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1 ASX Code: HDG Fully paid shares: 47,354,029 Announcement to the Australian Stock Exchange 15 th March 2011 Unlisted options: 2,800,000 Option to Earn Majority Interest in a Second Coal Prospect within Botswana. BOARD MEMBERS Peter Mullens Chairman Mark Major Managing Director Nathan McMahon Non-Exec Director Bryan Dixon Non-Exec Director CORPORATE DIRECTORY Company secretary - Lisa Wynne Stock exchange listing: Australian Securities Exchange Code: HDG, HDGO Solicitors: Cardinals Ground Floor, 57 Havelock Street West Perth WA 6005 Auditors MGI Perth Level 7, The Quadrant 1 Willliam Street Perth WA 600 Share registry Advanced Share Registry Services 110 Stirling Highway Nedlands WA 6009 Telephone (08) Facsimile (08) HEAD OFFICE Level 2, 38 Richardson St West Perth, WA 6005 Telephone : (08) Facsimile : (08) info@hodgesresources.com.au Option to earn up to a 90% interest in a strategic coal company with an Exploration Target of 800 Million to 1.3 Billion within the Moiyabana area, Botswana. Hodges Resources Ltd ( Hodges or the Company ) is pleased to announce that it has reached an agreement with shareholders of Jaquar Ventures (Pty) Ltd ( Jaquar ), for the acquisition of up to a 90% of the equity of Jaquar. Jaquar owns 100% of the the Moiyabana Coal prospect. It s second Coal project in Botswana. The Moiyabana Coal Prospect is located within the eastern central district of Botswana, approximately 70km in a direct line to the operational Morupule mine and Colliery; the only operational coal fired power plant in Botswana. The work completed by the current owner has shown that the exploration target investigated is confined to an area of around 45 square kilometers of the 540 square kilometer prospecting licenses. The presence of encouraging drill intersections from previous explorers and the vendor demonstrate that significant mineable coal seams are located within the target area and over the entire prospecting areas. Significantly the project areas have had minimal exploration and coal quality analytical work. The agreement is subject to due diligence. 1

2 THE MOIYABANA PROSEPCTS Jaquar Ventures prospecting licences PL93/2008 and PL94/2007 lie within the South East central Kalahari Subbasin of the Karoo Supergroup; 70 kilometers in a direct line to the Moruple Colliery and the Moruple South prospects located close to the town of Palapye (Figure 1) which Hodges is currently conducting due diligence on. Figure 1 Location of Jaquar Ventures Prospecting License, Morupule South prospect and Colliery EXPLORATION HISTORY Shell Coal Botswana (Pty) Ltd (Shell) carried out basic coal exploration work over the general area which consisted of reconnaissance drilling and geophysics. In 2008 Jaquar Ventures drilled three boreholes in an area they acknowledged as prospective from the initial Shell exploration data. On completion of the three boreholes and upon more analysis of the available Shell data, Jaquar commenced with a second phase of exploration in September During the second phase of exploration Jaquar drilled around 1,200m and undertook downhole wireline geophysical logging where possible. In addition to this, coal seams that were greater than 0.60m were sampled and analysed; as were series of seams less than 0.60m within the same carbonaceous sequence, as a single composite sample. Samples were transported to the Advance Coal Laboratory in South Africa for a coal quality analysis. 2

3 PROJECT EVALUATION Analytika Holdings, a geological and mine consultant group based in Gaborone, Botswana; prepared a report on behalf of the vendor detailing the vendor s exploration activities, local geology, summary of the laboratory result of the coal quality analysis, and developed a preliminary coal exploration target over a small area of Jaquar s prospecting license. This data and report were verified and reviewed as suitable for defining preliminary exploration targets. The target estimates are based on boreholes JV P1, JV P3, JV P4, JV P6, JV P7, JV P8, JV P12 and JV P13 (see figure 2 and 3). A preliminary estimate of a coal exploration target was calculated in the area defined by these boreholes using the polygon method. This was calculated over a specific area using insitu density of 1.80 and total coal thickness per specific hole. This methodology discussed above is insufficient to determine a resource under JORC, however, it does form the basis for the Company s exploration target of around 500 to 800Mt over a 30 kilometer square coal bearing area of the prospecting license which show indications for suitability for open cast mining; and another 300 to 500Mt target over a 50 kilometer square area of deeper coal seams which may not be suitable for open cast mining. These boreholes have not been modeled using methodologies compliant with a JORC code specification and are regarded as of reconnaissance status under the SANS code categorization. This code is not a JORC code and should be treated in such manner. Figure 2 Location boreholes and areas used in evaluating the target with coal indications close to surface and showing indications for open cast mining techniques. 3

