Independent technical valuation of Tanami Assets

Abstract

CJ Stephens Consulting Pty Ltd has prepared an Independent Technical Valuation of the rights to gold and base metal exploration properties in the Northern Territory held by Tanami Gold NL, and which are to be vended into ABM Resources NL. The report was commissioned by Stantons International Securities ('Stantons'). CJS Consulting understands that ABM intends to enter into an agreement with TGNL under which it will acquire all of TGNL's interests in the rights to the various minerals within the projects in exchange for cash and shares. Stantons requested that CJS Consulting prepare a fair market valuation of TGNL's mining assets to be sold to ABM based on public domain transaction metrics or other methods as deemed applicable. The properties cover a total area of approximately 23,544 square kilometres, representing a strategic holding in a region where the understanding of the geology is only just developing, and where there is a paucity or absence of modern mineral exploration. The region is remote, in places is affected by limited vehicular access and is largely indigenous lands. ABM reasonably argues that recent research shows the geology of the region is typical of gold provinces that host giant gold deposits, and that the endowment of the region may be many times that currently recognised. TGNL has an established history of working with the indigenous land owners to access lands for exploration. This history provides an important platform that ABM expects will allow it to explore systematically according to the technical rank of its exploration targets. ABM intends to apply its specialist knowledge in terms of regional geological and geophysical assessments to prioritising and exploring the various project areas. The properties occur within the North Australian Craton, which hosts the major mineral provinces of Mt Isa (base metals, copper-gold, uranium), Pine Creek (gold) and Tennant Creek (copper-gold) in addition to the Tanami gold deposits. The Tanami, Pine Creek and Tennant Creek mineral provinces display differences in the characteristic style of mineralisation within each province, however the geology and mineralising events are strongly correlated across these provinces. The properties are broadly grouped into four projects, The Tanami Project, the North Arunta Project, the Lake Mackay Project and the East Arunta Project. The region is overwhelmingly characterised by regolith deposits at surface, with a paucity of exposure. Only over the last 10 years has a comprehensive program of geological mapping program and acquisition of airborne geophysical data been undertaken. The Tanami Project covers an area of approximately 5,190 square kilometres and surrounding the gold fields hosting the Callie and Coyote gold mines, an area with endowment approaching 10 million ounces of gold. The region has been actively explored since the mid-1980s, however an understanding of the regional geology and the geological controls on gold mineralisation has only developed in the last 10 years. This understanding shows that earlier exploration was often ineffective and arguably was poorly targeted towards the model for mineralisation. The lack of exploration over the last ten years, when the greatest advances in understanding the geology of the area and the nature of the surface deposits, suggests that this project area is grossly underexplored. The North Arunta Project covers 6,656 square kilometres in the northern Arunta Terrain. The region includes rocks broadly correlated with the Tanami Project but which display greater degrees of deformation and metamorphism. Exploration within the region is in its infancy, and shows an emphasis on empirical exploration of known prospects. Areally significant gold and gold-arsenic geochemical anomalies have been outlined but remain at an early stage of exploration. The Lake Mackay Project covers approximately 11,510 square kilometres in the southwest of the Northern Territory, adjacent to the border with Western Australia. Exploration completed over the eastern portion of the project area, where access roads provide for vehicular access, has resulted in the discovery of base metal sulphide gossans and areally significant gold-copper geochemical anomalies. No material prospect scale geophysical exploration of these anomalies has occurred. The prospects show some similarities with Tennant Creek-style gold-copper systems, however the very greenfields nature of this project means there is potential for discovery of a range of mineralisation styles not yet targeted. The East Arunta Project comprises two sub-projects located to the northeast of Alice Springs. At Huckitta, Mithril Resources Limited has entered into a joint venture with TGNL over two tenements covering approximately 960 square kilometres. Mithril is exploring primarily for nickel-copper mineralisation and is presently earning an initial 60% interest. Mithril has undertaken electrical geophysical surveys and is continuing exploration. At Winnecke, TGNL retains a 5% interest, free carried until completion of a bankable feasibility study, in tenements covering 67 square kilometres and considered prospective for base metals. The Tanami, North Arunta, Lake Mackay and East Arunta Projects are each regarded as Exploration Areas in terms of the Valmin Code. Valuation ranges for TGNL's interests to various metals within the projects, based on the Multiples of Exploration Method, have been determined. As of the Valuation Date, 7 September 2009, the value of TGNL's various interests the Tanami, North Arunta, Lake Mackay and East Arunta Projects is considered to be in the range $7.1 million to $10.7 million. The preferred value assigned here is $9.1 million.