Annual report for EL 23726 '801' project, for the period ending 31 July 2006

Abstract

EL 23726, which is registered in the name of Conarco Minerals Pty Ltd, now comprises 298 blocks and is located near the Barkly Highway 260km east of Tennant Creek in the Northern Territory, Australia. The Conarco tenement abuts Indo's Wonarah phosphate project which was drilled by former JV partner Rio Tinto in 2001 to contain an inferred resource of 72Mt at 23 percent P2O5. In late 2002, Conarco discovered strongly anomalous geochemical lead (750ppm Pb) and arsenic (150ppm As) in weathered Cambrian sediments at a location named '801' while carrying out a reconnaissance survey for petroleum in the Georgina and McArthur Basins. Research by Conarco also revealed old drill holes in the area containing anomalous lead values up to 370ppm Pb. Follow-up work by Conarco defined a broad area within EL 23726 containing anomalous lead geochemistry which has a magnetic response defined from interpretation of the NTGS Barkly airborne geophysical survey. Additional magnetic modelling also revealed several magnetic targets for kimberlite. In March 2004, INDO Mines Ltd (formerly AKD Ltd) entered into a joint venture with Conarco over EL 23726. Approximately 2 years later, INDO withdrew from the JV on 12th May 2006. Work carried out to date by INDO included a review of the Conarco database and re-interpretation of the magnetic modeling undertaken by Conarco using consultant geophysicists, Southern Geoscience. The work undertaken by Southern Geoscience indicated similar depths to that of the Conarco modelling for just over half of the models. Some of the magnetic anomalies were significantly deeper, while some were significantly shallower, however in general, the targets range in depths from100m to 200m. Work completed during 2005/2006 involved a review of the geophysical data and the preparation for a drilling program to test a number of the magnetic anomalies. Work involved native title/site clearance programs for the proposed drilling program. Ground truthing of specific targets will take place following clearance.