Increased Resources at Cheowa



9 July 2008

Zambezi Resources Limited  

("Zambezi" or "the Company")

Increased Resource at Cheowa Copper Gold Project 

• Total CC2 Resource more than doubled to 6.5 million tonnes

  Indicated Resource of 3.5mt @ 1.1% copper and 0.23g/t gold
  Inferred Resource of 2.9mt @ 1.1% copper and 0.38 g/t gold

• Deep Diamond Drilling at CC2 demonstrates that mineralisation continues to depths of at least 500m and that grades may be increasing with depth

• New results include: 

4.4m at 2.73% copper from the 200m - 400m panel

2m at 3.63 % copper from the 200m - 400m panel

2.6m at 3.97% copper from the 400m - 600m panel

• Evaluation of optimum mining approach underway

• Diamond Drilling Scheduled to complete in July 2008. Further deep drilling may be best carried out from underground

Zambezi Resources Limited ("Zambezi") (AIM: ZRL; ASX: ZRL) today announces an updated resource estimate on its Cheowa Copper Gold Joint Venture Project in southern Zambia.

The company has recently focussed its attention on CC2 which is perceived to be the most highly mineralised zone within an overall corridor of up to 14km. The rationale behind this was that should sufficient ore grade material be defined at CC2, the company, together with its joint venture partner Glencore, would embark on a Prefeasibility Study with the aim of putting the deposit into production.

A revised Mineral Resource estimate has been completed in accordance with the 2004 JORC Code for CC2, with an Indicated Resource of 3.5mt @ 1.1% copper and 0.23g/t gold and an Inferred Resource of 2.9mt @ 1.1% copper and 0.38 g/t gold (Table 1). 

The total contained resource at CC2 has more than doubled from 2.9mt to 6.5mt. The new estimate was calculated over a strike length of 1,700m and incorporates for the first time an inferred category for the 200m-400m vertical panel below surface at CC2 where diamond drilling is ongoing.

Commenting today Julian Ford, Managing Director, of Zambezi Resources said: "Further resource increases are anticipated from an additional 37 diamond drill holes completed during the March quarter that intersected visible mineralization. I look forward to announcing these results as we continue to progress the project towards possible development."

  Table1: Mineral Resource Estimate, Cheowa Copper Gold Project1

1 Glencore earning 51%; 2 SG 2.35 for oxide zone, 2.71 for transition zone, 2.81 for fresh rock;  3At a lower cut of 0.3% copper, and a top cut of  7.3% copper;  4Reported within the comparable copper volume, top cut of 2.3 g/t gold.

The 200m-400m panel at CC2 has now been tested with 51 diamond holes, of which results have been received for only 14 holes. An additional 37 diamond drill holes drilled during the March quarter intersected visible mineralization consistent in width and copper sulphide percentages with those intersected within the 0-400m Mineral Resource. Samples have been dispatched for these holes and all assays are expected by end September, when a new global resource will be calculated and used for the Prefeasibility Study. These holes have primarily been drilled at depth below CC2 and the interpreted plunging higher grade copper zone (>1.5%), and have been targeted to intercept mineralisation between 400m and 600m below surface. Recent results received from the deep diamond drilling at CC2 include 4.4m at 2.73% copper and 0.25 g/t gold (CHEDD0083, 261.6-266m), 2m at 3.63 % copper and 0.50 g/t gold (CHEDD0074, 290-292m) and 2.6m at 3.97% copper and 0.23 g/t gold (CHEDD0080, 486.4-489m). These results suggest that mineralisation may be increasing with depth. Any further drilling at these depths may be best carried out from underground if an underground mining operation is established at the project going forward.

A diamond drill rig is now testing the 600m-800m panel, although the drill density in this panel will not be sufficient at this stage for estimation of a JORC resource. Rather, drilling of the deeper panel is designed to test for mineralisation for the last few years of a conceptual 10 year Life of Mine "LOM" plan.

Elsewhere at Cheowa, scout drilling at the CC3-CC6 envelope to the east of CC2 has returned a copper grade in the order of 0.5% in a mineralised wireframe over a strike length of approximately 400m to a vertical depth of 100m. Scout diamond and RC drilling carried out on the eastern conductors at CC12 has also returned a copper grade in the order of 0.5% in a mineralised wireframe over a strike length of approximately 830m to a vertical depth of 150m. In both these zones, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. The Prefeasibility is expected to be based on the CC2 target only and not include any resources from the other conductors which have also been tested in the 2007/08 drill campaign. These other areas may be brought to account if a mining operation is successfully established at CC2.

Joint Venture partners Glencore International AG ("Glencore") and Zambezi have agreed to combine the Cheowa and Chongwe Copper Belt ("CCB") joint ventures into a single joint venture.  To earn a 51% interest in the original Cheowa and CCB joint ventures, Glencore had to spend US$10 million and US$6 million respectively, for a total of US$16 million.  In the period to 30 June 2008, Glencore have collectively spent US$14.7m and are expected to reach the 51% threshold on both projects in the September 2008 quarter.

   Table 2: Cheowa Copper Gold Project - CC2 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 internal waste of 1m. Mineralised intervals >3m% copper reported here. No cut applied to gold values. Mineralisation dipping to north at 50-55 degrees. Mineralised widths reported on downhole basis, true width approximately downhole width x 0.9 . CHEDD 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 25 geologists and at least eight contracted drill rigs. The company is focused on discovering and developing large Copper-Gold projects in southern Zambia.  The company has entered into two Copper Joint Ventures with Glencore International AG ("Glencore") at Cheowa and the Chongwe Copper Belt. 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 is based on information compiled by Joint Venture and Country Manager Mr Paul Weedon  BAppSc (Geol), PGDipEconGeol, GradDipApp Fin, GDipManagement. Mr Weedon is a full-time employee of Zambezi Resources, and a Member of the Australasian Institute of Mining and Metallurgy. Mr Weedon is a Competent Person as defined in the December 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code) 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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