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RARE EARTH AND YTTRIUM PRODUCTS PRODUCED FROM THE DUBBO

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   ASX ANNOUNCEMENT – 16 NOVEMBER 2009                                                               Corporate Profile
                                                                                                  Alkane Board
                                                                                                  J. S. F. Dunlop (Chairman)
                                                                                                  D. I. Chalmers (Managing Dir)
                                                                                                  A. D. Lethlean
                                                                                                  I. J. Gandel
 RARE EARTH AND YTTRIUM PRODUCTS
                                                                                                  I. R. Cornelius
     PRODUCED FROM THE DUBBO
                                                                                                  L. A. Colless (Joint Secretary)
    DEMONSTRATION PILOT PLANT                                                                     K. E. Brown (Joint Secretary)


                                                                                                  Contact
                                                                                                  Ian Chalmers
                                                                                                  Managing Director

The Dubbo Zirconia Project (DZP) in New South Wales is one                                        96 Parry Street
of the world’s most advanced developments for zirconium,                                          PERTH WA 6000
niobium, yttrium and rare earth production and is based                                           Telephone +61 8 9328 9411
upon a world class resource.                                                                      Facsimile      +61 8 9227 6011
                                                                                                  Email ichalmers@alkane.com.au
The Demonstration Pilot Plant (DPP) at Lucas Heights, south                                       Web – www.alkane.com.au
of Sydney, has been operating continuously since 2008 and
has proven the flow sheet for the DZP.
                                                                                                  12    month        share   price
                                                                                                  range
The DPP has produced substantial quantities of zirconium
and niobium products which are being distributed to potential                                     A$0.515 - $0.15

customers around the world.                                                                       Market Cap 13 Nov 09

                                                                                                  ~A$98 million
The market for these products continues to expand, with new
                                                                                                  ASX Code: ALK
applications being developed and an expected significant
increase in the demand for zirconium metal for nuclear power                                      249 million shares (Sept 09)
energy requirements.
                                                                                                  October 2009
Recently the DPP has also produced its first light rare earth
and yttrium-heavy rare earth products. These products have                                        Cash ~ $4.9 million

major economic potential driven by environmental legislation                                      Investments ~ $5.8 million
to ensure emissions minimisation and energy consumption
                                                                                                  No debt
efficiency.

The DZP’s development would see the project become a                                              Media Relations

significant producer of the commercially important zirconium                                      Westbrook Communications
chemicals, zirconia, yttrium, dysprosium and terbium outside                                      Level 1, 17 Castlereagh Street
of China.                                                                                         SYDNEY NSW 2000
                                                                                                  Telephone +61 2 9231 0922
                                                                                                  Facsimile      +61 2 9231 0131
                                                                                                  Web – www.westbrookfin.com.au



    Registered Office: 129 Edward Street Perth WA 6000 Telephone: 61 8 9227 5677 Facsimile: 61 8 9227 8178
                           PO Box 8178 Perth Business Centre Western Australia 6849
                                  www.alkane.com.au        mail@alkane.com.au
Background

The Dubbo Zirconia Project (DZP) is located 30 kilometres south of the large regional centre of
Dubbo in the Central West Region of New South Wales (Figure 1). The DZP is based upon a large in-
ground resource of the metals zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements
(see 2004 Annual Report for full details and 20 August ASX Announcement).

Over several years Alkane has developed a flow sheet consisting of sulphuric acid leach followed by
solvent extraction recovery and refining to produce several products (Figure 2). This flow sheet is
currently being trialled by a Demonstration Pilot Plant (DPP) to recover a suite of zirconium
chemicals, zirconia, a niobium-tantalum concentrate and yttrium-rare earth concentrates which are
used in the expanding ceramic, catalyst,
electronics, rechargeable batteries and permanent
magnets, engineering ceramics, and specialty
glasses and alloys industries, as well as the
nuclear power industry.

The DPP was constructed within the facilities of
ANSTO Minerals, a business unit of the
Australian Nuclear Science and Technology
Organisation, and is one of Australia’s premier
research facilities located at Lucas heights in the
south of Sydney. The DPP was commissioned in
2008 and has operated several campaigns to date
producing over 1,300kg of zirconium chemicals
and 250kg of niobium concentrate.

