Combined annual report for the Eastern Project area 16 November 2009 to 15 November 2010

Abstract

Exploration during the reporting period in the EPA included further evaluation and analysis of; All geophysical data captured by Emmerson (namely the large detailed ground gravity survey and airborne magnetics survey, both conducted in 2008) and previous explorers; All geological and drilling data captured by previous explorers and Emmerson (during 2008 and 2009) in the EPA. As such the exploration activities were conducted with a holistic approach and included examination of all tenure, but then included more detailed exploration activities in some tenure due to the identification of increased prospectivity indicators. Drilling in the EPA during the reporting period was restricted due to focused drilling at Pinnacles North, Trinity and the Red Bluff prospects (Ella, Armstrong, Smokey, Cannonball, Parker, Coltrane, McCoy, Monk, Dizzy, Duke and Navarro). The focus on the Red Bluff prospects was a result of the same further evaluation and analysis recently completed over the EPA tenure. Drilling and exploration over 2010 has been driven by Emmerson's Joint Venture Agreement 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, more specifically the EPA. 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 ( >1000 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. The Tier 1 driving factor of the JV agreement therefore determines the timing of any drill testing of any identified targets within the EPA, dependant on if it has Tier 1 potential. 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 tenure, particularly that of the EPA over the next 5 years, with the possibility of, into the longer term should JV Tier 1 exploration be successful. Emmerson geologists and Emmerson contract geophysicists from Spinifex Geophysics, analysed the geophysics captured over the EPA tenure using a new technique never used over the Tennant Creek Mineral Field called VRMI (Vector Residual Magnetic Intensity) as can be seen from figures 21 and 22, it can be clearly seen the benefits obtained from applying this technique to Emmerson's magnetic datasets. The end product produced from VRMI analysis has enabled Emmerson to identify potential Ironstones with greater confidence (i.e. the Red Bluff Area, which now following drilling as revealed that large ironstones do exist there and which Emmerson has regularly intersected with drilling). The results of drilling at Red Bluff have provided great encouragement for identification and drilling of targets in the EPA scheduled for 2011. Emmerson has also scheduled Electromagnetic (EM) surveys for a large number of areas in the Tennant Creek Mineral Filed, included some within the EPA. This has been scheduled for January 2011. The EM data will further provide data sets for analysis to further define areas of potential mineralisation within the identified potential ironstone prospects from the VRMI data. Other exploration work included Emmerson engaging a 4 year PhD project entitled, '4D structural, magmatic and hydrothermal evolution of the gold-copper-bismuth systems in the Tennant Creek Mineral Field, N.T.' with Centre for Exploration targeting (CET, of the University of Western Australia) student Matthew Hill. This work will include assessment of various deposits within the Tennant Creek Mineral Filed including West Malbec, Chariot, Orlando, White Devil, Northern Star, the Pebbles granite quarry and more specifically within the EPA the Eldorado Mine and the Iris Fold/Quartz Hill fault, as well as inspecting drill core. A detailed ground gravity survey was conducted over the Flag target within SEL 25912, the aim of the survey was to assist in refining the model and drill holes to further test the anomaly. The data has been received and processed but further drilling has been postponed due to the success of drilling at the Red Bluff Area. Exploration work was also conducted on Mineral Leases and Claims held by Emmerson that fall within the EPA boundary and may be covered by a variety of Exploration Licence tenure, although this exploration is not strictly reportable, it has been included in this report to demonstrate Emmerson's commitment to a holistic exploration approach to both define economic resources but to also generate greater understanding of the geology and structures of the EPA. Using the VRMI Emmerson has identified targets warranting further exploration during the next reporting period, these include both Tier 1 (>1,000 000oz Au) targets and Tier 2 (& gt;250,000oz Au) targets. The Tier 1 target scheduled to be explored in the EPA, that falls outside direct EL tenure will be 'Giant Moon' which is located within ML 22285, refer to figure 23. Tier 2 targets scheduled for exploration in the EPA, that fall outside direct EL tenure will include Billy Boy located in ML 22285, Estralita located within MCC 334 and West Peko located within MCC's 239 and 240, refer to figures 24, 25 and 26 respectively. Timing of exploration over these targets may be dependent on Heritage clearances from Traditional Owners.