Group Annual Technical Report for EL 27972 Charlotte and EL 27974 Central Railroad, Charlotte Project for the period 21 September 2011 to 20 September 2012

Abstract

The Charlotte Project consists of seven exploration licences held by Tellus, located in the Amadeus Basin, approximately 130km south of Alice Springs. This group annual report relates to two of the exploration licenses; EL 27972 Charlotte and EL 27974 Central Railroad for the reporting period ending 20th September 2012. The Charlotte Project is targeting subsurface salt deposits to assess potential evaporitic mineralisation within the Amadeus Basin. Two known salt units are present in the Charlotte project area, namely the Chandler Formation (400-700m deep) and the deeper Gillen Salt Member (1,800m deep). Exploration activities to date indicate a significant thickness of massive to semi massive halite exists within the Chandler Formation with an estimated notional volume of massive to semi-massive halite target mineralization in the order of 2.3 km3. In order to assess potential evaporitic mineralisation further; drilling, core sampling and geochemical analysis of samples is required. Additional seismic data acquisition and processing would improve data coverage over the project area giving greater confidence is the salt unit model. Proposed seismic and drilling is expected to take place in Q3/Q4 in 2013. During the reporting period Tellus compiled the Mine Management Plan for exploration operations, signed an exploration agreement with the Central Land Council on behalf of traditional owners and completed the project prefeasibility study. The lodgment of a Notice of Intent for its Chandler Salt Mine Project is planned during the week commencing 19th November 2012.