Quarterly Activities Report for the Period Ended 30 September 2009

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2009

HIGHLIGHTS ABOUT STRAITS Straits Resources Ltd (ASX Code: SRL) is an ASX200 diversified resources company focussed on OPERATIONAL generating strong and sustainable earnings for its • Tritton produced 6,521 tonnes of copper for the shareholders from a balanced quarter, an increase of 9% on the previous quarter and portfolio of resource projects. 19% on the corresponding period in 2008. Straits controls and operates the Whim Creek Copper • Whim Creek produced 943 tonnes of copper for the Operation in WA, the Tritton quarter with production decreasing as the mine heads Copper and Hillgrove to closure by year end. antimony/gold mines in NSW and the Mt Muro gold mine in • Hillgrove produced 198 tonnes of antimony metal in the Indonesia. Straits also holds quarter with processing operations suspended in August 40% of PTT Asia Pacific Mining in order to tackle a number of technical issues affecting Pty Ltd (PTT Asia) which holds production. 45.6% of Straits Asia Resources which is listed on the Singapore • Mt Muro produced 8,760 ounces of gold and 65,425 Exchange. Straits Asia controls and operates the Sebuku and ounces of silver for the quarter in line with the previous Jembayan Coal mines in period. Indonesia.

CORPORATE In addition, Straits has an exposure to an outstanding • At the end of September 2009, the Straits Group cash portfolio of mining investments, resources totalled A$145 million. development projects and exploration ground throughout • At the end of September 2009 SRL’s indirect holding in Australia and Indonesia. Straits Resources also owns GfE and Straits Asia had a market value of A$303 million. Magontec, a European based specialty metals businesses. EXPLORATION

th SHARES ON ISSUE • Goldminco to undertake IP programme during the 4 Quoted: 245,544,428 quarter at the Blayney tenement looking for McPhillamy’s style Au‐sulphide systems. A major STRAITS RESOURCES LIMITED extension drilling programme is being prepared for the ABN 22 056 601 417 Temora copper/gold project, NSW. REGISTERED OFFICE • Drilling programme progressing at Tritton, NSW has First Floor 35 Ventnor Avenue intercepted the down plunge extension of the current WEST PERTH WA 6005 Tritton resource envelope. Drilling to test significant EM Australia conductors identified by LandTEM (EM system) south of Telephone (61 8) 9480 0500 Facsimile (61 8) 9480 0520 the current Tritton mine infrastructure. Email: [email protected] Website: www.straits.com.au

Quarterly Activities Report, September 2009

Sept 09 Sept 08 Qtr FY 2009 Qtr (Q1 FY (Q1 FY 2010) 2009) Tritton Copper Mine, NSW Copper produced (100%) tonnes 6,521 5,462 24,111 Copper sales (100%) tonnes 5,210 5,015 25,384 Cash costs (excludes TC/RC) US$/lb 1.24 1.25 1.09

Whim Creek Copper Mine, WA

Copper produced (stripped) tonnes 943 2,954 10,089 Copper sales tonnes 942 2,856 10,198 Cash costs (excludes TC/RC) US$/lb 1.75 2.01 2.43 Mt Muro Gold Mine, Indonesia Production Au oz 8,760 17,188 48,846 Ag oz 65,425 98,498 304,357 Sales Au oz 8,841 15,431 48,367 Ag oz 63,659 82,307 297,558 Cash costs US$/oz Au 1,226 736 918

Hillgrove Sb/Au Mine, NSW Antimony (Sb) produced tonnes 198 74 745 Sales tonnes 148 13 740

Group Revenue (excludes revenue from Straits Asia Resources) Sales Revenue (excludes GfE/Magon) A$’000 54,019 45,507 216,615 GFe/Magontec A$’000 57,226 128,740 349,585 *

BASE METALS BULK COMMODITIES

Strategic co‐investment alliance with PTT Group of companies

In April 2009 Straits(ASX:SRL) completed a strategic alliance with Asian energy major, the PTT Group of companies (PTT) of Thailand, via the sale of a 60% interest in its wholly owned subsidiary, Straits Bulk and Industrial Pty Ltd (SBI) for US$335m in cash to a wholly owned subsidiary of PTT Public Company Limited (the Transaction).

SBI is the holding company for SRL’s Brunei coal exploration interests, Madagascan coal exploration interests and 47.1% shareholding in the SGX listed Indonesian coal company, Straits Asia Resources Limited (SGX: SAR).

