Annual report for EL 26039 for the period ending 14 April 2009

Abstract

Depth to basement modelling has been conducted on SBM applications and granted tenure overlying interpreted concealed extensions of IOCG prospective Proterozoic rocks east of Tennant Creek. Modelling indicates that several of the targets contained within SBM tenure (namely TC126 and 127) appear to overlie magnetic basement of considerable depth, greater than the 250m limit typically used as a cut-off in other SBM BigGold projects. Table 1 shows the depth range within each of the target areas over EL26039 (within the 80th percentile), as well as a degree of confidence with which those depths should be accepted. The level of confidence is affected by both the amount of solutions that occur within a given target area and the distribution of depths within that area. Economic analysis suggests that it would be feasible to explore for high grade Tennant Creek style deposits under cover depths of up to 400m, however while grades required are often present in deposits within the Tennant Creek field the tonnages required rarely are. It is noted however that the SBL targets are prospective for larger ore systems than the larger Tennant Creek deposits such as Warrego and White Devil, and are also prospective for larger breccia style systems analogous to Chilean Mesozoic deposits such as Manto Verde and Mantos Blancos. As such depths indicated by this modelling should not preclude further exploration work being performed by SBL on these targets. Several of the targets contained within SBM tenure (namely TC126 and 127) appear to overlie magnetic basement of considerable depth, greater than the 250m limit applied to other SBM BigGold project areas. Other targets appear to overlie basement shallower than 250m and should be considered well within the range of drilling, allowing for the possible presence of thin 20-30m thick Cambrian basaltflows. In the case of Tennant Creek, interpretation of Naudy depth data has several caveats. The magnetic signature of the region is extremely complex. The effects of remnant magnetisation and alteration are well know in the area (e.g. Clark et al. 2004) and unlike other parts of Australia it is difficult to define lithological units by their magnetic signature. There are several lithologies other than Proterozoic Warramunga Group that have a significant magnetic signature (e.g. Cambrian Antrim Plateau Basalt); therefore Naudy solutions may be picking up depths to these lithologies rather than prospective ones. Another factor is that the ironstone bodies that host Tennant Creek deposits vary in magnetic intensity. Haematite end member or 'high level' targets are predominant (Haynes 2007) and have a lower magnetic intensity; therefore they may not be delineated by the Naudy routine. These caveats point to the fact that the Naudy routine may not be resolving the depth to prospective Warramunga Formation and that several other causative lithologies are present. This is especially applicable to targets over EL26038 (as part of a separate annual report for this tenement) that sit on the margins of interpreted Antrim Plateau basalt, a rock type which is probably responsible for the high-frequency magnetic signature seen in the area and the resultant relatively shallow depth solutions. Antrim Plateau basalt can range up to 200m in thickness; therefore depths to prospective Warramunga Formation in these areas could be up to 200m greater than indicated by the Naudy results. In order to determine a viable depth of exploration for Tennant Creek, an investigation was made into the economic viability of exploring for and mining various styles of discreet, high grade Tennant Creek deposits. The study concluded that such deposits are viable to explore for at depths of up to 400m. For example a tonnage and grade required to make exploration viable at a depth of 400m would be approximately 5Mt @ 12-15g/t Au, including Cu credits. While several deposits in the Tennant Creek field contain the required grade (e.g. Nobles Nob, Juno, White Devil), only one contains the required tonnage (Warrego).