M52/776 and E52/1455 are subject to a 2.5% net smelter royalty

Abra Deposit Technical Summary | Geophysics | Mineralisation | Mineral Resources | Scoping Study Results

The Mulgul Project comprises granted mining lease M52/776, exploration licences E52/1455, E52/1887 and E52/2185, prospecting licences P52/1261 to /1263 covering approximately 321 square kilometres.

M52/776 contains the polymetallic Abra lead-silver-(zinc)-copper-gold deposit which remains open in most directions and represents the most significant minerals discovery in the region to date.

Mineralisation intersected in drillholes at the Genie and Hyperion prospects, each more than 2 kilometres distant from the Abra deposit, suggest that Abra represents only part of a major base metals mineral system.

Abra Deposit Technical Summary

The middle Proterozoic age Jillawarra Sub-Basin is preserved as a 65 kilometre long and 10 kilometre wide belt, the centre of which is dominated by the east-west trending Coolina Anticline.

The geology in the vicinity of the Abra deposit has been assigned to three main stratigraphic units (from the youngest to oldest):

• Jillawarra Formation
  Predominantly siltstones with minor sandstones
  
• Kiangi Creek (locally the West Creek) Formation
  Clastic rocks, typically siltstones
  
• Irregully (locally the Gap Well) Formation
  Clastic and carbonate rocks, typically siltstones and dolomites
  

The Abra deposit consists of a large resource of disseminated and vein hosted galena, chalcopyrite (and sphalerite) mineralisation.

The deposit occurs within a banded, massive and brecciated, silica-barite-hematite-magnetite-dolomite sequence and an underlying chlorite altered hydrothermal breccia, immediately below the disconformity separating the Gap Well Formation from the overlying West Creek Formation. The top of the deposit is 250 metres below surface.

The mineralised sequence comprises, from top to bottom, Red Banded Zone (ZRB) (silica- barite-jaspilite-hematite-magnetite-dolomite), Dolomite Banded Zone (dolomite-silica-magnetite), Black Banded Zone (BBZ) (silica-magnetite-hematite-dolomite), Chlorite Alteration – Breccia Stringer Zone and Footwall Laminated Sediments (LLS). This sequence trends east-west and dips at 10° to 30° south.

A number of faults have been interpreted based on physiographic lineaments and magnetic data. The regional east-west Quartzite Well Fault may separate into a series of splays to the north of the project area. The Tangadee Lineament may be represented by northeast trending faults interpreted to the east of the deposit.

Geophysics

In 1981, the Abra deposit was first tested when Geopeko Limited, in joint venture with Amoco, targeted a single diamond drillhole into a discrete magnetic anomaly within the eastern, buried portion of the basin.
Magnetics and later gravity geophysical anomaly definition has proved to be critical in the discovery of the Abra deposit. The regional magnetic anomaly that was first targeted in historic drilling relates to intensive iron oxide alteration at Abra, whereas gravity modelling can be explained in terms of the observed barite-rich rock types.

In 2006 AML identified the absence of Induced Polarisation (“IP”) geophysical surveying in the province and set about applying the technique within the Mulgul project area. AML’s rationale reflected the fact that few of the major Proterozoic base metal systems worldwide (both SEDEX and IOCG) are expressed as EM anomalies but many give IP anomalies.

AML completed a wide (800 metre) spaced IP survey over 7 kilometres of strike centred on the Abra deposit, which resulted in the definition of three significant anomalies. A broad IP anomaly, named Hyperion, extends 2 kilometres west from the Abra deposit and has a geophysical signature consistent with the depth and magnitude observed over the Abra deposit.

A major anomaly was detected in the northeast corner of the survey area. This anomaly, designated Rhea, appears to be relatively shallow and is of significantly stronger magnitude when compared with the anomaly over the Abra deposit.

An anomaly was detected to the south of Genie drillhole GD1, which was drilled to test a magnetic anomaly and intersected 28m averaging 2.4% Pb. This anomaly, designated Tethys, is comparable in magnitude and depth with that observed over the Abra deposit. It is noteworthy that drillhole GD1 was drilled to the north and has not tested the Tethys IP anomaly.

Mineralisation

Base metal mineralisation at Abra occurs in the upper part of the Gap Well Formation on the southern limb of the Coolina Anticline, approximately 1-2km south of the interpreted anticline crest and about 12km west of basement rocks of the Coobarra Dome. The deposit is overlain by at least 200 metres of (mostly unmineralised) West Creek Formation and the upper stratabound mineralization typically dips at approximately 15-25 degrees towards the south.