Marketing activities are advanced with direct
contact with potential customers in Japan,
Europe and North America, and zirconium and
niobium product samples being sent to Japan,
China, Europe and North America. Distribution
of yttrium and rare earth samples is anticipated
to commence later this year.

Product Development

Zirconium: Zirconium basic sulphate (ZBS) is the primary product recovered from the DPP,
and this has been converted to zirconium hydroxide (ZOH) and zirconium basic carbonate
(ZBC) which are of high quality, returning 99% ZrO2 when calcined (high temperature
drying). These products have diverse uses such as being converted to zirconia (ZrO2) for use
in auto exhaust catalysts, a high growth pollution control development area. Other high
growth markets are advanced ceramics, environmental drying agents and metal pre-treatment.
Auto manufacturers are replacing zinc-based body undercoat with more effective zirconium
primers.

The ZOH has also been converted to a 99.2% ZrO2 zirconia with very low hafnia (HfO2)
content. The existing flow sheet reduces the Zr to Hf ratio from 50:1 in the ore to 350:1 in
the products. Hafnium free zirconium metal is used to make tube or fuel rods and reactor
vessel construction in nuclear power plants, and other natural sources of zirconium have a
much higher Hf content.

Currently there are 436 reactors operating in the world, with 40 under construction, a further
110 planned and 272 proposed (World Nuclear Association). Due to the specific

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                                                                   Alkane Resources Ltd – ASX Announcement
                                                                                     16 November 2009
characteristics of zirconium metal, no substitution is anticipated and depending upon reactor
type and size, the average nuclear plant uses 10 to 45 tonnes of zirconium. The fuel rods have
a life of about 5 to 6 years and the zirconium metal cannot be recycled, and is ultimately
stored with the used fuel. Demand for nuclear grade zirconium metal is expected to increase
dramatically over the next ten years as the nuclear revival gathers pace.




Figure 2

Yttrium and Rare Earths: Test work to prove the recovery of yttrium and rare earths from
the current flow sheet has continued in the laboratory at ANSTO using solutions generated by
the DPP. This flow sheet naturally separates the light rare earths (LREE = lanthanum,
cerium, neodymium, praseodymium and samarium) from the yttrium and heavy rare earths
(HREE = gadolinium, terbium, dysprosium and erbium) (Figure 2).

Recently LREE and YHREE samples were recovered from the plant. Preliminary analyses of
these products have confirmed the favourable distribution of the rare earths with:

LREO damp filter cake 45% total REOs giving 86% total REOs as dried product

YHREO damp filer cake 55-60% total YREOs giving plus 90% total YREOs dried

As reported to the ASX on 20 August, “Dubbo Zirconia Project Chinese Rare Earth Export
Control”, the Rare Earth Industry is currently experiencing dynamic change with
unprecedented demand and growth triggered by China’s export control and environmental
legislation to ensure emissions minimisation and energy consumption efficiency. As a result
some rare earth metals such as dysprosium (Dy), terbium (Tb), and yttrium (Y) are expected
to be in short supply by consuming industries outside China.
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                                                               Alkane Resources Ltd – ASX Announcement
                                                                                 16 November 2009
Key Drivers of REE Demand (source IMCOA)

Magnets                 Nd, Pr, Sm, Tb, Dy      Drives for many electronics and electronic motors
NiMH Batteries          La, Ce, Pr, Nd          Rechargeable batteries. Hybrid vehicle batteries
Phosphors               Y, Tb, Eu, La, Ce       Compact fluoro lights, LCDs, LEDs, PDPs
Fluid Catalysts         La, Ce, Pr, Nd          Petroleum production
Polishing Powders       Ce, La, Nd              Glasses for TV, computer monitors
Auto Catalysts          Ce, La, Nd              Emission controls
Glass Additive          Ce, La, Nd              Limits UV transmission, high quality glass lens
Fibre Optics            Er, Y, Tb, Eu           Signal amplification

While further development work is required to confirm the commercial viability of the DZP
yttrium and rare earth products, it is anticipated that the circuits will be added to the DPP
early in 2010 to generate product for distribution to potential customers.

