Annual Report EL 22961 Litchfield Project for the year ended 10 July 2005

Abstract

This second annual report summarises all exploration work conducted by Discovery Nickel Ltd (DNL) on EL 22961 for the annual period ended 04 August 2005. Exploration completed to date on EL 22961 includes: review and compilation of open file reports, published literature and data; interpretation of the aeromagnetic, gravity and landsat data; designing the boundaries of a Geotem Survey; designing a soil sampling program; collection and analysis of the 2004 field season; and assessment of geochemistry and recommendations for ground EM. The exploration work on EL 22961 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 was initiated to test three prospect areas for Ni-Cu-PGE mineralisation, associated with the Wangi Basics (SW Daly, Chilling Creek and Sandy Creek Prospects). Both SW Daly and Chilling Creek fall on tenement 22961. The program highlighted four main Ni-related multi-element geochemical anomalies of interest. Anomaly LFGC1 at the northern end of the SW Daly Prospect is the most compelling as it shows elevated Ni-Cu-Pt-Pd-(Co) on three lines, over a strike length of about 2.5 km. The anomaly strikes roughly NNW and coincides with a linear magnetic feature. Another multi-element anomaly further SE at SW Daly (LFGC2), occurs in the vicinity of two strong magnetic features and some gabbroic outcrops. This anomaly is also worthy of further work. Quantec Geoscience has been contracted to collect ground EM (SMARTEM) over these soil geochemistry anomalies during September 2005.