Huandot Magnesite Deposit EL 27724 Annual Report for the period 6 May 2011 to 5 May 2012

Abstract

EL 27724 is the only granted title held by Thessally Resources Pty Ltd (Thessally) in the Northern Territory. The title covers the same area as the former ERL 128 and hosts the Huandot magnesite deposit. Between 1987 & 2006 metallurgical test work on magnesite from ERL128 concluded the magnesite was of a suitable quality for magnesium metal production. However, the very tight material quality specifications, as well as more cheaply available magnesite from China and the lack of infrastructure in the area combined to see the project fail to reach production stage. An economic review carried out by CSA Global associate and industrial minerals expert Mr Murray Lines has deemed the project suitable for further marketing and engineering work. His confidence is based on his review of the historic resource estimates, past mine design details as well as past operating and capital cost estimates with relevance to the present and forecasted booming market for magnesite products. Thessally will apply for the renewal of EL 27724 to continue on from its positive Year 1 and 2 appraisals and to progress with the further evaluation of the magnesite deposit at Huandot. Revaluating the magnesite deposit under the terms of present day and projected future market requirements has shown the current economic potential for the development of a magnesite mine within the area of EL 27724. The primary objectives during the term of the renewed licence are to: Advance the project to a higher level of engineering study. Following the completion of an updated economic assessment an evaluation program will be designed to address areas of risk and to add further value to the Huandot deposit; Secure a longer term of tenure via an Exploration Retention Lease so that title to the area is guaranteed; and Complete field programs to allow assessment of the critical issues identified during the concept study. This would likely include field work to: obtain material for further metallurgical test work; and marketing of the magnesite to a new potential user or customer base.