India releases quarterly activities report

HIGHLIGHTS

Surda Mine - Copper

                        •The Surda project continued ramping up towards target copper production with a 24% increase in copper-in-concentrate production over last quarter.

•

Mill capacity now exceeds target production.

•

Mining production is nearing target but was hampered during the quarter by equipment availability and installation and commissioning of new equipment.

Base Metals - Aravalli

                        •Diamond drilling program confirmed extensions of lead-zinc mineralised zones from the adjacent two operating mines onto India Resources Limited (IRL) ground.

•Vedanta Resources PLC announced exploration success from within the Mining Lease excised from IRL's ground.

•Magnetic data was received and supports the continuity of mineralisation onto IRL's ground.

Diamonds - Bundelkhand, Bhandara, Dharwar

                        •Second Reconnaissance Permit (RP) Number 62 granted at Bundelkhand. This largely unexplored area of 780 sq km is uniquely positioned - it lies 20km NE of Rio Tinto's Bunder (Saptarshi) Diamond project, 40km west of Panna, India's only recently producing diamond mine and has previously sampled kimberlitic anomalies to the west along the Dhasan River and to the NE in IRL's other RP.

•Field activities curtailed due to monsoon season.

Base Metals - Askot

                        •SRK Consulting announced an NI43-101 (JORC standard) resource estimate on Pebble Creek Mining's (TSX-V: PEB) Askot Project of 2.0 million tonnes at 2.6% Cu, 5.7% Zn, 3.7% Pb, 0.5 g/t Au and 37 g/t Ag. IRL holds a 17.14% interest in PEB.

Corporate

                        •Working capital debt facility of $1.5 million secured from Hong Kong based global supply chain manager, Noble Group.

OPERATIONS REPORT

Surda Project

Safety

No lost-time injuries were recorded during the quarter. Among several initiatives this quarter were the purchase of Mines Rescue equipment and the introduction of a "Work Permit" system for the project.

Production

Copper production at the Surda project continued to ramp up during the quarter, with a 24% increase in metal-in-concentrate produced over the last quarter. During the quarter the project produced 2,662 tonnes of concentrate at 23.81% Cu from 80,090 tonnes of mined material. All concentrate is sold to India Resources Limited partner Hindustan Copper Limited.

While production was up solidly, the targeted production rate wasn't met consistently, mainly due to commissioning delays for the three newly delivered load-haul-dumpers (LHDs) and an unscheduled replacement of the motor for the no. 4 hoisting shaft. The LHDs had to be disassembled at surface, lowered down the shaft, taken to the working areas and reassembled. The LHDs are now all working and by the end of the quarter mine production was reaching the targeted production rate more consistently. Mill capacity was upgraded to target during the quarter and is currently processing all material supplied from the mine.

IRL continues to introduce new mining and processing equipment and undertake further refurbishment of the mine and plant to facilitate production increases. During the quarter, two new stopes were prepared in Blocks 4 and 6. Grade was lower than target due to variations in three of the working stopes. Block 8 was suspended due to the presence of only low grade material in the face. At Block 18 a 1.5m thick waste band was identified in the middle of the stope and by quarter end was being selectively mined and left to supplement backfill. At Block 32 grade was down due to excessive dilution from a more friable hanging wall.

At the Mosaboni Concentrator plant major works included the commissioning of the 12 new Metso flotation cells which operated on a trial basis and will be fully operational in October.

The Surda project retains strong community support, and IRL has been active in its contribution to community programs, including maintenance of the local reservoir, where a new water filter was installed. A donation was also made to help flood affected people in the neighbouring state of Bihar.

Exploration and Resource Definition Activities

Exploration activities at the Surda project consisted of continued interpretation of the results of the recent drilling program and resource modelling work ahead of a JORC resource estimate. Mine grade control was also given high priority during the quarter.

Figure 1 - Work in progress - Oblique view of surveyed workings and drilling data entered to date.

