ML 24031 Bootu Creek Manganese Project Annual Exploration Report for period 20 September 2012 to 19 September 2013

Abstract

Exploration activity included RC drilling and aerial photography. RC resource delineation and exploration drilling on ML 24031 comprised 28 RC holes for 1,452 metres. Drilling extended Zulu delineation 50 metres south and tested offset exploration targets at Yaka SE and Masai NW. Aerial photography covering the Bootu Creek Manganese Project, and parts of EL 28662, was flown by Aerometrix Pty Ltd on 22 June 2013. The objective of exploration on ML 24031 is normally to replace mineral resources depleted by manganese mining operations. However, due to a restricted exploration budget, the focus for 2013 moved to exploration on adjacent Exploration Licences. The limited exploration program on ML 24031 was restricted to resolving the potential of two small exploration prospects (Masai NW and Yaka SE). Masai NW prospect remains encouraging with a small Gradient Array IP survey planned to resolve local structure prior to further drilling in 2014. Yaka SE appears to narrow and low grade to warrant pursuing. Resource delineation drilling in 2012 extended the Chugga North resource model 180m further north, and the Fold Nose resource model a further 200m to the northwest. Mineral Resources are due for re-estimation as at 31st December 2012. The 31 December 2012 Mineral Resource decreased 2.8 Mt from that quoted for 31 December 2011. That equates to a net pre-mining decrease of 0.4 Mt after allowing for 2012 mine depletion of 1.9 Mt at 21.8 percent Mn (survey adjusted mine production) and a net decrease of 0.5 Mt in ROM stocks. Delineation drilling at Zulu will be included in the 31 December 2013 Mineral Resource estimation. The extent of funds available for the 2014 exploration program is not clear at this stage and is dependent on the re-estimation of current Mineral Resources and Ore Reserves using more severe cost, price and foreign exchange rate parameters.