Mount Peake 23074 2010 AR - geoscience.nt.gov.au · 2 Executive Summary During the reporting period TNG completed a 14 hole RC programme and a 4 hole diamond drilling programme. Two

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ENIGMA MINING LTD

MOUNT PEAKE PROJECT

ANNUAL REPORT

22/07/09 to 21/07/10

EL 23074

Tenement/s EL 23074 1:250 000 Sheet Name

Mount Peake (SE5305)

Holder Enigma Mining Ltd 1:100 000 Sheet Name

Anningie (5554)

Manager Tennant Creek Gold (NT) Pty Ltd

Datum GDA94-52

Operator Enigma Mining Ltd GDA_E 317050-327590

Commodity

GDA_N 7599400-7617851

Elements Analysed

V; Ti; Fe; Ni; Cu; PGM’s

Keywords Magnetite, Vanadium, Titanium, Nickel, Copper, PGM, Layered mafic intrusion, geophysics, drilling, metallurgy, testwork, geochemistry.

Authors C. Wetherley (Geologist) Approved P.E. Burton (Director & CEO)

Report Date August 2010 Distribution TNG Limited (1) Department of Resources – Minerals & Energy (1)

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Executive Summary

During the reporting period TNG completed a 14 hole RC programme and a 4 hole diamond drilling programme. Two of the diamond drillholes were part of the ‘Stirling

Deeps’ project, which aims to provide information on the nature and extent of a potential layered mafic intrusion in the Western Arunta province. The RC drilling was aimed at infilling and testing extensions to the existing Inferred

Resource. Samples were initially analysed by XRF and those with results in excess of 15% Fe were submitted for Davis Tube Recovery (DTR) in order to assess the magnetic separation, recovery and concentrate grades. The most significant DTR intersection was:

115 m @ 1.13% V205, 15.3% TiO2, 54.7% Fe. The diamond drilling at Mount Peake was designed to produce core for metallurgical testing. Geological logging was completed and core from both holes was transported to

Amdel Laboratories. No immediate analysis was undertaken on the core. Results of the ‘Stirling Deeps’ drilling indicated minor mineralised zones. These were sampled and submitted for analysis. Best results were: SDDD001 153ppm Cu, 121ppm

Ni, 50ppm Cr, SDDD002 105ppm Cu, 282ppm Ni, 148ppm Cr. Review of pre-existing geophysical data formed a large part of the exploration

programme in the current reporting year. A review was undertaken on regional magnetic data and airborne GEOTEM flown by Fugro Airborne Surveys in 2003. As a result of these reviews a number of targets have been recommended for follow-up in the upcoming year.

In addition to these reviews a heli-borne magnetic and gravity survey was undertaken over the central area of EL 23074. The new magnetic data highlights the existing

magnetic anomaly, with N-S strike orientation and amplitude in excess of 4000 nanno-Teslas and subsequent 3D modelling indicates the source of the magnetic complex is a ring-type dome structure.

Results from the radiometric survey have revealed previously unknown uranium anomalies, up to 500m long that occur adjacent to the Mount Peake vanadium deposit. Uranium has not been routinely assayed in any of the previous exploration work at Mount Peake. Field checking of the anomalies is planned and re–assaying of sample pulps and

residues is scheduled. TNG’s metallurgical consultants, Mineral Engineering Technical Services (METS) have

confirmed that a high-grade vanadium pentoxide (V2O5) concentrate can be produced from the Mount Peake mineralisation. A range of testing was undertaken which resulted in the production of a vanadium-rich titanomagnetite grading 1.0-1.3% V2O5.

Additional research by METS resulted in the development of a new hydrometallurgical process suitable for extracting all three key commodities (V, Ti, Fe) from the ore. TNG and METS have submitted a joint Patent Application to protect the invention and allow

commercialisation at a later date. TNG has also commissioned METS to undertake a new Scoping Study to take into account the new hydrometallurgical processing technique,

In July 2010 previously analysed drillhole samples were sent for additional analyses to assist in the completion of a full geochemical review of the project. The main aim of this review was to outline the nickel prospectivity of the area. An interim review has been

completed by Nigel Brand from Geochemical Services Pty Ltd.

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This initial study concluded that from the Mount Peake data made available for

assessment there was no indication of Ni fertility or prospective Ni-sulphide mineralisation. This work is ongoing.