Aravalli Project - Base Metals

Exploration work continued at the Aravalli Project in Rajasthan, north western India, where IRL is targeting development of base metals deposits, including copper - lead - zinc. At the start of the quarter a diamond drilling program was ongoing and 4 holes were completed (ARD 3 to 6) for a total of 1,420.3m drilled in the quarter. A full table of the ARD drilling programme results is included below. Results for ARD3-5 were reported in the June 2008 quarterly report.

Aeromagnetic and GEOTEM data flown by BHP Billiton and Anglo American respectively over RP 1 were finally received from the Government of Rajasthan. The data were purchased for a nominal amount. The aeromagnetic data were processed in Perth and an image from that processing is shown in Figure 2, along with the location of IRL drilling and the excised mining leases. The image is "Analytical signal" with a lighting angle applied from the southeast that emphasises NE-SW trending magnetic anomalies. The image shows subtle but continuous anomalies extending from the mining operations into the RP, strengthening IRL's interpretation that the mineralisation also extends in a similar fashion. The mining infrastructure at Rajpura Dariba shows up as a strong magnetic anomaly in the centre of the Rajpura Dariba mining lease. The survey was flown before operations commenced at the Sindesar Khurd mine. The GEOTEM data (an electromagnetic technique seeking below-surface electrically conductive material) is still being interpreted.

According to the 2008 Annual Report of Vedanta Resources PLC (quoted on the London Stock Exchange) JORC Resources plus Reserves remaining for these mines are: Rajpura Dariba 24.7 million tonnes at 6.58% zinc, 1.68% lead and at Sindesar Khurd 37.2 million tonnes at 5.81% zinc, 3.82% lead. Vedanta have had a very successful exploration campaign within the Sindesar Khurd excised ML, as they have added 24.6 million tonnes of Indicated plus Inferred Resources over that reported in 2007.

Sindesar Kalan East

ARD006 was drilled at Sindesar Kalan East. The hole intersected 6 zones of mineralisation with a best intercept of 35m at 1.53% Zn, 0.31% Pb from 231m. The mineralisation confirms the presence of the Sindesar Kalan East deposit on IRL ground. The Sindesar Kalan East deposit is considered to rank as one of the world's largest SEDEX deposits (Goodfellow and Lydon, 2007, available at http://gsc.nrcan.gc.ca/mindep/synth_dep/sedex/index_e.php). Information purchased from the Geological Survey of India (GSI) shows 16 SKU diamond drill holes (SKU1-16) as well as 4 BMU (Bamnia) and 17 NSRU holes in the Sindesar Kalan area with a total of 571 mineralised metres of assay results. Further analysis is being undertaken to estimate whether this information verifies the resource estimates made by GSI, but preliminary analysis suggests that it does. The exploration target for this area, based on these GSI historic resource estimates, is considered to be in a range of 65-75 million tonnes at 2.0 to 2.2% Zn, 0.4 to 0.6% Pb.

The sum of exploration targets¹ defined at the Aravalli Project is a range of 95-135 million tonnes at between 2.2 to 4.5% Zn, 0.7 - 1.8% Pb in several discrete areas. Although the grades are on the low side, there is clearly potential to discover discrete higher grade lenses, such as are known to occur at Sindesar Khurd and Rajpura Dariba.

¹ Note, as per ASX guidelines: "Exploration targets" should not be mistaken for an estimate of Mineral Resources or Ore Reserves. The figures are based on historic (not JORC) estimates by the GSI, the current drilling, the SRK Consulting report in the IRL Prospectus of April 2007 and IRL's interpretation of the available geological and drilling data. The potential quantity and grade is conceptual in nature, there has been insufficient exploration as yet to define a Mineral Resource, and it is uncertain if further exploration will result in the determination of a Mineral Resource. Extensive further drilling will be required to establish JORC standard estimates of Resources and this will take place on Prospecting Leases or Mining leases that IRL have now applied for through its wholly owned subsidiary Crown Mining India Private Limited. IRL has a preferential right to PLs and MLs from holding a granted Reconnaissance Permit over the area under the Mines and Minerals (Development and Regulation) Act 1957.

