EL 22240 Morgan Second Annual Report 24 July 2002 to the 23 July 2003

Abstract

Exploration Licence 22240 Morgan, covers a small portion of land in two strips north and west of two shallow but concealed mineralised ironstone bodies (the Malbec prospect) contained within the Mineral Claims C526, C527 and C528, located 1km west of the Chariot gold mine. Targets are shallow haematite-ironstone related gold deposits. This report records the exploration work done on EL 22240 during the second year of tenure, from the 24th July 2002 to the 23rd July 2003. Exploration Licence 22240 covers only a small area of land, filling a narrow gap between the three Malbec Claims and nearby (Giants Reef Exploration Limited) EL's to the west and to the north. The Malbec Claims (MC C526-C528) are partially located within the EL on the north western margin. On the eastern margin on the EL lies part of the a Chariot Mine Lease ML C176. Until January 2003, EL 22240 came under the Central Joint Venture 2, which covered the Chariot gold deposit and a number of other tenements in the Tennant Creek goldfield. The Joint Venture was between Giants Reef, (managers, holding 57% equity), Sons of Gwalia (replacing PacMin; 33%) and Newmont NFM (formerly Normandy NFM; 10%). Giants Reef purchased Sons of Gwalia's Joint Venture assets (43%) and became the sole owner of the CJV2 project, including EL 22240. No obvious magnetic targets exist within EL 22240. A literature assessment of EL 22240 was conducted. The assessment highlighted the fact that previous exploration over the tenure had focussed on the targeting of magnetic anomalies to identify magnetic ironstone bodies. Giants Reef noted that limited gravity data exists over the tenure and concluded that the potential for new non magnetic haematite-hosted discoveries within EL 22240 are likely. An orientation gravity survey was completed over the Chariot mine and proposed infrastructure sites. The survey accurately mapped haematite-dominant ironstone in the open cut area and provided information enabling line and station spacing decisions to be made for a larger regional gravity survey. A regional gravity survey was conducted over EL 22240 and surrounding tenure. Interpretation of the gravity data over EL 22240 suggests the existence of a small body with a small density contrast, located within the reporting area of EL 22240, directly west of the Malbec prospect. There is no magnetic anomalism to support the gravity response, and the target was named Malbec West. A Mining Management Plan and a CLC work program detailing all aspects of Giants Reef's plans to RC drill test the gravity anomaly identified within EL 22240 were submitted and subsequently approved. Approval was provided by the CLC, under instruction from Traditional Owners, for two 100m RC holes within EL 22240 which are to test the gravity anomaly. At the time of writing this report the RC program was currently being carried out. In order to access the Malbec West drill holes, an existing baseline from the Malbec Prospect west to the Amadeus Basin to Darwin Gas Pipeline - Tennant Creek Spur was re established and extended. A gate was built within the north-south fence separating Aboriginal Freehold Land and Tennant Creek Pastoral Land which enabled access into EL 22240. The quite limited but detailed gravity survey appears to have added a new dimension to Giants Reef's understanding of the non-outcropping geology and the distribution of non-magnetic ironstone bodies within the survey area. The fact that non-magnetic ironstones, hosting gold mineralisation are known to exist (Chariot deposit), yet have not really been searched for previously in the Tennant Creek Goldfield, means that the potential for new discoveries is highly likely.