An updated Inferred Resource Estimate was completed by Snowden Mining Industry Consultants Pty Ltd in February 2010. The estimate of: 139 Mt @ 0.29% V2O5, 5.3% TiO2, 23.7% Fe, 32.5% SiO2 and 8.2% Al2O3 represents a 30% increase from the

previous resource estimate of 107Mt with improved concentrate grades.

The work undertaken during the 2009-2010 reporting year has ensured that there is plenty of scope for further exploration to take place. Follow-up of geophysical targets will

be a priority in 2010-2011. Metallurgical work will continue and a new scoping study undertaken by metallurgical consultants METS. A full geochemical review of the Mount Peake data will provide information on the Ni-sulphide prospectivity of the area and whether this warrants follow-up.

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TABLE OF CONTENTS

1. INTRODUCTION ........................................................................................... 7

2. LOCATION AND ACCESS ............................................................................... 8

3. TENURE ........................................................................................................ 8

4. TNG EXPLORATION 2009-2010 .................................................................... 9

4.1 Drilling ......................................................................................................... 9

4.1.1 Drilling Collaboration Funding ................................................................... 9

4.1.2 RC Drilling ............................................................................................. 9

4.1.3 Mount Peake Diamond Drilling ................................................................ 12

4.1.4 Stirling Deeps Diamond Drilling .............................................................. 13

4.2 Geophysics ................................................................................................. 14

4.2.1 Heliborne Magnetic and Radiometric Survey ............................................. 14

4.2.2 Regional Magnetic Modelling .................................................................. 18

4.2.3 Review of Airborne GEOTEM ................................................................... 21

4.3 Metallurgy .................................................................................................. 24

4.4 Geochemical Review .................................................................................... 24

4.4.1 Results from ARD02 .............................................................................. 25

4.4.2 Results from Stirling Deeps Diamond Drillholes ........................................ 25

4.4.3 Results from MPDD01 and MPDD02......................................................... 25

4.4.4 Interim Geochemical Review .................................................................. 26

4.5 Resource Estimate ....................................................................................... 29

5. EXPENDITURE ............................................................................................ 30

6. PROPOSED 2011 PROGRAM ....................................................................... 31

6.1 Proposed Expenditure: ......................................................................................... 31

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FIGURES

Figure 1: Location of Mount Peake project area. ........................................................ 8

Figure 2: Mt Peake RC drillhole locations over magnetic image. ..................................10

Figure 3: Mt Peake DD drillhole locations over magnetic image. .................................12

Figure 4: A photo of the heli-borne survey in progress. .............................................15

Figure 5: Location of Mount Peake Heli-borne survey, showing flight lines. ..................15

Figure 6: Reduced to Pole magnetic intensity image. The drill hole collars are

overlain on the image. ..............................................................................16

Figure 7: A Snap shot from the 3d model looking towards the north west. Shown

are the drill holes drilling towards the coherent westerly dipping source

of the high intensity magnetic anomaly. Note how the depth of the

source increases significantly to the north. ...................................................17

Figure 8: Radiometric image stack displaying the individual channels (Uranium,

Thorium & Potassium) as well as a Ternary image (R=potassium,

G=Thorium, B=Uranium). The individual channel images have the RTP

magnetic intensity contours overlain on them. .............................................18

Figure 9: The three magnetic complexes selected for more detailed modelling. ............19

Figure 10: Proposed W1 drillhole location on magnetics.............................................20

Figure 11: 3D model snapshot, looking SW, showing the location of W1 in

relation to the high amplitude Mount Peake magnetic anomaly (left of

figure). Susceptibility shells, highlight the absence of a high intensity

core (dark area on LHS) below W1. .............................................................20

Figure 12: z-component EM response with potential targets annotated and

tenements outlined. ..................................................................................22

Figure 13: Outline of GEOTEM survey showing original Discovery Nickel targets,

thirteen anomalies identified by Sexton, 2010, and the 35 areas of

interest identified as part of the SGC study. .................................................23

Figure 14: REE analysis of MPDD001. ......................................................................25

Figure 15: REE analysis of MPDD002. ......................................................................26

Figure 16: AFM diagram showing the geochemical position of the Mount Peake

samples. ..................................................................................................26