Possible Production Scenario

The primary metal output for the DZP was considered to be the zirconium chemicals and a
base case ore throughput of 200,000 tonnes per annum was initially chosen to establish a
market presence of less that 7% of total world demand. Since that time the zirconium market
has expanded and a greater throughput is possible. Also demand for the niobium concentrate
and yttrium and rare earth products has increased dramatically, and support a larger start up
capacity.

The defined resource is large enough so that even at the expanded rate the open pit mining
would have a life in excess of 200 years.

Product                         200,000 tpa                     500,000 tpa

ZBS, ZOH, ZBC, ZrO2             9,000tpa(3ktpa ZrO2)            22,500tpa(7.5ktpa ZrO2)

Nb -Ta concentrate              1,000tpa(0.7ktpa Nb2O5)         2,500tpa(1.75ktpa Nb2O5)

LREE concentrate                990tpa (REOs)                   2,475tpa (REOs)

YHREE concentrate               301tpa (REOs)                   753tpa (REOs)

ZBS = zirconium basic sulphate; ZOH = zirconium hydroxide; ZBC = zirconium carbonate; ZrO2; Equivalent
~99% ZrO2 + HfO2 basis. Nb-Ta concentrate = ~77% Nb2O5; 1.0% Ta2O5 calcined basis


Current Program
The DPP operation has confirmed the process flow sheet, and is providing engineering data
for capital and operating cost estimates, and has also generated substantial product for market
evaluation. Data from the DPP and Letters of Intent from future customers will be
incorporated in the current Definitive Feasibility Study. A development decision is
anticipated in the second half of 2010, with production possible late 2011.

TZ Minerals International Pty Ltd in Perth are the program and feasibility study managers; a
task they have been coordinating since the inception of the project in 1998.




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                                                                     Alkane Resources Ltd – ASX Announcement
                                                                                       16 November 2009
COMPANY BACKGROUND

Alkane is a multi commodity explorer and miner with its operations focussed in the mineral rich Central West
region of New South Wales, centred about 400km northwest of Sydney. Over several years, including
experience in developing the Peak Hill Gold Mine, Alkane has built a substantial resource base and is
proceeding towards several developments:

The Tomingley Gold Project currently has a 840,000 ounce gold resource within the Wyoming and Caloma
deposits, (full details 2008 Annual Report). A feasibility study for the development of the project with potential
50,000 to 60,000 ounce per annum production is anticipated to be completed before the end of 2009.

Near Orange, the Company has a joint venture (ODEJV) with Newmont, one of the world’s largest gold
miners, which resulted in the discovery in 2006 of a potentially significant gold deposit at McPhillamys within
the Moorilda Project. This discovery includes intersections of 123 metres grading 1.96g/t gold and 77 metres
at 1.65g/t gold within a 600 metre by 200 metre mineralised zone. Recent diamond drilling has confirmed the
potential of the project to host a major gold system with an intersection in KPD003 of 366 metres grading
1.85g/t gold.

Elsewhere within the region, Alkane has defined a 2 million tonne 1.00% copper Indicated Resource (details
2005 Annual Report) which is being reviewed for its development potential at Galwadgere within the
Wellington Project, and several other advanced exploration projects with encouraging drill intercepts. New
exploration targets have been identified at several other locations.

In Western Australia the Company holds 5 million shares (6%) of listed iron ore explorer BC Iron Limited
and a diluting 23% residual interest in a nickel sulphide joint venture with Xstrata Nickel (Jubilee) near
Leinster.




The information in this report that relates to exploration results, mineral resources and ore reserves is based on information compiled by Mr
D I Chalmers, FAusIMM, FAIG, (director of the Company who has sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004
Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian Chalmers consents to the
inclusion in this report of the matters based on his information in the form and context in which it appears.


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                                                                                               Alkane Resources Ltd – ASX Announcement
                                                                                                                    16 November 2009
Demonstration Pilot Plant Images:




Main DPP Shed                                  Internal Main Shed




                                               Primary filter




Rotary Kiln                                    Solvent Extraction Circuit




Zirconium and Niobium Product Recovery         Zirconium Sulphate Filter

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                                                                Alkane Resources Ltd – ASX Announcement

				
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