EL 10103 'Warramana', EL 10317 'Yalco' and EL 10329 'Yalco 1' Combined third annual report for the period 5 June 2004 to 4 June 2005

Abstract

Exploration Leases 10103 'Warramana', 10317 'Yalco' and 10329 'Yalco 1' cover a combined area of 1,275 km2 and are located within the McArthur Basin near the Gulf of Carpentaria, Northern Territory, approximately 25 km northwest of Borroloola, on the Bauhinia Downs and Mount Young 1:250,000 map sheets. Rio Tinto Exploration Pty Ltd acquired the leases as a result of its takeover of North Mining Ltd during 2000. All three leases were granted on 5th June 2002 for a period of six years. During Year 2 of the leases, the Batten Trough Farm In and Joint Venture Agreement was entered into between Rio Tinto Exploration Pty Ltd (North Mining Limited and other Rio Tinto companies) and Anglo American Exploration (Australia) Pty Ltd. This Agreement was signed on 29th September 2003 and it was been lodged with the Department for registration. Under this Agreement, Anglo American Exploration (Australia) is carrying out work on these licenses. They now form part of a regional exploration project that Anglo American Exploration (Australia) Pty Ltd is undertaking in Joint Venture with Rio Tinto Exploration Pty Ltd (North Mining Limited) within the McArthur Basin. The other leases within the Project include EL 7294, EL 10316 and EL 23676. The exploration target is sediment hosted massive sulphide Pb ? Zn deposits. Rio Tinto Exploration?s previous exploration results in the area had confirmed the favourable geological setting and Zn-Pb prospectivity of the Batten Fault zone. The sub-basin remains a quality 'grassroots' exploration target that Anglo American Exploration (Australia) Pty Ltd intends to test as part of their larger Batten Fault Zone Project. Fieldwork conducted during the third year of the leases included inspection of diamond drill core from previous exploration, a preliminary geological reconnaissance and rock-chip sampling survey was conducted during September 2004 and a ground TEM program was also completed. The key decision point to move to drill follow-up phase was confirmation of a large coherent bedrock conductor (>1km2) at explorable depths (<300M). The TEM survey has not shown any bedrock conductor responses, which meet these criteria. Previous exploration in the Batten Trough project has shown mineralisation in the area is conductive. The TEM collected in 2004 is considered to have been an effective test technique.