Kagara expands resource

Just announced, and look at the silver and gold content of this zinc resource.

KAGARA ZINC LIMITED 2002-07-16 ASX-SIGNAL-G

HOMEX - Perth

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Kagara Zinc Limited is pleased to announce the acquisition of the Red
Dome tenement package from Niugini Mining for a consideration of
$640,000 payable in cash or Kagara shares at Kagara's election at
settlement. The sale is subject to ministerial approval which is
expected within 3 months. The tenements adjoin Kagara's Walsh River
Tenements in the Chillagoe region of Northern Queensland.

The major asset within the package is the Mungana indicated and
inferred base metal resource of 1.21 million tonnes at 11.9% zinc,
3.1% lead, 2.6% copper, 138 grams per tonne silver and 1.3 grams per
tonne of gold. This equates to approximately 28% zinc equivalent,
which is similar to the Surveyor deposit.

There is within the package of granted mining leases a total resource
inventory of 170,000 tonnes of zinc, 52,000 tonnes of copper, 66,000
tonnes of lead, 10.1 million ounces of silver and 576,000 ounces of
gold. This increases Kagara's total resource inventory for the Mt
Garnet project to 786,000 tonnes of zinc, 83,000 tonnes of copper,
203,000 tonnes of lead, 21.8 million ounces of silver and 673,000
ounces of gold. The 28% increase to the zinc inventory will now be
incorporated into Kagara 3 - 5 year objective to expand output of
zinc concentrate to 150,000 tonnes per year.

The package encompasses 7 granted mining leases totalling 1584
hectares and a granted exploration permit of 38,770 hectares. In
excess of $15 million has been expended on the tenements including
more than 80,000 metres of diamond and RC Drilling.

As financial and personnel resources permit, a number of base metal
targets along the 3.5km strike length between Red Dome and Mungana
will be drill tested.

INITIAL TARGETS ARE:

1) Girofla - where previous drilling encountered 45 metres at 4.5%
zinc, 8.3% lead, 0.4% copper and 125 grams per tonne silver in the
deepest hole drilled.

2) Lady Jane - where previous drilling encountered 2 metres at 12.9%
zinc, 12.5% copper and 880 grams per tonne silver in the deepest hole
drilled.

3) Griffiths - where previous drilling has encountered a 3 metre
intersection of massive sphalerite-chalcopyrite.

As far as the gold resources acquired are concerned, an assessment
will be made as to how to utilise these substantial assets to provide
the best return for Kagara Shareholders. Of initial interest is the
high grade Mungana gold deposit containing an indicated and inferred
530,000 tonnes at 5.8grams per tonne gold and the potentially open
pittable and heap leachable upper Mungana indicated and inferred
resource of 1.2 million tonnes of 2.2 grams per tonne gold and 112
grams per tonne silver.

Released by: Mr Kim Robinson
EXECUTIVE CHAIRMAN
Kagara Zinc Limited
Telephone: (08) 9481-1211
Mobile: (0427) 440 045