Annual report for EL 23683 and EL 23685, 17 June 2005 to 16 June 2006

Abstract

The Sylvester project is located in the Barkly Tablelands of the Northern Territory, 220km northeast of Tennant Creek and 120km north of the Barkly Homestead Roadhouse. The Tablelands Highway passes through the centre of the area. The project consists of two exploration licences: EL23683 Lower Sylvester and EL23685 North Sylvester. The area was identified as conceptual target area based on proprietary methods and modelling conducted by Paradigm Geoscience Pty Ltd. A review of previous exploration work confirmed the prospectivity of the area with a large number of microdiamonds reported by previous explorers. While the diffuse spread of microdiamonds over much of the NT has been well described, the Sylvester area is characterised by microdiamond abundances well above the general background level. The microdiamonds are spread over an area of approximately 3000km2 and there is no obvious centre/s to the anomaly, presumably due to the surficial processes, poor drainage and large areas of shallow cover. In order to characterise the microdiamonds found in the Sylvester region, the company compiled previous diamond exploration data over an area of 10,000km2 and then reviewed, classified and tabulated descriptions of all microdiamonds described. When the microdiamonds are classified into three simple categories (common, rare and very rare types), it becomes evident that there is a cluster of rare/very rare types in the centre of the area, surrounding EL 23685. This provides good evidence for a local source of the diamonds and confirms the prospectivity of the area. Reconnaissance exploration conducted during the previous period led to the conclusion that standard surface exploration methods would not be effective in tracing the microdiamonds to their source. A program was planned to identify and sample palaeo-drainages by drilling and was schedule to commence in May 2005. The program has been delayed because the company has been unable to secure the services of a drilling contractor but will proceed once this has been resolved. Shallow sampling of drainage channels, and more extensive rock geochemistry was planned for Year 3. Due to a late finish to the wet season, this work could not be accomplished during the third terms of the licence (but has been completed since the anniversary of the licence). During Year 4 of the licence, the shallow drilling of alluvial channels will be completed, and a relatively large volume of sample collected for heavy mineral analysis and geochemistry.