Murchison Metals Limited (ASX:MMX) Quarterly Report For The Period Ending 30 September 2009

Perth, Oct 29, 2009 AEST (ABN Newswire) - As at 30 September 2009 Murchison Metals Limited (ASX:MMX)(PINK:MUMTF) was debt free and had cash and liquid investments of A$108 million, a decrease of A$17.4 million from the previous quarter. Included in this cash outflow are amounts paid to Crosslands and OPR of A$13.9 million to finance feasibility studies and exploration costs. Interest earned on investments for the quarter amounted to A$1.1 million.

During the quarter, work continued on feasibility studies for both Crosslands' mine expansion project and OPR's port and rail project. Murchison expects the feasibility studies to be completed in 2010. These studies are being prepared as conditions in key iron ore markets continue to improve.

It has been reported that Chinese steel production in September matched the record daily rate set in August, at around 1.69 million tonnes per day, or an annualised rate of approximately 617 million tonnes. This record production rate is also reported to have carried through into the first half of October. Based on these reported rates, Chinese steel production is now 23% higher than in 2008. The World Steel Association is now forecasting that 2010 global steel demand will grow by 9%, returning to 2008 levels.

Consequently, Chinese iron ore imports hit a record high in September, with China Customs reporting 64.6 million tonnes of iron ore imported for the month. Chinese iron ore imports have increased markedly since the start of 2009, as cheaper higher quality imported ore displaces lower quality higher cost domestic production in market share.

Benchmark negotiations for the 2010 iron ore price are expected to begin in the December quarter. Given the strong market and positive outlook, analysts are forecasting an increase of between 10% to 20% from the 2009 benchmark fines price.
Settlement of Evans and Koh Litigation

During the quarter, the Company settled the legal proceedings brought against the Company by David Evans and SH Koh, former directors of Chameleon Mining NL ("Chameleon").

The litigation, which commenced in March 2005, concerned an agreement made in 2004 between the plaintiffs and Nicu Metals Ltd (now Murchison) before the current Murchison Board and senior management group were appointed. The plaintiffs had claimed a 5% interest in the Jack Hills iron ore project and a quantity of Murchison shares.

Chameleon, which claimed to have an interest in the litigation under an agreement with the plaintiffs, had estimated the value of the claim to be in the order of A$150 million - A$250 million.

Under the terms of the settlement, Murchison agreed to issue 3.5 million shares, make a payment of A$350,000 and pay the plaintiff's costs (to be assessed).

Chameleon Litigation

On 29 November 2007, Chameleon commenced legal proceedings against Murchison, Crosslands and several other parties. Chameleon is claiming an interest in the Jack Hills and Weld Range projects and/or Murchison's shares in Crosslands, arising out of a series of transactions that occurred in 2004 before the current Board and management of Murchison were appointed.

After a 4 week hearing in the Federal Court in Sydney the matter was adjourned on Friday 23 October 2009. The oral evidence has been completed and the parties will return to the Court for closing submissions in early February 2010.

Murchison is pleased that the matter has now progressed to the point where the only substantial remaining issue is for the parties to present their closing submissions. Murchison is satisfied with the way the trial has progressed to date and looks forward to a successful outcome.

Annual General Meeting

The Company's Annual General Meeting will be held at 10am on Wednesday 18 November 2009 at the Parmelia Hilton, Perth. The Notice of Meeting and the Annual Report for the year ending 30 June 2009 are available on the Company's website.

For the complete Murchison Metals Quarterly Report for the period ending 30 September 2009, please click the link below:

http://www.abnnewswire.net/media/en/docs/61663-ASX-MMX-466541.pdf

Contact

Paul Kopejtka Executive Chairman Murchison Metals Ltd Tel: +61-8-9492-2600