Surrender report for EL 26248 and EL 26250, 14 May 2010

Abstract

Daly River is, located approximately 145 kilometres south of Darwin in the Northern Territory. Deposits of copper, lead and zinc have been mined sporadically from veins and lodes in the Daly River region since the late 19th century. Approximately 7,000 tonnes of oxide ore grading 20% to 30% copper has been produced. Modern mineral exploration, since the 1960s, using geophysical and geochemical techniques, resulted in the discovery of several small volcanogenic massive sulphide (VMS) deposits, which to date have been prohibited from exploitation by their small size and uneconomic grade. Exploration for gold in the area has been minimal. Troy Resources NL currently holds the area, including all the old mines, prospects and new discoveries, under four granted exploration licences and two exploration licence applications. Troy has carried out little exploration work in the area having been restricted both currently and in an earlier period of tenure by other stakeholder ownership disputes. The project area has potential for discovering additional base-metal deposits and gold and a number of inadequately tested and untested targets generated by previous explorers are available for immediate follow-up. Also, it is anticipated that other targets can be generated through surveys resulting from the appraisal of the large volume of data in existence. This report pertains to Daly River Project exploration licences EL 26248 and EL 26250 for the period 15 February 2009 to 14 February 20010. No work has been carried out on the tenements the subject of this report and no expenditure has been incurred on the ground. Negotiations were delayed pending determination by the Northern Land Council ('NLC') of right of ownership and determination of demarcation boundaries between two Aboriginal groups, the Malak Malak and Kamu, within the Aboriginal Corporation awarded the freehold. A court case relating to the dispute between the two traditional owner groups found in favour of the Kamu people. The Malak Malak refused to recognise the decision but no appeal was lodged against the decision and the time allowed for this process has lapsed. Malak Malak's refusal to recognise the decision left Troy with no legitimate negotiating partner. Eventually meetings were scheduled for November 2006 although the dispute between the two groups had not been settled. The meetings were subsequently rescheduled to early 2007 and as the negotiating period for the ELAs was due to expire 31 December 2006 an extension of time was granted.In spite of the refusal of consent, it is recommended that Troy persevere with the project, and try to encourage the Aboriginal landholders to reopen negotiations toward the grant of EL 22066 and EL 10081. During March 2007 separate meetings were held with the Malak Malak and Kamu people on successive days at the Nauiyu Community Hall, Daly River. Representatives of the NLC arranged the meetings, established the appropriate protocol and were present at the meetings. In conclusion both groups refused consent. The Kamu were indecisive and requested a month to consider Troy's proposal. However, as NLC protocol required a decision on the day of the meeting their only alternative was to refuse consent. The applications therefore went into moratorium for five years. ALRA clearly requires that any re-opening of negotiations has to be at the instigation of the Aboriginal land owners. No work has been carried out on the tenements the subject of this report and no expenditure has been incurred on the ground.