Preliminary results for the year ended 30 June 2007

Neptune Minerals is pleased to announce its preliminary results for the year ended 30 June 2007.

HIGHLIGHTS

Active exploration programs

• Kermadec 07, Neptune’s second New Zealand exploration program, began in May 2007 and concluded in August 2007. Neptune discovered two hydrothermally inactive SMS zones over which the Company intends to lodge a mining licence application.
• In July 2007, Neptune commenced its third New Zealand exploration program, Colville-Monowai 07, and participated in an international research program in Neptune’s Italian application areas.

Newmont Mining placement

• In June 2007 Neptune received an investment of £2.5 million from Newmont Mining Corporation, the world’s second largest gold mining company. This placing represented a 10.85% holding in Neptune.
• Newmont may participate in exploration activities in a joint venture and may place staff and provide technical expertise to assist Neptune’s future exploration activities.
• Neptune’s cash position at 30 June 2007 was healthy with £5.92 million in the bank.

Strong exploration portfolio

• During the 2007 financial year, Neptune was granted 200,326 km2 of new exploration acreage and made new applications for 214,000 km2.
• The Company now has a tenement portfolio of 627,000 km2 under licence or application.

Increased shareholder value

• Neptune’s share price increased 155% in the year to 30 June 2007.
• Its market capitalisation increased from £9M to £24M during the financial year.

Result and dividend

• The loss for the Group for the year ended 30 June 2007 amounted to £649,000 (2006: £1,760,000).  The Directors do not recommend payment of a dividend.

Dr Simon McDonald, Neptune’s Chief Executive Officer, said:

“Neptune has made significant progress towards its goal of undertaking trial mining by 2010.  The encouraging discovery of two new SMS zones in Neptune’s New Zealand tenements is an important step towards converting these tenements into mining licences.

"Investor confidence in Neptune has grown, as evidenced by the placement to Newmont and the 155% share price increase in the past year.  Securing the backing of additional significant investors and industry partners will allow Neptune to accelerate exploration and development of its projects.”

CHAIRMAN AND CHIEF EXECUTIVE’S REPORT

The 2007 financial year was a busy and exciting time for Neptune and for SMS commercialisation.  When Neptune was formed in 1999, SMS deposits were relatively unknown outside the research community as was still the case in 2005 when Neptune became the only listed company focussed on exploration and development of SMS deposits.  Within two years, however, interest in the SMS industry has grown considerably. There are now four companies exploring for SMS.  Neptune aims to be trial mining by 2010.

When it was listed on AIM in October 2005, Neptune had one granted prospecting licence and two applications in the New Zealand Exclusive Economic Zone (EEZ).  Neptune undertook to perform two exploration programs within two years using the funds raised at IPO.

By the end of August 2007, Neptune had been granted licences in New Zealand, Papua New Guinea and Micronesia covering a total of 264,000 km2 and had completed three exploration programs in New Zealand and one in Italy using IPO funds.  Neptune has a further 363,000 km2 under application in six jurisdictions, all of which underline the robust pipeline of exploration projects.

Commercialisation of SMS represents one of the few remaining frontier opportunities for mining companies that need new sources to replace current production and to meet growing demand.  Major players in the mining industry have invested in the developing SMS market, with Anglo American, Barrick Gold, Teck Cominco and, most importantly for Neptune, Newmont Mining Corporation investing in the sector.  Newmont became a significant shareholder in June 2007 and Neptune looks forward to Newmont’s involvement and support in the New Zealand exploration program as well as  Neptune’s other projects.

Neptune remains committed to a sustainable development strategy and will continue to work cooperatively with government authorities on marine research and environmental baseline studies in all of its projects.  The Company has made a strategic decision to operate in countries only where the appropriate legislative system is in place to support responsible development of SMS deposits.

Objectives

Neptune aims to be at the forefront of identifying and developing SMS deposits and developing the technologies required to commercialise those deposits in a safe and environmentally sustainable manner.  Key to Neptune’s success will be:

• A large and diverse exploration portfolio;
• An active and professionally managed  exploration program;
• Entering into strategic partnerships with mining companies and marine technology providers; and
• Undertaking additional fundraisings to accelerate SMS commercialisation and maximise the return for investors.

 Large and diverse exploration portfolio

Neptune has used its first mover advantage in defining and applying for a large and diverse portfolio of SMS acreage.  There is now a total of 627,000 km2 either subject to granted exploration title or as applications in areas of known SMS mineralisation.  The focus is primarily in the Western Pacific Ocean.

During the 2007 financial year, Neptune was granted new exploration licences totalling 200,326 km2 in the Exclusive Economic Zone of the Federated States of Micronesia and within the territorial waters of Papua New Guinea.