PTT is a diversified energy group of companies engaged in oil and gas exploration and production, gas transmission and processing, energy trading and retail distribution segments and accounts for nearly 30% of the total market capitalisation on the Stock Exchange of Thailand. 2

Quarterly Activities Report, September 2009

SBI has been renamed PTT Asia Pacific Mining Pty Ltd (PTT Asia). Straits still maintains significant exposure to bulk commodities through its remaining 40% interest in PTT Asia.

Straits Asia Resources PTT Asia– 45.6%

As Straits now has a minority interest in PTT Asia, production and financial information for Straits Asia Resources will now only be reported to SRL shareholders at the same time as market announcements are made by Straits Asia Resources. Straits Asia’s quarterly report is due to be released in November 2009.

At the end of September 2009 SRL’s indirect holding of 18.2% in Straits Asia Resources had a market value of A$303 million.

Madagascan Coal Project PTT Asia– 33.5% Red Island Minerals Phase 3 of the drilling programme, focusing on the Andemby and Vohibory areas, commenced in September 2009 and is progressing well. Drilling at Sakamena identified coal in most areas of the tenement. The average coal thickness at Sakamena is estimated to be some four metres, over six seams, compared to Sakoa where it is 12 metres over three seams. Coal is being intersected in the northern areas of Andemby and this coal appears to be similar in quality to that found in Sakoa. The drilling programme is scheduled to be completed by January 2010. To date some 17,000 metres have been drilled and 3,500 samples taken. Independent laboratory analysis of the large volume of drill samples is ongoing.

The final ESIA Report has been submitted to the environmental authorities and a decision is imminent. Ongoing discussions are being held with the Ministry of Transport and the Ports Authority regarding project infrastructure development.

Coal Exploration, Brunei PTT Asia – Joint Venture 35% In excess of 5,000km of mapping traverses have been completed in Brunei to date. The program has delivered over 1,400 outcrops mapped, of which 300 have been coal outcrops. Given the findings of the mapping program and the coal quality analysis, the region presents a number of coal bearing formations , a younger lignite bearing formation and an older bituminous coal bearing formation. The older formation contains a number of separate multi seam coal horizons.

A drilling program has been developed that will focus on a number of the more prospective areas as well as obtaining further data on the stratigraphic and structural aspects of the basin which may identify additional targets. Drilling will commence soon after the granting of the Prospecting License which is expected to be issued early in 2010.

Yannarie Solar Project, Western Australia PTT Asia – 100%

On 1 September, the Minister for Environment made her determination on Straits’ appeal against the recommendations of the West Australian Environmental Protection Authority (EPA). The Minister decided to accept the recommendations of the Appeals Convenor and remit the project back to the EPA for further assessment. PTT Asia Pacific Mining is reviewing a number of options and initiatives to 3

Quarterly Activities Report, September 2009 close some of the gaps and concerns in relation to the original EPA assessment and will be consulting with the EPA and the government on the best way to progress development of this project.

BASE METALS

Tritton Copper Mine, New South Wales Straits – 100%

QUARTERLY PRODUCTION STATISTICS – TRITTON Units Sept 09 Qtr Sept 08 Qtr FY 2009 (Q1 FY (Q1 FY 2010) 2009)

Mined tonnes 235,003 227,702 932,532 Grade % Cu 2.79% 2.42% 2.72% Milled tonnes 242,959 215,704 921,116 Grade % Cu 2.80% 2.72% 2.74% Recovery % 94.55% 93.22% 94.11% Cu Concentrate tonnes 25,426 21,958 95,026 Cu Grade % 25% 24.90% 24.95% Cu in concentrate tonnes 6,434 5,462 23,713 Cu Cement tonnes 87 0 398 Total Cu Produced tonnes 6,521 5,462 24,111

Production from the Tritton Copper Mine in the September quarter totalled 6,521 tonnes of copper in concentrate, an increase of 9% on the previous quarter. Ore mined was 235,003 tonnes at a grade of 2.79% Cu.

The processing plant’s throughput increased during the quarter with tonnes milled of 242,959 (from 219,430 in the previous quarter). Recoveries have been maintained during the quarter with recoveries to concentrate of 94.6%. The processing plant is well positioned to exceed the 1.4 million ore tonnes treated per annum when required.

Site cash costs (excluding TC/RC’s) increased for the quarter to US$1.24 per pound Cu (from US$0.93/lb in the June quarter). The increase in US$ costs was attributable to an adjustment for inventory movement, an increase in the oil price and to a significant strengthening in the A$ against the US$ during the quarter.

The copper cementation process produced 87 tonnes of copper for the quarter.

