Dragon Energy Limited (ASX:DLE) Lee Steere Project Exploration Update

Perth, Jan 11, 2011 AEST (ABN Newswire) - Dragon Energy Ltd (ASX:DLE) is pleased to announce significant assay results from 100% owned E69/2126-I, which is the eastern tenement of the Lee Steere Project in the Eastern Nabberu Basin, about 200km northeast of Wiluna.

The eastern Lee Steere tenement comprises 47 blocks of 146km2 in area, and covers 28km strike of the prospective Frere Formation. The western Lee Steere tenement (E69/2377-I) is located some 80km to the west, which covers 19.6km strike of the Frere Formation. Past exploration work in the 1970s by Amax Exploration and BHP (ASX:BHP) (NYSE:BHP) identified hematite/goethite enrichment along the Frere Formation. Giralia's (ASX:GIR) (PINK:GRLRF) advanced Earaheedy Project (iron ore) is located 154km to the west, Cazaly's (ASX:CAZ) Cecil Rhodes Prospect iron ore discovery is located 67km to the west, and Ausquest's (ASX:AQD) manganese Dome project is located 72km to the southwest.

Ground traverses and rock chip sampling was carried out over 16km of the 28km strike of the Frere Formation. Stratigraphic units with variably elevated iron were observed within the Formation as discontinuous units. Numerous elevated iron outcrops were identified, with the largest being a granular iron outcrop of dimensions 90x20m, returned 59.6% Fe (LSR031).

A number of outcrops, pods and surface encrustations of manganese were observed in the area. The highest Mn grade of 49.5% (LSR035) was received from a discontinuous 100m Mn-rich pod of apparent 24m thickness with diffuse Mn enrichment of the host rock margins over a 200x30m area, discordant to the strike of the Frere Formation. The main areas of Mn outcrop appear to be discrete localised enrichment of the Frere Formation, and different in characteristics to the stratabound Mn units with clearly defined contact boundaries observed at the western Lee Steere tenement.

In the 15 October 2010 ASX Release a number of significant rock chip Fe and Mn assays were reported from the western tenement. Gold assays have recently been received from these samples with 19 from 23 samples returning assays above the 0.01ppm detection limit. The highest assay returned 0.34g/t Au.

Dragon intends to carry out further field reconnaissance on as yet unexplored tenement areas. Ground magnetic and 3D gravity modelling the western tenement are underway to define potential exploratory drill sites.

Project Background

Dragon acquired the 100% owned Lee Steere Project from Polaris Metals in March 2010. Polaris has a free carried interest to 25% until Dragon has sole funded A$1,000,000 of iron ore exploration. Subsequent iron ore exploration and/or development work will be funded on a 75/25 basis. The agreement provides Dragon with exclusive rights to any other minerals discovered.

For the complete Dragon Energy Ltd announcement including location maps and figures, please view the following link:

http://www.abnnewswire.net/media/en/docs/64958-ASX-DLE-524058.pdf

Contact

Gang Xu Managing Director Tel: +61-8-9322-6009 Mob: +61-411-039-645 Mark Hafer Exploration Manager Tel: +61-8-9322-6009 Mob: +61-403-966-776 http://www.dragonenergyltd.com/