Mineralisation at Abra is developed over a vertical distance of more than 300 metres in the core of an intense alteration system, comprising upper stratabound alteration/mineralisation overlying a complex hydrothermal breccia/stockwork, viz (from shallowest to deepest):

• Stratabound Domain
  
  Upper Red Banded Zone
  Iron oxide (banded red haematite with subordinate magnetite)–barite–carbonate–silica–pyrite–galena
  
  Black Banded Zone
  Iron oxide (banded grey haematite/magnetite)–silica–carbonate–chlorite–barite–galena–(chalcopyrite)-pyrite
  
  
• Stockwork Domain
  
  Pervasive chlorite/siderite alteration of laminated sediments overprinted by intense hydrothermal breccia grading to upright laminated veins and zones of quartz-haematite-chalcopyrite-(gold)-pyrite-magnetite-dolomite

The red and black zones totally obscure the nature of the original host sedimentary rock. Minerals tend to be concentrated from top to bottom as barite, galena and chalcopyrite (plus or minus gold).

Fifty-five drillholes completed at the Abra deposit (at July 2008) have identified >250 vertical metre thickness of lead-silver-zinc-copper-gold mineralisation at depths ranging between 250 metres to 650 metres below surface. Drilling has shown that alteration and base metal mineralisation extends over a distance of almost 1,000 metres east-west and 800 metres north-south and is open in all directions.

Significant historic intersections include:

Lead mineralisation (at 1.0% Pb cutoff):
AB16 - 222 metres averaging 7.6% Pb from 367 metres,
including 44 metres averaging 25.3% Pb from 497 metres
AB24 - 232 metres averaging 5.0% Pb, 0.2% Cu, 0.5% Zn from 308 metres
AB32 - 68 metres averaging 7.3% Pb, 0.2% Cu from 494 metres

Zinc mineralisation (at 0.5% Zn cutoff):
AB4 - 20 metres averaging 1.3% Zn, 3.2% Pb from 422 metres
AB24 - 72 metres averaging 1.4% Zn, 5.6% Pb from 366 metres
AB31 - 46 metres averaging 2.2% Zn, 5.3% Pb from 380 metres

Copper-gold mineralisation (at 0.3% Cu cutoff):
AB3 - 27 metres averaging 0.9% Cu, 2.6g/t Au from 503 metres
AB12 - 82 metres averaging 0.8% Cu, 0.9g/t Au from 618 metres
AB22a - 73 metres averaging 1.1% Cu, 0.2g/t Au from 693 metres  

Significant recent (2007-2008) intersections include:

Lead mineralisation (at 1.0% Pb cutoff):
AB40 - 190.8 metres averaging 4.1% Pb from 358.3 metres
AB43 - 159.3 metres averaging 4.0% Pb from 303.7 metres
AB43 - 124.5 metres averaging 5.8% Pb from 499.5 metres
             including 74 metres averaging 7.1% Pb from 508 metres
AB48 - 155 metres averaging 5.2% Pb from 266 metres
AB50 - 273 metres averaging 6.2% Pb from 374 metres 
             including 23 metres averaging 12.4% Pb from 380 metres and 
             including 22 metres averaging 15.7% Pb from 470 metres
AB52 - 252 metres averaging 3.3% Pb and 3.8 g/t Ag from 404 metres 
AB53 - 10 metres averaging 2.3% Pb and 3 g/t Ag from 334 metres
AB54 - 126 metres averaging 4.5% Pb and 4.9 g/t Ag from 294 metres
AB54 - 44 metres averaging 6% Pb and 13.2 g/t Ag from 491 metres 
AB55 - 12.5 metres averaging 3.2% Pb and 11 g/t Ag from 490.5 metres
AB55 - 21.5 metres averaging 1.3% Pb and 6.1 g/t Ag from 516 metres
AB55 - 18 metres averaging 4.5% Pb, 8.6 g/t Ag from 556 metres
AB55 - 42 metres averaging 3.5% Pb, 2 g/t Ag from 602 metres
AB56 - 101.1 metres averaging 5.3% Pb and 19.4 g/t Ag from 380 metres 
AB57 - 65 metres averaging 3.9% Pb and 10 g/t Ag from 597 metres
AB58 - 118.3 metres averaging 4.9% Pb, 18 g/t Ag from 398 metres 
AB59 - 90 metres averaging 5.6% Pb and 42 g/t Ag from 430 metres 
AB59 - 26 metres averaging 4.4% Pb and 8 g/t Ag from 570 metres 

Zinc mineralisation (at 0.5% Zn cutoff):
AB43 - 1.3 metres averaging 14.6% Zn, 29.2% Pb, 1.82g/t Au from 570 metres 
AB48 - 11 metres averaging 4.6% Zn, 6.9% Pb from 367 metres 
AB50 - 4.3 metres averaging 4.6% Zn, 7.3% Pb from 599 metres

Copper-gold mineralisation (at 0.3% Cu cutoff):
AB39 - 21 metres averaging 0.7% Cu from 731 metres 
AB43 - 12 metres averaging 0.8% Cu, 0.9g/t Au from 674 metres 
AB47 - 36 metres averaging 0.8% Cu from 394 metres 
AB50 - 53 metres averaging 0.6% Cu, 1.3g/t Au, 5.0% Pb from 604 metres 
AB50 - 30 metres averaging 0.7% Cu, 0.4g/t Au from 694 metres

Abra mineralisation shows strong similarities with major base metal deposits world-wide, including those in the Mt Isa district of northern Australia, Red Dog in Alaska and the Sullivan deposit in Canada.

