Paladin Makes Third Tunisian Discovery

Paladin announces the discovery and successful testing of oil in Dalia 1, the latest exploration well in the Adam Concession in southern Tunisia.

The well, operated by ENI Tunisia B.V. ('ENI'), was spudded on May 20, 2004 and encountered several oil and gas bearing zones distributed throughout the Acacus A and Tannezuft sandstones at a depth of approximately 3400 meters.

During initial testing of selected oil-bearing intervals across 11 meters of perforations, the well produced at a rate of approximately 3,600 bpd of 44 degrees API oil on a 48/64' choke and at a flowing wellhead pressure of 1,150psi.

The well has been completed and suspended as a production well pending approval of a field development plan and hook up to existing process and export facilities some 13 km distant. Paladin anticipates that field production will commence within the next few weeks. The rig will move shortly to the adjacent Hawa Field to drill a second production well.

If the Tunisian state oil company, ETAP, confirms their intent to participate, Paladin will have a 7% interest in the Dalia Field. Paladin's partners' will be ETAP (30%), ENI Tunisia B.V (17.5%), ENI Tunisia BEK (17.5%) and Pioneer Natural Resources Company (28%).

Roy Franklin, Chief Executive of Paladin, commented:

'This is our third oil and gas discovery in succession in Tunisia, which, with rapid tieback to existing process facilities, should be contributing to the Company's operating cash flow in a matter of weeks. In addition, negotiations are ongoing to allow the commercial production of gas from the Adam Concession to commence later in 2004.'