5 February 2008

OPERATIONAL OUTLOOK – JANUARY 2008

Midwest Corporation Limited (“the Company”) is currently advancing exploration and pre-development activities in five discrete projects with potential to utilise common logistics infrastructure in the Mid West region of Western Australia. While the projects are at different stages of exploration and evaluation, each project continues to produce encouraging results which confirm the resource potential and justifies our accelerated exploration programmes. These individual project exploration results also provide an indication of the potential of the Company which underpins the future value of Midwest shares. The projects include:

·         Koolanooka (Hematite) – DSO project in production; 1 million tonnes (“Mt”) per annum from an Ore Reserve of 7.9Mt at 57.8% Fe (as at 29 December 2007).

·         Koolanooka (Magnetite) – Significant magnetite Mineral Resource of 430Mt at 35% Fe, representing approximately 26% of the mineralised outcrop strike length.

·         Weld Range – Flagship haematite project with 133Mt JORC compliant Mineral Resource at 58.5% Fe from Madoonga and Beebyn deposits, representing approximately 38% of the mineralised outcrop length and with an exploration target of up to 299Mt across the tenements (including the Hampton Hill Mining JV).

·         Jack Hills – Hematite project with an initial JORC compliant Mineral Resource estimate of 15.4Mt at an average grade of 59.7% Fe with an exploration target of up to 36Mt of DSO across the tenements. There is the potential to supplement the DSO with a beneficiable ore product which is being further evaluated.

·         Robinson Range – Exploratory mapping programme of hematite deposits with rock chip samples having returned average assay ranges of 59.2% to 63.4% Fe.

In support of the exploration projects, Midwest has put in place a detailed programme to create infrastructure, minimise operational risks and build strategic relationships that will smooth the transition from ‘explorer’ to ‘export miner’. , Midwest has a joint venture studies partner Sinosteel, one of China’s largest iron ore trading and investment companies. The agreement covers the Weld Range and Koolanooka magnetite projects and allows for joint implementation of exploration, feasibility studies and an off-take agreement. 

Concurrently, Midwest is working with independent infrastructure provider Yilgarn Infrastructure and the WA Government to bid for proponency for the development of Mid West rail and Oakajee port. The infrastructure proposal is being co-ordinated in conjunction with Midwest’s Preliminary Feasibility Study for the development of Weld Range, which is scheduled to be completed in Q3 2008. 

In developing the Koolanooka DSO project Midwest has already invested $31 million in infrastructure including the acquisition of rolling stock.

Together, these projects represent a valuable portfolio of development projects which are positioned to take maximum advantage from the currently positive outlook for high iron ore prices driven by strong economic development in China and India.  The MIS iron ore projects are on-track to provide the resources needed to meet our targets rising from 0.8Mt of DSO sales achieved in 2007 to potentially 15Mt of DSO sales in 2012, with additional growth beyond.

PROJECT OUTLOOK

Koolanooka/Blue Hills (Hematite)

Koolanooka has an Ore Reserve of 7.9Mt at 57.8% Fe as at 29 December 2007, with 1Mtpa installed capacity and 100% of current production on secure export contracts to China. The first shipment of iron fines of 58,300 tonnes was shipped from Geraldton to China on 27 February 2006.

The Koolanooka project is being developed in three stages:

Stage 1 – Loading, haulage and shipment of the iron ore fines stockpiles at Koolanooka with approximately 0.4Mt of marketable ore remaining as at 29 December 2007.

Stage 2 – Crushing, haulage and shipment of ore produced by mining at Koolanooka of 4.33Mt and at Blue Hills of 3.17Mt.

The Company has completed construction of its storage handling facilities at the port of Geraldton which include a storage shed capable of holding up to 85,000 tonnes of ore and a road receival hopper, and is currently seeking development approval for a rail loading facility at Tilley Railway Siding, near Morawa.

2008 Outlook

Stage 2 is planned to commence in the second quarter of 2008, subject to Government approval. The planned rate of production and sales for this project will grow to about 1.5Mt per annum from end of 2008.

Koolanooka (Magnetite)

The Koolanooka magnetite project has a significant Indicated and Inferred Mineral Resource of 430Mt at 35% Fe, and is open at depth and along strike. While of lower grade than hematite ore, a Scoping Study completed in February 2006 concluded that the magnetite resource could be substantial enough to justify the construction of a beneficiation plant to supply blast furnace grade pellets to the export market. Preliminary analysis shows the magnetite to be of the type favoured by mills in China and bench scale testing of magnetite pellets has been undertaken. Additional exploration and assessment is required before the size of the opportunity can be fully assessed and evaluated. Metallurgical test work to optimise recovery is underway.

