8 July 2008

Zambezi Resources Limited  

("Zambezi" or "the Company")

Kangaluwi Copper Project Update

• 100% owned Kangaluwi prospect confirmed as major new discovery of copper mineralization in Southern Zambia

• 28km of prospective strike length identified in immediate area. Drilling to date has tested only 10% of the estimated prospective strike length

• Initial Metallurgical Test results indicate sulphide recovery in excess of 95% for copper from conventional flotation

Zambezi Resources Limited ("Zambezi" or the "Company") (AIM: ZRL; ASX:ZRL) today announces progress on its 100% owned Kangaluwi Copper Project which is the main focus of the 2008 drilling campaign.

The greater Kangaluwi project covers in excess of 28km of strike length. The company intends to test the majority of this strike length in the 2008 and 2009 field seasons.  

The 2008 drilling campaign is now well underway with 6 rigs on site and 15,500m drilling completed so far this season. Further encouragement has been received from recent drilling with excellent continuity both down dip and along strike. 

The new independent analytical laboratory being established in Lusaka in Zambezi's sub-leased warehouse is expected to be fully operational by the end of August and is expected to substantially reduce assay turnaround times.

Preliminary metallurgical testwork on composite 2007 drill core from Kangaluwi has indicated favourable metallurgical characteristics. The ore is relatively soft with a Bond Mill Work Index of 11.5 kWhr/t, and a Rodmill Work Index of 8.9 kWhr/t. This is based on a single composite test. The first rougher flotation test showed recoveries in excess of 95% copper and silver which are the only metals expected to be of economic value for the Kangaluwi Project. A set of more comprehensive metallurgical tests will be undertaken commencing in September 2008.  

Commenting today Julian Ford, Managing Director of Zambezi Resources, said "Following the success of the drilling programmes in 2007 and early 2008 we now recognise that Kangaluwi represents a major new discovery in Southern Zambia. The identification of wide intersections of potentially ore grade mineralisation is particularly encouraging. We are excited about the substantial, near surface potential that this deposit offers. With excellent first pass metallurgical results for the recovery of sulphide copper, the strategic importance of this project in the Zambian copper industry has now been established. As a result, we have decided to continue drilling to define the project's boundaries and potential size."

The 2007 drilling campaign initially focused on 3km of strike length at Kangaluwi, which was later narrowed down to an 800m section drilled to a 50m by 50m pattern. The company chose to intensively drill a small area in order to evaluate the possible economic potential of the mineralisation. Due to the encouraging results from this drilling the company has decided that the mineralisation has sufficient potential to justify a much more extensive drilling program at Kangaluwi and on the remaining five zones identified.

The recent intensive drilling program comprised a total of 19,928m of RC and diamond drilling. Assay results from RC and diamond drilling carried out in 2007 continue to return significant copper mineralisation over substantial widths in multiple zones (Table 1). The new results, which are additional to those already announced, include 4.78m at 1.86% copper from 78.67m, 5.72m at 1.26% copper from 104m, 8.72m at 0.93% copper from 43.28m, and 12.5m at 0.97% copper from 91.5m. These results further demonstrate the consistent mineralisation typically encountered at this discovery to date. 

Table 1: Kangaluwi Copper Project - New RC and Diamond Drill Hole Assay Results

Coordinate system Arc50 UTM Zone 35S. Mineralised intervals calculated on basis of lower cutoff of 0.3% Cu, minimum mineralised interval of 0.5m, maximum consecutive internal waste of 2m. Mineralised intervals >3m% copper reported here. Mineralisation dipping to south at approx 35 degrees. Mineralised widths reported on downhole basis, true width approximately downhole width x 0.98. Azimuths reported on UTM grid, grid north = 5.5 degrees magnetic. KNGRC prefix denotes RC drillholes, KNGDD prefix denotes diamond drillholes.

For more information contact:   

Julian Ford, Managing Director               Jeremy Wrathall, Non-Executive Director

Zambezi Resources (Australia)               Zambezi Resources (London)

+61 (08) 9216 9000                                  Mob: +44 7712 776 100

+61 (0) 418 949 580

Fiona Owen                                               Laurence Read / Graham Herring

Grant Thornton UK LLP                           Threadneedle Communications

+44 20 7383 5100                                   +44 20 7936 9600

Nicholas Read / Kate Bell

Read Corporate

+61 (08) 9388 1474

+61 (0) 419 929 046

Downloads available from the Zambezi website at: www.zambeziresources.com 

ADDITIONAL INFORMATION

Zambezi is listed on London's AIM market and the Australian Securities Exchange (ASX & AIM Ticker: ZRL) and currently has two main projects, Cheowa and Kangaluwi.  Zambezi is one of Africa's most active exploration companies with a large, in-house, exploration execution capacity consisting of over 20 geologists and at least eight contracted drill rigs.  The company is focused on discovering and developing large Copper-Gold projects in southern Zambia. At Kangaluwi, which is 100% owned, Zambezi is conducting extensive exploration drilling, as the company believes that the Kangaluwi project has the potential to be a world class open pit copper deposit. Zambezi plans a major resource drill out campaign in 2008 and 2009. The company also has entered into two Uranium Joint Ventures on approximately 50% of its tenement area, one with Rio Tinto and the other with Lithic Metals and Energy.  

The information in this report that relates to Exploration Results is based on information compiled by Exploration Director Geoffrey Johnson BSc (Hons), PhD, Grad Dip Env Sc. Dr Johnson is a full-time employee of Zambezi Resources, and a Fellow of the Australian Institute of Geoscientists. Dr Johnson is a Competent Person as defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, and consents to the inclusion in the report of the matters based on the information in the form and context in which it appears..

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