Lara Exploration Ltd. (TSX VENTURE:LRA) ("Lara" or the "Company") is pleased to
report that Lara and its partner Kiwanda Mines LLC ("Kiwanda") have signed a
Heads of Agreement to sell certain rights and options held by their Phosphate
Alliance and Coal Alliance to Australian Securities Exchange listed Phillips
River Mining Limited ("Phillips River"). Lara understands that Kiwanda already
owns 19.9% of Phillips River and, subject to completion of the proposed
transaction and a related financing, intends to use Phillips River as the
vehicle to pursue its interests formerly held by the two Alliances. 


Under the terms of the agreement, Phillips River will acquire the following
assets and options:




a.  Lara's 19.9% interest in central Colombian coal producer Carbhid S.A. 
    
b.  The Coal Alliance's option to earn a 51% interest in Escalones mining
    rights owned and operated by Carbhid. 
    
c.  The Coal Alliance's option to earn up to a 75% interest in the Pelaya
    coal property in northern Colombia (the remaining 25% will remain held
    by Lara). 
    
d.  The Phosphate Alliance's option to acquire a 75% interest in the Bifox
    phosphate mining rights in northern Chile (the remaining 25% will remain
    held by Lara). 
    
e.  The option to earn a 75% interest in the Ki phosphate exploration rights
    adjacent to the Bifox mining rights (the remaining 25% will remain held
    by Lara). 



For the coal assets, Phillips River will pay an amount determined by an
independent valuation which, after deduction of an initial $450,000 payment to
Lara, will be satisfied by the issuance of shares of Phillips River (split 75%
to Kiwanda and 25% to Lara) at a deemed price of A$ 0.20 each. Of such shares,
60% will be paid on closing and the remaining 40% will be paid on achievement of
production and resource establishment milestones. The amount payable for the
phosphate assets will also be determined by an independent valuation, the first
50% of which will be paid on closing and the remaining 50% of which will be paid
on achievement of production and resource establishment milestones. Phillips
River has also agreed to reimburse Lara $770,000 (inclusive of the foregoing
$450,000) of the costs incurred by Lara in acquiring and maintaining these
interests, with $200,000 paid on signing of the Heads of Agreement and the
remainder upon closing the transaction. Phillips River will also assume the
day-to-day costs of these assets, effective immediately. Finally, Lara will have
the right to appoint one of the six directors comprising Phillips River's board
of directors.


Under the terms of the Alliance Agreements between Kiwanda and Lara and which,
as to Kiwanda's interests, will be assumed by Phillips River, the Pelaya coal
property, the Bifox phosphate property and the Ki phosphate property will become
Designated Projects, whereby Phillips River will invest, in each project, US$5
million over a four-year period (US$ 1 million of which is a firm commitment) in
exploration and development to raise its interest to 65%. Phillips River may
then raise its interest to a total of 75% by delivering a Feasibility Study as
defined by National Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators within a further two years
(subject to spending a minimum of US$ 2 million per year).


About Lara

Lara is an exploration company following the Prospect Generator business model,
which aims to minimize shareholder dilution and financial risk by generating
prospects and then exploring them in joint ventures funded by partners. The
Company currently holds a diverse portfolio of prospects and deposits in Brazil,
Peru, Colombia and Chile. Lara's common shares trade on the TSX Venture Exchange
under the symbol "LRA". 


Neither the TSX Venture Exchange nor the Investment Industry Regulatory
Organization of Canada accepts responsibility for the adequacy or accuracy of
this release.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Lara Exploration Ltd.
Chris MacIntyre
VP Corporate Development
+1 416 703 0010
info@laraexploration.com
www.laraexploration.com

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