* JORC Compliant

2008 Outlook

Midwest plans to undertake a limited diamond drilling program to confirm the company’s understanding of the Mineral Resource for the project and to provide material for further metallurgical test work. The program will run for 3 months after Vegetation Clearance Permits are approved and will involve 19 holes and 5,700 metres of drilling.

Weld Range

The Weld Range Project is Midwest’s flagship Direct Shipping Ore (DSO) project with confirmed total of 133.4Mt of hematite Mineral Resources (JORC) at 58.5% Fe at a cut off grade of 50% Fe. Grades as high as 66.9% Fe have been recorded.  The areas covered by the Mineral Resource estimate have no noteworthy deleterious contaminant elements and have acceptable strip (waste : ore) ratios.

* JORC Compliant

The Weld Range project has significant potential due to high grade outcrops over a total 16 km strike length. The current resource represents only 6 km of the strike length.

2008 Outlook

On 4 December 2007 Midwest announced the commencement of an $11 million accelerated drilling program at Weld Range, to be completed between December 2007 and August 2008 (involving approximately 40,000 metres of drilling). The Company expects to have up to seven RC and diamond core drilling rigs working during this period to achieve these targets.

This program is the Company’s largest single drilling program which is aimed at increasing the JORC Mineral Resource from the 133Mt already confirmed. To date Midwest has only substantially explored three key mineralised zones in its Weld Range tenements and considers the unexplored areas offer good potential to expand resources.

Midwest’s accelerated drilling campaign will be completed between December 2007 and August 2008 as follows:

·         Madoonga (W14, W25) and Beebyn (W7, W8, W9, W10, W11, W12) – approximately 24,000 m RC between December 2007 and June 2008

·         North East Extension (W38, W39, W40) – approximately 2,400m RC in February 2008

·         Beebyn North (W30, W31, W45) – approximately 2,400m RC April to June 2008. This has been included in the drilling program as a result of encouraging drill results recently announced.

·         Wilgie Mia North (W6, W20, W13)  - approximately 4.700m RC April to June 2008 (Hampton Hill Mining JV)

·         North and Other (Limestone Well, W34, W35, W36, W41, W42, W43) – approximately 4,300m RC March to June 2008

·         Hampton Hill Mining JV (W17, W19) – approximately 2,600m RC May to August 2008.

Midwest is on track to complete its Pre-Feasibility Study (PFS) for Weld Range by September 2008. This PFS will be very close to Definitive Feasibility Study standard, since it forms the agreed basis for formal buy-in negotiations between Midwest and Sinosteel (whereby Sinosteel may acquire up to 50% of the project and form an operating joint venture with Midwest, in return for paying an acceptable value for the asset).

Jack Hills

Jack Hills has an initial JORC compliant Inferred Mineral Resource of 15.4Mt at an average grade of 59.7% Fe for the Project, using a cut off grade of 50% Fe. The Inferred Mineral Resource estimate relates to mineralised lenses at the Matthew Ridge, Dead Goat Hill and Taylor Range Prospect hematite deposits encompassing exploration tenure held by Midwest in the Jack Hills Project area. The estimate incorporates 186 Reverse Circulation (RC) drill holes completed for 12,071 metres and has delineated eight (8) separate Resource areas.  A summary of the classified Mineral Resource estimates is presented in the table below:

* JORC Compliant

Testing has recently been undertaken to determine whether a concentrate quality suitable for blast furnace grade sinter feed and direct reduction grade pellet feed could be produced from the Company’s Matthew Ridge Prospect at the Jack Hills DSO Project area. These tests were conducted on selected drill core intervals at a range of target grind sizes from Beneficiable Feed Ore (BFO) located beneath the DSO type ores at Matthew Ridge.

Testing of 14 drill core samples produced high quality magnetic concentrates at relatively coarse grind sizes.  The results from Jack Hills show that commercial products could potentially be produced from the lesser quality BFO type materials using conventional mineral processing technology.

Testing demonstrated:

·         High quality magnetic sinter feed and concentrates can be produced at relatively coarse grind sizes with low contaminant levels and relatively high mass recoveries between 38% to 42%

·         The BFO type can be upgraded to a blast furnace grade magnetite product

·         BFO type has potential to extend to at least 200m vertical depth from surface.

2008 Outlook

There is considerable scope to increase the Resource base and overall confidence of the JORC classification through infill, extensional and deeper drilling planned for 2008. Accordingly a further 13,500 metres of RC and diamond drilling has been budgeted for the Jack Hills Project in 2008 for both hematite and beneficiable ore types. This drilling is planned to be completed by September 2008.