Quarterly Activities Report, September 2009

Whim Creek Copper Mine, Western Australia Straits – 100%

QUARTERLY PRODUCTION STATISTICS ‐ WHIM CREEK

Units Sept 09 Qtr Sept 08 Qtr FY 2009 (Q1 FY (Q1 FY 2010) 2009) Ore Mined tonnes 0 504,701 864,424 Grade % Cu 0 0.95% 0.94% Ore Stacked tonnes 0 536,349 1,384,879 Grade % Cu 0 0.87% 0.95% Production (stripped) tonnes 943 2,954 10,089 Cathode Sold (Cu) tonnes 942 2,856 10,198

Production from the Whim Creek Copper Mine totalled 943 tonnes of copper cathode with the operation continuing to draw down copper inventory from the heap leach pads, as operations proceed to closure by year‐end.

The operation continues to be cash flow positive as costs are reduced in line with declining production.

In June 2009 Straits sold an option to purchase the Whim Creek solvent extraction/electrowinning plant to Finders Resources for A$5 million. This option can be exercised between October 2009 and March 2010.

In August 2009, Straits agreed to sell (subject to a formal sale & purchase agreement being finalised) the other Whim Creek assets, including the Salt Creek and Balla Balla copper‐zinc projects and associated tenements, to Venturex Resources Limited, for shares in that company.

Hillgrove Antimony/Gold Project, New South Wales Straits – 100% QUARTERLY PRODUCTION STATISTICS – HILLGROVE Units Sept 09 Qtr Sept 08 Qtr FY 2009 (Q1 FY (Q1 FY 2010) 2009) Ore Mined tonnes 14,307 33,830 120,436 Grade – Au g/t 1.52 1.63 2.34 Grade – Sb % 2.05% 2.48% 3.13% Grade – W % 0.05% 0.04% 0.05% Ore Milled tonnes 18,646 20,577 113,281 Grade – Au g/t 2.24 1.60 2.014 Grade – Sb % 1.90% 2.28% 2.32% Grade – W % 0.02% 0.02% 0.03%

Hillgrove produced 198 tonnes of antimony in the September 2009 quarter and sold 148 tonnes. During the quarter production continued to be hampered by a number of technical issues, including issues with process water treatment management and the interface between the leaching and

Quarterly Activities Report, September 2009 electrowinning sections of the plant. In August 2009 processing activities at Hillgrove were temporarily suspended to fully investigate the technical issues, the cost and the time necessary to implement the required plant modifications to achieve commercially viable production levels. During this period monthly direct site costs have been reduced to approximately $700k per month.

Mt Muro Gold Mine, Indonesia Straits ‐ Contract of Work 100% QUARTERLY PRODUCTION STATISTICS ‐ MT MURO Units Sept 09 Qtr Sept 08 Qtr FY 2009 (Q1 FY (Q1 FY 2010) 2009) Ore Milled tonnes 185,529 172,062 652,050 Grade – Gold g/t Au 1.7 3.5 2.62 Grade – Silver g/t Ag 16 32 24.55 Recovery ‐ Gold % Au 87.6% 90.80% 88.70% Recovery ‐ Silver % Ag 66.4% 58.80% 60.20% Production (Gold)* oz Au 8,760 17,188 48,846 Production (Silver) oz Ag 65,425 98,498 304,357 Gold Sold Oz Au 8,841 15,431 48,367

* Production reported is gold poured

The Mt Muro operation produced 8,760 ounces of gold and 65,425 ounces of silver, during the September 2009 Quarter (8,597 oz Au & 55,776 oz Ag in the June 2009 quarter). The low production performance was brought about by operating bottlenecks and a lack of available ore for mining. Cash costs increased for the quarter to US$1,226 per ounce.

As discussed in the previous quarterly report a re‐evaluation of Mt Muro has resulted in a commitment to a new production plan at Mt Muro based around the development of the Serujan open pit, the Berinjin and Merindu elluvial mines and the Soan deposit. The mine is currently in the process of mobilising new mining equipment in order to move to owner operator management and replace the existing contractor. Work will commence on the new Soan decline in the first quarter 2010.

The new production plan is forecast to deliver 320,000 recovered gold equivalent ounces over a minimum five year time frame at average cash costs of approximately US$600/oz. This plan requires investing US$20 million (including US$16 million mine development costs) in Mt Muro over the 12 month period to June 2010. It is expected that as new mining areas become available by year‐end, production will increase.

