Annual Technical Report for EL 28900 Eastern Railroad, Charlotte Project for the period 5 March 2012 to 4 March 2013

Abstract

The Charlotte Project consists of six exploration licenses held by Tellus, located in the Amadeus Basin, approximately 130km south of Alice Springs. This annual report relates to one of the exploration licenses; EL 28900 Eastern Railroad for the reporting period ending 4th March 2013. 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 mineralisation in the order of 2.3 km3. 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. Tellus commissioned RPS Group Canada to review available 2D seismic survey data and assess the extent of salt within the Chandler Formation. A geological and geotechnical assessment of the project area was conducted to assist with drill planning; in consultation with Douglas Partners Pty Ltd. 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.