astro resources nl

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The last six months have represented a transition period for Astro Resources NL (“AstroResources” or “the Company”) as it changes its focus from diamond and base/preciousmetal explorer to mineral sand explorer/developer through its acquisition of 80% ofGovernor Well Minerals Pty Ltd, holder of the Scott Coastal Plain Mineral Sands Project.

The Company also retains an interest in several East Kimberley (WA) diamondexploration projects, one East Kimberley uranium/diamond exploration project and a 60%interest in the North Doolgunna Project (Peak Hill Goldfields district).The flagship Scott Coastal Plain Mineral Sand Project covers 400 square kilometres andis situated in the Nannup region (south-west WA) within the Southern Perth Basin, aworld-class heavy mineral province with its Governor Broome project containing anInferred JORC Resource of 154.3 Million tonnes @ 4.3% Heavy Minerals.From 2005 to March 2007, Metal Sands explored the Governor Broome project areaswith six aircore drilling campaigns, completing 1,321 holes for a total of 17,364 metres. Itis estimated that Metal Sands spent up to A$5.0 million on the projects during theirtenure. Metallurgical testwork undertaken in 2005 (from a sample set of 400 drillholes)indicated it is possible to extract the majority of the valuable HM. Ilmenite and zircon werefound to have median grain sizes of about 165μ and 120μ respectively.In 2006, Metal Sands commissioned GRD Minproc to undertake a Scoping Study thatresulted in recommendations to undertake further drilling to gain greater confidence in theresource, preliminary geotechnical and hydrological surveys in addition to mineralogical,metallurgical and processing test-work.Subsequent to the acquisition, TZ Minerals International, (“TZMI”) was commissioned toundertake a technical review building on the Scoping Study undertaken by GDR Minproc.In September 2011, Astro announced the interim report by TZMI indicated the potentialfor a long mine life operation within the Governor Broome Project areas.Preliminary financial modelling by RM Research indicates that the current JORCresource has the potential to support a 5Mtpa, +30 year mine life operation with anaverage grade of 4.1% HM (producing 150,000 tpa ilmenite, 4,000 tpa rutile, 11,000 tpaleucoxene, 5,000 tpa garnet and 11,000 tpa zircon) and a CAPEX of <A$60 million,returning NPV’s (10% discount rate) of over A$100 million and internal rates of return inexcess of 40%.

Our investment case is further strengthened with the outlook for mineral sands remainingfavourable on the back of supply side constraints permitting delays, infrastructurechallenges, tight debt/equity markets, rising costs and lengthy construction periods.Comparison with other listed companies in the region (such as Image Resources)indicates that there is plenty of upside in the ARO share price (+ 1.0 cents per Share)which RM Research anticipates will eventuate as the Company commences explorationon the untested strandlines (extending 10 kilometres to the south-west of the existingresources) and implements the recommendations from the GRD Minproc Scoping Study.As with a number of the mineral sands resources in the Perth basin, a processing facilitywill need to be established in a centralised location, possible capitalising on under-utilisedexisting infrastructure in Bunbury to fully optimise the resource potential and projecteconomics. Drilling at Governor Broome is anticipated to commence this month withresults due mid 2012 at which time we anticipate a re-rating of the Company to +0.60 cps.The fully underwritten 3 for 5 Rights Issue (closing 27/4/12) at A$0.002 with a one for fourfree attaching option (ex A$0.005, exp 30/6/14) will cash the Company up with a furtherA$2.4 million and allow a fast tracking of exploration at Governor Broome.

*Pro-Forma Capital Structure

Sector Materials

Share Price (A$) 0.003

Fully Paid Ordinary Shares (m) 3,488.1

Opt (ex 5c, exp 30/11/12) (m) 381.7

Opt (ex 2c, exp 31/03/12) (m) 11.0

Opt (ex 1c, exp 30/06/14) (m) 739.5

Opt (ex 1c, exp 30/06/12) (m) 130.0

Opt (ex 1c, exp 31/07/13) (m) 47.5

Opt (ex 2c, exp 7/10/12) (m) 5.5

Market Cap (undil) (A$m) 10.5

Share Price Year H-L (A$) 0.007-0.002

Approx Cash (A$m) 2.9

*post 3 for 5 rights issue at 0.20 cents, exp 30/06/2014

Directors & Management

Peter Jermyn Exec Chairman

Robert Hyndes Executive Director

Malcolm Macleod Non-Exec Director

Graham Libbesson Non-Exec Director

Major Shareholders

Mining Investments Limited 19.4%

Dentost P/L 3.5%

Citicorp Nominees Pty Limited 2.7%

Analyst

GT Le Page +61 8 9488-0800

Share Price Performance

Astro Resources NLGovernor Broome Mineral Sands...genuine developmentopportunity

10th April 2012

ASX Code: AROSpeculative Buy

– Copyright © 2012 RM Research - www.rmresearch.com.au

10 April 2012

INVESTMENT CASERESOURCE GROWTH: The Governor Broome project (JORC Resources of 154Mt @ 4.3%HM) provides ARO with a “walk up” start to upgrade the current resource and extend theglobal resource with multiple strand lines remaining untested.

