Perth Office

Suite 3, Level 3, 1292 Hay Street West Perth Western Australia, 6005

Telephone +61 8 6102 6990 Facsimile +61 8 6102 6993

Jakarta Office

Kantor Taman A9 Unit C8-C10 Jl. Mega Kuningan Lot 8.9/9 Jakarta 12950, Indonesia

Telephone +62 21 5793 3425 Facsimile +62 21 5793 3424

Kangaroo Resources Limited ABN: 38 120 284 040 ASX Code: KRL

26th October 2010

OOPPEERRAATTIIOONNSS UUPPDDAATTEE –– MMAAMMAAHHAAKK CCOOKKIINNGG CCOOAALL PPRROOJJEECCTT

Barging operations resume and first export coal sale now imminent

International coal producer Kangaroo Resources Limited (“KRL” or the “Company”) is pleased to provide an update on development and mining activities at its Mamahak Coking Coal Project in Indonesia. As previously reported, KRL has been working towards ramping-up production at Mamahak to a steady-state target level of 50,000 tonnes per month during the final Quarter of 2010 but has been hampered by low water levels in the upper Mahakam River, resulting in delays to the movement of significant tonnages of coal downstream (see ASX Announcement – 3 September 2010). KRL can now confirm that barging operations have re-commenced following the rise of river levels in the upper reaches of the Mahakam River, enabling transportation of coal to resume. The Company has stockpiled 49,000 metric tonnes of coal at its port facility and is now commencing transport of this coal to an ISP (intermediary stockpile point) facility near Tenggarong. The coal product will be stockpiled there awaiting full shipment to be supplied under the terms of its initial coal off-take agreement with a Japanese customer. An additional 8,000 – 10,000 metric tonnes of coal has been prepared for mining to fulfil the balance of the coal sales agreement. This first export sale is expected to be finalised prior to the end of the current quarter.

Conveyor loading coal onto barge at Mamahak port facility

While awaiting the re-commencement of barging operations, KRL has used the time productively to review and improve all aspects of the Mamahak Project, including equipment usage, mine planning, third party contractors and infrastructure requirements.

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These improvements have included the installation of a new crusher, which is operating at a capacity of 200t/hour, and upgrading the haul road and accommodation facilities. In addition, land compensation obligations, mine planning, logistics issues, mine equipment works are all currently continuing in preparation for the ramp-up to steady-state production.

Pictures of the coal stockpile at the Mamahak port facility (left) and coal being loaded onto barge

The Company is continuing to assess outsourcing options for the mining operations at Mamahak to achieve the best possible outcomes from the Project. KRL is continuing to target a production ramp-up at the Mamahak Coking Coal Project to a steady-state level of 50,000 tonnes per month (annualised target of 600,000tpa). KRL Managing Director, Mark O’Keeffe, said: “We are pleased to have re-commenced the barging of coal at Mamahak after the unprecedented duration of low river levels in the upper Mahakam River. The initial sale of coal from this project will accelerate our production growth strategy to build the Company into a significant Indonesian coking coal producer.”

Pictures of the ISP facility near Tenggarong showing loading conveyor (left) and stockpile area.

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Further information: Mark O’Keeffe Managing Director T | +61 8 6102 6990 E | info@kangarooresources.com W| www.kangarooresources.com

ABOUT KANGAROO RESOURCES

Kangaroo Resources Limited (ASX: KRL) is an emerging international mining Company with a portfolio of advanced coal projects in the East Kalimantan region of Indonesia.

The Company’s projects host significant coking and thermal coal resources which will underpin KRL’s strategy to become a significant Indonesian coal producer, building on the first production achieved at its GPK Project in December 2009.

KRL is committed to building a sustainable mid-tier mining house, focusing on Indonesian coal and using the considerable experience and expertise of its exceptional in-country partners to fast track development and production.

The Company’s medium term strategy entails vending in valuable new coal projects, while at the same time continuing to build production in the short term from up to three existing projects. The Company is targeting up to 0.5 million tonnes production in 2010, ramping up progressively thereafter to ultimately achieve up to +10 million tonnes coal per annum from three distinct production hubs in East Kalimantan within three years.

Appendix 1: Project Location Map – East Kalimantan, Indonesia

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