Annual Report EL 10140 Litchfield Project for the year ended 14 March 2005

Abstract

This report summarises work carried out on Exploration License 10140, Litchfield Project, Northern Territory for the year ended 14 March 2005. Through compilation efforts, Falconbridge (Australia) Pty Limited identified the Litchfield/Batchlor area of the Northern Territory as being favourable to host Proterozoic, intrusive related, magmatic Ni-Cu-PGE sulphide mineralisation, such as Thompson or Voiseys Bay in Canada. The area has seen little historic work and has not been the focus of dedicated nickel sulphide exploration in recent years. In December 2003, Discovery Nickel Limited acquired 100% interest in EL 22961 and other Falconbridge tenements following the successful listing of Discovery Nickel on the Australian Stock Exchange. The tenement area lies in the western parts of the Pine Creek Inlier (Litchfield Province) and is considered to have excellent potential for magmatic Cu-Ni mineralisation related to the Proterozoic Wangi Basics. The Litchfield Province is the continuation of the prospective Halls Creek Province of the Kimberley's, a known significant magmatic Cu-Ni province (e.g. Sally Malay Deposit). Most significant nickel-copper massive sulphide deposits are extremely good conductors. Discovery Nickel's exploration approach relies heavily on airborne electromagnetic (AEM) surveying, followed up by ground EM to define targets. Plus where appropriate DNL conciders regional soil geochemistry an excellent technique to identify areas of mafics for further exploration. Exploration completed to date on EL 10140 includes: - review and compilation of open file reports, published literature and data; - interpretation of the aeromagnetic, gravity and landsat data; - Collection and interpretation of Geotem Survey - designing a soil sampling program; - Collection and analysis of the 2004 soil data. - Assessment of geochemistry and GEOTEM with recommendations for ground EM. The exploration work on EL 10140 has not advanced as fast as intended due to delays in gaining the relevant statutory permits, and due to the short field season that applies to this part of northern Australia and challenges in contracting specialists to complete planned exploration surveys. During September-October 2004, soil sampling has defined one interesting multi element anomaly within the mafic Sandy Creek complex 1.2 km away from a subtle GEOTEM anomaly interpreted from the October 04 GEOTEM survey. During 05/06 these targets will be assessed by a field visit, additional infill geochemistry followed by ground EM and possible drilling.