FINANCIAL METRICS: Preliminary financial modelling by RM Research indicates that thecurrent resource has the potential to support a +30 year mine life based on a CAPEX of<A$60 million, returning NPV’s (10%) of over A$100 million and internal rates of return inexcess of 40%.

FAVOURABLE PEER ANALYSIS: Comparison with other listed companies in the region(such as Image Resources) indicates that there is plenty of upside in the ARO share price (+0.6 cents per Share) in the near term should Scoping/Pre Feasibility Studies live up to ourexpectations.

COMMODITY LEVERAGE: The supply demand equation over the medium to long termremains favourable for Mineral Sands on the back of a strong 2011 which saw zircon pricesup by 130% and high grade titanium up 110% YOY. A recent review by Deutsche indicatesthat the supply side will be somewhat constrained until at least 2014. High-grade titanium isprojected to reach US$2,500/t in 2012 while zircon is forecast to reach US$2,500/t in 2013 onthe back of Chinese growth resumption in 2H 2012. Permitting delays, infrastructurechallenges, tight debt/equity markets together with rising costs and lengthy constructionperiods are likely to continue to put pressure on supply.

COMPANY OVERVIEWAstro Resources NL (“Astro Resources” or“the Company”) (ASX: ARO) changed itsname in September 2009 from AstroDiamond Mines NL to reflect a change infocus from diamond to mineral exploration.It has since established itself as anAustralian mineral sand explorer with apredominant focus within Western Australia.The Company’s diamond assets include theLower Smoke Creek Project (E80/4320) andthe Carr Boyd Range (E80/4316) togethercovering around 210km2 and strategicallylocated 12 kilometres north of the ArgyleDiamond Mine. ARO also holds the LissadellRoad Dykes Project comprising threecontiguous leases situated 9 kilometres westof the Argyle Diamond Mine.

In October 2009, ARO acquired Macphee Resources Pty Ltd, which holds the MacPheeProject (E80/3243) located in the East Kimberley region (Western Australia) on a belt ofProterozoic granite containing five uranium occurrences and several untested airborneradiometric anomalies. There are also has a number of untested diamond targets on theMacphee project area.In April 2010, the Company acquired 100% of North Doolgunna Metals Pty Ltd, which holds a60% interest in the North Doolgunna Project (E52/2480-2482) situated in the Peak HillGoldfields district.In September 2011, the Company acquired 80% of Governor Well Minerals Pty Ltd whichholds the Scott Coastal Plain Mineral Sands Project situated within the Augusta region (south-west Western Australia) within the Southern Perth Basin, a world-class heavy mineralprovince. The project covers around 400 square kilometres and contains Inferred JORCResources of 154 Million tonnes @ 4.3% Heavy Minerals.

FIGURE 1: AstroResources NL ScottCoastal Plain Project(source: AstroResources AGMPresentation, 30th

November 2011).

– Copyright © 2012 RM Research – www.rmresearch.com.au

10 April 2012

EXPLORATION OVERVIEWScott Coastal Plains Mineral Sands ProjectLocation and AccessThe Scott Coastal Mineral Sands Project is located on the Scott River Coastal Plain,approximately 25 kilometres east of Augusta in the southwest of Western Australia. It is 25kilometres west of the Jangardup mine, operated and rehabilitated by Cable Sands (now partof the Cristal Group).

IntroductionARO holds six granted ELs, one EL application and five granted PL’s covering approximately395.6 km2 of the Scott Coastal Plain (Figure 2), situated about 115 kilometres to the south ofthe port of Bunbury. ARO has successfully re-assigned Consent and CompensationAgreements formerly signed between the landowners and Metal Sands to ARO, and hasbeen building strong working relationships with local stakeholders, including landholders andShires.

Project Tenements Area (km2)

Scott Coastal Plain 6 Exploration Licences 326.25

1 Exploration Licence application 65.3

5 Prospecting Licences 5.18

Total 396.73

A number of HM deposits have been located within the near-surface sediments of the coastalplain. The primary prospect within the area is Governor Broome (North and South), withinwhich a JORC Inferred Resource of 51 Mt @ 5.0% HM for a contained 2.6 Mt of HM has beenestimated, and on which the GRD Minproc Scoping Study was based on.

