KAGARA LTD (ASX: KZL)

CHAIRMAN'S AGM ADDRESS - 7 NOVEMBER 2008

Thank you all for attending this Annual General Meeting of Kagara Ltd.

It is indeed a difficult time for everyone involved in the global metals mining business and it is a time that calls for prudent financial management. Kagara is in the fortunate position of having low cost production of both zinc and copper and having the flexibility of being able to mine and treat high grade ore bodies in these difficult times. However, I am sure everyone in attendance today is here to get an update on our strategic review, which we announced we were embarking upon in the September Quarterly Activity Report and which is designed to maintain a strong cash flow business into the future.

I am pleased to report that today we completed our financing arrangements with our bankers, with NAB rolling existing corporate facilities including a $100 million debt facility to October 2009 and Westpac Banking Corporation providing a $50 million facility maturing in March 2009. These facilities are designed to cover the period of maximum cash drawdown in November and December 2008 as our copper ore stocks, which now stand at 380,000 tonnes grading 3% copper, are built up at all treatment plants, as concentrate stockpiles are run down in advance of the wet season and as residual Mungana treatment plant expenditures continue. We are also building up stockpiles of polymetallic ore from underground at Mungana and Mt Garnet but it is likely that the polymetallic plant at Mt Garnet will process copper ore for periods during the wet season.

The strategic review has also identified additional operational cost savings, on top of the $70 million figure announced on 30 October 2008, which will result in a reduction in our net debt position by the end of the financial year using current metal prices and exchange rates.

Longer term, we do not expect copper and zinc prices to remain at current levels and as mine closures accelerate globally and prices recover, our higher cost zinc operations at Balcooma and Dry River South will be reactivated to feed the Mt Garnet polymetallic plant. As prices improve, we will also reactivate the Mungana base metal treatment plant but in the interim, work will continue on bringing forward the Mungana gold development. Joe Treacy will talk about our thoughts in regard to this gold development in his presentation after the meeting. Now that sufficient resources have been defined in the North Queensland area to sustain a long term operation and in an effort to preserve cash, our exploration has been scaled back to a team of core individuals with no drilling being carried out. Exploration in Western Australia has also been scaled back, with the recent completion of drilling at Admiral Bay. The only drilling to be carried out over the remainder of this year will be ore definition drilling at the Lounge Lizard nickel deposit which is expected to feature prominently is Kagara?s future short term growth. Our exploration at Admiral Bay over the last two years has shown that this large deposit will become one of the great base metal mines of the future, but in the current environment, development is beyond Kagara?s financial capability and a joint venture partner will be sought to take the project forward.

In closing I would like to take this opportunity to thank Graeme Collins and his team from our operations in North Queensland for their contribution and for their past efforts which has resulted in Kagara being awarded the Queensland Miner of the Year at the Mining 2008 conference in Brisbane last week. I would also like to thank our shareholders and our bankers for their forbearance and support during these difficult times.

Kim Robinson

Executive Chairman