Zambezi Resources Limited (ASX:ZRL)

Kangaluwi Copper Project Update

?  100% owned Kangaluwi Copper Project returns further confirmation of its status as major new discovery of copper mineralization in Southern Zambia

?  RC drilling returns substantial mineralised widths and grades including: 13m at 2.36% copper, 15m at 1.47% copper, 9m at 1.79% copper and 4m at 2.66% copper

?  Diamond drilling confirms down dip continuity of mineralisation

?  Mineralisation remains open along strike and at depth

?  Strong correlation emerging between structural corridors evident in VTEM data and higher grade copper mineralisation

?  75% of the estimated total prospective strike length of the greater Kangaluwi project remains to be drill tested

Zambezi Resources Limited (?Zambezi? or the ?Company?) (AIM: ZRL; ASX:ZRL) today announces progress on its 100% owned Kangaluwi Copper Project (Fig 1).

The 2008 drilling campaign has been underway since May with up to 6 rigs on site and to the end of July, approximately 23,500m drilling has been completed so far this season. Further encouragement has been received from recent drilling with excellent continuity of mineralisation established both down dip and along strike.

Recent encouraging RC drillhole intercepts from the  Kangaluwi Prospect, include: 13m at 2.36% copper, 15m at 1.47% copper, 9m at 1.79% copper, 4m at 2.66% copper, 5m at 1.45% copper, 5m at 1.35% copper, 4m at 1.76% copper, 4m at 1.15% copper, 3m at 2.58% copper and 3m at 1.47% copper (Table 1, Figs 2, 3).

Significantly, ongoing interpretation of data from the recent VTEM survey in conjunction with further drilling and assay results, is providing an increasing degree of confidence in a newly defined strong correlation between distinct trends in the VTEM data and the position of higher grade copper mineralisation (Fig 2).

The VTEM anomaly currently being tested strikes NW ? SE and forms a linear, continuous zone of 3.2km in length. The zone is coincident with a mapped structural corridor and surface geochemical anomalies in excess of 100ppm copper. To date, a 700m length of this zone has been tested by drilling, with a remaining 2.5km long zone open to the south east and yet to be drill tested. A further seven discrete VTEM anomalies of similar character identified within the Kangaluwi Copper Project area are yet to be tested by drilling.

Mineralisation at Kangaluwi consists of chalcopyrite, bornite, malachite and azurite. The dominant copper mineral species is chalcopyrite, with increasing amounts of coarse grained, vein filling aggregate and disseminated bornite now being encountered at depth. The host rocks consist of sheared and brecciated metasediments and metavolcanics. Mineralisation dips moderately to the south west at approximately 30-40^o and occurs within the sheared northern limb of an overturned ESE- plunging regional synformal fold.

Geophysical and structural interpretation is ongoing to assist in drill planning and targeting. Drilling to date has confirmed multiple, stacked lenses of mineralisation from surface which are proving to be continuous along strike and appear to be increasing in both grade and width at depth. Deeper diamond drilling completed at the Kangaluwi Prospect has confirmed down dip continuity of mineralisation, returning significant visual estimations of copper mineralisation including: 18m at approximately 3% chalcopyrite, and 3m at approximately 3% chalcopyrite and 3% bornite (Fig 3). Assays are awaited for these intervals.

The greater Kangaluwi project covers in excess of 28km of strike length (see Fig 1) and detailed drilling has tested only approximately 3.5km strike length to date at Kangaluwi. At the neighbouring Chisawa prospect, drilling has commenced but has tested only approximately 3.5km strike length at drill section spacings of no closer than 200m. 75% of the estimated total prospective strike length of the greater Kangaluwi project remains to be drill tested.

Figure 1: Kangaluwi Copper Project showing Soil Geochemical Copper Anomalies and Prospect Locations.