On 24 October 2011, Astro announced following a review and re-interpretation of the historicdata of the Governor Broome East project, JORC Inferred Resource were re-calculated to154.3Mt @ 4.3% HM for a contained heavy mineral of 6.6Mt of HM from 105Mt @ 3.99%.

A previous explorer has also estimated resources within the Rover Range and Warner GlenProspect areas.

Geology & Mineralisation

TABLE 1: AstroResources NL ScottCoastal Plain Projecttenements (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).

FIGURE 2: Scott CoastalPlain Project, Geology(source: ContinentalResource Management,Independent GeologistsReport, August 2011).


10 April 2012

The Scott Coastal Plain Project is located in the Southern Perth Basin which is part of thelarge Perth Basin, a host to a number of world-class heavy mineral deposits from PortGregory, north of Geraldton, to Jangardup, near the south coast of Western Australia.The Scott Coastal Plain contains a series of fossil dune and shoreline systems formed duringthe Pleistocene Period, oriented broadly sub-parallel to the coast. The majority of the HMdeposits of the Perth Basin are located along similar shorelines, with high-grade depositsoften associated with embayments such as that occurring within the Governor Broome Northprospect.On the Scott Coastal Plain, the Warren Shoreline (Figure 2) contains a number of HMdeposits, including the Governor Broome deposit and Cristal Australia’s Scott River, FourAcres, Jangardup and Jangardup South deposits. The Governor Broome deposit is located ina north trending embayment in the paleo-shoreline (Figure 3).HM deposits located to date on the Scott Coastal Plain occur within both the Warren Sandsand Warnbro Group sediments. At the Governor Broome deposit, the mineralisation isconcentrated at the base of the Warren Sands (up to 10 metres thick), within reworkedWarnbro Group sediments just above the unconformity, and within the upper few metres ofthe Warnbro Group (Figure 4).

Historic Regional Exploration & Mining

The Scott Coastal Plain was explored by a number of mineral sands producers during the1980s and 1990s. That exploration led to the delineation of HM resources by the BHPMinerals Ltd Group (‘BHP’), both at Beenup and within the Rover Range Prospect, and byCable Sands (WA) Pty Ltd (now Cristal Australia Pty Ltd (‘Cristal’)) at Jangardup. BHP minedthe Beenup deposit from 1996 to 1999 and Jangardup was mined from 1994 to 2003.

Previous Exploration

Governor Broome ProjectGovernor Broome North and South deposits are located in a north trending embayment in thepaleo-shoreline (see Figure 3), Governor Broome East deposit is underpinned by mineralizedstrandlines extending east toward Cristal’s Fouracres Deposit through to Jangardup andJangardup South.

Previous explorationFrom 2005 to March 2007, Metals Sands explored the prospect drilling 1,321 holes for17,364 metres including 501 on the Governor Broome North and South resource area. 271 on

FIGURE 3: GovernorBroome Deposit synthesisof exploration (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).


10 April 2012

271 holes were completed on a 120 metre by 120-metre grid within the northern section and230 holes were completed on a more irregular pattern within Blue Gum Plantations. 675 holeswere drilled across Governor Broome East.

Figure 3 shows the density and distribution of the Company’s drill-holes, the area of thecollective Governor Broome prospects and the location of three large mineralised strand-linesthat underpin the Governor Broome East resource.

Governor Broome Amalgamated ResourcesUsing a lower-cut of 2% HM/upper-cut of 30% slimes, total JORC resources for the GovernorBroome prospects total 154.3Mt @ 4.31% HM (Table 2).

Mineral Assemblage

The total heavy mineral assemblage was analysed using two methods (Table 3):QEMSCAN analysis of two samples from Warren North and South and Warnbro Northand South, andBulk sample (mixed Warren and Warnbro), Doral stated the mineral assemblage.

QEMSCANWarren

(%)

QEMSCANWarnbro

(%)

Doral(%)

North South North South

*Rutile 9.4 3.5 2.2 1.5 -

Ilmenite 59.4 60.5 73.2 61.1 74.2

Garnet 15.2 20.9 14.6 25.2 14.7

Zircon 6.1 4.1 3.6 3.3 6.2

*TZ Minerals consider that rutile contents are typically lower than those indicated from the QEMSCAN estimates for Warren inthis geological setting.