Figure 17: TAS (total alkalie vs silica) classification diagram with the Mount

Peake data plotting in the bottom left corner. ...............................................27

Figure 18: Alkaline vs Sub-alkaline classification diagram. Mount Peake rocks

display a very distinct and unique signature. ................................................27

Figure 19: Jensen cation plot showing typical mafic and felsic rock compositions. .........28

Figure 20: Jenson cation plot showing the position of the Mount Peake rock suite. ........28

Figure 21: The Mount Peake REE's exhibit a mid-ocean ridge basalt (MORB)

signature. ................................................................................................29

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TABLES

Table 1: EL 23074 tenement details. ........................................................................ 8

Table 2: RC Drillhole locations. ................................................................................ 9

Table 3: DTR Concentrate results summary. ............................................................11

Table 4: Mount Peake Diamond Drillhole Locations. ..................................................12

Table 5: Stirling Deeps Drillhole Locations. ..............................................................13

Table 6: Best results from Stirling Deeps Drilling. .....................................................14

Table 7: Details of proposed drillhole W1. ................................................................19

Table 8: EL 23074 target summary for the Mount Peake AEM survey (from

Sexton 2010). ..........................................................................................21

Table 9: Summary of targets identified within EL 23074 in the SGC review. .................23

Table 10: Additional analyses performed on existing drillhole samples. .......................24

Table 11: February 2010 Mount Peake Inferred Resource at a 0.1 % V2O5 cut-off

grade. .....................................................................................................30

Table 12: February 2010 Mount Peake Inferred Mineral Resource – grade

tonnage report. ........................................................................................30

Table 13: Expenditure for the period 22/07/09 - 21/07/10. .......................................30

Table 14: Proposed Expenditure .............................................................................31

APPENDICES

Appendix 1 – Digital Data Appendix 2 – Drilling Reports

Appendix 3 – Geophysical Reports Appendix 4 – METS Reports Appendix 5 – Resource Estimate Appendix 6 – Interim Geochemical Report

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1. INTRODUCTION

Exploration Licence 23074 was granted to Tennant Creek Gold (NT) Pty Ltd (TCG) on the 22/07/2002. TCG is a wholly owned subsidiary of TNG Ltd. On 29 May 2007, TCG transferred the licence ownership to Enigma Mining Ltd, another wholly owned subsidiary of TNG Ltd. The licence was renewed for 2 years on 22/07/2008 and expires on 21/07/2010. TNG have submitted another 2 year renewal application to extend the tenure until 21/07/12.

All reference to work carried out by TNG Ltd or its subsidiaries will be referenced ‘TNG’ in this report. The regional geology, mineralisation and previous exploration that has taken place in this area has been detailed in previous Annual Reports. This report covers the work that TNG have done in the current reporting year, 22/07/09-21/07/10.

A significant amount of work has been carried out in this reporting period comprising field,

laboratory and resource evaluation work. RC and diamond drilling was undertaken early in the reporting year and laboratory testing was carried out on the new drill core. A heli-borne magnetic and radiometric survey was carried out over the Mount Peake

magnetic anomaly and re-interpretation of existing geophysical data has introduced a range of previously untested targets worthy of follow-up.

Significant metallurgical work has been carried out on the Mount Peake drill core and a new hydrometallurgical method of extracting three commodities (V-Ti-Fe) from the ore has been developed and a patent drawn up to protect the invention.

Snowden Mining Industry Consultants (Snowden) completed an updated Inferred Resource Estimate in February 2010, resulting in a 30% increase from the previous estimate. A geochemical review of newly analysed Mount Peake data is currently underway to

determine the potential for Ni-sulphide mineralisation in the area. An interim report is included in this Annual Review.

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2. LOCATION AND ACCESS

EL 23074, part of the Mount Peake project, is located approximately 280km NE of Alice

Springs, and 60km west of the sealed Stuart Highway to Darwin (Figure 1). Access in the licence area is good with well maintained station and previous exploration tracks. The new LNG gas pipeline runs 20 km east of the project area and the Darwin to Adelaide

railway 80km to the east. Exploration access to the area has been granted by the CLC and Traditional Owners, and

Authorisation 0447-01 is in place for drilling from 5 February 2009.

Figure 1: Location of Mount Peake project area.