As at 31 July, the Company?s Board resolved to implement a revised exploration strategy in light of ongoing uncertainty in global financial markets. The key element of the revised strategy is the reduction of all drilling operations in Zambia except for one drill rig that will continue target drilling at the Kangaluwi Copper Project until the end of the field season in November 2008. Zambezi remains confident that in the near future, with a sustained strong copper price, an improved investment outlook for copper exploration in Zambia will eventuate. This will provide certainty for the significant investment required to drill out and develop the Kangaluwi Project.

Commenting on the announcement, Julian Ford, Managing Director of Zambezi Resources, said: ?The continued excellent drill results confirm our opinion that the Kangaluwi Copper Project has the potential to develop as a world-class copper asset and a company-making project. We look forward to progressing this project as rapidly as possible?.

Table 1: Kangaluwi Copper Project ? New RC Drill Hole Assay Results

Coordinate system Arc50 UTM Zone 35S. Mineralised intervals calculated on basis of lower cutoff of 0.3% Cu, minimum mineralised interval of 0.5m, maximum consecutive internal waste of 2m. Mineralised intervals >3m% copper reported here. Mineralisation dipping to south at approx 35 degrees. Mineralised widths reported on downhole basis, true width approximately downhole width x 0.98. Azimuths reported on magnetic grid, UTM grid north = 354.5 degrees magnetic. KNGRC prefix denotes RC drillhole.* denotes results received since last Kangaluwi update, but tabled in the Quarterly Activities Report of 25 July 2008.

Figure 2: Kangaluwi Prospect  showing VTEM anomaly (Channel 10), and position of VTEM anomaly axes (red solid lines and red dashed lines) with  coincident higher grade mineralisation drilled to date.

Figure 3: Kangaluwi Prospect Drill Section 786800E with assays and visual results to date.

For more information contact:      

Julian Ford, Managing Director                         Jeremy Wrathall, Non-Executive Director

Zambezi Resources (Australia)                         Zambezi Resources (London)

+61 (08) 9216 9000                                           Mob: +44 7712 776 100

+61 (0) 418 949 580

Fiona Owen                                                        Simon Edwards / Adam Lloyd               

Grant Thornton UK LLP                                     Evolution Securities Ltd

+44 20 7383 5100                                             + 44 20 7071 4300

Nicholas Read / Kate Bell                                 Laurence Read / Graham Herring

Read Corporate                                                 Threadneedle Communications

+61 (08) 9388 1474                                          +44 20 7653 9850

+61 (0) 419 929 046

ADDITIONAL INFORMATION

Zambezi is listed on London?s AIM market and the Australian Securities Exchange (ASX & AIM Ticker: ZRL) and currently has two main projects, Cheowa and Kangaluwi.  Zambezi is one of Africa?s most active exploration companies with a large, in-house, exploration execution capacity. The company is focused on discovering and developing large Copper-Gold projects in southern Zambia.  At Kangaluwi, which is 100% owned, Zambezi is conducting extensive exploration drilling, as the company believes that the Kangaluwi project has the potential to be a world class open pit copper deposit.  The 2007 drilling campaign initially focused on 3km of strike length at Kangaluwi, which was later narrowed down to an 800m section drilled to a 50m by 50m pattern. The company chose to intensively drill a small area in order to evaluate the possible economic potential of the mineralisation. Due to the encouraging results from this drilling the company has decided that the mineralisation has sufficient potential to justify a much more extensive drilling program at Kangaluwi and on the remaining five zones identified. The company also has entered into two Uranium Joint Ventures on approximately 50% of its tenement area, one with Rio Tinto and the other with Lithic Metals and Energy.  

The information in this report that relates to Exploration Results is based on information compiled by Exploration Director Geoffrey Johnson BSc (Hons), PhD, Grad Dip Env Sc. and General Manager Exploration Mr Jay Klopper BSc (Hons). Dr Johnson is a full-time employee of Zambezi Resources, and a Fellow of the Australian Institute of Geoscientists.  Mr Klopper is a full-time employee of Zambezi Resources, and a Member of the Australian Institute of Geoscientists.  Dr Johnson and Mr Klopper both have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as  Competent Persons as defined in the 2004 Edition of the  Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.  Dr Johnson and Mr Klopper both consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

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