First annual report for the period 6 June 2006 to 5 June 2007, EL 22744 Arrla Bay 1, EL 22708 Arrla Bay 2, EL 24657 Arrla Bay 2a and EL 22707 Arrla 3

Abstract

The Arrla Bay Project consists of four granted Exploration Licences (EL) 22744, 22708, 24657 and 22707 that were applied for in 2000 by Rio Tinto Exploration Pty Limited (RTE). A further six applications that are in various stages of the grant process also form part of the project. The tenements are located approximately 60 km northeast of Oenpelli in north-west Arnhem Land and consequently are processed under the Aboriginal Land Rights Act 1975 (ALRA). The tenements are considered prospective for lateritic bauxite mineralisation, similar to the style observed at Gove. Diamonds and uranium are secondary targets. Lateritised Cretaceous sediments of the Arafura Basin extend over most of the tenement area. Outcropping basement of Proterozoic granites and metamorphics also occur (see plan pAI07_005). Exploration completed during the reporting period included access negotiations and work programme clearances; helicopter based reconnaissance sampling; a botanical survey; track construction; stream sampling (80# and gravel fractions); wacker sampling and an aircore drilling programme. A total of 53 aircore holes were drilled for 368m. Two plateaus within the tenement area were considered to have potential for bauxite, and were targeted. The south plateau (~305 km2) was considered a less attractive target than the north (~265 km2), based on radiometric data, field observations and drilling. A total of eight holes at ~1 km spacing on the south plateau showed consistently low alumina results (max 25.2 %, ave. 8.43 % alumina). The north plateau was drilled by 45 holes at ~1 km spacing and revealed a limited lateritic profile with a maximum result of 2 m at 43.4 % alumina (ave. 17.2 % alumina). Neither plateau has any further potential for a significant bauxite resource. The five diamond gravel samples returned negative results for indicators and diamonds. Work carried out during the 2006 dry season returned negative results for bauxite and diamonds. No further exploration for bauxite or diamonds is warranted on these tenements. A review of the uranium potential for these tenements is recommended.