Annual report for EL 24357 'Arunta Project', for the year ended 30 March 2006

Abstract

This report summarises work carried out on Exploration License 24357, which is part of Discovery Nickel Limited's Arunta Project, for the year ended 30th March 2006. The Arunta Project is located approximately 250km N-NW of Alice Springs in the Northern Territory. The North Arunta Province is dominated by a series of sulphidic Proterozoic sedimentary sequences on an Archean/Proterozoic boundary zone that have been intruded by late mafic sills. Quaternary and Tertiary cover of variable thickness, conceal large areas of bedrock in the area and although the region has seen some exploration for a variety of commodities (including gold, copper, iron ore, and diamonds) the evaluation of the nickel potential of the area has been very limited to date. During regional compilations by Falconbridge the area was recognised to have potential when the Barrow Creek nickel sulphide occurrence 75-100km east of the project area was noted in regional assessment files. Also, rumours of success in the Andrew Young belt to the south prompted further assessment of the NTGS geophysical and geological datasets. These compilations flagged major regional structures coincident with interpreted mafic bodies in the project area that had potential for nickel sulphides and hence tenement applications were made. Tenement EL 24357 however was not applied for by DNL until 2005. This tenement was applied for after drilling at prospect B1 on EL 23392, west of EL 24357 intersected a significant new sulphide system. DNL interpreted from the regional aeromagnetic data that there was a high probability that this new sulphide system extended to the west of DNL's then current tenements. Therefore, DNL applied for EL24357 in order to completely cover the sulphide system with a view of targeting areas where the sulphide system comes into contact with mafic intrusions. Work completed in the area to date includes negotiating a land access agreement with the Traditional Owners, compilation of historic and regional datasets, ground EM survey, interpretation of ground EM results, magnetic data interpretation and drilling of two exploration holes.