Annual report exploration licence EL 22961 Litchfield Project Northern Territory for the year ended 10 July 2007

Abstract

This fourth annual report summarises work carried out on Exploration License 22961, Litchfield Project, Northern Territory for the year ended 10 July 2007. In 2001, 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 mineralization, 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, Falconbridge secured a numner of Tenements in the Litchfield area including EL 22961. In December 2003, Discovery Nickel Limited acquired 100% interest In Falconbridges Litchfield project. During management Discovery Nickel Limited now Discovery Metal Limited, DML collected soil geochemistry and ground based electromagnetic survey in the north of EL 22961 focused firmly on nickel exploration in the Wangi Basics. The DML soil program highlighted a number of anomalies that remain untested. 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. In late 2006 DML entered into a Joint Venture with Trajan Minerals Limited TRJ who now are the current tenement managers. TRJ has a boarder exploration approach and subsequently have embarked on a review of all historical data to asses EL 22961's potential for a range of commodity styles. EL 22961 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). EL 22961 also has potential for Pine Creek styled Gold mineralisation, Labelle/Byno pegmatite related Tantalium, Uranium and Copper Gold considering the proximity of the EL to the Daly river copper field. Initial studies have revealed the historical Terry's Prospect (Gold) lies in the southern portion of the EL 22961 and will be an initial exploration focus along with nickel potential associated with the Wangi basics espically around the untested geochemical anomaly LFGC1. Exploration completed to date on EL 22961 includes: - New review and compilation of open file reports, published literature and data; - Re-interpretation of the aeromagnetic, gravity and landsat data; - designing the boundaries of new aeromagnetic surveys - Field visit to northern part of EL 22961 - Design of soil program at Terry's Prospect