EL 10316 'Reward' Third annual report for the period 22 July 2004 to 21 July 2005

Abstract

Exploration Lease 10316 'Reward' covers an area of 752.46 sq km and is located within the McArthur Basin near the Gulf of Carpentaria, Northern Territory, approximately 50 km southwest of Borroloola, in the central part of the Bauhinia Downs 1:250,000 map sheet. The lease was acquired as a result of Rio Tinto Exploration Pty Ltd's takeover of North Mining Ltd during 2000, and was granted on 22nd July 2002 for a period of six years. During the second year of the lease, the Batten Trough Farm In and Joint Venture Agreement was entered into between Rio Tinto Exploration Pty Ltd (North Mining Limited and other Rio Tinto companies) and Anglo American Exploration (Australia) Pty Ltd. This Agreement was signed on 29 September 2003 and it has been lodged with the Department for registration. Under this Agreement, Anglo American Exploration (Australia) Pty Ltd is carrying out work on the licenses covered by the agreement. They now form part of a regional exploration project that Anglo American Exploration (Australia) Pty Ltd is undertaking in Joint Venture with Rio Tinto Exploration Pty Ltd (North Mining Limited) within the McArthur Basin. The other leases within the Project include EL 7294, EL 10103, EL 10317, EL 10329, and EL 23676. There was little opportunity to undertake fieldwork in 2003 due to the Joint Venture agreement with the Rio Tinto group being finalised late in the field season. 2004 field activities were delayed until June due to an excessively long wet season; this fieldwork had originally been planned for April. The exploration target is sediment hosted massive sulphide Zn-Pb deposits of the HYC type. Rio Tinto Exploration's previous exploration results in the area had confirmed the favourable geological setting and Zn-Pb prospectivity of the Batten Fault zone. The fault zone remains a quality 'grassroots' exploration target that Anglo American Exploration (Australia) Pty Ltd intends to test as part of their larger Batten Fault Zone Project. During the third year of the lease a TEM survey was conducted over selected targets. The key decision point to move to drill follow-up phase was confirmation of a large coherent bedrock conductor (>1 km2) at explorable depths (<300M). The TEM survey has not shown any bedrock conductor responses that meet these criteria over the selected targets. Previous exploration in the Batten Trough project has shown mineralisation in the area is conductive. The TEM collected in 2004 is considered to have been an effective test technique. Four diamond drill holes were completed during the 2004-2005 field seasons for a total of 1748.6m on the Myrtle Prospect. Previous drilling of MY1 and MY2 had not tested the entire thickness of Barney Creek Formation. The current drilling program (MY6-9) showed that two lenses of laminated pyritic carbonaceous dolomitic siltstone and three lenses of disseminated, patchy, semi-massive and finely-laminated sphalerite occur in a 50-200m thick interval of the HYC Pyritic Shale Member, in the northwestern quadrant of the Myrtle sub-basin. The two pyritic carbonaceous dolomitic siltstone lenses overlie the Zn-rich intervals and contain minor bedding-parallel sphalerite-rich laminations and late cross-cutting carbonatesphaleritegalena veins and veinlets. Twenty-four rock chip samples were collected during the 2004 field season. No significant results were obtained from this sampling. Regional- and prospect-scale mapping in the Myrtle sub-basin are ongoing, in order to identify favourable locations for drilling.