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Tawana Resources NL - Quarterly report for the period ended 30 September 2006

Release Date: 30/10/2006 07:30:01      Code(s): TAW
Tawana Resources NL - Quarterly report for the period ended 30 September 2006   
Tawana Resources NL                                                             
(Incorporated in Australia)                                                     
(Registration number ACN 085 166 721)                                           
Share code on the JSE Limited: TAW & ISIN: AU000000TAW7                         
Share code on the Australian Stock Exchange Limited: TAW & ISIN: AU000000TAW7   
("Tawana" or "the Company")                                                     
Quarterly Activities and Cash Flow Report                                       
1 July - 30 September 2006                                                      
Key Points                                                                      
 - Bulk sampling of Blacktop kimberlite dyke commenced                          
* 600+ diamonds to 23 October                                                  
 * Blacktop 01 and 02 dykes confirmed diamondiferous                            
 * Processing and concentrate analysis to continue into                         
- Engineering plans for Kareevlei Wes trial mining                             
* Mining Right application proceeding - process slower                          
    than expected                                                               
- Drilling of Daniel Kimberlite targets nearing completion                     
 * 26 Falcon targets drilled during first phase                                 
 * Bulk sampling of kimberlites at Falcon targets A1, A9/10   and A25           
* Joint Venture agreement formalised                                           
Commenting on the quarter"s work, Managing Director Wolf Marx said "We have had 
an outstanding start to the bulk sampling program at Blacktop.  As of 20        
October we have 600 diamonds from relatively small parcel of concentrate that   
has been produced to date.  It will be several months before we have completed  
treating the costean material and assessing the recovered indicator minerals    
and diamonds, and I look forward to keeping shareholders advised of progress".  
Mr. Marx went on to say "In South Africa, we are in advanced discussions with a 
party interested in participating in the alluvial project.  We are also         
advancing a proposal with a new Black Empowered group to gain access to a       
section of the Daniel Kimberlite project area not covered by our partners BHP   
Billiton and Seven Falls".                                                      
Mr. Marx concluded: "We are still endeavouring to secure a licence to commence  
the Kareevlei Wes trial mining program.  The process of gaining approvals       
through the relevant government departments remains challenging, but it appears 
that we are close to meeting pre-approval requirements".                        
Pilbara Western Australia                                                       
Blacktop Kimberlite Project                                                     
(Tawana 50% and operator /De Beers Australia Exploration 50%)                   
Blacktop number 01 and 02 dykes are diamondiferous. The dense media separation  
(DMS) plant was commissioned on 8 September 2006, and to 30 September, 263      
diamonds weighing 20.89 carats were recovered from analysis of the initial      
Flowsort concentrate.  To 20 October 640 diamonds weighing 52.82 carats had     
been recovered. The majority of the stones are white dodecahedrons, with the    
largest stone weighing 1.24 carats.  All diamonds are in the size fraction +1mm 
to -19mm.                                                                       
The excavation of sample costeans from the Blacktop 01 kimberlite commenced on  
14 August 2006, and a total of 79 costeans was excavated perpendicular to the   
strike of the dyke. Ten costean clusters (figures 1 and 2) were focused on      
areas where the dyke widened ("blows") in places up to some 5 metres in width.  
Approximately 6,000 tonnes have been excavated and trucked to the DMS plant.    
While additional blows may exist along strike of Blacktop 01, costeaning was in 
areas which were readily accessible.                                            
Since commissioning the DMS plant, processing has progressed well and at the    
end of September 2,100 tonnes of material had been processed through the plant. 
DMS concentrates are screened, packed and sealed on site and transported to     
Perth on a regular basis where the concentrates are passed through a Flowsort X-
Ray recovery unit. The resulting concentrate from the Flowsort unit is sent to  
Tawana"s laboratory in Melbourne for identification of indicator minerals and   
diamonds. It is expected that treatment of the material will be completed late  
in the December quarter, with completion of Flowsort and laboratory analysis    
continuing into 2007. Update reports will be released as results are to hand.   