Geology and MineralisationThe Warren Sands vary in thickness from 5 metres to 15 metres with variable clay contentscontaining 1% - 8% valuable HM. Common accessory minerals are garnet, pyrite and fine coalfragments. Reworking of the older sediments has occurred above the Warren Sands/ WarnbroGroup unconformity and is accompanied by concentrations of heavy minerals (Figure 4).

TABLE 2: AstroResources NL mineralresults for GovernorBroome deposit (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).

TABLE 3: GovernorBroome Deposit HMconcentrate mineralogy(source: ContinentalResource Management,Independent GeologistsReport, August 2011).

FIGURE 4: GovernorBroome Deposit crosssection on 6,209,640mN(source: ContinentalResource Management,Independent GeologistsReport, August 2011).


10 April 2012

QEMSCAN analysis of 30 drill-sample heavy mineral concentrates (Table 4) revealed thefollowing concentrations. Ilmenite recovered during the pilot testwork had an average TiO2

content of 52%.

QUEMSCAN PILOT TESTWORK

Mineral From (%) To (%) Mean (%) Calculated feed (%)

Ilmenite 55.1 74.3 63.5 74.2

Rutile 1.3 11.2 4.1

Zircon 3.2 6.2 4.3 6.2

Garnet 13.8 26.5 18.9 14.7

Iron sulphides 1.9 4.8 3.1 3.1

Other 2.7 14.1 6.1 1.7

Totals 100 100

MetallurgyPilot testwork in 2005 from 400 drillholes indicated that it is feasible to extract the majority ofthe valuable HM with Figure 5 showing the composition of the feed and Figure 6 themineralogy of the recovered concentrate. Ilmenite and zircon were found to have median grainsizes of about 165μ and 120μ respectively.

Rover Range and Warner Glen

Additional prospects within the project area include Rover Range and Warner Glen situatedwith exploration lease 70/3862 and covering an area of 34.09 km2 just south of the BrockmanHighway.

Previous exploration

The most recent significant phase of exploration was undertaken by BHP from 1987 to 1999.This phase of exploration outlined two areas of HM mineralisation with 400 metre x 400 metreAircore drilling-one on each side of the Blackwood River. Better results were returned from theWarner Glen Prospect which intersected 30-51 metres of sediments averaging > 2% Ilmenite.BHP was successful in outlining an Inferred Resource of 701 Mt @ 2.6% Ilmenite and anIndicated Resource of 106 Mt @ 2.8% Ilmenite within the area to the east known as WarnerGlen (Figure 7).

Geology and MineralisationThe tenement is located on the western section of the Scott Coastal Plain, between theDunsborough Fault to the west and the Alexander Bridge Fault to the east. The predominantHM is ilmenite (Figure 6), possibly derived from high grade metamorphics from theProterozoic Leeuwin Complex, to the west of the Dunsborough Fault.

TABLE 4: GovernorBroome Deposit, heavymineral concentratemineralogy (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).

FIGURE 5: GovernorBroome Deposit pilottestwork results-calculated feedcomposition (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).

FIGURE 6: GovernorBroome Deposit pilottestwork results-concentrate composition(source: ContinentalResource Management,Independent GeologistsReport, August 2011).


10 April 2012

HM mineralisation at Warner Glen is mostly within Warnbro Group sediments extending over2 kilometres east-west and more than 1 kilometre north-south (Figure 7) with an averagethickness of 23 metres (2% ilmenite cut-off, 30% slimes cut-off). The deposits remain open toboth the north and the east. To the west, it extends beyond the Blackwood River into thelarger area of the Rover Range mineralisation. The ilmenite content of this zone is of the orderof 3.7%.

Within the Rover Range area, the mineralised unit has been shown to extend for 5 kilometresnorth-south and 2.5 kilometres east-west (Figure 9).

FIGURE 7: Rover RangeDeposit, outline ofmineralisation (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).

FIGURE 8: Warner GlenDeposit, cross section6,216, 200mN (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).


10 April 2012

Metallurgy

Metallurgical studies by BHP found the ilmenite quality ranged from 55% TiO2 in the upper24m to 53-54% between 24-36 m depth, and to 51% below 36 metres. The challenges are thehigh slimes content of the waste materials (requiring an appropriate disposal method) and thesecond is the abrasive nature of the quartz grains within the sediments, which have thepotential to cause excessive wear of mining/processing equipment.

Significant Exploration PotentialThere is significant potential within the Company’s Scott Coastal Plain Project to discover newareas of heavy mineral mineralisation and to extend known deposits. This includes the paleo-shoreline between the Governor Broome deposit in the west and Four-acres in the east RoverRange also has potential for zones of higher-grade ilmenite and lower slimes contents to beoutlined by examination of the extensive drilling data. Mineralisation also remains open to thewest and south (Figure 10).

