limited 

ACN 103367684 

24 February, 2005 

Ref: 8001502.Ll 

Principal Registrar Titles Division 
Department of Business, Industry & Resource Development GPO Box 3000 
Darwin NT 0801 

Dear Sir/Madam, 

Re: EL 23092 Covenant 

Red Metal Limited requests a variation of covenant for EL 23092 for the year ended 12/2/2005. Enclosed is a ~ue for the prescribed fee of $50.00 for variation of a covenant. 

The expenditure incurred during the period for EL 23092 was $7,616 while the covenant. was $50,000. We regret being unable to meet the commitment due to the circumstances outlined below. 

No fieldwork was conducted on EL 23092 pending the outcome of negotiations with indigenous landowners for approval to grant adjacent ELA 23139 to Red Metal. The adjacent ELA covers similar target lithologies for Pb-Zn-Ag mineralisation north of Roper River on Aboriginal Freehold Land owned by Ngukurr community. Unfortunately the Northern Land Council has not been able to respond to Red Metal's application and the negotiating period has been extended until 19 December 2005. It was our wish to be able to explore both tenements simultaneously. 

The area of EL 23092 was reduced by 52% from 466 to 224 blocks in December 2004. 

Further work is warranted on the licence to ground truth the airborne TEM anomalies and 
follow-up two unexplained zones of anomalous lead and zinc stream geochemistry. 

Work in Year 3 will include ground investigation of airborne TEM features and further geochemical stream sampling, soil sampling and ground based gravity over the two areas of anomalous stream geochemistry. 

I trust this infonnation is sufficient to meet the Department's requirements. 

Yours sincerely, 

Rob Rutherford Managing Director