A variety of kimberlite types was identified during costeaning including a      
large proportion of macrocrystic textured kimberlite containing numerous mantle 
xenoliths. This is deemed significant as large crystals tend to indicate that   
the kimberlite was sourced deep within the mantle, an ideal environment for     
diamonds   A summary of the production statistics for the processing of the     
Blacktop bulk sample to the end of September are shown in Table 1.              
Table1. Bulk sample Summary to 30 September 2006                                
Samples      DMS       DMS          Flowsort  Flowsort     Diamonds  Diamonds   
Excavated    Processed concentrate  processed concentrate  recovered recovered  
t            t         Produced t   t         Sorted in    No        cts        
Lab kg                            
6,000        2,100     22.4T        4.202     2.039        263       20.89      
Figure 1:  Contour map showing costeans and bulk sample sites over Blacktop 01  
Samples were also taken over the Blacktop 02 dyke (figure 1) for heavy mineral  
analysis. These samples have been analysed in Tawana"s laboratory and the       
diamondiferous nature of this sub-parallel dyke has been confirmed.             
Figure 2: Excavation of kimberlite from sample site BTB10                       
Figure 3:  Blacktop processing and camp site                                    
(All images can be view on the Company"s website; www.tawana.com.au)            
Pilbara Regional Exploration                                                    
Regional reconnaissance and follow-up sampling within the 17 granted De Beers   
tenements commenced on 26 September and was completed by 11 October 2006.  This 
program included reconnaissance stream sampling and the follow up of anomalies  
generated from aeromagnetic surveys and heavy mineral anomalies from previous   
De Beers sampling.                                                              
This helicopter sampling program was based out of Blacktop camp and included    
Tawana geologists and a geologist on secondment from De Beers.  The sampling    
area covered approximately 4000 square km.                                      
Some 266 samples were collected during the program as shown in Table 2 and      
Figure 4.                                                                       
Table 2 Sampling statistics for 2006 field period                               
Sample type  Samples                                                            
Loam         165                                                                
Stream       97                                                                 
Rock         4                                                                  
TOTAL        266                                                                
Figure 4: Map highlighting Pilbara tenement boundaries and distribution of      
samples collected during current field season                                   
Kareevlei Wes Project                                                           
(Tawana 74% and operator/Seven Falls 26%)                                       
As previously reported the Company"s South African and Australian based mining  
consultants have completed the detailed planning for the trial mining of the    
KV2 kimberlite at Kareevlei Wes.                                                
The Mining Right application has progressed to the stage where it has been      
approved by the Northern Cape Provincial Departmental stakeholders and is still 
being assessed by the Kimberley regional branch of the Department of Minerals   
and Energy (DME). Once this process has been completed the application will be  
referred to the DME headquarters in Tshwane (formerly Pretoria). Guidelines     
recently announced by the DME indicate that the DME allows for a 12 month       
completion of processing of Mining Right Applications.                          
In view of the longer than anticipated (based on DME guidance) time taken for   
the Mining Right to be processed the Company has notified its South African     
employees that they will be retrenched at the end of November if, as now        
anticipated, the Mining Right has not been approved prior to that time. Re-     
employment priority will be given to current employees when the Mining Right    
has been approved.                                                              
Daniel Kimberlite Project                                                       
(Tawana 22.2% and operator/ BHP Billiton 51.8% /Seven Falls 26 %)               
Tawana has commenced negotiations with a black empowered group holding          
Prospecting Rights over a large area within the Daniel Project Area.            
Falcon Targets                                                                  
Drilling of the Falcon kimberlite targets is nearing completion with no         
additional kimberlites identified. Twenty six targets have been drilled during  
The current drilling is on ground covered by granted new order Prospecting      
Rights. Applications for additional Prospecting Rights were submitted to cover  
several other Falcon targets on 19 farms in the Daniel Project Area, but the    
Company has been informed that the applications over all 19 farms have been     
rejected on the grounds that prior applications by other parties had been made. 
