EL 27724 Annual Report for the period 7 May 2014 to 6 May 2015 Huandot

Abstract

EL 27724 is one of two granted titles (the other is EL 29946) held by Thessally Resources Pty Ltd (Thessally) in the Northern Territory. The title covers the same area as the former ERL 128 and hosts the Huandot magnesite deposit. Between 1987 & 2006 metallurgical test work on magnesite from ERL 128 concluded the magnesite was of a suitable quality for magnesium metal production. However, the very tight material quality specifications, as well as more cheaply available magnesite from China and the lack of infrastructure in the area combined to see the project fail to reach production stage. In early 2012, an economic review carried out by CSA Global associate and industrial minerals expert Mr Murray Lines deemed the project suitable for further marketing and engineering work. Revaluating the magnesite deposit under the terms of present day and projected future market requirements highlighted the current economic potential for the development of a magnesite mine within the area of EL 27724. Thessally was granted the renewal of EL 27724 for a two year period until the 6th May 2014. In the first year of the renewal period a field program to allow assessment of the critical issues identified during the concept study was completed. Magnesite samples were collected to verify historic results and product specifications. The results of the test work verified the suitability of the material for the production of; Dead Burned Magnesite (DBM), a feed for caustic calcined magnesia and magnesium metal. The availability of positive and up to date results has also led to the renewed marketing of the Huandot magnesite to potential end users. To assist with the marketing component of the magnesite products a data room was developed and it contained initial pre-feasibility information to enable the distribution of information on the magnesite project. In the second term of the renewed licence tenure the primary objectives were to advance the project to a higher level of engineering study. A Preliminary Desktop Mine Scoping Study was carried out by CSA Global and it reiterated that the Huandot magnesite is suitable for most end use applications as defined by the previous year's test work. It concluded that the deposit remains open and that it can be mined using conventional open pit methods. Importantly, the study highlighted that the project has the potential to be developed into an economically viable mine operation should a suitable customer base be secured.