3. TENURE

Exploration Licence 23074 is part of the “Mount Peake” Project and covers a total area of

169.2km2. It is 100% held by Enigma Mining Limited, a wholly owned subsidiary of TNG Limited. EL 23074 was granted to Tennant Creek Gold (NT) Pty Ltd (“TCG”) on the 22/07/2002 for 6 years and expired on 21/07/2008. TCG applied for a 2 year renewal on

28/04/08 which was granted on 22/07/2008 and expires on 21/07/2010. In February 2009 TCG transferred the licence to Engima Mining Limited due to a restructuring of the parent company TNG. Tenure details for EL23074 are summarised in

Table 1.

Table 1: EL 23074 tenement details.

TITLE PROSPECT AREA (blocks) GRANT DATE EXPIRY DATE

EL23074 Mount Peake 53 22/07/2002 21/07/2010

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4. TNG EXPLORATION 2009-2010

A significant amount of work has been carried out in this reporting period comprising field, laboratory and resource evaluation work. RC and diamond drilling was undertaken and laboratory testing carried out on the new drill core. A heli-borne magnetic and radiometric survey was carried out over the Mount Peake magnetic anomaly and re-interpretation of existing geophysical data has introduced a range of previously untested targets worthy of follow-up. Snowden Mining Industry Consultants (Snowden) have completed an updated Inferred Resource Estimate. Significant metallurgical work has been undertaken on the Mount Peake drill core and a new hydrometallurgical method of extracting commodities from the ore has been developed. A geochemical review of the Mount Peake data is currently underway and an interim report is included in this Annual Review.

4.1 Drilling

4.1.1 Drilling Collaboration Funding

TNG was awarded $75,000 in funding from the Northern Territory Government for diamond drilling in the Stirling Deeps project (located at Mount Peake) as part of the Governments $2.4 million collaborative funding programme.

The funding was approved on the 26th July 2009, and a ‘Geophysics and Drilling

Collaborations Funding Agreement’ was drawn up between TNG Ltd and the Northern Territory of Australia and signed by the relevant parties.

The drilling took place in October-November 2009 and details are provided below (Section

4.1.3).

4.1.2 RC Drilling

A 14 hole RC drilling programme was completed at Mount Peake in October - November 2009. This programme was aimed at infilling and testing extensions to the existing Inferred

Resource. The RC programme resulted in a total of 2172m being drilled with hole depths ranging from 90m-222m. Seven of the holes were drilled vertically and the remaining seven drilled at -60o towards 090o (Table 2). All holes were sited using a handheld Garmin 76C GPS unit with an accuracy of ±4m. All digital data is attached in Appendix 1 and a full

drilling report is attached as Appendix 2.

Table 2: RC Drillhole locations.

Prospect Hole No East North Tenement Dip Mag Az

Depth (m)

Mt Peake 09MPRC007 322,400 7,606,003 EL23074 -60 o 090 o 90












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Figure 2: Mt Peake RC drillhole locations over magnetic image.

The drilling was completed from 25th October - 8th November 2009 by McKay Drilling Pty

Ltd utilising a Schramm T685W, a Rod truck mounted on an 8X8 Mercedes and an 8X8 Mercedes Air Truck. One crew worked a 12 hour day shift, producing an average of 163m of sample per drilling shift. One driller and two offsiders managed the rig at all times. Drilling

continued in each hole until mineralisation ceased.

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Samples were sieved and washed to obtain chips for logging and future reference. Bulk one

metre samples were collected in green plastic mining bags marked with the corresponding metre and the smaller samples were collected in calico bags, each marked with a sample number.

Samples to be sent for analysis were selected from the base of the transported material through to past the base of mineralisation. Any duplicates that fell within this zone were also sent for analysis.

A total of 1305 Samples and 51 duplicates were transported from site to ALS in Alice Springs. Samples were initially analysed by XRF and those with results in excess of 15% Fe

were submitted for Davis Tube Recovery (DTR) in order to assess the magnetic separation, recovery and concentrate grades. A summary of results is shown in Table 3. Significant DTR intersections include:

115 m @ 1.13% V205, 15.3% TiO2, 54.7% Fe 89 m @ 1.16% V205, 14.2% TiO2, 54.4% Fe 104 m @ 1.16% V205, 15.1% TiO2, 54.9% Fe 85 m @ 1.09% V205, 16.0% TiO2, 52.9% Fe

Table 3: DTR Concentrate results summary.