The Company has reason to believe that on at least seven of the farms no prior  
applications exist. The Company is making representations to the DME on behalf  
of the Joint Venture to reinstate our applications over these seven farms.      
A1, A9/10 and A25 Kimberlites                                                   
Tawana completed bulk sampling programs designed to determine the grade and     
diamond quality of the kimberlites identified as Falcon targets A1, A9, A10 and 
A25 (Table 3). Kimberlite was excavated from each of the four kimberlites and   
transported to the Company"s DMS plant located at Perdevlei where the minus     
19mm plus 1.5mm material was processed. The following Table summarises the      
results. No further work will be conducted on these kimberlites and             
rehabilitation has been completed.                                              
Table 3: Bulk Sampling Results                                                  
Kimberlite  Tonnes Diamonds  Carats CPHT  Largest (ct)                          
A1          1178   30        5.13   0.8   3.15                                  
A9          535    1         0.23   -     -                                     
A10         720    33        2.37   0.33  0.29                                  
A25         182    2         0.12   0.06  -                                     
Tawana Alluvials                                                                
(Tawana 70% and operator/Seven Falls 30 %)                                      
Eastern Gravels and Feeder Channel                                              
Negotiations with third parties to participate in the continuation of the       
economic assessment of the Eastern Gravels and Feeder Channel alluvial diamond  
deposits are continuing.                                                        
Joint Venture Agreement Formalised                                              
Tawana, BHP Billiton and Seven Falls have formalised the various separate       
agreements between the companies into one Joint Venture Agreement. In the       
process the companies have agreed to amend some aspects of the terms to         
recognise circumstances that did not exist at the time the original agreements  
were negotiated.                                                                
One of the key amendments is the transfer of an additional 4% equity in the     
Tawana Alluvials (Eastern Gravels and Feeder Channel) from Tawana to Seven      
Falls in consideration for Seven Falls waiving its rights to a participating    
interest in any areas within the Daniel Project Area (defined as an area having 
a radius of 30 kilometres centered on the Finsch Mine) in which fully black     
empowered parties other than Tawana, BHP Billiton or Seven Falls hold           
Prospecting Rights. BHP Billiton has also agreed to waive its rights to a       
participating interest in such areas but retains the right to a 2.5% royalty    
from any diamond production from such areas in consideration of the provision   
to Tawana of Falcon data on the areas. Tawana has agreed to seek to acquire the 
diamond marketing rights for such areas for BHP Billiton on a best endeavours   
Melbourne Laboratory                                                            
Activity within the Melbourne Laboratory during the third quarter was primarily 
focused on the examination of Flowsort concentrate from the Blacktop bulk       
sampling program, and the recovery and classification of macrodiamonds from     
these samples. Flowsort macrodiamond concentrate are delivered to the           
laboratory on a weekly basis.                                                   
In addition to diamond recovery, the laboratory also completed audit checks on  
Flowsort tailings, and recovered quality assessment spikes introduced to review 
both on site DMS and Flowsort processes.                                        
Treatment, examination and reporting of Pilbara exploration samples was         
undertaken, and work was also conducted on third party client samples.          
Dr Leon Daniels resigned as director and executive director of the Company to   
pursue other interests.                                                         
The Company is in advanced negotiations with a major black owned South African  
company to form a strategic alliance to jointly pursue resource projects in     
Southern Africa.                                                                
30 October 2006                                                                 
Wolf Marx                          Basil Tambanis                               
Tel: +61 3 98635222                Tel: +61 3 98635222                          
Mob: 0428 398446                   Mob: 0414 434339                             
Email:wolf.marx@tawana.com.au; basil.tambanis@tawana.com.au                     
This report is based on information compiled by Wolf Marx BSc, BA, FAusIMM,     
CPGeo, Managing Director of Tawana Resources NL. He has sufficient experience   
relevant to the style of mineralisation and types of deposits under             
consideration, and to the activities undertaken, to qualify as a competent      
person as defined in the 2004 edition of the "Australasian Code for the         
Reporting of Mineral Resources and Ore Reserves"                                
PricewaterhouseCoopers Corporate finance (Pty) Limited                          
Rule 5.3                                                                        
Appendix 5B                                                                     
Mining exploration entity quarterly report                                      
Introduced 1/7/96.  Origin:  Appendix 8.  Amended 1/7/97, 1/7/98, 30/9/2001.    
