EL 22349 Molyhil Annual Report 17 May 2011 to 16 May 2012

Abstract

Tungsten and Molybdenum mineralisation was originally discovered at Molyhil in 1973. Fama Mines Pty Ltd selectively mined approximately 20,000 tonnes of ore during 1976 - 1977. Petrocarb Exploration NL acquired the operation in 1978 and production continued until late 1981 when Tungsten prices collapsed. Petrocarb published an indicated open cut reserve of 1.8 million tonnes at 0.6% WO3 and 0.3% MoS2. The reserve ore grade was primarily based on statistical analysis of mining head grades. Mining experience indicated that the drill estimated grades were low, with production head grades significantly higher. In June and July 2004, Tennant Creek Gold completed 5 diamond drill holes for 675.59 metres and 23 Reverse Circulation (RC) holes for 3,146.7 metres. A JORC compliant drill indicated resource was subsequently calculated at 2,065,009 tonnes grading 0.304% WO3 and 0.182% MoS2. The resource remains open at depth down plunge to the south. In December 2004, 3 trenches were excavated over an 80-metre strike length of the southern orebody and 15 tonnes of ore extracted for metallurgical test work. An average grade of 0.70% WO3 and 0.58% MoS2 was calculated for the 15 tonne sample and is an almost identical grade to Petrocarb historical mined grade. The bulk sample results were considerably higher than assayed intersections from nearby RC drillholes, and provide further evidence that the drill indicated grade substantially underestimates the true grade of the deposit. In July 2005 Sunsphere commenced a trial underground mining program to confirm the head grade of the deposit relative to the previous drilling and historical grades. Three shafts and crosscuts were excavated in the Southern Lode and totalled 96 and 102m respectively. The extracted ore was crushed, sampled and assayed. Further samples were used for metallurgical test work. The bulk sampling was used to upgrade the JORC resource to a Measured Resource of 370,000t at 0.52% WO3 and 0.32% MoS2, an Indicated Resource of 1,750,000t at 0.52% WO3 and 0.26% MoS2, and an Inferred Resource of 250,000t at 0.7% WO3 and 0.2% MoS2. This resource has been estimated to a depth of 150m (RL250m). The Measured Resource is to a depth of 45m (RL 355m). Two RC programmes were completed during year 5 exploration for a total of 56 holes (TMRC024-054 and 07MHRC001-025). The first programme was completed in September and October 2006 (TMRC024-054) and included 14 reconnaissance water bores (TMRC037-050) supervised by KH Morgan and Associates. The second RC programme was completed in March 2007 (07MHRC001-025). 5,723 metres of RC drilling was completed in total. 3,281 samples were sent to ALS and Genalysis in Perth for assay. The additional drill data led to a revised Measured Resource of 530,000t at 0.42% WO3 and 0.27% MoS2, an Indicated Resource of 2,400,000t at 0.39% WO3 and 0.17% MoS2, and an Inferred Resource of 800,000t at 0.15% WO3 and 0.1% MoS2. This revised resource has been estimated to a depth of 265m (RL135m). Search Exploration Services of Adelaide were contracted to complete a detailed high power dipole-dipole IP survey over the Molyhil deposit in August 2007. The aim was to outline magnetite skarn lode positions down to a vertical depth of 300m. The results from the IP survey identified the down plunge position of the Southern and Yacht Club Lodes at the south end of the deposit and a near surface anomaly to the south on line 19600N at approximately 10250E. Additional conductors were identified at the north end of the deposit on line 20240N however the source of the conductors could not be identified with the reconnaissance RC drill holes. Year 7 Exploration included 16 RC holes completed by McKay Drilling of WA for a total of 2,340m (09MHRC001-016). RC holes drilled to the north and south of the main pit area failed to identify any magnetite skarn associated with the previously identified IP anomalies. All other holes drilled in and adjacent to the existing pit intersected good widths of mineralised magnetite skarn. The existing model and the notion of two separate lodes (Southern and Yacht Club) were revised and updated during Year 8.