Partial relinquishment report for EL 26535, EL 26556 and EL 26557, June 2010

Abstract

Sinosteel were granted exploration licenses EL 26535, EL 26556 and EL 26557 in July - August 2008. The tenement areas are located along a coastal region of the southern part of the Gulf of Carpentaria in the Northern Territory. The region has a tropical climate, with a wet season lasting from November to April. Access along roads is typically only possible in the dry season, from May to October. The area is considered prospective primarily for manganese mineralisation, similar in style to the Groote Eylandt Mn deposits and carbonate hosted hydrothermal manganese, like prospects at Robinson River within tenement EL 26556. Groote Eylandt Mn mineralisation occurs within Cretaceous shallow marine sediments of the Walker River Formation. It is possible that the Walker River Formation extends under cover into Sinosteel's tenure. Hydrothermal carbonate hosted Mn mineralisation occurs in other parts of the tenements, but there has been no large deposits discovered to date. The tenure is primarily covered by Quaternary cover and areas within 5-10km of the coast consist of relatively flat expanses of tidal marshes, lagoons and mangroves. Pre quaternary outcrop from 1:250,000 scale mapping is restricted to the southern limits of the tenements. Outcropping geology consists of Cretaceous sandstone, claystone and siltstone and Mesoproterozoic sandstones of the Roper Group and Karns Dolomite, and dolomitic siltstones and sandstones of the Talwallah Group. Following the grant of the tenements, Sinosteel undertook an open-file data compilation and desktop study that was completed in July, 2009. Outcomes of the study were that exploration for Mn mineralisation was complicated by the Quaternary cover and an airborne electromagnetic (AEM) survey was recommended. Southern portions of the tenement were prioritised as there is less Quaternary cover and no tidal mangrove swamps. Sinosteel recently contracted Geotech Airborne to conduct a helicopter electromagnetic survey using the VTEM system. Survey production was completed on 24 June, 2010. The VTEM survey has been limited to the southern portions of the tenements, and no part of the survey is within the areas to be relinquished. Attached is a map showing the location of the tenements, an outline of the VTEM survey area, and graticules to be relinquished. Note a waiver of reduction is being sought for tenement EL 26539.