Name of entity                                                                  
Tawana Resources N.L.                                                           
ABN                                  Quarter ended                              
("current quarter")                        
69 085 166 721                       30 September 2006                          
Consolidated statement of cash flows                                            
Current        Year to date                 
Cash flows related to operating     quarter        ( 9 months)                  
activities                          $A"000         $A"000                       
1.1     Receipts from product       -                                           
sales and related debtors                                               
1.2     Payments for   (a)          (1,942)        (3,689)                      
        exploration and evaluation                                              
                  (b)  development                                              
(c)  production                                               
                  (d)               (480)          (1,339)                      
1.3     Dividends received          -              -                            
1.4     Interest  received          40             51                           
1.5     Interest and other costs                                                
        of finance paid                                                         
1.6     Income taxes paid                                                       
1.7     Other (provide details if                                               
                                    (2,382)        (4,977)                      
        Net Operating Cash Flows                                                
Cash flows related to                                                   
        investing activities                                                    
1.8     Payment for purchases of:                                               
(b)equity investments       -              (95)                         
        (c) other fixed assets                                                  
1.9     Proceeds from sale of:                                                  
(b)South Yarra Building     -              1,870                        
1.10    Loans to other entities                                                 
1.11    Loans repaid by other                                                   
Net investing cash flows    -              (1,775)                      
1.13    Total operating and         (2,382)        (3,202)                      
        investing cash flows                                                    
        (carried forward)                                                       
1.13    Total operating and         (2,382)        (3,202)                      
        investing cash flows                                                    
        (brought  forward)                                                      
        Cash flows related to                                                   
financing activities                                                    
1.14    Proceeds from issues of     -              6,806                        
        shares, options, etc.                                                   
1.15    Proceeds from sale of       -              -                            
forfeited shares                                                        
1.16    Proceeds from borrowings    -              -                            
1.17    Repayment of borrowings     -              -                            
1.18    Dividends paid              -              -                            
1.19    Other (provide details if   -              -                            
        Net financing cash flows    -              6,806                        
        Net increase (decrease) in  (2,382)        3,604                        
cash held                                                               
1.20    Cash at beginning of        7,326          1,340                        
        quarter/year to date                                                    
1.21    Exchange rate adjustments   -              -                            
to item 1.20                                                            
1.22    Cash at end of quarter      4,944          4,944                        
Payments to directors of the entity and associates of the directors             
Payments to related entities of the entity and associates of the related        
1.23    Aggregate amount of payments to the       98                            
        parties included in item 1.2                                            
1.24    Aggregate amount of loans to the parties  Nil                           
        included in item 1.10                                                   
1.25    Explanation necessary for an understanding of the                       
Non-cash financing and investing activities                                     
2.1     Details of financing and investing transactions which                   
have had a material effect on consolidated assets and                   
        liabilities but did not involve cash flows                              
2.2     Details of outlays made by other entities to establish                  
or increase their share in projects in which the                        
        reporting entity has an interest                                        
Financing facilities available                                                  
Add notes as necessary for an understanding of the position.                    
