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1st ann.

Vulcan Resources Limited (‘Vulcan”) (ASX: VCN, FSE: VUA, WKN: A0HHEF, Norwegian OTC: VCNR) today announced an extension of the Definitive Feasibility Study (“Study”) for the Kylylahti Copper-Cobalt Project in Finland. The Study is managed by SNC-Lavalin Australia Pty Ltd (“SNC”).
The Study envisages a 550,000-650,000 tpa mine and concentrator at Kylylahti which produces copper-gold concentrate for sale to smelters and nickel-cobalt-zinc concentrate for further processing at the site of the Kemira GrowHow chemical plant at Siilinjärvi, 100km from the mine site.
The concentrate processing facility to be constructed at Siilinjärvi comprises a roaster, autoclave and hydrometallurgical plant which employ mature and established technologies. This facility would process nickel-cobalt-zinc concentrate to produce a number of high value products for sale: nickel-cobalt hydroxide, copper sulphate, zinc sulphate, iron ore fines and sulphur dioxide gas.
To date the Study indicates that the project is technically feasible and economically positive, however initial capital and operating costs at the Siilinjärvi site in particular, have been much higher than expected. In conjunction with unfavourable movements in the USD/EUR exchange rate, these costs suggest that the current configuration of the project, although generating substantial cashflow, will not give an acceptable return at long term metal prices. Therefore the company has extended the timetable for completion of the Study until the first quarter of 2008 to incorporate a review of costs and an optimisation of the project.
Vulcan Managing Director Alistair Cowden commented “There are numerous opportunities to add value through cost reduction and project enhancement that we will be pursuing. SNC and Vulcan have identified opportunities such as increasing the throughput at Siilinjärvi and modifications to the flowsheet. Work has already commenced on optimisation of various areas of the project”.
Drilling is underway at the deposit to infill and extend high grade zones within the deposit and to test for extensions to the lower limit of the deposit down plunge,
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Follow up ann.

Vulcan Resources Limited (“Vulcan”) (ASX: VCN, FSE: VUA, WKN: A0HHEF, Norwegian OTC: VCNR) today announced that drilling at the Vaara nickel deposit, which is part of the Kuhmo Nickel Project, indicated that prior Resource estimates for the deposit understated nickel grades and possibly platinum and palladium grades. The drilling also indicated that the deposit remains open to the north-west.
Vaara is a large, low grade nickel sulphide deposit at the northern end of the Kuhmo greenstone belt in central eastern Finland (Figure 1).
Vulcan’s General Manager in Finland, Mr Jarmo Vesanto, said the drilling at Vaara was designed to test the continuity and limits of the Resource.
“All intercepts exceeded the average grade of the prior Resource estimate of 0.35% nickel, some by two or three times,” said Mr Vesanto.
A total of 13 holes for 969 metres were drilled in the shallow portion of the deposit. Best results received from 9 of 13 holes drilled to date include several thick intersections:
25 metres from 26 metres depth at 0.69% nickel, 0.39 g/t palladium, 0.17 g/t platinum
43 metres from 30 metres depth at 0.43% nickel, 0.16 g/t palladium, 0.07 g/t platinum
Highest values obtained are 1.44% nickel, 1.10 g/t palladium and 0.52 g/t platinum. A full tabulation of available results is attached, results from four drill holes are awaited.
The deposit is located 15-20 kilometres north-west of Vulcan’s Peura-aho and Hietaharju deposits from which high grade intercepts have been reported in the last three months. The deposit is hosted in a thick serpentinite unit which is part of a 20 kilometre long belt of komatiites and associated ultramafic rocks. There are seven drilled nickel occurrences within this belt, numerous geophysical anomalies, MMI geochemical anomalies, till geochemical anomalies and nickel anomalous boulders (Figure 2, 3). High grade massive nickel sulphides are spatially associated with disseminated mineralisation at a number of Australian nickel deposits. Prospectivity in this belt is high.
Vaara outcrops and forms a hill with minimal soil or till cover. Mineralisation occurs as 1-5% disseminated sulphides. It was discovered by the Geological Survey of Finland (“GTK”) during regional mapping in 1998.
An Indicated and Inferred Resource of 6.1 million tonnes at 0.35% nickel, 0.10% platinum and 0.15% palladium was estimated by Snowden and Associates last year. This drill programme indicates the Resource model can be improved by better modelling of Resource geometry, application of different cut-off grades, inclusion of this higher grade drilling and further extension drilling. Prior metallurgical testwork by the GTK generated a best result of 24% nickel in concentrate for 65% recovery from a sample from a high grade surface outcrop.
On receipt of all drill results, the following programme will be implemented:
1. Further infill and extension drilling (open pit delineation).
2. Metallurgical testwork.
3. Geotechnical drilling.
4. New Resource estimate and pit optimisation.
5. Drill testing of adjacent geochemical anomalies and of a prior intercept of nickel in drilling at the margin (footwall?) of the ultramafic rock complex.
6. Regional ‘deep-looking’ EM survey.
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