4 Figure 3 Location of boreholes and areas used in evaluating the target with coal indications in a deep seam and showing indications for underground mining techniques. The coal quality is variable, but raw qualities are suitable for domestic thermal markets, indicative of the areas coal field s. There is evidence within the laboratory testwork that some of the coal could be upgraded to export quality coal. The ranges for the exploration target coal quality are expressed in Table 1, below. Table 1. Raw Coal (air dried basis) quality variability. Seam Thickness (m) Upper seam 4.7 to 23.7 Lower seam 2.5 to 8.4 CV (MJ/kg) Ash H2O Vols Total S The stated exploration target above and coal quality must be regarded as provisional indication of likely tonnages and qualities only. Hodges intends to review and upgrade this target to JORC standards within the next 6 months. The exploration target is conceptual in nature and there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. 4

5 TERMS OF THE AGREEMENT Under the terms of the agreement, Hodges will pay US$20,000 for an exclusivity period in which to conduct due diligence until the 13 th May On election to continue Hodges will have 18 months in which to explore the area of interest and determine if it is a viable project for the Company. Hodges are limited to spending up to a maximum of US$7 million during this option period. On exercising the option Hodges will pay the vendor a milestone payment of US$0.025 per tonne for all JORC classified Measured and Indicated Resources calculated to that date. This payment is capped at a minimum of US$6 million and a maximum of US$9 million. At this point the milestone payment and the cost accumulated during the 18 month exploration programme, will be summed and conveyed into shares of Jaquar. This accumulated sum will be deduced from the final payment. In order to purchase the remaining interest in the company (to a maximum of 90%), Hodges will have 9 months from accepting the option to pay the resulting balance of the 18 month accumulated sum from the purchase price of US$70Million. If Hodges elects not to continue with the option, the expenditure undertaken during the exploration period will be converted to shares within Jaquar at that point. Hodges will also enter into a Loan agreement with the vendors and provide a Loan facility of US$3 million on initiation of the agreement. This loan will be repaid on the 18 month milestone or converted into shares of Jaquar. Hodges has the exclusive right, until 13 th May 2011, to conduct due diligence prior to entering into the binding agreement outlined above. A finder s fee consisting of US$80,000 cash payment and issuing of 2.5 million shares and 2 million Options is payable on execution of a binding agreement. An additional finder s fee of 4 million shares and 2 million Options may be payable on definition of a 700 million tonne JORC compliant resource and on decision to mine, an additional 4 million Shares and 2 million Options will be warranted. Please contact Mark Major should you have any queries on this announcement. Mark Major DISCLAIMER This announcement has been prepared relying on information provided by the vendor. The report on the project was completed by Analytika Holdings (Pty) Ltd, Gaborone, Botswana, a geological consultant group with extensive experience in coal in Southern Africa. At the time of drafting this announcement, Hodges has not independently verified the information regarding the above mentioned project. Hodges has no reason to believe the information is not accurate and intends to verify the information whilst conducting due diligence on the projects. It is uncertain that following evaluation and/or further exploration a resource or reserve will ever be able to be reported in accordance with the JORC Code. 5

6 ADDITONAL INFORMATION ON COAL IN BOTSWANA Botswana is located within southern Africa continent. It is a country bordered by the republic of South Africa to the south and south east; Namibia to the west, and Zimbabwe to the north east. Botswana has a stable multi party democracy and is considered to have a medium to low political risk, similar to Namibia. It GDP per capita of US$5,995 and an average growth of 5% per annum ( ). It has over US$9 Billion in foreign currency and gold reserves with a favorable foreign investment climate with no exchange controls and a low tax rates. It has an A2 credit rating by Moody s and Transparency International rate it as having one of the lowest corruption indexes in the world (36 th out of 180 countries in the 2008 review). Botswana is considered to have extensive unexploited coal resources which are estimated to be in the order of 212Bt; which would make it one of the most coal rich countries in Africa. The government has recently undertaken a long term economic development strategy to enhance the potential exploitation of its coal assets for domestic and export demands. It has commenced expansion to its Morupule colliery and is looking to foreign investment to open several others in the coming years. At present the export markets are limited for Botswana. Today they can be accessed principally through South Africa. These routes are increasingly busy and access to the rail and port facilities are tight. The Botswana government has conducted studies on potential other routes to various ports from the coalfields. The possible new routes for transporting coal to export markets are a TransKalahari west coast railway to ports in Namibia and an east coast railway through ports in southern Mozambique. At present the Botswana and Namibia governments are in the final process of tendering for the building of the TransKalahari Railway with construction expected to start in Competent Persons Statements The information in this report that relates to Exploration Targets is based on information reviewed by Mr Mark Major, who is a Member of AusIMM. Mr Major has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Major consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 6