formal agreement during the coming week.

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