High Grade Drilling Results from Melba Flats Project

SYDNEY, Australia, Jan. 9 /PRNewswire-FirstCall/ -- Allegiance Mining (ASX: AGM) today announced high grade drilling results from the Melba Flats project in Western Tasmania, including encouraging results from the Nickel Reward Project and the Devereaux Prospect. A full copy of the report is available at www.allegiance-mining.com.au/default.asp?id=21.

Drilling results at the Nickel Reward Project revealed a .7m (drill hole width) intersection of massive sulfides assaying 10.8% Nickel and 3.81% Copper, at twice the depth of previously drill-tested mineralisation. Drilling results from the Devereaux Prospect, 800 metres west of Nickel Reward Project, identified a significant new zone of Nickel-Copper mineralisation with the best intersection being 4.7m (drill hole width) of 1.3% Nickel, 0.94% Copper. The mineralisation type bears similarity to that recorded from large magmatic Nickel, Copper, Cobalt, Platinum and Palladium deposits, such as to those found at Voisey Bay.

In August 2007, a 269 ha Mining Lease (ML 2M/2007) was granted to Allegiance over the principal resource areas at Melba Flats to facilitate mine development. Based on the drilling results, Allegiance has commenced the planning and permitting of shallow open-cut and underground mining operations at Nickel Reward and North Cuni-Genets within the recently granted Mining Lease. Quotations for metallurgical test-work have been received.

Commenting on the drilling results from the Melba Flats project, Tony Howland-Rose, Chairman of Allegiance Mining, said:

"Allegiance has for some time been of the view that the Melba Flats area is highly prospective for deeper substantial Nickel-Copper-Gold-Platinum deposits. These drilling results confirm Melba Flats possesses many of the important key geological features of large magmatic Nickel-Copper sulfide deposits, and nickel skarn deposits, such as at Voisey Bay and gives me enormous confidence in the potential for the area to deliver long-term value for Allegiance shareholders.

"With Avebury now close to production, it is the intention of the Company to direct an increased exploration and development effort onto Melba. A substantial program of core drilling is scheduled to commence this month (January 2008) to follow up on the encouraging drilling results and pursue the long held view that the Melba Flats area is highly prospective for larger Nickel-Copper deposits at depth below the current level of shallow drilling. Also in 2008 we will commence deeper drilling at Nickel Reward, follow-up drilling at Devereaux, metallurgical test work, mine planning and Development Plan and Environmental Plan studies, and technical studies of Melba mineralisation to guide deeper exploration.

"We expect that short-term production from Melba will substantially enhance economic outcomes from the Avebury mill, and realisation of the deeper prospectivity opportunities will afford the Company a major platform for long- term growth," he said.

    For Further Information Contact:

    Media: Ross Thornton, Third Person,
    +61418 233 062;

    Stuart Carson, Third Person,
    +61403 527 755

    Shareholders : Information line on 1300 135 871 (Within Australia)
    Foreign holders please dial +61 3 9415 4395

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