FIGURE 9: Rover RangeDeposit (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).


10 April 2012

FIGURE 10: Scott CoastalPlain Project explorationpotential (source:Continental ResourceManagement,Independent GeologistsReport, August 2011).


10 April 2012

DEVELOPMENT SCENARIOSGRD Minproc completed a Scoping Study on the historic Governor Broome (North and South– 51Mt @ 5%) deposit in September 2006. The findings of the Scoping Study indicated that ata 1% HM cut-off grade, there appears to be sufficient mineralisation to support a 5 Mtpaoperation for over 12 years, treating an average grade of 4.1% HM, with moderate to highslimes levels.

The study recommended that additional work be undertaken prior to a Prefeasibility Study,including further drilling to reduce drill spacing, preliminary geotechnical and hydrologicalsurveys and mineralogical, metallurgical and processing testwork.

RM Research has undertaken financial modelling based on preliminary data and a JORCResource of 154Mt @ 4.31% (Table 5). The tolling of mineral sand concentrate at acentralised location needs to be investigated (perhaps Bunbury) which would also enableprocessing of other mineral sand deposits in the region (eg Image Resources’ north PerthBasin Project) and in the process allow for enhanced economies of scale.

ASSUMPTIONS

Price Assumptions (A$US/tonne)

-Sulfate ilmenite 145/tonne

-Rutile 1000/tonne

-Leucoxene 750/tonne

-Zircon 1725/tonne

-Garnet 100/tonne

Ore mined 154 Mt

Tonnes per annum 5.0 Mtpa

Mine life 30 years

FINANCIAL

Revenue US$1.7 billion

Operating Costs US$24/tonne

Capital costs US$53 million

Weighted average R/C* 1.4

Payback 3 years

METRICS

After-tax IRR 42%

After-tax NPV (10%) US$100.0 million

NOTESOperating Costs

Dredge and concentrator-$3.0/tonne of ore

Overburden-$1.2/tonne of overburden

Selling costs-$19.8/tonne of product

CAPEX

CAPEX assumed a second-hand dredge at a confidence level of -10% to +30%.

Infrastructure

Grid power available.

Financial evaluation

The costs presented in 2010 values carried forward as real costs.

Products: 150,000 tpa ilmenite, 4,000 tpa rutile, 11,000 tpa leucoxene, 5,000 tpa garnet and11,000 tpa zircon.

TABLE 5: GovernorBroome Deposit,Development Scenario(source: RM Research,January 2012).


10 April 2012

MINERAL SANDS MARKET OUTLOOKChina remained a key influence over CY 2011 which saw zircon prices up 130% and highgrade titanium up 110%. This was in part fuelled by a subdued supply outlook until 2014, theslowing economy in China (45% zircon, 20% TiO2 market) and Europe (25% zircon, 28% TiO2

market) has created some breathing space. Deutsche (January 2012) believes high gradetitanium pricing will peak at US$2,500/t in 2012 while zircon will reach a high of US$2,500/t in2013 (Table 6) as Chinese growth resumes in 2H 2012 (Deutsche Bank, Mineral Sands,Industry Update, January 2012).Following an analysis of over 30 potential projects (at various stages of development),Deutsche concludes that there will be a supply response over time as elevated prices promptmarket reaction as mineral sands are not rare and are not generally technically complex toproduce. Deutsche however consider that companies will face increasing challenges frompermitting delays, lack of infrastructure, funding holdups, rising input costs and lengthyconstruction periods (Deutsche Bank, Mineral Sands, Industry Update, January 2012).

2011 2012 2013 2014 2015 2016 2017 2018 LT

Rutile (US$/t) 1045 2450 2200 2000 1600 1400 1200 1000 1000

Syn Rutile (US$/t) 875 2000 1900 1700 1360 1190 1020 850 850

Zircon (US$/t) 1893 2300 2500 2500 2200 2000 1700 1500 1500

AUD/USD 1.02 0.98 0.94 0.91 0.88 0.85 0.82 0.8 0.8

While quality zircon deposits remain in short supply (Figure 11), the slowdown in the Chineseproperty sector (China 45%, ceramics 55% of zircon market) in 4Q 2011 has taken the heatout of the market. Deutsche expect a price of US$2,300/t in 2012 (compared to US$2,420/t,4Q 2012) (Figure 10). There is an expectation that prices will not decline significantly givenIluka Resources Ltd (ASX: ILU) controls +30% of the market and may restrict supply. Forexample, over CY 2009 production vs sales differed by up to 25% (Deutsche Bank, MineralSands, Industry Update, January 2012).

