Bootu Creek Manganese Project annual exploration report for ML 24031 3rd year 20th September 2007 to 19 September 2008

Abstract

The mineral lease is located entirely within the Tomkinson Creek Group in the Ashburton Province of the Tennant Creek Inlier. The favourable manganese bearing horizon is located on the contact between the dolostone and siltstone units of the Attack Creek Formation (Pta) and the overlying sandstone of the Bootu Formation (Ptb). A number of manganese deposits occur around the eastern and western limbs of the Bootu Syncline, with current economic interest focused on deposits along the eastern limb. Bedding dips in this area are typically around 35, with local variations ranging from 15 to 45. The principal manganese mineralisation consists of strata-bound layers contained within dolomitic siltstone and medium grained sandstone. There is a marked increase in Mn grade towards the base of the layers. True thickness of the layers is typically 5-8m, but varies from 3-4m up to 12m. The immediate foot-wall is formed by siltstone, generally hematitic. The immediate hanging-wall consists of a variable sequence of siltstones and sandstones, usually with hematite and minor manganese mineralisation. The sedimentary sequence generally coarsens upwards. The deposits currently targeted for initial mining are sections of the Shekuma and Gogo resources, located on the east limb of the Bootu Syncline. These are roughly parallel and 500m apart, trending 350 - 360, west dipping, and extend about 2000m along strike. These deposits are generally buried beneath up to 10m of recent transported deposits, unlike the deposits previously mined, which all outcropped. The minerals present appear to be an assemblage of several potassium, barium and manganese oxides ? hydroxides, generally comprising a mixture of varieties of cryptomelane and psilomelane. The prospective Palaeozoic rocks are also covered in part by Cenozoic alluvium, colluvium and aeolian sand. Work conducted on ML24031 (and the two adjacent exploration licences) included further interpretation of the 2006 helicopter borne Hoist-EM survey and Aster multi-spectral data, updated Ikonos satellite imagery, drill planning and clearing of access tracks and drill sites, and 176 (9,917m) of RC exploration drilling. The 2007 RC drill program was still in progress at the end of the reporting period and continued until late November 2007. A total of 9,917m of RC exploration drilling was conducted on ML24031 during the reporting period. All resource and reserve estimates were updated for the end of December 2006. Resource models for Shekuma, Chugga and Chugga West, Gogo and Xhosa, Tourag and Zulu were recalculated by Hellman and Schofield (H&S) following receipt of assay results and interpretation by site geologists of 2006 drill data. H&S used 3D Ordinary Kriging (OK) for resource estimation following evaluation and selection of appropriate search parameters for each domain (usually a +18% ore zone and a separate +14% hangingwall domain) and minimum search criteria for resource classification. The resource for Shekuma was depleted for ore processed to December 2006. The Combined Resource for Bootu Creek (calculated at an 18%Mn cut-off) increased by 5.5 million tonnes (+50%) compared to the previous calculation by RSG Global in May 2004 (see Table 1), after allowing for the 0.6 million tonnes @ 24.2% Mn processed to the end of December 2006. Additional production (ore crushed) from Shekuma Pit and Gogo pits for the 9 months ending September 2007 was 1.1 million tonnes at 24.8% Mn, depleting the above model by the same amount. The next resource update will be as at December 31st 2007.