Head Grades

-45µm DTR

-45µm DTR

Concentrate Grades

Hole ID From

(m)

To

(m)

Interval Thickness

(m)

V2O5

(%)

TiO2

(%)

Fe

(%)

Mass Recovery

(%)

V2O5

(%)

TiO2

(%)

Fe

(%)

09MPRC008 26 121 95 0.31 5.4 26.6 - - - -

Including 32 121 89 0.32 5.5 27.1 23.7 1.16 14.2 54.4

09MPRC009 9 124 115 0.38 6.8 28.5 30.8 1.13 15.3 54.7

09MPRC010 41 148 107 0.35 6.2 25.7 - - - -

Including 44 148 104 0.35 6.2 25.9 28.1 1.16 15.1 54.3

09MPRC011 77 115 38 0.21 4.0 22.3 - - - -

Including 77 90 13 0.23 4.3 23.8 17.7 1.19 12.3 55.7

Including 96 100 4 0.23 4.3 23.6 17.7 1.21 12.4 55.1

Including 112 115 3 0.23 4.2 22.8 18.7 1.12 11.5 51.9

09MPRC012 45 93 48 0.35 6.3 27.0 - - - -

Including 47 93 46 0.35 6.4 27.4 27.7 1.19 14.9 54.9

09MPRC012 102 106 4 0.22 4.0 23.7 17.0 1.16 12.4 55.3

09MPRC013 24 124 100 0.45 8.4 32.1 - - - -

Including 39 124 85 0.47 8.7 33.6 40.4 1.09 16.0 52.9

09MPRC014 25 90 65 0.30 5.3 22.5

Including 31 85 54 0.30 5.3 22.9 20.2 1.16 15.2 51.9

09MPRC018 9 49 40 0.31 5.6 20.8 - - - -

Including 9 23 14 0.32 5.8 20.8 24.1 1.17 16.0 55.0

Including 27 49 22 0.31 5.5 21.1 22.4 1.26 12.3 54.8

09MPRC019 14 42 28 0.32 5.9 22.1 - - - -

Including 17 24 7 0.39 7.2 25.2 29.0 1.17 17.2 53.6

Including 28 42 14 0.29 5.2 21.1 23.9 1.17 15.2 52.9

These new drill results have established consistent mineralisation over substantial widths

with mineralisation now extending over a total 2km strike length within a magnetic feature that has a strike length of 9km. Logging has confirmed that the host rock gabbro extends to MPRC017 (Figure 2). Full assay results are included in Appendix 1.

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4.1.3 Mount Peake Diamond Drilling

Two diamond drillholes (09MPDD01-02) were completed for 225.4m (Table 4; Figure 3). Both holes were pre-collared. These holes were drilled PQ in order to obtain a large sample for metallurgical testwork.

Table 4: Mount Peake Diamond Drillhole Locations.

Prospect Hole No. Easting Northing Dip Azimuth Depth

Mount Peake 09MPDD01 322610 7606507 -88.7 0 128.0

Mount Peake 09MPDD02 322658 7606204 -63.4 270 97.4

Figure 3: Mt Peake DD drillhole locations over magnetic image.

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The drilling was completed by Associated Exploration Drillers Pty Ltd utilising a UDR 100

drilling rig, mounted on an 8x4 Mercedes Actros from 28th October - 21st November 2009. Two crews worked a 12 hour continuous shift, producing an average of 22.4m PQ core per shift. The drilling was completed using a 3m barrel; however the length of the drilling run

was reduced in broken ground. Geological logging was completed and the data is included in Appendix 1. Core from both holes 09MPDD01 and 09MPDD02 was transported to Amdel Laboratories. No immediate

analysis was undertaken on the core. All holes were cased with PVC casing to enable downhole EM to be completed at a later

date. A full drilling report is included in Appendix 2. 4.1.4 Stirling Deeps Diamond Drilling

A further two diamond drillholes (Stirling Deeps; SDDD001-SDDD002; Table 7) were

completed with funding provided by the NT Governments collaborative funding programme. The holes were drilled with the aim of providing information on the nature and extent of a potential layered mafic intrusion in the Western Arunta province.