Granting of these new tenements represents an important step in Neptune’s strategy to build a geographically diverse portfolio of quality exploration tenements in countries where the appropriate legislative system is in place to support responsible development.

Active exploration program

In May 2007 Neptune commenced Kermadec 07, its second New Zealand exploration program. The program comprised high-resolution seafloor mapping and sampling of SMS targets.

During the year, Neptune contracted the New Zealand National Institute for Water and Atmospheric Research (NIWA) vessel RV Tangaroa to undertake ship-based multi-beam bathymetry (swath) mapping over the Colville and Monowai tenements offshore New Zealand. The 30-day program began in July 2007 and fulfills the first term work and expenditure commitment for each licence at a cost of NZ$1.6M (£620,000).

Neptune is considering a joint venture structure as the means of funding Project Trident, a program of continuous exploration across Neptune's granted tenements.  The aim of Project Trident would be to utilise a dedicated survey and sampling vessel with technical and geological staff for at lease 24 months to explore Neptune's New Zealand licences.

The Company plans to undertake resource development using existing marine technologies that have been proven over decades in the offshore oil and gas, diamond mining and the seafloor cable and trenching industries.  Neptune is concurrently forming technical partnerships that will support Neptune during commercialisation.  Partnerships with technology specialists and marine contractors will undertake economic scoping studies, engineering studies and provide logistical support to improve and optimise the systems used in SMS commercialisation.

Additional funding

During the 2007 financial year, Neptune allocated 53% of its operating expenditure on exploration and activities relating to increase in acreage.  As at 30 June 2007, Neptune had cash in hand of £5.92 million.  It is intended that Neptune’s future activities will be financed by a combination of joint venture agreements, together with private and public capital raisings.

In June 2007, Neptune raised £2.5 million through a private placement with Newmont Mining Corporation, the world’s second largest gold mining company.  Newmont holds 10.85% of Neptune stock and has right of first refusal to take a majority joint venture position on any of Neptune’s exploration projects in New Zealand, Japan and Papua New Guinea.  Newmont will conduct metallurgical test-work on the SMS samples that Neptune collects during Kermadec 07 and has the right, at its cost, to allocate its technical staff to assist Neptune with geological, engineering and metallurgical studies.

Seeking cornerstone investments by key mining industry players such as Newmont was part of Neptune’s initial business strategy.  Newmont’s investment and participation, possibly together with others, will allow Neptune to accelerate its activities and work towards a trial mining project in 2010.

RESULTS AND DIVIDEND

The loss for the Group for the year ended 30 June 2007 amounted to £649,000.  The loss incurred in the 15 months to 30 June 2006 amounted to £1,760,000.

The Directors do not recommend payment of a dividend.

EVENTS SUBSEQUENT TO THE END OF THE PERIOD

Neptune completed the Kermadec 07 exploration program on 12 August 2007, announcing the discovery of two hydrothermally inactive SMS zones on the Rumble II West seamount in the Company’s prospecting licence PL39-195 (Kermadec). This SMS field comprises relict sulphide “chimneys” standing up to 13m high and mounds of SMS material including chimney fragments. 

The Company’s intention is that this area will form the basis of Neptune’s first mining licence application.

On 28 August 2007, Neptune concluded its Colville-Monowai 07 exploration program, completing more than 20,000 km2 of ship-mounted multi-beam bathymetry (“swath”) mapping over the Company’s prospecting licence PL39-194 (Monowai).  Numerous SMS-prospective seafloor features were defined for the first time.  These will be further investigated during Neptune’s proposed Project Trident, which should commence in 2008.

On 30 August 2007, Neptune completed its participation in a multinational scientific research program on board the German research vessel RV Meteor.  The Company collected samples from prospective areas on the Palinuro, Marsili and Panarea Seamounts offshore Italy, over which Neptune has tenement applications.

OUTLOOK

Neptune’s priorities for the next year are to commence Project Trident – with full-time exploration activities in New Zealand – and to lodge a mining licence application with the New Zealand Government over the inactive SMS zones identified during the Kermadec 07 exploration program.

Neptune will also continue making applications in selected areas and undertaking exploration programs in areas with tenements granted.

The Company is in the process of forging technical partnerships with specialised industry groups, and is undertaking a scoping study of the mining and lifting technologies required for commercialisation.

Neptune intends to set in place funding arrangements to underpin future core activities, to accelerate the business of commercialising SMS and to maximise shareholder returns.

Peter Vanderspuy                                                        Simon McDonald

Chairman                                                                      Chief Executive

This announcement was approved by the Board of Directors on 19 September 2007.