Partial relinquishment report for EL 24716 Lucy Creek for period ending 1 December 2010

Abstract

The Lucy Creek Project comprises three tenements, EL 24716 Lucy Creek, EL 24724, Johanssen Range and EL 10215 Jervois. These licenses were applied for and granted to Arafura Resources NL in December 2005. Two licenses, Lucy Creek and Johanssen Range, were transferred to NuPower Resources Ltd during the demerger by Arafura of certain uranium assets into the new company. Arafura retained Jervois but transferred the rights to uranium to NuPower. Arafura's interest in these tenements, prior to the demerger, included the potential for orthomagmatic Fe-Ti-V, Ni-Cu and Pt-Pd-Au and other types of mineralisation associated with mafic intrusions of the Arunta block, tungsten, molybdenum, other base metal and gold mineralisation in the Bonya Schist and equivalent rocks of the Arunta, Mary Kathleen style or iron-oxide copper gold related mineralisation in the Arunta Block, various styles of uranium mineralisation including sandstone and unconformity related styles in the Georgina Basin, sediment-hosted MVT, base metal or phosphate mineralisation in the Georgina Basin and a range of other commodities associated with intrusives such as carbonatites, kimberlites and pegmatites. The uranium interest is based on the 2004 NTGS airborne radiometric data that contains a large uranium anomaly in the western Jervois Range, mostly within EL 24716 but extending into the adjacent EL 10215. Previous exploration here by CRA for unconformity U-Cu-P mineralisation in the mid 1990's tested the lateral undercover extensions of the Mount Baldwin/Arthur Creek Formations and while uranium results were disappointing they intersected significant intervals of phosphate mineralisation at the Patanella Prospect but did not proceed with this. The extensive radiometric anomaly appears to have received little attention. The geology of EL 24716 comprises mostly Cambrian cover sediments of the Georgina Basin overlying basement rocks of the Arunta Block Bonya Schist preserved in the south. They crop out in the Jervois Range where they dip gently to the west. The Early Proterozoic Bonya Schist is the oldest formation here confined to the southern parts of Lucy Creek and parts of the areas relinquished. The formation is subdivided into 5 informal units and one formal unit, the Kings Legend Amphibolite, present immediately south of Johanssen Range. The Schist comprises mostly muscovite and two-micas schists derived from mostly pelitic, psammopelitic and calcareous metasedimentary rocks, with subordinate psammitic and quartzite units, and felsic and mafic igneous rocks, metamorphosed to upper greenschist to lower amphibolite facies. Various Proterozoic granites intrude the Bonya Schist, one of which is represented here, on the southern side of the Johanssen Range, consisting of foliated, locally porphyritic, muscovite granite with local magnetite or tourmaline aggregates. The Schist is also intruded by several different phases of Samarkand Pegmatite of medium to very coarse grained plagioclase and minor K feldspar and quartz with accessory muscovite, tourmaline, apatite and sphene. These also underlie parts of the relinquished blocks. The earliest sediments of the Georgina Basin represented here are laminated to thinly bedded, fine grained, quartz arenite to sublitharenite with minor thin to thickly bedded, coarse grained, quartz arenite of the Grants Bluff Formation in the eastern flanks of the Jervois Range. This is overlain by recessive, micaceous, very thin to very thickly bedded, siltstone, laminated mudstone and medium grained quartz arenite of the Elkera Formation. In the Jervois Range this formation contains a stromatolitic dolostone unit near the top of the formation that is capped with a lenticular very thickly bedded, feldspathic, pebbly orthoquartzite. Mild tectonism (Huckitta Movement) followed the Elkera Formation so that it is overlain disconformably by the Mount Baldwin Formation comprising thin to very thickly bedded, frequently cross bedded, fine-medium grained, quartz arenite forming prominent ridges in both ranges. There units underlie much of the area relinquished. Errarra Formation, disconformably overlies Mount Baldwin Formation and consists of basal sandstone grading upwards through silty shale to a white dolostone-silty dolostone unit 23m thick. This is overlain by a silty sandstone to siltstone unit 36m thick that is topped by a limestone and dolostone unit containing sandy carbonate, 67m thick. This formation, containing phosphorite, outcrops along the base of the eastern flank of the Jervois Range, and is locally indurated by Tertiary laterite and silcrete as observed at Lucy Creek. The formation may be locally absent on the NW flank of the Jervois Range where Arthur Creek Formation appears to rest directly on Mount Baldwin Formation all areas of Errarra Formation have been retained. Arthur Creek Formation overlies Errarra Formation (and Mount Baldwin Formation where the Errarra Formation is absent). It contains a lower sequence of recessive, fossiliferous, organic-rich, laminated, pyritic, calcareous siltstone the upper part of which contains very thick limestone beds, overlain by calcareous quartz arenite to quartzose limestone. Arrinthrunga Formation conformably overlies Arthur Creek Formation in the central and western part of the project area containing a thick well bedded sequence of dolostone and limestone with minor siliclastic rocks. Eight interfingering lithofacies have been recognized one of which is the Eurowie Sandstone Member preserved in the NW corner of the Johanssen Range area. This is the youngest formation of the Georgina Basin represented here. The Arthur Creek and Arrinthrunga Formations underlie most of the central and western parts of the project area but are covered extensively with Quaternary alluvium from Arthur Creek and its tributaries. Most of the Arthur Creek Formation have been retained but most of the Arrinthrunga Formation has been relinquished. There are no known mineral occurrences in the areas relinquished. In Year 1 Arafura Resources completed an RC drilling program at Lucy Creek, in EL 24716 and the adjacent EL 10215 in November 2006 to test for uranium mineralisation associated with an airborne uranium radiometric anomaly identified by the 2004 NTGS regional survey and subsequently reflown for greater detail by Arafura Resources in December 2005. Of the total of 60 holes and 1713 metres drilled throughout the anomaly, 45 holes for 1472 metres were completed on EL 24716, none of which lie within the areas relinquished here. In Year 2 following the demerger of uranium assets from Arafura to NuPower, NuPower carried out preliminary metallurgical testwork for uranium recovery on drill samples from Lucy Creek but did not work on the relinquished areas. Mapping and sampling of the anomaly in Year 3 confirmed that it is confined to a highly weathered phosphorite unit within the Errarra Formation where uranium (and its daughter products) have been locally scavenged by the regolith. This downgraded the uranium potential but highlighted the phosphate potential instead. A review of open file reports also in Year 3 showed that CRA had intersected significant zones of phosphorite during a short drilling campaign to explore for unconformity related U-Cu-P styles of mineralisation at the Patanella Prospect at the northern end of the main radiometric anomaly drilled by Arafura, further enhancing the phosphate potential of the Lucy Creek Project. Bore waters were sampled from both tenements and assayed for a broad range of major and trace elements that include one bore from the relinquished area. In Year 4 NuPower carried out detailed geological mapping and geochemical sampling of Patanella area that provided a better understanding of the geological and structural controls on the phosphate mineralisation that was followed by further drilling in the Patanella area in Year 5. There was no work done in the areas relinquished in Years 4 or 5 since by now these areas were no longer regarded prospective for phosphate. Groundwater anomalies reported previously, in Year 3, were found to be erroneous on reassay, results of which were reported in Year 5. Assays for the Single bore sampled from the relinquished areas are repeated here. They contain no significant assays except for elevated nickel and cobalt. The exploration focus at Lucy Creek has therefore shifted form uranium to phosphate. Required to reduce the granted area of the license NuPower has identified areas of negligible phosphate potential, that have received almost no exploration work, and recommended them for relinquishment.