Combined annual report for the period 24 February 2006 to 24 February 2007 Combined Tenement Group AN 389, EL 10137, EL 22269, EL 22270, EL 23237

Abstract

This report details exploration activity for iron mineralisation conducted by Territory Iron Pty Ltd within the combined Frances Creek Tenement Grouping (AN 389, EL 23237, EL 10137, EL 22269, EL 22270) during the year ending 24th February 2007. These activities were conducted under an iron ore rights acquisition agreement with Arafura Resources NL for iron ore mineralisation only within the tenements. During the reporting period Territory Iron undertook RC, diamond and air-core drilling, resource and reserve estimations, metallurgical studies and detailed mining studies on anumber of key deposits within AN 389 and EL 10137 with the objective of confirming: the tonnage for these deposits to JORC Indicated Resource and Probable Reserve status; the presence of resources and reserves of sufficient size to allow the re-opening of the Frances Creek Mine, and defining the geotechnical and metallurgical parameters for detailed mine planning work: Preliminary mine design and infrastructure construction work commenced during the reporting period. This report concentrates on exploration activities; details of mine planning and ancillary activities are found in the Frances Creek Mine Project Mine Management Plan document lodged on the 22nd December 2006 with the DPIFM. Work during the reporting year comprised: RC drilling- 18,904m in 342 holes; Aircore drilling-541.8m in 120 holes; Geotechnical Diamond drilling-434.62m in 4 holes; Assaying of 5387 one-metre interval RC drill-hole samples; 268 one-metre interval Aircore samples; 12 rock chip samples; 48.5m of channel sampling with 38 assayed samples; Surveying of all RC drill-hole collars; dewatering of the Helene 3 and Helene 6/7 pits and associated costeaning; historical data validation and compilation; geological mapping of iron mineralisation; acquisition of photogrammetry and satellite data; detailed mining, environmental and metallurgical studies; resource and reserve modelling of iron ore deposits; earthworks associated with mine infrastructure construction. Total expenditure for the tenements during their anniversary periods was $2,506,413.