Mount Peake Project Annual report 22 July 2010 to 21 July 2011 EL 23074

Abstract

A significant amount of work has been carried out in this reporting period comprising drilling, metallurgical optimisation and pilot plant testwork, two scoping studies and commencement of pre-feasibility work. A geochemical review was also completed indicating low potential nickel fertility or prospectivity for nickel sulphide mineralisation in the Mount Peake area. The new hydrometallurgical process - the TIVANTM process - which was jointly developed in 2010 in conjunction with TNG's metallurgical consultants, Mineral Engineering Technical Services Pty Ltd, has for the first time using hydrometallurgy successfully extracted commercial grades of vanadium, titanium and iron from the Mount Peake Deposit, which is hosted by a similar rock type (Magnetite-Gabbro) to that which hosts most known vanadium deposits worldwide. An international patent application for the TIVANTM hydrometallurgical process has been filed by TNG and metallurgical consultants Mineral Engineering Technical Services Pty Ltd. Snowden Industry Consultants completed a detailed Scoping Study based on the revised JORC Inferred Resource of 139.1Mt at 0.29% V2O5, 5.34% TiO2 and 23.66% Fe. In addition to this resource, TNG has estimated an Exploration Target 1 of 500-700Mt grading 0.2-0.4% V2O5 and 25-35% Fe based on available geophysics. A subsequent scoping study was commissioned to investigate the effect of producing a ferrovanadium product (FeV), as a further value-add to the vanadium pentoxide concentrate produced. In March 2011 TNG advanced the project to Pre-Feasibility stage and appointed Sinclair Knight Mertz, to manage the completion of a Pre-Feasibility Study (PFS) for the Mount Peake Project. The PFS, which is expected to take seven months to complete, will build on the positive independent Scoping Study completed by Snowdens earlier in the year and will be based on a conventional open pit mining operation processing 5Mtpa. It will be undertaken in conjunction with the next phase of pilot plant metallurgical test work. Reporting on environmental factors, flora and fauna, and water assessment have been completed to date. A diamond drilling programme was carried out at the Mount Peake Fe-V-Ti deposit in May and June 2011. Eight diamond drillholes (11MPDD03-10) were completed for 1081m. These holes were drilled HQ in order to provide representative samples for metallurgical and Pilot Plant testwork. In July a 23 hole, 2748m RC infill-drilling programme was completed over the Mount Peake deposit. The programme was designed to in-fill and upgrade the current JORC Inferred Resource estimate of 140Mt at 0.29% V2O5, 5.34% TiO2 and 23.66% Fe, to indicated status. A total of 2040 samples were collected and sent for analysis. Results are awaited. TNG has employed the services of consultant geologist Finn Barrett to review and analyse the geological data on Mount Peake and produce a comprehensive report on the geology, stratigraphy and styles of mineralisation within the Mount Peake gabbro hosted Ti-V-Fe deposit. A preliminary report has been produced and analytical results are awaited in order to complete the study. A number of samples from the diamond drilling programme were sent to Nea Kameni Pty Ltd for petrographic analysis. Nine polished sections were produced. The rock types within the sections are mainly ultramafic cumulate rocks with varying degrees of cumulus titanomagnetite and olivine with intercumulus andesine, augite and biotite. Andesine and augite are cumulus in some rocks.