Mount Peake Project Annual report 22 July 2009 to 21 July 2010 EL 23074

Abstract

During the reporting period TNG completed a 14 hole RC programme and a 4 hole diamond drilling programme. Two of the diamond drillholes were part of the 'Stirling Deeps' project, which aims to provide information on the nature and extent of a potential layered mafic intrusion in the Western Arunta province. The RC drilling was aimed at infilling and testing extensions to the existing Inferred Resource. Samples were initially analysed by XRF and those with results in excess of 15% Fe were submitted for Davis Tube Recovery (DTR) in order to assess the magnetic separation, recovery and concentrate grades. The most significant DTR intersection was: 115 m at 1.13% V205, 15.3% TiO2, 54.7% Fe. The diamond drilling at Mount Peake was designed to produce core for metallurgical testing. Geological logging was completed and core from both holes was transported to Amdel Laboratories. No immediate analysis was undertaken on the core. Results of the 'Stirling Deeps' drilling indicated minor mineralised zones. These were sampled and submitted for analysis. Best results were: SDDD001 153ppm Cu, 121ppm Ni, 50ppm Cr, SDDD002 105ppm Cu, 282ppm Ni, 148ppm Cr. Review of pre-existing geophysical data formed a large part of the exploration programme in the current reporting year. A review was undertaken on regional magnetic data and airborne GEOTEM flown by Fugro Airborne Surveys in 2003. As a result of these reviews a number of targets have been recommended for follow-up in the upcoming year. In addition to these reviews a heli-borne magnetic and gravity survey was undertaken over the central area of EL 23074. The new magnetic data highlights the existing magnetic anomaly, with N-S strike orientation and amplitude in excess of 4000 nanno- Teslas and subsequent 3D modelling indicates the source of the magnetic complex is a ring-type dome structure. Results from the radiometric survey have revealed previously unknown uranium anomalies, up to 500m long that occur adjacent to the Mount Peake vanadium deposit. Uranium has not been routinely assayed in any of the previous exploration work at Mount Peake. Field checking of the anomalies is planned and re-assaying of sample pulps and residues is scheduled. TNG's metallurgical consultants, Mineral Engineering Technical Services (METS) have confirmed that a high-grade vanadium pentoxide (V2O5) concentrate can be produced from the Mount Peake mineralisation. A range of testing was undertaken which resulted in the production of a vanadium-rich titanomagnetite grading 1.0-1.3% V2O5. Additional research by METS resulted in the development of a new hydrometallurgical process suitable for extracting all three key commodities (V, Ti, Fe) from the ore. TNG and METS have submitted a joint Patent Application to protect the invention and allow commercialisation at a later date. TNG has also commissioned METS to undertake a new Scoping Study to take into account the new hydrometallurgical processing technique. In July 2010 previously analysed drillhole samples were sent for additional analyses to assist in the completion of a full geochemical review of the project. The main aim of this review was to outline the nickel prospectivity of the area. An interim review has been completed by Nigel Brand from Geochemical Services Pty Ltd. This initial study concluded that from the Mount Peake data made available for assessment there was no indication of Ni fertility or prospective Ni-sulphide mineralisation. This work is ongoing. An updated Inferred Resource Estimate was completed by Snowden Mining Industry Consultants Pty Ltd in February 2010. The estimate of: 139 Mt at 0.29% V2O5, 5.3% TiO2, 23.7% Fe, 32.5% SiO2 and 8.2% Al2O3 represents a 30% increase from the previous resource estimate of 107Mt with improved concentrate grades. The work undertaken during the 2009-2010 reporting year has ensured that there is plenty of scope for further exploration to take place. Follow-up of geophysical targets will be a priority in 2010-2011. Metallurgical work will continue and a new scoping study undertaken by metallurgical consultants METS. A full geochemical review of the Mount Peake data will provide information on the Ni-sulphide prospectivity of the area and whether this warrants follow-up.