EXS April 4, 2012

Exco Resources Limited Mining and exploration company focused on gold and copper assets Gold-producing White Dam project in SA an important source of cash Cloncurry Copper Project sold in June 2011 to Xstrata for $175m

Junior explorer Exco Resources has had two major wins in recent years, a track record that most small miners would be envious of. The company continues to expand its exploration programme, hoping to repeat the success of its White Dam gold mine operation and the Cloncurry Copper Project (CCP) now that ample cash is available. The company remains focused on copper and gold exploration in north-west Queensland and around its White Dam operations in South Australia. White Dam, a joint venture between Exco (75%) and Polymetals (25% - ASX:PLY) 80km west of Broken Hill in SA, poured its first gold in April 2010 and has repaid loans over the project 9 months ahead of schedule. Though the dump/heap leach method used to extract the precious metal is low cost, cash operating costs did increase for White Dam in 2011 as the resource became depleted. Whilst a handsome profit has been generated, no new ore will be extracted from the current pit and further exploration will be conducted. The much smaller Vertigo deposit nearby will provide a marginal increase to production, but total production will be down on prior periods. Rehabilitation costs are not expected to be significant for the site. The sale of Excos Cloncurry Copper Project to Xstrata in June 2011 was well timed for the small explorer, with the LME copper price breaking through the $10,000/tonne just months before. The $175m sale resulted in a $0.38 per share fully franked dividend paid out to shareholders. Since then, demand for copper has been seriously affected by the European debt crisis and signs of a hard landing for China. Prices had fallen to below US$7,000/tonne but have since rebounded to just above $8,200. Gold prices have been fluctuating on news and rumours of quantitative easing and recovery (US), slowdown (China) and outright collapse (Eurozone). Further fluctuations are likely, but gold will remain above the US$1,500/ounce level as demand for the precious metal continues to grow in China and India. The drilling programme in Queensland has been hampered by the wet season but should ramp up in the coming months. The Cloncurry and Hazel Creek projects are Excos two main prospective endeavours, located around Cloncurry and 90kms further to the north, respectively. The Cloncurry area is known for its iron oxide-copper-gold deposits, so Exco may have struck a significant resource at its Salebury prospect (an intersection of 16m at 1.86% Cu and 1.22g/t Au). The company has also identified resources (indicated and inferred) of 1.842m tonnes at 1.03% Cu at the Turpentine prospect within the Cloncurry Project. Further drilling will use up a lot of Excos excess cash, but some of that may also be saved for any potential acquisitions or strategic investments. Since payment of the special dividend and capital return in November 2011, Excos share price has fluctuated around the $0.20 mark. The substantial return to shareholders shows managements reluctance to sit on large piles of cash in the absence of attractive investment and exploration opportunities. If a quick injection is needed by the company, it is hoped that investors will be just as willing to part with their money.

Kosta Sinelnikov

2012