Table 5: Stirling Deeps Drillhole Locations.

Prospect Hole No. Easting Northing Dip Azimuth Depth

Stirling Deeps SDDD001 323000 7606200 -88.7 0 405.8

Stirling Deeps SDDD002 322482 7606310 -89.9 0 285.9

This drilling was also completed by Associated Exploration Drillers Pty Ltd using the same equipment described above. Two crews worked a 12 hour continuous shift, producing an average of 34.5m HQ core per shift.

The diamond core was processed systematically conforming to the following routine:

• Core recoveries and metre marks;

• Magnetic susceptibility;

• Core photographs (wet);

• Core tray marking;

• Geological and structural logging; and

• Core cutting.

SDDD001 reached 405.8m, ending in porphyritic granite. Hematite and sericite alteration was present in varying degrees from 280m to the end of hole. A summary log of the mineralised intervals is shown below and the best results are shown in Table 6.

SDDD001 24-58m (magnetite gabbro) 219-231m (fg base of gabbro/hematite altered siltstone contact)

280-298m (base of quartzite & hematite/sericite altered porphyritic granite contact)

SDDD002 reached 285.9m ending in a quartzite unit. A summary log of the mineralised intervals is shown below. Anomalous values of chromite were intersected from 100m and

the interval from 141-149m gave chromite values of 114-148ppm (Table 6). There was no prominent PGE or sulphide mineralisation. SDDD002 8-150m (magnetite gabbro)

250-262m (fg base of gabbro/siltstone contact) The mineralised zone was cut and sampled as half core. The remaining half core has been

catalogued within the Northern Territory core library for future public reference.

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A total of 223 samples (1 sample per metre in mineralised intervals) were submitted for

sampling. All samples were sent to ALS, and received a ME-ICP61 Multi-element analysis for determination of the following twelve elements Al, As, Cr, Cu, Fe, Ni, P, S, Th, Ti, U and V. These samples also received a PGM-ICP24 50g fire assay for Pt, Pd and Au. A CRUSH-21

code was also added for sample preparation due to the nature of the samples. Best results are shown in Table 6. All assay results, geological logs and magnetic susceptibility data is included in Appendix 1.

Table 6: Best results from Stirling Deeps Drilling.

Hole ID

Highest

Cu (ppm)

Highest

Ni (ppm)

Highest

Cr (ppm)

SDDD001 153 121 50

SDDD002 105 282 148

Gabbro was intersected in both holes and reinforces the presence of an extensive olivine

gabbro intrusion; however the presence of a mafic layered intrusion was not confirmed. TNG’s exploration model remains strong with further follow up drilling programmes proposed to adequately test the potential of a layered mafic complex. Chromite

mineralisation within SDDD002 reinforces the mafic intrusion model with more work required to investigate any additional mineralisation.

4.2 Geophysics

4.2.1 Heliborne Magnetic and Radiometric Survey

In August 2009 Aerosystems Pty Ltd flew a detailed heli-borne magnetic and radiometric survey over the Mount Peake magnetic anomaly. The data was collected using a Robinson R44 helicopter with a boom (stinger) mounted magnetometer and a 16L spectrometer. This innovative system configuration is the only piston driven helicopter collection system

operating in the world today (Figure 4).

The survey was flown with an east-west line orientation and separation of 50m. The mean terrain clearance for the survey was 50m. A total of approximately 425 line kilometres of data was collected over 129 flight traverses (Figure 5).

The data was processed by Baigent Geosciences and a full report is attached in Appendix 3. The geophysical digital data is attached in Appendix 1. Modelling of the data was undertaken by D. McInnes at Montana GIS and a summary of his report is included below.

The full report is contained in Appendix 3.

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Figure 4: A photo of the heli-borne survey in progress.

Figure 5: Location of Mount Peake Heli-borne survey, showing flight lines.

