Combined annual report for the Western Project area 16 May 2009 to 15 May 2010

Abstract

Exploration Licences in the WPA, were acquired by Giants Reef Exploration Pty Ltd (Giants Reef) and Santexco Pty Ltd to search for Tennant Creek style iron oxide copper-gold deposits. Giants Reef Exploration Pty Ltd (Giants Reef) and Santexco Pty Ltd are wholly owned subsidiaries of Emmerson Resources Ltd. This combined report records the exploration work completed on these ELs during the WPA Combined Reporting period from 16 May 2009 to the 15 May 2010. Much progress has been made during the reporting period and is evident from the numerous identified targets detailed in section 7. Exploration activities are largely been driven by Emmerson's Joint Venture with Ivanhoe Australia. Emmerson entered into a Joint Venture Agreement (JV) with Ivanhoe Australia (Ivanhoe) on 16 April 2009. The JV is aimed at the discovery of economic IOCG deposits in the majority of Emmerson's Tennant Creek Tenements, and includes all EL's, SEL's and A's within the WPA. Ivanhoe must spend a minimum of $18 million dollars in the first three years to earn a 51% interest in the tenure subject to the JV, and spend an additional $10 million over years four and five to retain that interest. The JV is specific in relation to targeting of deposits, such that, JV exploration is targeting Tier 1 (>1 000 000oz Au) deposits in Emmerson's Tennant Creek Tenements that are subject of the JV, where Ivanhoe can earn up to a 70% interest in such a deposit, by sole funding the project to production. This JV places Emmerson in a very strong position to deliver significant in-ground exploration activities and hence expenditure over its Tennant Creek tenure, including all EL's, SEL's and A's over the next 5 years, with the possibility of, into the long term should JV exploration be successful. Emmerson's approach to exploration in the WPA is a carefully calculated one, using multiple data sets to best determine prioritisation of targets, to increase the probability of success and to systematically test each identified target. Section 7 details all advances made during the reporting period, of which there are many and positions Emmerson in a strong position to be a successful explorer in Tennant Creek and particularly the WPA. Emmerson's confidence in the prospectivity of its WPA tenure is best reflected in its exploration expenditure. Total expenditure on the ELs, SEL's and A's during the WPA Combined Reporting period from 16 May 2009 to the 15 May 2010 is estimated at $713,895.36 versus covenants totalling $218,250.00, the RAB program at Red Bluff Area in SEL 24979 has yet to be included in this expenditure, and would be a significant addition.