$400,000 Private Placement Arranged to Finance Geophysical Survey in Fox River

August 21, 2006

VANCOUVER — Callinan Mines Limited has retained Geotech Airborne Services (“Geotech”) to perform a comprehensive airborne Versatile Time Domain Electro-Magnetics (“VTEM”) survey on the Fox River Project near Gillam in Northern Manitoba. The Fox River property is held in a Joint Venture with Bell Resources (“Bell”) and has been optioned from W.P. “Bruce” Dunlop. Callinan is the operator for the Joint Venture.

The survey will be comprised of approximately 6,000 line kilometres of flight path flown over an area of approximately 167,000 hectares (413,000 acres) and will commence immediately. The VTEM airborne survey is designed to locate conductive bodies below surface which could represent Nickel and PGE rich sulphide intrusions in the area’s mafic rocks. This airborne survey will eliminate the need for linecutting and ground geophysics, allowing the Company to focus entirely on sampling operations — including diamond drilling — for the entire fall and winter exploration seasons. The joint venture project has already isolated a conductor through a pulse EM ground survey that bears a striking similarity to the conductive signature of Voisey’s Bay Nickel Co.’s “Ovoid” mine in Labrador. The conductor is 600 meters (2000 feet) wide and appears to be approximately 800 meters (2600 feet) in length. The Geotech airborne survey will help to ascertain this conductor’s true size.

The VTEM system can measure the electrical properties of buried rock formations to a depth of 700 metres (2300 feet). The system has a unique aerodynamic design and a programmable high-power transmitter. This means that geologists can explore to depths previously only accessible with ground surveys, with accuracies sufficient for targeting drill holes, and with the high speed of a helicopter-borne survey system. Callinan CEO Mike Muzylowski stated, “In addition to giving us a broad and detailed view of the geophysical occurrences in the belt, this survey will represent a significant cost savings. We’re looking forward to an aggressive program to test our existing conductors, along with any that might be discovered by this survey.”

Callinan will finance its portion of the survey by conducting a private placement of 500,000 units at $0.80 per unit with Geophysical Prospecting Inc. The units will consist of one common share and one half warrant, each whole warrant exercisable at $0.85 per share for 12 months.

About Geotech Airborne

Geotech has conducted airborne electromagnetic geophysical surveys for more than two decades using their proprietary technology and has a long history of notable innovations. In January of this year, the Geotech VTEM system won Mining Magazine’s Exploration-Equipment Award for 2005. For more info on the Geotech Airborne VTEM system please go to: http://www.geotechairborne.com

Fox River Project

Callinan became interested in the Fox River area due to the occurrence of sizeable magnetic anomalies in the proximity of an under-explored mafic sill. The consensus among geological professionals is that this area represents one of the best possibilities for a new discovery of a world class base metals orebody in Canada. The Fox River Belt is widely believed to be a potential host of an extension to the Thompson Nickel Belt. The Project encompasses over 167,000 hectares and contains multiple high priority Nickel/PGE targets.

The project is being conducted under the supervision of Pat DeVeaux, P.Geo, a qualified person as defined by NI 43-101.

On behalf of the board of directors,

“Mike Muzylowski”

President & CEO

The TSX Venture Exchange has not approved and does not accept responsibility for the adequacy and accuracy of this release.