AusQuest Limited (ASX: AQD) is pleased to advise that diamond drilling has commenced at the Balladonia Copper-Nickel Project in the Fraser Range region of Western Australia (WA), which is subject to its Strategic Alliance Agreement (SAA) with a wholly-owned subsidiary of South32.

A total of six diamond drill holes for 1,400 metres is planned to test targets at the Tea Tree and Harms Lake prospects, with funding for this program partly provided by the Government's Exploration Incentive Scheme (EIS).

At the Harms Lake Ni-Cu-PGE prospect, two drill-holes will test electromagnetic (EM) targets associated with the interpreted mafic/ultramafic intrusion, while at the Tea Tree Cu-Pb-Zn prospect, four holes will test the base metal potential of the inferred banded iron formation (BIF) sequence and a strong EM conductor located at its western margin.

AusQuest's Managing Director, Graeme Drew, said the Company was looking forward to seeing the results of the drilling, with both targets having delivered encouraging early-stage results from the limited amount of exploration completed to date.

'A positive outcome from either prospect would significantly change the perception of this area, which has some similarities to both the Fraser Range region next door - which hosts several nickel-copper orebodies - and the Cloncurry Belt in NW Queensland, where several major copper-gold deposits are known to occur. 'We are excited that drilling is now underway and we look forward to reporting on results as they become available.'

FORWARD LOOKING STATEMENT

This report contains forward looking statements concerning the projects owned by AusQuest Limited. Statements concerning mining reserves and resources may also be deemed to be forward looking statements in that they involve estimates based on specific assumptions. Forward-looking statements are not statements of historical fact and actual events and results may differ materially from those described in the forward looking statements as a result of a variety of risks, uncertainties and other factors. Forward looking statements are based on management's beliefs, opinions and estimates as of the dates the forward looking statements are made and no obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should change or to reflect other future developments.

Contact:

Tel: 08 9364 3866

Fax: 08 9364 4892

Email: InvestorRelations@ausquest.com.au

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