Hammer Hill Project EL 9725 and EL 10136 Year 6 Annual Report for period 13 February 2007 to 12 February 2008

Abstract

This report presents the work completed during the sixth year of tenure on the Hammer Hill Project; a joint venture between Mithril Resources (manager) and Arafura Resources. The project covers granted Exploration Licences EL 9725 and 10136, which have joint reporting. The Hammer Hill Project area straddles the Huckitta and Illogwa Creek 250,000- scale map sheets and is centred about 180 km northeast of Alice Springs, south of the Plenty Highway. Work completed over the tenement area during the sixth year of tenure includes:

- A review on the effectiveness of the ground EM last year

- Flying of a helicopter based VTEM survey

- Identification of high priority VTEM targets

- Field verification of targets generated, including mapping and rock sampling

- Ground EM over three targets

-Recommendations for drill test of multiple conductors identified at target IVT015 and IVT016

In addition to the above, BHPB elected to joint venture into the project (as part of the Mithril / BHP Billiton alliance) whereby BHP Billiton can earn up to 51% of the project through $5M sole funding exploration activities. Future work will consist of drilling of existing targets and continuing the ground EM over the VTEM targets generated.