With a recommencement of strong Chinese growth expected in 2H 2012, Deutscheanticipates upward pressure on zircon prices in 2013 with a peak price of US$2,500/t before agradual softening to US$1,500/t LT (2018) (Deutsche Bank, Mineral Sands, Industry Update,January 2012).

Deutsche also considers that the major pigment producers buying TiO2 feedstock will continueto favour high grade (+85% TiO2) material to limit environmental damage while at the sametime maximizing production. High-grade TiO2 prices are projected to hover around US$2,450/tthroughout CY 2012 (Figure 12). With most deposits having a ~1:4 zircon to TiO2 ratio,titanium demands can be met more easily than zircon however Deutsche expect high-gradeproducts and ilmenite that can be upgraded via slag/SR processes to be in demand (DeutscheBank, Mineral Sands, Industry Update, January 2012).

While new supply (Figure 13) in the mineral sands market is not due before 2014, demandfrom developing countries, particularly China, is the major swing factor. While we believe thesupply/demand balance remains favourable for producers, over the next 6 months equitiesmay be volatile as global uncertainty persists.

TABLE 6: Rutile,Synthetic Rutile, Zirconand A$:$USD projections(source: Deutsche Bank,Mineral Sands, IndustryUpdate, 18th January2012).


10 April 2012

FIGURE 11: Zircon supplyand demand balance, withdeficit projected to end by2015 (source: DeutscheBank, Mineral Sands,Industry Update, 18th

January 2012).

FIGURE 12: Titaniumsupply, price and deficitprojections (source:Deutsche Bank, MineralSands, Industry Update,18th January 2012).

FIGURE 13: Titaniumsupply and demandbalance (source:Deutsche Bank, MineralSands, Industry Update,18th January 2012).


10 April 2012

OTHER PROJECTSMacphee Creek Project (EL 80/3243), uranium, diamonds. East Kimberley region(Western Australia), 130 kilometres south of Kununurra. The project contains six uraniumoccurrences up to 0.85% U308, and nine uranium anomalies (Figure 14).

A number of magnetic anomalies have been identified that may represent potentiallydiamondiferous ultramafic pipes. There has been renewed interest on the back of VenusMetals Ltd JORC Inferred Resource of 5 Million carats (17.9Mt @ 28 CPHT) at theSmoke Creek Project which borders the Company’s Lower Smoke Creek Project.

Lissadell Road Dykes (P80/1615-1617), diamonds. The project is situatedapproximately 116 kilometres south-south west of Kununurra and 9 kilometres west ofArgyle Diamond Mine (Figure 14).

Lower Smoke Creek (E80/4120) and Carr Boyd Range (E80/3196), diamonds. Thetenements cover approximately 160 square kilometres and are situated approximately110 kilometres south southwest of Kununurra in the East Kimberley region (WesternAustralia) (Figure 14, 15).

The southern boundary of Lower Smoke Creek Project adjoins the Argyle Diamond Minetenement area (30 Mt @ 1 carat/m3 representing an estimated grade of 50-70 carats per100 tonnes) (Figure 15).

FIGURE 14: MacPheeCreek, Carr Boyd, LowerSmoke and LissadellRoad Dykes Projects(source: AstroResources NL, 2011Annual Report).

FIGURE 15: LowerSmoke Creek Project,synthesis of previousexploration activity(source: AstroResources NL, 2011Annual Report).


10 April 2012

Gold - North Doolgunna JV (E52/2480 - 2482), gold. ARO 60%. Situated south west ofthe Plutonic Gold Mine (Peak Hill Goldfield) within the Marymia Inlier. In October 2010 anionic leach soil geochemistry was completed on E52/2482 and identified anomalouselement associations linked to greenstones/gold mineralisation (Figure 16).

Tanami (Northern Territory), gold. Two exploration licences remain in application inthe gold-prospective Tanami (Northern Territory).

PEER COMPARISON AND ESTIMATE OF VALUE

Not surprisingly there is a wide range of yardstick valuations (i.e. EV/Tonne Heavy Mineral)with lower grade deposits owned by the likes of Gunson Resources Limited (Coburn MineralSands Project, JORC Inferred & Indicated Resources of 308Mt @ 1.2% HM) or “lower value”ilmenite rich deposits such as World Titanium Limited’s (Ranobe Project, JORC Inferred &Indicated Resources of 1.47 billion tonnes @ 4.7% HM) trading at an equally modestA$1.60/tonne HM (Figure 17). In terms of deposit style and geographic location ImageResources NL’s (ASX: IMA) is possibly the nearest comparable listed company (North PerthBasin Project, JORC Inferred & Indicated Resources of 69.6Mt @ 5.0% HM) and is trading atan EV/HM tonne of A$8.80.

