Annual and Final Report for EL 22269 'Mt Saunders', for year ending 24 February 2008

Abstract

Exploration Licence 22269 ('Mt Saunders') covers metasediments of the Palaeoproterozoic Namoona and Mount Partridge Groups, and the adjacent intrusive Allamber Springs Granite, to the north-east of the abandoned township of Frances Creek in the Northern Territory. EL 22269 is part of Arafura Resources Limited's (Arafura) Frances Creek Project area comprising AN 389, EL 10137, EL 22270 and EL 23237. Frances Creek, which served iron mining operations in the immediate area in the 1960's and early 1970's, is situated 167 kilometres south east of Darwin and 23 kilometres due north of Pine Creek. Territory Resources Limited (Territory) re-commenced iron mining at Frances Creek mid-2007. In September 2003 Territory (then Territory Iron Limited) entered into a joint venture agreement with Arafura whereby Territory was granted the right to explore for and mine iron ore over several tenements in the Frances Creek district, including EL 22269. This report documents work conducted on EL 22269 by Arafura (since 2002) and Territory (since 2003). During the life of the title, reductions of 6 blocks (Year 4) and 6 blocks (Year 6) were effected. No on-ground exploration was conducted on EL 22269 during 2002, as a result of delays at that time in Arafura's attempt to finalise an IPO to raise exploration funds. In September 2003 Arafura entered into an agreement with Territory Resources whereby Territory could explore EL 22269 (and other titles in the Frances Creek Project) for iron ore. Arafura listed on the ASX in November 2003, allowing commencement of on-ground exploration on EL 22269. A detailed stream sediment sampling program on EL 22269 and was due to be conducted in early-December 2003, but the start of heavy seasonal rain at that time necessitated postponement of the program until the middle of 2004. A total of seventy-seven (77) stream sediment samples were collected over the western portion of EL 22269 as part of a more substantial survey in the district. Sites were sampled at an average sample density of 9-10 samples per square kilometre. Sample spacing and density was based on experience gained from characterisation programmes conducted in the region by Homestake Gold in the period 1996-1998 when the Golden Honcho and Golden Slips gold-bearing reefs were discovered. Samples from each site comprised 1.5 kilograms of -2.5 millimetre (2 millimetre mesh) material and 50 grams of -80# material. Duplicate samples were collected at every 20th site. The -2.5 millimetre samples were analysed for Au and Ag by the BLEG technique (DIBK solvent extraction; AAS determination). The -80# fraction were analysed for Cu, Pb, Zn, Ni and Co by AAS after MA3 digest (HCL/HNO3/HCLO4). No Au anomalism was detected on EL 22269 in the Mundogie Sandstone east of the Thelma Anticline and no gold anomalism was present in the Masson Formation further to the south. Over the Masson Formation in the southern part of the EL, lead and zinc values were much higher than over the units further north. Lead values were mostly above 100 ppm and most zinc values were above 300 ppm with peak values of 535 ppm and 699 ppm from adjacent drainages at site 211 (237 ppm Pb) and 211A (157 ppm Pb). While these results clearly attest to high lead and zinc background tenor in the Masson Formation, it was unclear whether any of the results were anomalous for the sample population from the Masson Formation. Geological reconnaissance traversing of EL 22269 at approximately 500m intervals across the general strike of iron prospective lithologies within the Masson Formation was completed. In addition, twenty-seven (27) rock chip grab samples were collected from a number of iron occurrences. These samples contained weak iron mineralisation only and were not submitted for analysis. No iron occurrences of potential economic interest were noted. One RC drill hole, FERC004, for a total of 40m was completed within EL 22269. A total of six (6) one-metre interval drill samples were collected and assayed for Fe, SiO2, Al2O3, TiO2, CaO, MgO, Mn, K2O, P, S and Loss-on-Ignition (LOI). All elements of the standard suite of samples were determined by XRF spectrometry, whilst LOI was determined gravimetrically. Hole FERC004 was drilled into outcropping hematite mineralisation, with strong Fe values and relatively low impurities obtained from 0-4m depth. The laminated silica-rich nature of the mineralisation encountered in hole FERC004 was considered to be significantly different from that at Frances Creek, and consequently of no interest. During 2006 exploration activity on EL 22269 was restricted to brief geological reconnaissance field visits. An airborne hyperspectral remote sensing survey was flown by Hyvista Corporation over the Frances Creek Project area in October 2007. Coverage included a 700-metre wide strip of the western portion of EL 22269. No mineralogical or geological/chemical variations attributable to iron mineralization were interpreted in spectral data acquired over EL 22269.