Bundelkhand Project - Diamonds

No field activities were carried out at the diamond projects due to an unusually heavy and prolonged monsoon season. In the Bundelkhand Project, RP number 62 was granted during the quarter. This largely unexplored area of 793 sq km is uniquely positioned - it lies 20km NE of Rio Tinto's Bunder (Saptarshi) Diamond project, 40km west of Panna, India's only recently producing diamond mine and has previously sampled kimberlitic anomalies to the west along the Dhasan River and to the NE in IRL's other RP. IRL's two RPs cover more around 1,800 sq km and are located in the 80 km long Panna alluvial diamond field. Rio Tinto have announced an exploration target of 40-70 million tonnes at their Bunder Project where at least eight lamproite pipes have been delineated.

The 56 stream sediment samples collected previously were observed for kimberlitic mineral indicators. None were found. An investigation of sampling procedure discovered that a systematic sampling error occurred - the samples were not taken from trap sites and were taken from gravel banks in the main stream rather than the tributaries. This programme will need to be re-done. The ongoing data review uncovered an anomalous sample collected prior to IRL's acquisition, which occurs in the northern part of RP 57.

Askot Project - Copper, Lead, Zinc, Gold

IRL holds a strategic 17% shareholding in Pebble Creek Mining Limited (TSX-V: PEB), which owns 100% of the Askot Project through a subsidiary Adi Gold Mining Pvt Ltd. The Askot project lies on a granted Prospecting Licence in Uttarakhand State.

The Askot project is a polymetallic volcanogenic massive sulphide deposit containing 5 metals of economic significance: gold, silver, copper, lead and zinc. The full extent of the mineralised system has not been defined and there is further anomalism over a wide area. The lens discovered to date has been defined for 800m and is faulted at its northern end, with potential for the remainder to be discovered north of the fault.

In August 2008, SRK Consulting, the worldwide geology and engineering consultancy, estimated an NI43-101 (and JORC) compatible resource for the Askot Project of 2.0 million tonnes at 2.6% Cu, 5.7% Zn, 3.7% Pb, 0.5 g/t Au and 37 g/t Ag at a net smelter revenue cut off of $US100 per tonne. Full details of that resource can be found in announcements by Pebble Creek.

Bonai Project - Iron Ore

IRL has maintained its application portfolio of 15 applications in the states of Orissa and Jharkhand.

CORPORATE ACTIVITIES

The Company had previously provided a commercial loan facility to Monarch Gold Mining Company Limited (Monarch) with the majority of the facility having been repaid. On 10 July 2008, the Company was advised that Monarch had been placed in Voluntary Administration. As of that date, the outstanding balance of the loan facility including accrued interest was $4.019 million. The loan repayment schedule was suspended following the appointment of Voluntary Administrators. The Company is now waiting upon advice from the Voluntary Administrators on the capability and timing of repayment of the outstanding amount.

During the quarter the initial and second creditors meeting were held by the Administrators and the Administrators also provided a report to creditors. IRL is represented on the creditors' committee. The creditors resolved to enter into a holding Deed of Company Arrangement which was executed on 5 September 2008 to allow the Administrators time to conclude their investigations, effect the sale of the assets and a restructure of Monarch's share capital.

Hong Kong based global supply chain manager, Noble Group, provided a working capital debt facility of $1.5 million. The facility was provided on normal commercial terms and is repayable within 18 months with Noble subsequently having been granted the right to earlier repayment on demand. The loan is secured by a fixed and floating charge over the Company. During the quarter $500,000 has been drawn of this facility.

In July 2008, the registered office of IRL was changed to 989 Wellington Street, West Perth, Western Australia.

No shares or options were issued during the quarter. The issued share capital of India Resources Limited at the end of the quarter comprised 175,646,966 shares and 114,725,679 listed options. The Company also has on issue 47,000,000 unlisted options over ordinary shares.

Eoin Rothery

Managing Director