Interestingly, our modelling above (Development Scenarios) compares favourably (on lowermineral sand pricing assumptions) with IMA’s North Perth Basin Project with an A$83 millionCAPEX, 12 year mine life returning NPV (10% discount rate) of A$109 million (ilmenite –US$200/ tpa, rutile - US$1,350/tpa, zircon - US$2,240/ tpa and leucoxene - US$2,240/ tpa).This suggests that there is good upside (> 1.0 cps) for the Company if it can upgrade theGovernor Broome JORC Resource and demonstrate its economic potential, or more speficallycomplete a Scoping/Pre-Feasibility Study in the near term.

EV/T HM selected Explorers/Developers

FIGURE 16: NorthDoolgunna Project,showing regional geologyand significant deposits inthe area (source: AstroResources NL, 2011Annual Report).

FIGURE 17: EV/TonneHM Resources forselected Mineral SandExplorers/Developers(source: RM ResearchInternal Modelling,January 2012).


10 April 2012

CORPORATEIn December 2011, the Company issued 120 million Shares at 0.32 cents each (A$384,000)for the acquisition of an 80% interest in Governor Wells Pty Ltd (holds 100% of the SouthCoastal Plain Project).

In February 2012, the Company announced that it was to raise A$3.1 million via a A$500,000placement and a $2.6 million fully underwritten rights issue. The placement was successfullycompleted in last February and the rights issue is set to close on 27 April 2012 and is fullyunderwritten by Western Australian based Pareto Capital.

This funding will provide Astro with a strong balance sheet to execute its work programs andadvance the Scott Coastal Mineral Sands Project.

RISK ANALYSISFollow-up drilling at Governor Broome may fail to increase the current resource or identifyextensions to mineralisation.

The failure to secure a treatment facility for the Governor Broome deposit may hinderdevelopment plans for ARO.

Softening mineral sand prices in response to weakening Chinese and European demandcould have a negative effect on the securities of ARO.

The Company is exposed to diamond prices through its Macphee Creek, Lissadell RoadDykes, Lower Smoke Creek and Carr Boyd Range Projects. While the outlook for thediamond market remains positive with a shortage of rough supply expected over the nextten years on the back of constant global production and increasing demand.

The Company is also exposed to gold through its North Doolgunna Project. Gold hascome off recent highs and may come under pressure as investors move back into US$has economic conditions improve.

Further declines in equity markets may continue to put pressure on junior resourcecompanies as investors switch out of “risk” into perceived safe haven investments suchas cash, gold and counter cyclical equities. Our medium term view is that the riskpremium has been eroded for many junior resource companies and we see near termupside.

A strengthening Australian dollar (as funds flow back into riskier currencies) may makethe price of precious/base metals in local (Australian) currency terms less attractive.


10 April 2012

DIRECTORS AND MANAGEMENTPeter Jermyn NON-EXEC CHAIRMANMr Peter Jermyn has over thirty-five years experience in the mining and energy sectors. Hehas been involved in the successful development of hydrocarbon projects in Australia, theMiddle East, the United States, the former USSR, PNG, Indonesia, the Philippines andColumbia (South America). Peter has also worked extensively in the exploration for andproduction of minerals in Australia, Canada, Africa, the United States and Indonesia. MrJermyn is also Chairman of ASX listed entity Mooter Media Limited.

Robert Hyndes, B.Comm. EXECUTIVE DIRECTORMr Hyndes has managed emerging and growth stage projects with experience in Australia,UK, Asia and the US across a range of industries including resources, technology andprofessional services. He has market experience including debt and equity capital raising,project acquisition and divestments, business and strategic planning and operationalmanagement. Mr Hyndes is currently director of Charles St Capital PLC (AIM-listed), VectorResources Limited and Georgian Energy Limited, and director and company secretary ofMamba Minerals Limited. Mr. Hyndes holds a Bachelor of Commerce (Curtin University ofTechnology) with a double major in Economics and Marketing.

Malcolm Macleod, B.Sc. (Hons) EXECUTIVE DIRECTORMr. Malcolm Macleod has over 40 years experience in the mining and resources industryincluding oil, gas, coal, base metals, gold and diamond exploration in Australia, Africa, Europeand Central Asia. Recent work has included oil and mineral exploration including mineralevaluation in Somalia, Uganda, Sierra Leone, South Africa, Zimbabwe, Cyprus andTurkmenistan. Malcolm is a member of the Australian Institute of Geoscientists, GeologicalSociety of Australia and the Petroleum Exploration Society of Australia and holds a Bachelorof Science in Geology (Honours) from the University of Western Australia.

