1 May 2009

Zambezi Resources Limited

(AIM: ZRL; ASX: ZRL)

Corporate Update

Zambezi Resources Limited ('Zambezi' or the 'Company') (AIM: ZRL; ASX:ZRL) today announces that, further to announcements on 28 November 2008 and 31 March 2009, it has reached agreement with all its major creditors for the conversion of debt to ordinary shares at AUD$0.02 cents per share subject to shareholder approval. Shareholder approval will be sought for the issue of 161,685,161 ordinary shares.

Following the issue of these shares, the Company will have 388,561,335 ordinary shares in issue, assuming that no additional ordinary shares are issued by the Company in the interim period.

The creditors have also agreed to extend the existing standstill arrangements to the earlier of the shareholder approval for the conversion of debt or 30 June 2009. The moratorium will allow Zambezi the opportunity to prepare a notice of meeting seeking the requisite shareholder approval and then to raise additional funds for its projects in Zambia. 

The Company is continuing discussions with various parties with a view to refinancing the Company on its own behalf and through intermediaries acting on its behalf. This includes sourcing interim funding until adequate funding for the foreseeable future has been secured. The Company's current strategy is aimed at minimising on going costs while retaining the intellectual property and knowledge base built up over the past five years.

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