Annual report for EL 23726 801 Project, for the period ending 31 July 2005

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 AKD's Wonarah phosphate project which was drilled by former JV partner Rio Tinto in 2001 to contain an inferred resource of 72Mt @ 23% P2O5. In late 2002, Conarco discovered strongly anomalous geochemical lead (750 ppm Pb) and arsenic (150 ppm 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 370 ppm 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 2003, AKD entered into a joint venture with Conarco over EL 23726. Work carried out to date by AKD has included a review of the Conarco data base 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 from100 m to 200 m. AKD is currently preparing for a drilling program to test a number of the magnetic anomalies. Work completed during 2005 mainly involved a review of the geophysical data and the plotting of the magnetic targets in suitable format. Work also involved the compilation of additional maps comparing the magnetic targets against regional gravity and digital elevation. The Company also commenced native title/site clearance programs for the proposed drilling program. Ground truthing of specific targets will take place following clearance.