Graham Libbesson NON-EXEC DIRECTORMr Libbesson is a Chartered Accountant with over 30 years experience in management,mergers and acquisitions and financial transactions. Mr Libbesson has been a director ofother listed and private companies, and a member of various audit committees.

Lynton McCreery, CPA COMPANY SECRETARYMr. McCreery has been Director and Secretary to a number of listed public companies duringthe past 29 years. He is an Associate Member of the Australian Society of Certified PractisingAccountants. Lynton is also Company Secretary of the ASX listed entities Jaguar MineralsLtd and East Coast Minerals NL.

Adrian Griffin TECHNICAL ADVISORAdrian is a mining professional with exposure to metal mining and processing throughout acareer spanning more than three decades. He has helped develop extraction technologies fora range of minerals in particular relating to nickel laterites. He is former CEO of AIM listedDwyka Diamonds Ltd, a founding director of Washington Resources Ltd and also afounding director of Empire Resources Ltd, Ferrum Crescent Ltd, Reedy LagoonCorporation Ltd and ASX-listed Northern Uranium Ltd, He is also Managing Director ofASX-listed iron ore developer Midwinter Resources NL.

Geoff Richards OPERATIONS MANAGERGeoff is a former chief geologist for Iluka and a career industrial minerals geologist with astrong exploration management background and broad industry experience, including Ilukaand Westralia Sands undertaking a number of roles including managing government affairs,chief planning analyst, chief geologist and exploration manager.


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CONCLUSIONRM Research believes the Governor Broome deposit is a genuine development opportunityfor the Company if it can push the project through to a Pre-Feasibility then Feasibility Phaseover the next 24-36 months. From a market point of view, companies with smaller resourcebases (such as IMA’s North Perth Basin Project) are trading at significantly higher valuations,no doubt due to the more advanced status of the project. The missing link in the south-westremains the ability to process mineral sands and a centralised Bunbury plant would certainlyprovide a treatment option for Governor Broome (ARO) and potentially the North Perth BasinProject (IMA). In the near term, the commencement of an extensive infill and extension drillprogram has an excellent chance of both upgrading and increasing tonnage in the existingresources. Speculative Buy.


10 April 2012

Registered OfficesPerthLevel 2, 6 Kings Park RdWest Perth WA 6005

Phone: +61 8 9480 0800Fax: +61 8 9321 8399

PO Box 154West Perth WA 6872

Email / [email protected]

RM Research Recommendation CategoriesCare has been taken to define the level of risk to return associated with a particular company.Our recommendation ranking system is as follows:

Buy Companies with ‘Buy’ recommendations have been cash flow positive for some time and have a moderate tolow risk profile. We expect these to outperform the broader market.

Speculative Buy We forecast strong earnings growth or value creation that may achieve a return well above that of thebroader market. These companies also carry a higher than normal level of risk.

Hold A sound well managed company that may achieve market performance or less, perhaps due to anovervalued share price, broader sector issues, or internal challenges.

Sell Risk is high and upside low or very difficult to determine. We expect a strong underperformance relative tothe market and see better opportunities elsewhere.

Disclaimer / DisclosureThis report was produced by RM Research Pty Ltd, which is a Corporate Authorised Representative of RM Capital Pty Ltd (Licence no. 221938). RM Research will receivepayment of A$35,000 for the compilation and distribution of four research reports. RM Research Pty Ltd has made every effort to ensure that the information and materialcontained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of theinformation and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, RM Research Pty Ltddoes not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is forinformation purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities. The securities recommended by RM Researchcarry no guarantee with respect to return of capital or the market value of those securities. There are general risks associated with any investment in securities. Investorsshould be aware that these risks might result in loss of income and capital invested. Neither RM Research nor any of its associates guarantees the repayment of capital.WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particularinvestor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this documentwithout obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financialsituation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any)before making any decision.DISCLOSURE: RM Research Pty Ltd and/or its directors, associates, employees or representatives may not effect a transaction upon its or their own account in theinvestments referred to in this report or any related investment until the expiry of 24 hours after the report has been published. Additionally, RM Research Pty Ltd may have,within the previous twelve months, provided advice or financial services to the companies mentioned in this report. As at the date of this report, the directors, associates,employees, representatives or Authorised Representatives of RM Research Pty Ltd and RM Capital Pty Ltd may hold shares in Astro Mining NL.

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