ASX / Media Release 21 May 2010 EPSILON AGREES TO SALE OF MARDIE IRON ORE PROJECT Highlights Epsilon agrees to sell its Mardie Iron Ore Project to Bluestar for A$1M; Epsilon retains 10% free carried interest in all mineral rights, other than salt, until completion of a Bankable Feasibility Study; Sale is structured in two tranches: i) A$300,000 in cash on completion; ii) A$700,000 as a contingent payment following approval to construct a salt operation on Mardie Project; Transaction completion is conditional on approvals from Australian and Korean government authorities. Australian resources company Epsilon Energy Ltd (ASX:EPS) (Epsilon or the Company) today announced it has entered into an agreement with South Korean owned Bluestar Minerals Pty Ltd (Bluestar) for the sale of its Mardie Iron Ore Project in Western Australias Pilbara region for a total of A$1 million. The terms of the sale include a cash payment of A$300,000 to be paid on completion of the transaction and a further A$700,000 contingent payment on Bluestar receiving all required statutory and government approvals to construct a salt operation on the Mardie Project.

Completion of the transaction is conditional on all requisite approvals by the Australian and South Korean Governments. Epsilon has agreed to sell the Mardie Project tenement to Bluestar and retains a 10% free carried interest in all mineral rights other than salt until the completion of a Bankable Feasibility Study. Bluestar is focused on developing industrial minerals projects including iron ore, minerals sands, coal and salt.

The iron ore exploration targets at the Mardie Project that have been identified by Epsilon will provide the basis for the next stage of work.

This will be designed and managed by Perth-based project development specialists, Prodemas International. The sale is in line with the Companys strategy to divest non-core assets and focus on its gold assets in Guyana.

Epsilon has also withdrawn from the Balladonia lignite joint venture in southern Western Australia and retains 100% of the uranium rights for this project.
Richard Monti Executive Director Epsilon Energy Ltd To download the full ASX announcement click here http://www.asx.com.au/asxpdf/20100521/pdf/31qg31yw20425n.pdf
For further information please contact:
Mr Richard Monti Executive Director Epsilon Energy Ltd Tel: (08) 9482 0540 Em:
Mr James Harris Professional Public Relations Tel: (08) 9388 0944 Mob: 0400 296 547 Em:
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