GFE/MAGONTEC

Gfe The Groups revenues were US$31 million for the quarter. Overall turnover was stronger than expected with market conditions in China improving and Europe flat. Credit conditions in Europe are still difficult with credit insurers continuing to cancel cover for many companies. This impacts the ability of Gfe to draw down trade finance to fund the purchase of inventories to grow business. Gfe continues to focus on a cost optimisation program given the level of business activity. Gfe was cash flow neutral for the quarter. Gfe is a non‐core business to Straits, and the Group is looking at divesting this business.

Magontec

Quarterly Activities Report, September 2009

Overall production of magnesium alloy and anodes increased over the previous quarter with improved market conditions in China but with Europe still flat. The plant in Xian China is now running at full capacity, however the plant in Bottrop Germany is running at approximately half capacity. Magontec was cash flow neutral for the quarter. Chinese and Japanese Magnesium alloy markets have improved from the previous quarter. Demand in Europe has stabilised, in part due to a car recycling “clunker” program in Germany ceasing in August. Pure magnesium prices in China have stabilised at RMB16,000/t, with the commodity price starting to increase slightly following the Chinese national holidays. Magontec utilises trade finance facilities to fund the purchase of stocks and receivables. These can only be funded where credit insurance can be obtained and Magontec has been subjected to similar difficult credit conditions as facing Gfe in Europe.

EXPLORATION

QUEENSLAND

Yandan Straits – 100%, Drummond Gold – earning 51%

Drummond Gold Limited (ASX:DGO) have entered into an agreement with Straits to earn a 51% interest of the Yandan Project.

East Hill Drummond Gold announced high grade results from their first phase diamond drill hole programme into the East Hill Prospect as announced on the 12th August 2009 and subsequent to the quarter end on 13th October 2009.

Better intersections include: •2m @ 15.54 g/t gold •13m @ 5.91 g/t gold •2m @ 9.96 g/t gold •1.9m @ 48.12 g/t gold •4m @ 12.82 g/t gold

These initial results confirm the presence of high grade mineralisation in the central portion of East Hill which may be amenable to underground mining. Additional drilling is now required to improve the understanding of the mineralisation and test for extensions to substantiate East Hill’s potential as an economic mine. For full details see the announcements made by Drummond Gold Ltd.

Drummond’s current exploration drilling program at Yandan is targeting the discovery of a high grade feeder system beneath the East Hill pit, (which lies approximately 400 metres east of the main Yandan pit).

Illamahta Prospect A drilling program has also recently been completed at the Illamahta prospect, located 12 kilometres south from the Yandan Mine, where drilling by Ross Mining and WMC in the early 1990’s outlined gold mineralisation over a 300m strike extent. There is potential to extend the zone of mineralisation to the west and at depth. The Illamahta mineralisation is hosted by the same stratigraphy and within a

Quarterly Activities Report, September 2009 similar structural setting to the Yandan ore body. No assay results have been received to date for the Illamahta drilling.

Greenvale (Three Rivers) Straits – current 84.27%

At the end of the September 2009 quarter Straits was at an advanced stage of discussions for selling its interest in the Greenvale Project.

NEW SOUTH WALES

Tritton Straits – 100%

Tritton Copper Project Deep surface diamond drilling commenced in the September 2009 quarter, this drilling has been planned to evaluate the down dip potential of the Tritton orebody below the current resource/reserve. At the end of the quarter two holes had been completed (TTDD002 and TTDD003). Both holes (spaced 100m apart) intercepted the Tritton mineralised system. The intercepts were approximately 150m vertically and 250m below historical drill intercepts. The drilling has confirmed the depth continuity of the mineralised zone. TTDD002 was drilled to a depth of 1,273m and intersected massive and disseminated sulphides from 1,118.2m to 1,184m (approximately 69m true width), indicating a thickening of the mineralised zone with depth. TTDD003 intersected a thinner interval from 1,150m to 1,164m indicating its position close to the southern boundary of the mineralisation. A down‐hole EM survey was carried out in hole TTDD002, with results indicating the presence of a stronger conductor occurring to the north east and down dip of the hole. This target will be drill tested in the December 2009 Quarter with continuation of the current drill programme.

Tritton Deeps Significant Assay Results. (1% Cut‐off grade, max 3m internal dilution) Datum AGD66

A geophysical program, consisting of fixed and moving loop LandTEM, was conducted over the area covering Tritton South and Greater Hermidale in July 2009. The area had previously been tested with SirotemEM but was limited to an effective depth of approximately 200m. The LandTEM with an effective penetration of up to 450m identified six deeper, strong EM conductors that are semi coincidental with magnetic features along strike from the Tritton orebody, the Tritton ore body itself has a weak magnetic association. The strongest response is similar to the decay constant over the Tritton deposit. These high priority targets will be followed up with diamond drilling in the December 2009 Quarter. Refer table and diagram below.

