AZR Aztec Res.

RNS Number:9429K
Aztec Resources Limited
24 October 2006

24 October 2006

ASX Announcement

 Aztec Successfully Concludes Agreement with Australian Royalties Corporation -
                        Banking Credit Approval Pending

Aztec Resources Limited (ASX and AIM code: AZR) ("Aztec") is pleased to announce
the signing of a deed of settlement and release ("Agreement") terminating the
royalty and repurchase rights held by Australian Royalties Corporation Pty
Limited ("ARC"), the original vendor of 30% of the Koolan Island Iron Ore
tenements.

Under the Agreement:-

* ARC will release all caveats it has lodged over Aztec's Koolan Island
  mining tenements;

* ARC and Aztec have terminated the royalty and repurchase arrangements.
  As a result, ARC is no longer entitled to amongst other things:

  * The royalty of A$1 per tonne for every tonne of iron ore sold
    from the Project that was previously payable to ARC;

  * The option for ARC to repurchase its original 30% interest in
    the Koolan Island tenements for a nominal sum if production has not
    commenced from those tenements by 15 June 2007;

* Aztec has issued 77,777,778 fully paid ordinary shares in Aztec to ARC
  at a price of $0.225 per share (equivalent to Aztec's one month Volume
  Weighted Average Price to 18 October 2006).

This issue of these shares to ARC represents total consideration of $17.5
million for the royalty and associated rights. This represents a substantial
saving to the undiscounted value of the royalty which would have been $29.1
million over the life of the mine based on the planned mining schedule of 29.1
million tonnes. This $29.1 million excludes any additional payments likely to be
attributed to any upside potential from Aztec's exploration activities.

Aztec Chairman Ian Burston said the Agreement was an excellent outcome for Aztec
shareholders:

"We have improved the profitability and security of the project by extinguishing
all rights held by ARC."

"Most importantly, the agreement with ARC will allow the banking syndicate to
finalise credit approval for Aztec's $100 million debt finance facility. Once
credit approval is received, which we anticipate will be in the next few days,
Aztec will be on track to deliver first mining and stockpiling of iron ore by
the end of 2006 and first shipments of iron ore in early 2007," Mr Burston said.

Aztec notes that the issue of shares to ARC will trigger a defeating condition
in Mount Gibson's (ASX code: MGX) Offer. However, the signing of this agreement
was a commercial imperative that was critical to the future of the Company and
Directors felt the interests of Aztec shareholders were best served by entry
into this Agreement. As previously noted, Aztec has kept Mount Gibson, to the
extent possible, fully appraised of developments.

ARC has indicated its position in respect of the Mount Gibson Offer in a letter
which can be viewed as an attachment to this announcement on the ASX website
www.asx.com.au.

In summary, ARC will accept the Offer in relation to the shares issued under the
Agreement if:

   * Mount Gibson varies the Offer so that it extends to the shares issued to
     ARC under the Agreement;

   * Aztec Directors recommend the Offer (in the absence of a better offer);
     or

   * Mount Gibson's Offer is declared free of all defeating conditions no
     later than 21 days after the date of the issue of the new shares.

Aztec has requested that the suspension from trading be continued until the
credit approval from the banking syndicate is received. Aztec undertakes to keep
the market informed of progress in respect of credit approval.

For further information please contact:
Aztec Shareholder Information Line
Australian Callers: 1800 602 244
International Callers: +61 8 6218 4220

Media Enquiries
Purple Communications
Warrick Hazeldine
Tel: +61 8 9485 1254
Mob: +61 (0) 417 944 616
E:whazeldine@purplecom.com.au

UK
Fiona Owen, Grant Thornton: +44 (0) 870 991 2318


                      This information is provided by RNS
            The company news service from the London Stock Exchange

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