Highland Plains Project and Exploration Targets EL 25068, EL 25600, EL 25972, EL 27038 and EL 27269 Group annual geological report for the period ended 7 August 2010

Abstract

Work undertaken in the reporting period has concentrated on logistics and planning for mining at Highland Plains, and mineralogical treatment of phosphate ore. A one tonne phosphate sample for metallurgical testwork was collected from outcropping phosphorite adjacent to drillhole HAC001 in May 2010. It was trucked to Amdel, Adelaide for use in metallurgical testwork, A mid-September reconnaissance drilling program is planned at the Buchanan Dam, Alroy and Alexandria prospects on EL 25600. However this is pending drill rig availability in the last quarter of the year. No work has been conducted on EL 25972, EL 27038 or EL 27269. Two reconnaissance field trips investigating iron ore mineralisation were conducted in the reporting period. The first, in May, was helicopter-supported. The work focussed on exploring areas delineated by previous NTGS mapping and any within range of similar geological nature. A total of 100 grab samples were collected, with samples returning a maximum of 52.3% Fe. The July field trip discovered the previously-unmapped Sticky Fly and Fearless Fly deposits, which are hosted in the Burangoo Sandstone and Wallis Siltstone members of the Constance Sandstone, South Nicholson Group. A total of 115 grab samples were collected, returning low P and a maximum of 63.7% Fe. Mineralisation is open to the east, west and north. Samples were assayed using XRF on the oxide element suite, Loss on Ignition, and selected minor elements. This technique was conducted on all iron ore grab samples at Amdel Laboratories in Adelaide. Metallurgical testwork has been ongoing throughout the reporting period and a scoping study report is in the process of being finalised at the end of the reporting period. The final report will be included in the next reporting period. Testwork was carried out on core recovered during the 2009 drilling campaigns, and on a one tonne sample collected in May 2010. Wet and dry season flora and fauna field studies were undertaken by EcOz Environmental Services. Fieldwork was undertaken between 29 September 2009 and 3 October 2009 for the dry season study, and 26 to 30 April 2010 for the (late) wet season report. The Camooweal Dolostone and Thorntonia Limestone were identified as potential targets for project water supply by Klohn Crippen Berger mining environmental group. Three test bores and an observation bore were drilled in the previous reporting period and evaluated in the current reporting period. Test pumping of the two most prospective bores did not sufficiently stress the aquifer to assess maximum production rates, however yields in excess of 25.0L/s and 7.0L/s respectively are not considered unrealistic based on the testing results. A 100 hour pumping test resulted in a 21cm draw-down, which recharged within 2 minutes of ceasing pumping. Slurry Systems Pty Ltd were commissioned by POZ to investigate alternative modes of transport to move 3Mtpa of phosphate rock from Highland Plains. The report considers factors such as particle SG and rheology, size consistency, corrosion rates, pipe size, head loss gradients, and hydraulic gradient lines. Three routes to three different destinations were considered. Phosphate Australia is continuing its search for a Strategic Partner to assist in developing the Highland Plains phosphate mine and associated infrastructure. This will continue to be a focus of the company in the coming reporting period.