Tritton – Great Hermidale Area – Landtem Anomaly Coordinates AGD66 Datum.

Quarterly Activities Report, September 2009

Location new Tritton LandTEM targets in relation to mine site infrastructure. Tritton and Great Hermidale Area

Quarterly Activities Report, September 2009

Goldminco Straits ‐ 66% (TSX‐V: GCP)

During the quarter, Goldminco Corporation (GCP), a TSX listed exploration company raised C$4.5 million for exploration purposes from major shareholders. Straits now own 66% of the company. Exploration activities focussed at the Blayney project near Orange, NSW and the Temora Project, NSW.

Goldminco is set to undertake an intensive IP programme during the December 2009 Quarter on the Blayney tenement seeking McPhillamy’s style Au‐sulphide systems. A drilling programme will also commence at the Temora project in the current quarter to test for extensions to the Cu/Au porphyry mineralised systems already defined.

SOUTH AUSTRALIA

Torrens EL3195 Straits – earning 70%

The Torrens Joint Venture comprises Argonaut Resources NL (ASX:ARE) and Straits (earning 70% interest).

Straits is exploring for iron‐oxide copper‐gold (“IOCG”) systems in the highly prospective Stuart Shelf region of South Australia (Torrens Project). The Torrens Project is located near the eastern margin of South Australia’s Gawler Craton region (Stuart Shelf), within 50 kilometres of Teck Cominco’s Carapateena copper‐gold discovery and 75 kilometres from BHP Billiton’s Olympic Dam mine.

During the quarter a meeting was held with the new Kokatha Uwankara management committee in Port Augusta. Straits were given a firm commitment from the group that discussions with Straits are to be progressed. In addition Straits has held a number of meetings with the State Government to resolve the access issue in order to recommence drilling operations. During these meetings Straits was given a firm undertaking and commitment that this matter is likely to be resolved within the next 3 to 6 months.

INDONESIA

Mt Muro (IMK) Straits – 100%

Exploration activities at Mt Muro have continued with the evaluation of historical targets within the Indo Muro Kencana, Contract of Work (IMK CoW). Newly discovered targets at the Lahung and Untu prospects have been drill tested with assay results awaited.

The IMK CoW offers exposure to a geological setting with excellent potential to contain additional high grade low sulphidation epithermal vein systems. Total production from the field is now approaching two million gold equivalent ounces.

Quarterly Activities Report, September 2009

CORPORATE

Cash & Debt At the end of September 2009, the Straits Group cash resources totaled A$145 million (approx 17% held in US$). As part of the PTT transaction a further US$115 million payment is still outstanding and payment is expected in the current quarter.

In addition, Straits has investments of A$16m in listed companies excluding Straits Asia.

At the end of the September 2009 quarter Straits debt comprised the $80.0 million Convertible Note with Standard Chartered Private Equity Limited (SCPEL) and trade finance facilities of US$52 million debt within GfE/Magontec which is backed by receivables.

Hedging There are six forward exchange hedges in place at 30 September 2009 totalling US$54.5 million for settlement from October 2009 through to June 2010. These FX forward were put in place to lock in the A$ receipts forecast to be received from copper shipments over this period.

By Order of the Board

Milan Jerkovic Chief Executive 23 October 2009

For further information contact: Mr Milan Jerkovic – Chief Executive Officer (08) 9480 0500 or

Mr Dave Greenwood –Corporate Affairs (08) 9480 0500 or go to our website at www.straits.com.au

References in this report to “Straits Resources Limited”, “Straits” and “Company” include, where applicable, its subsidiaries.

About Straits Resources Straits is an ASX200 diversified resources company focussed on generating strong and sustainable earnings for its shareholders from a balanced portfolio of resource projects and investments. Based in Perth, the company has a management team with an impressive track record of advancing resource projects through to full‐production. Straits controls and operates the Whim Creek Copper Operation in WA, the Tritton Copper and Hillgrove antimony/gold mines in NSW and the Mt Muro gold mine in Indonesia.. Straits also holds 40% of PTT Asia Pacific Mining Pty Ltd (PTT Asia) which holds 45.6% of Straits Asia Resources which is listed on the Singapore Exchange. Straits Asia controls and operates the Sebuku and Jembayan coal mines in Indonesia. In addition Straits has an exposure to an outstanding portfolio of mining investments, development projects and exploration ground throughout Australia, Indonesia, Madagascar & Brunei. Straits also own GfE and Magontec, European based specialty metals businesses.

Quarterly Activities Report, September 2009

PROJECT LOCATIONS