Midwest intends to continue RC and diamond core drilling programmes in 2008 on the eight Prospects at the Jack Hills DSO Project identified in 2007 as having economic potential to develop into mining operations, with the purpose of upgrading Mineral Resource estimates and increasing confidence in the level of JORC classification.

A desk top Scoping Study for the Jack Hills project has commenced in conjunction with Coffey Mining as technical consultants. The study is expected to be completed by the end of Q2 2008.

Robinson Range

A recent detailed mapping and surface sampling program produced rock chip samples which returned average assay ranges of 59.2% to 63.4% Fe with acceptable levels of deleterious contaminant elements occurring over substantial strike lengths. The table below gives a breakdown of average analytical results received for rock chip sampling from each prospect mapped during the programme.

Although these results represent the early stage of exploration, it is noteworthy that the surface samples imply that further exploration is justified over a substantial area. Additionally, Robinson Range’s proximity to Jack Hills and Weld Range means that any economic Mineral Resource confirmed at Robinson Range could be transported using the same rail and port infrastructure available to transport Weld Range and Jack Hills ore.

Midwest has acquired ML52/244 at Robinson Range which is a known previous source of high grade manganese in the Robinson Range area. Midwest has identified other mineralised outcrops of manganese on tenements at Robinson Range. Midwest will be evaluating the opportunities to develop a small scale manganese mining operation using the existing infrastructure at Geraldton Port for the current Koolanooka/Blue Hills operation. Midwest believes that this opportunity provides security against potential delays in Government approvals for Stage 2 of the Koolanooka/Blue Hills operation, as well as providing an opportunity to profitably extend the commercial life of those infrastructure assets.

2008 Outlook

An initial assessment programme of 12,000 metres of RC drilling has been budgeted for completing new exploration drilling targets in 2008.

This drilling will involve 1 RC drilling rig and is expected to be completed by August 2008, subject to vegetation clearing approvals and finalisation of the terms on which heritage clearance surveys are to be undertaken by the granted native title parties.

A further 2,000 metres of RC drilling has been scheduled to delineate manganese resources in the Robinson Range tenements commencing in February 2008.

Port and Rail Infrastructure

The WA Government’s has outlined a program for selection of an infrastructure provider for the development of the port and rail infrastructure required to permit the development of Weld Range, Jack Hills, Robinson Range and the Koolanooka Magnetite projects. Midwest expects that an infrastructure provider will be appointed by the Government in a timeframe which will enable the development of the Company’s flagship project – Weld Range – to be confirmed.

By cooperating with Yilgarn Infrastructure and entering into Foundation Infrastructure User Agreements with Yilgarn Infrastructure, Midwest has met the W.A. Government’s objective of having an independent infrastructure provider, while also avoiding the capital cost and burden of the infrastructure provision.

Summary

In short, the outlook for the next 6 – 9 months is for delivery of a series of value confirming milestones that are expected to result in Midwest becoming a leading producer of iron ore and concentrates in the region. Midwest’s development program is successfully putting in place infrastructure and risk mitigation strategies in parallel to developing a portfolio of individually substantial projects with high earnings potential.

-End-

For further information contact:

Competent Person:

The information in the report to which the statement is attached that relates to Mineral Resources, Ore Reserves and exploration results (rock chip samples) is based on information compiled by Mr Malcolm Titley who is a Member of The Australasian Institute of Mining & Metallurgy and/or by Mr. David Broomfield, who is also a Member of the Australian Institute of Mining and Metallurgy.

Mr Malcolm Titley (MAusIMM) is a Principal of CSA Australia Pty Ltd and is responsible for the estimation of the Mineral Resources for the Weld Range deposits, the Jack Hills deposits and the Koolanooka Detritals and Mungada East deposits (Koolanooka/Blue Hills Hematite). Mr Titley is also responsible for the estimation of Ore Reserves for the Koolanooka/Blue Hills Hematite project.

 Mr Titley has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Titley consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Mr David Broomfield (MAusIMM) is a full time employee of Midwest, and provided geological and mineralogical interpretations for the Mineral Resource estimates of the Koolanooka/Blue Hills Hematite and Jack Hills Hematite projects. Mr Broomfield also provided the Mineral Resource models for the Koolanooka South Fold and Blue Hills Mungada West pit optimisation studies for the Koolanooka/Blue Hills Hematite project. Mr Broomfield is also responsible for the compilation of the exploration results (rock chip sampling data) for the Robinson Range project.

Mr. Broomfield has had sufficient experience which is relevant to the style of mineralisation and the types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr. Broomfield consents to the inclusion of his name and to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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