Annual report for the period 1 January 2014 to 31 December 2014

Abstract

In 2013, an extensive loam and stream gravel sampling program was commenced over MLN 1154 and surrounding exploration licence EL 26944 that targeted the unconformity between the Bukalara Sandstone and the overlying Cretaceous Sandstone. Processing and assessment of the results continued during 2014. To date, 101 samples have been processed and returned 59 positive results, with a total of 2 microdiamonds and 268 kimberlitic chromite grains being recovered. These results are considered encouraging and highlight the potential for additional kimberlite discoveries within the mining lease. During 2014, three targets were identified for investigation using a Geonics EM34-3 ground electromagnetic instrument. A total of 12.6 line kilometres were completed. The targets were a mixture of historic ground gravity, ground electromagnetic and geochemical anomalies. A detailed desktop review of all available data (geophysical, geochemical and indicator mineral results) undertaken by a Consultant Research Manager in Perth was completed. Some 58 geophysical targets with potential kimberlite signatures were identified within the mining lease. The targets have been prioritised based on their properties, with a higher priority given to those with coincident geophysical and/or geochemical signatures. During the year, the Company completed a review of results from the hydraulic borehole mining trial completed in September 2013. Following this review, other alternative mining methods were investigated. The methods analysed were chosen on the basis that they could potentially provide a quicker path to restarting mining operations with lower upfront capital costs. A detailed feasibility study was completed on the chosen alternative of mechanical clamshell grab mining situated upon a barge floating on the flooded open pits. Preliminary work commenced on barge design and contractual term sheet negotiations with the mining contractor.