Mineral Resources

In 2006 the Company commissioned RSG Global Pty Ltd to undertake a resource estimate study at the Abra base metal deposit using the results of drilling completed to the end of 2005.  As a result of this study an Inferred Resource of 50.3 million tonnes at 4.0% Pb and 10 g/t Ag, and 9.8 million tonnes at 0.6% Cu and 0.5 g/t Au was estimated.

Scoping study work concluded that if the resource could be increased to in excess of 75 million tonnes at similar grades, then the project holds potential for development using large scale underground cave mining and producing lead-silver and copper-gold concentrates.  Drilling was completed between 2006 to present, targeting this objective.

In April 2008, the Company commissioned resource consultants, MacDonald Speijers, to carry out new resource estimation work based on all drilling data available to 25 April 2008.

The new estimate includes 14 historic diamond core drillholes and 26 diamond core drillholes completed by the Company, 17 more than were available for the previous estimate.  This has permitted better resolution of mineralisation in the core of the deposit resulting in an upgrade of category for that portion of the resource.

Two distinct and contiguous mineralised domains, previously recognised at Abra, were delineated:

•  An upper lead domain typically between 200 metres and 250 metres thick.
• A lower copper-gold domain up to 100 metres thick.

The Mineral Resource for each of the mineralised domains at the Abra deposit amounts to:

ABRA DEPOSIT Indicated and Inferred Mineral Resource
Domain	Cutoff Grade	Category	Million Tonnes	Pb (%)	Ag (g/t)	Cu (%)	Au (g/t)	Zn (%)
Lead	2.5% Pb	Indicated	33	4.1	10	0.13	0.06	0.1
		Inferred	60	3.9	10	0.12	0.04	0.1
		Total	93	4.0	10	0.12	0.05	0.1
Copper-Gold	0.4% Cu	Indicated	4	0.4	5	0.59	0.56	0.0
		Inferred	10	0.3	4	0.63	0.47	0.0
		Total	14	0.3	4	0.62	0.49	0.0
The lead and silver mineralisation interpretation was constructed using a 2.5% lead cutoff and the estimation was completed using Ordinary Kriging.  The copper and gold mineralisation interpretation was constructed using a 0.4g/t copper cutoff and the estimation was completed using Ordinary Kriging.  Mineral Resource Statement as at 14 May 2008.

Excellent potential exists for ongoing minerals exploration to underpin further increases to the Abra Mineral Resources and to delineate significant new satellite deposits, highlighted by:

• The identification of significant geophysical anomalies near to and along strike from Abra with signatures consistent or more intense than that over the Abra deposit.
  
• The intersection of more than 20 metres of mineralisation approximately 2 kilometres west of the Abra deposit in HY1, including 6.05 metres averaging 9.86% Pb and 42g/t silver from 548.2 metres and 3 metres @ 0.6% Cu from 567 metres. 

Scoping Study Results

During 2006 a preliminary scoping study was undertaken by RSG Global Pty Limited (“RSG”), which evaluated the operational and infrastructure environment for a large tonnage underground mining operation located in the area of the Mulgul Project.

The scoping study assumed the overall grade and tonnage characteristics of the Abra deposit and incorporated the metallurgical characteristics derived from recent testwork. Metallurgical testwork completed in 2006 indicates that Abra mineralisation responds well to conventional flotation (grind size >100 microns) with production of a commercial lead concentrate (grade up to 67% Pb) at very high flotation recoveries (>97%).

The study also assessed different options for transport of concentrate to port, including the foreshadowed future development of rail infrastructure into the region and potential for slurry piping.

The study’s key objectives were to:

• Identify the operational factors that will likely most influence the economic potential of the Abra deposit.
  
• Provide constraints on the tonnage and size characteristics required of a deposit within the region to meet typical project economic hurdles.

The preliminary scoping study indicated that the size and tenor of mineralisation at the Abra deposit has the potential to contribute to a resource consistent with large scale underground cave mining and producing lead-silver and copper-gold concentrates.

Key inputs assumed in the study include:

 

Deposit Size	-	target 75Mt – 100Mt at ≥4% Pb equivalent grade (>3Mt contained Pb metal equivalent)
Mining	-	underground cave
Mineral Processing	-	simple 2 stage flotation produces commercial grade concentrate (up to 67%Pb at 97% recovery)
Transport	-	rail and/or slurry piping of concentrate
Indicative production scenario based on Inferred Mineral Resources:
Mine life	-	12 years
Production Capacity	-	6 Mtpa (sub-level cave)
Average Grade	-	4.1% Pb (in-ground) 3.6% Pb (mine diluted)
Tonnes mined/processed	-	59 Mt @ 3.6% Pb
Total Contained Metal	-	1.95 Mt
Concentrate Tonnes	-	2.89 Mt
Payable Metal Tonnes	-	1.74 Mt
Average Annual Concentrate Production	-	240,000 tonnes

 

Abra Deposit Technical Summary | Geophysics | Mineralisation | Mineral Resources | Scoping Study Results