Combined annual exploration report on the East Arnhem Land Project for the period 20 April 2010 to 19 April 2011 on EL 10182, EL 24524 and EL 27249

Abstract

EL 10182 and EL 24524 were applied for respectively by Groote Eylandt Mining Company Pty Ltd (Gemco) in September 1998 and BHP Billiton Minerals Pty Ltd (BHPB) in December 2004. These applications are located within aboriginal freehold land and consequently were processed under the Aboriginal Land Rights Act 1975 (ALRA). Although the original applications covered much larger areas, the land council gave consent only to parts of the applications. As a result 3 new ELs (27249, 27216 and 27217) were created to cover the non-contiguous consent areas and 10 new EL applications to cover the non-contiguous non-consent areas. EL 27216 and EL 27217 were entirely surrendered during the reporting period. Rio Tinto Exploration Pty Ltd (RTX) has a joint venture agreement with Gemco which gives them the right to explore for bauxite on EL 10182. BHPB also has a joint venture agreement with RTX to explore for manganese on some of their tenements including EL 4171 which adjoins EL 24524. BHPB is exploring for manganese on all of these ELs, which together are referred to here as the 'East Arnhem Land Project'. This report describes the work which BHPB has undertaken to explore for Mn on this project during the current reporting period (20 April 2010 to 19 April 2011). The Cretaceous package of rocks in east Arnhem Land area is stratigraphically similar to that of Groote Eylandt which hosts one of the largest Mn deposits in the world. Historical prospecting undertaken during 1960's by BHPB (then BHP Ltd) had identified a number of Mn occurrences in the region including Peter John River, Caledon Bay and Lake Evella. Most of the exploration work during the reporting period focused on EL 10182, which is located near the Caledon Bay Prospect. A total of 12 air core drill holes (totalling 517.5 m) were drilled 1 to 2 km apart to test the geological targets in EL 10182. All were vertical holes with lengths ranging from 34.5 m to 53.5 m. Although it was intended to drill deeper up to the base of the Cretaceous sequence, most of the holes had to be stopped at lengths of around 40 m due to drilling difficulties. Further it was planned to drill 58 holes during the field season and accordingly all the accesses and sites were cleared. However, the drill programme had to be ended after drilling only 12 holes because of major rig breakdowns and early start of rainy season. Drill chips were collected at 0.5 m intervals for geological logging. Samples for assaying were predominantly taken as composites of 2.0 m or less. Only the intervals with suspected Mn mineralisation were sampled at 0.5 m. A total of 469 samples (including 19 duplicates and standards) were collected which represent drilling intervals ranging from 0.5 m to 2.5 m. Drilling results indicated the presence of thin and discontinuous intervals of low-grade sandy Mn mineralisation in only four holes in EL 10182. The best interval contained 21.5% Mn over 1.0 m starting from a depth of 12.5 m in EARC207. Biostratigraphic age dating was attempted on 20 samples taken out of the drill chips (held in chip trays) from holes drilled into Peter John River and Caledon Bay prospects. Most of the samples yielded small amounts of foraminifera and spores/pollens, which indicate a mid-Cretaceous age corresponding to the lower part of the Late Albian stage. Mineralogical studies by X-ray diffraction and polished thin sections on a few drill chip and outcrop samples indicated presence of Mn oxides in the form of cryptomelane and pyrolusite only in one sample. During the forthcoming field season in 2011, it is proposed to complete drilling of the unfinished portion of the 2010 drill programme (46 holes) over EL 10182. It is also proposed to drill 3 to 4 deep holes in EL 24524 to intersect the full thickness of the Cretaceous rocks.