June Quarterly Report

RNS Number:5336H
AuIron Energy Ld
26 July 2001

26 July 2001


              QUARTERLY REPORT FOR THE PERIOD ENDED 30 JUNE 2001


SOUTH AUSTRALIAN STEEL AND ENERGY (SASE) PIG IRON PROJECT (AUY 90% interest)

Demonstration Plant Operations

The Whyalla demonstration plant achieved sustained high levels of output and
product quality for extended periods from mid May to end June as referred to
in previous releases.  Early in the June quarter, initial planned trials with
lower quality Leigh Creek coal were cancelled due mainly to capacity
constraints in the coal drying plant.  The furnace was shutdown from 8 April
to 13 May for scheduled maintenance and repairs and crew leave.

The furnace operated almost continuously from 13 May to 29 June. Steady state
operation and trials to determine influences on pig iron product quality were
extended.

Lances with a new design were installed and commissioned on 7 June following
which much higher productivity process conditions were achieved using oxygen
enrichment.  Results included 34 hours of continuous smelting during which
iron ore feed rates above 3 tonnes per hour were achieved over an 11 hour
period equivalent to over 150% of nominal design rate.

The plant is now shut down and operations are expected to resume in early
August.


Feasibility Study

AuIron has decided to commence the important scale up work for the SASE
Project's feasibility study.  This will include increasing the capacity of
several key original ancillary equipment items over the next few months with
the objective of achieving production rates from the existing furnace several
times that of the original nominal design capacity.

The feasibility test work smelting will therefore extend operations of the
demonstration plant beyond July 2001, will include completion of testing coal
recently extracted from AuIron's Ingomar pit and assess higher levels of
smelting intensity.  This is expected to reduce further the scale-up ratio for
the commercial plant and should also lower financing risks for the commercial
plant.


Ingomar Coal Trial Pit

Cooks Construction and MineConsult completed the extraction of 16,000 tonnes
of Ingomar coal on time and below budget during May.  A total of 5,000 tonnes
of crushed and sized coal was transported to Whyalla where it is being washed
and prepared for the smelting trials in the September quarter.  It is planned
to use the remainder of the bulk sample for power station combustion testing
and other local and export coal market development strategies.

By agreement with the relevant government authorities, the pit is in a ready
condition for ease of commencement of commercial coal mining.  Cost estimates
and commercial mine development plans are proceeding during the September
quarter.

The completed test pit measures 200 X 200 metres and is 32 metres deep with
670,000 bank cubic meters of overburden having been removed.  Photographs of
the trial pit progress may be accessed from the Company's website.



Federal Government Environmental Clearance of Ingomar

Data collected from the Ingomar coal area in the March quarter was referred to
the Federal Government's Environment Australia for consideration under the
Environment Protection And Biodiversity Conservation (EPBC) Act.  Environment
Australia advised that as a result of the survey no endangered species would
be affected and therefore the provisions of the EPBC Act had been satisfied.


BALLYMONEY NORTHERN IRELAND MINE AND POWER PROJECT
(AUY 100%)

Power Station Partner

A pre-feasibility study for a Ballymoney Power Station is being undertaken by
independent power consultants.  Upon completion of this study, AuIron intends
to prepare an information memorandum with a view to inviting proposals from
potential power station partners.  Since the end of the June quarter,
invitations were issued to selected financial institutions to apply for the
role of financial adviser to the Ballymoney project.  The responses are being
evaluated.


Mine Planning and Costing

New studies and costings will be completed in the September quarter to assist
in the preparation of the power station pre-feasibility referred to above.


New Drilling Programme

A new in-fill drilling programme will also commence in the September quarter
in order to establish improved geotechnical certainty in mine design and
costing and to provide more detailed coal quality data for the  power station
final feasibility studies when a power station partner is selected.


FINANCIAL/CORPORATE

The fully underwritten AuIron Rights Offer of one new share at 85 cents or
31.25 pence sterling for each four existing shares held was successfully
completed and certificates/holding statements will be issued and dispatched to
Shareholders by 30 July 2001.  The gross proceeds of the issue were
approximately $ 55 million. The total number of AuIron issued fully paid
shares will then be 326,539,232.

We are pleased to note that on 6 July 2001 Capital Group Companies Inc of the
USA, acquired 5,290,580 additional AuIron shares.  Following that acquisition,
Capital Group had an interest in 19,620,000 Shares.


Index Inclusion

AuIron shares have been included since 1 July 2001 in a new international fund
manager index published jointly by Morgan Stanley and Standard and Poors, the
"GICS Materials" Index.  AuIron is one of only 30 Australian companies
included in this index.

As previously announced, AuIron Shares were included in the S&P ASX 200 Index
from 1 April 2001.


COMPETENT PERSON

All technical information in respect of the coal, pig iron and electricity
related projects was prepared by Eur Ing Mr. N F Arthur, B E (Chem) Hons, C
Eng, FIChem, FAusIMM, FAICD, Managing Director & CEO and accurately reflects
the information compiled by him.  Mr. Arthur has consented and not withdrawn
his consent to include herein the information in the form and context in which
it appears.
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