EL 22349 Molyhil Year 8 Annual report 17 May 2009 to 16 May 2010

Abstract

The existing block model for the Molyhil deposit was revised during Year 8 to incorporate results from the Year 7 RC drilling mentioned above. Continental Resource Management completed a revised block model using Micromine software which resulted in the following updated geological resource for the Molyhil deposit; Measured resource 540,000 (t), 0.24% MoS2, 0.33% W03, and 29.4% Fe2O3. Indicated resource 2,300,000 (t), 0.18% MoS2, 0.38% W03, and 27.9% Fe2O3. Inferred resource 900,000 (t), 0.2% MoS2, 0.15% W03, and 27% Fe2O3. The resource has been estimated to a depth of 270m (RL130m). The Measured Resource is to a depth of 55m (RL 345m). The resources were estimated by geostatistical interpolation using the inverse distance squared method. Block sizes were 5m x 5m x 5m. The resources were estimated within wireframes, constructed to contain the significant bodies of iron-rich skarn. A lower cut of 15.25% Fe2O3 was employed in the estimation reported in summary below, as it is anticipated that mining and treatment would be of the visually distinguished entire iron-rich portions of the bodies. Current operating and capital costs together with 2009 market prices for molybdenum and tungsten were used to complete a revised Whittle Optimisation for the Molyhil deposit based on the updated block model completed by Continental Resource Management. Current metal prices, particularly those for molybdenum, used in the revised optimisation resulted in unfavourable forecast revenue for the project at this point in time. A decision was made by the board of directors to suspend development of the Molyhil project until there is a significant increase in the molybdenum price.