Second Annual Rechnical Report ML 27422 and ML 29042, 22 December 2012 to 21 December 2013

Abstract

During the current reporting period production of ilmenite commenced from mining on ML 27422. In total mining 68,000 tonnes at 5 percent TiO2 resulted in 3,400 tonnes at 50 percent Ti02 produced through the processing plant on ML 29042, which also includes the office and camp. From an exploration perspective AIR conducted a review of ilmenite tonnage potential on Sill 80 both within ML 27422 and in the adjoining EL extending north to the Roper Highway at Flying Fox Station. This review resulted in trenching being conducted across ML 27422. Trenching was carried out in three stages. Initial trenching and sampling was carried out in September 2012, prior to commencement of mining to validate the auger sampling assay results in the immediate start of mining area. This was followed by a second programme in April 2013 within the early mine schedule of the ML. This was followed by a regional trenching programme in July 2013, designed to establish depth of ilmenite for tonnage estimation. Two bulk samples were subsequently forwarded to Cristal Mining Australia Limited (as potential buyers) in Bunbury WA for test work but apparently not carried out. In summary trench mapping and sampling showed that ilmenite mineralisation often extended below the one metre deep auger drilling, thus increasing tonnage potential. The trenching within the Mining Lease and surrounds also showed that the ilmenite grade was not restricted to red soil but extended into black soil regolith also. A programme of follow up air core drilling was planned for resource validation but due to lack of available funding was never implemented. Similarly mining was also deferred from mid-2013 whilst the company set out to raise funds to sustain the operation and its exploration tenements into the future.