                                    Amount        Amount used                   
                                    available     $A"000                        
3.1     Loan facilities             Nil           Nil                           
3.2     Credit standby arrangements Nil           Nil                           
Estimated cash outflows for next quarter                                        
4.1     Exploration and evaluation                814                           
4.2     Development                               Nil                           
        Total                                     814                           
Reconciliation of cash                                                          
Reconciliation of cash at the end   Current       Previous                      
of the quarter (as shown in the     quarter       quarter                       
consolidated statement of cash      $A"000        $A"000                        
flows) to the related items in the                                              
accounts is as follows.                                                         
5.1     Cash on hand and at bank    29            209                           
5.2     Deposits at call            4,915         7,117                         
5.3     Bank overdraft              -             -                             
5.4     Other (provide details)     -             -                             
        Total: cash at end of       4,944         7,326                         
        quarter (item 1.22)                                                     
Changes in interests in mining tenements                                        
Tenement    Nature of   Interest     Interest           
                        reference   interest    at           at end of          
                                    (note (2))  beginning    quarter            
                                                of quarter                      
6.1     Interests in                                                            
reduced or                                                              
6.2     Interests in                                                            
        acquired or                                                             
Issued and quoted securities at end of current quarter                          
Description includes rate of interest and any redemption or conversion rights   
together with prices and dates.                                                 
                        Total       Number      Issue       Amount paid         
                        number      quoted      price per   up per              
security    security            
7.1     Preference                                                              
        +securities     Nil         Nil                                         
7.2     Changes during                                                          
        (a)  Increases                                                          
        through issues                                                          
(b)  Decreases                                                          
        returns of                                                              
        capital, buy-                                                           
7.3     +Ordinary       87,097,481  87,097,481  Various     Various             
7.4     Changes during                                                          
        (a)  Increases  Nil         Nil                                         
        through issues                                                          
(b)  Increase                                                           
        exercise of                                                             
7.5     +Convertible                                                            
        debt            Nil         Nil                                         
7.6     Changes during                                                          
        (a)  Increases                                                          
        through issues                                                          
(b)  Decreases                                                          
7.7     Options                                 Exercise    Expiry date         
        (description    21,869,843  21,869,843  price       30 April            
        and conversion                          $1.00       2008                
7.8     Issued during   Nil         Nil                                         
7.9     Exercised       Nil         Nil                                         
during quarter                                                          
7.10    Expired during  Nil         Nil                                         
7.11    Debentures      Nil         Nil                                         
(totals only)                                                           
7.12    Unsecured       Nil         Nil                                         
        notes (totals                                                           
Compliance statement                                                            
1    This statement has been prepared under accounting policies which comply    
with accounting standards as defined in the Corporations Act or other standards 
acceptable to ASX (see note 4).                                                 
2    This statement does give a true and fair view of the matters disclosed.    
Sign here:     W.T.Marx  Date: 30 October 2006                                  
Print name:    W.T.Marx                                                         
1    The quarterly report provides a basis for informing the market how the     
     entity"s activities have been financed for the past quarter and the effect 
     on its cash position.  An entity wanting to disclose additional            
information is encouraged to do so, in a note or notes attached to this    
2    The "Nature of interest" (items 6.1 and 6.2) includes options in respect   
     of interests in mining tenements acquired, exercised or lapsed during the  
reporting period.  If the entity is involved in a joint venture agreement  
     and there are conditions precedent which will change its percentage        
     interest in a mining tenement, it should disclose the change of percentage 
     interest and conditions precedent in the list required for items 6.1 and   
3    Issued and quoted securities. The issue price and amount paid up is not    
     required in items 7.1 and 7.3 for fully paid securities.                   
4    The definitions in, and provisions of, AASB 1022: Accounting for           
Extractive Industries and AASB 1026: Statement of Cash Flows apply to this 
5    Accounting Standards ASX will accept, for example, the use of              
     International Accounting Standards for foreign entities.  If the standards 
used do not address a topic, the Australian standard on that topic (if     
     any) must be complied with.                                                
All press releases and announcements may be inspected on the Company"s web      
site, namely: www.tawana.com.au                                                 
Date: 30/10/2006 07:30:47 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             

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