Combined Annual Report for the period 1 November 2010 to 31 October 2011, covering mining tenements ML 24727, ML 25087, ML 25088, ML 25152, ML 25396, ML 26222 and ML 25529

Abstract

Reverse circulation (RC) drilling during the reporting year totalled 261 RC holes for a total of 23,878 metres. The majority of RC holes were completed on ML 24727; 14 RC holes were completed within ML 25152 and 7 holes were completed in ML 26222. Aircore drilling during the reported year totaled 86 Aircore holes for a total of 4,778 metres. All of the AC holes were completed within ML 24747. There were a total of 4 diamond drill hole tails (drilling at the bottom of RC pre-collars) completed for 126.25 metres during the reporting year. A total of 28,656 riffled reverse circulation and Aircore samples were collected and logged. The total amount assayed was 10,117 samples. Mineral Resource models were updated by Territory Resources Limited personnel for several Frances Creek deposits in 2011. Helene 5 and Helene 6/7 were re-estimated as a single 'Helene 5/6/7' model, Helene 3 and Helene 4 into 'Helene 34'. This was done as part of ongoing resource evaluation and upgrade for the Mineral Resource portfolio at Frances Creek. The modelling process involved generating a 3D wire-framed mineralisation and lithology models which were then interpolated using inverse distance squared. A variety of interpolation search orientations were used to suit the varied mineralization and geological trends. A cut off grade of 45% Fe is used for: Helene 34, Helene 5/6/7, Helene 11, Jasmine and Thelma 01 deposits. A cut off of 50% Fe is used for Ochre Hill, Saddles East and Thelma-Rosemary deposits. Total Indicated and Inferred Mineral Resource Inventory at the Frances Creek Mine as at 30th September 2011 was 12.08 Mt at 56.4% Fe (note this excludes the Millers Deposit - 1.28 Mt at 53.2% Fe, which is on pending ML 26429).