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Magnetic Modelling

The new magnetic data highlights the existing magnetic anomaly, with N-S strike orientation and amplitude in excess of 4000 nanno-Teslas (Figure 6). The northern extent

of the anomaly is terminated by a north-westerly structure that has offset the strike extension of the anomaly to the east (dextral movement). The magnetic trend then strikes in a NNE orientation and is repeatedly truncated by structures that also appear to have dextral movement. They also appear to have down thrown the northern continuation of the

magnetic anomaly source. The results of the 3D modelling confirm the above interpretation and also indicate the

source of the magnetic complex is a ring-type dome structure (Figure 7). On the western flank of the structure the source of the high intensity magnetic anomaly has a westerly dip and plunges to the south. The modelling clearly displays the dextral offsetting of the magnetic source and the deepening of the northern extension of the source. On the eastern

flank of the magnetic structure, the source appears more complex with easterly dipping variable susceptibility magnetic shells.

Figure 6: Reduced to Pole magnetic intensity image. The drill hole collars are overlain on the image.

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Figure 7: A Snap shot from the 3d model looking towards the north west. Shown are the drill holes drilling towards the coherent westerly dipping source of the high intensity

magnetic anomaly. Note how the depth of the source increases significantly to the north. Radiometric Modelling

Results from the radiometric survey have revealed previously unknown uranium anomalies, up to 500m long that occur adjacent to the Mount Peake vanadium deposit.

A large potassium low is evident directly north of the interpreted magnetic dome structure (Figure 8). Within the north-westerly striking structures (interpreted in the magnetic data/images and 3D model to have offset, laterally and vertically, the linear magnetic feature) there are elevated uranium and thorium anomalies. The northern radiometric

anomaly rings the southern margin of the potassium low. These radiometric images indicate that there may also be an ENE structure through the area and that the elevated uranium/thorium anomalies may be developing on cross cutting structures.

The potassium high that strikes from south to north through the area, which is coincident with the uranium and thorium low, would appear to be the response of a current day drainage feature.

Uranium has not been routinely assayed in any of the previous exploration work at Mount Peake. Field checking of the anomalies is planned and re–assaying of sample pulps and

residues is scheduled.

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Figure 8: Radiometric image stack displaying the individual channels (Uranium, Thorium & Potassium) as well as a Ternary image (R=potassium, G=Thorium, B=Uranium). The

individual channel images have the RTP magnetic intensity contours overlain on them.

4.2.2 Regional Magnetic Modelling

The regional magnetic data over the Mount Peake project area covers the entire area of EL 23074. The data was remodelled by Montana GIS in February 2010. The full report is included in Appendix 3.

The data displays a complex magnetic high-zone enveloping several magnetic anomalies of greater than 3000 nano-Tesla. Most of the modelling has been done using a merge of the NTGS data with the magnetic component of the GEOTEM survey completed by Fugro

Airborne Surveys in January 2003.

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The first pass interpretation of the regional magnetic data and resulting model identified

three principle magnetic domains which were selected for more detailed work (Figure 9). Parts of EL 23074 lie within the western domain (Bottom left in Figure 9).

Figure 9: The three magnetic complexes selected for more detailed modelling.

One drill hole was proposed within the western domain (Table 7, Figure 10). The hole falls on the western boundary of EL 23074 and is designed to test the deep source of the

moderate amplitude magnetic anomaly to the west of the intense Mount Peake anomaly (Figure 10). It targets a magnetic susceptibility shell of good amplitude at its shallowest point (Figure 11; McInnes, 2010a).

Table 7: Details of proposed drillhole W1.

Hole_ID Priority East North RL Depth Dip Azimuth

W1 2 317150 7608800 490 500 65 240

The outer magnetic shell of the anomaly source, should be intersected at 200m and a finishing depth of 500m is proposed, above the core of the modelled magnetic susceptibility

high.

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Figure 10: Proposed W1 drillhole location on magnetics.

Figure 11: 3D model snapshot, looking SW, showing the location of W1 in relation to the high amplitude Mount Peake magnetic anomaly (left of figure). Susceptibility shells,

highlight the absence of a high intensity core (dark area on LHS) below W1.

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4.2.3 Review of Airborne GEOTEM

Planetary Geophysics A review of the airborne GEOTEM, flown by Fugro Airborne Surveys in 2003, was carried

out by Mike Sexton of Planetary Geophysics Pty Ltd in March 2010. A full report is attached in Appendix 3. Thirteen late-time, intermediate to strong conductive features were identified in the

GEOTEM data. These features may be reflecting variations in weathering or cover conductivity and/or depth, alteration, or the presence of massive sulphides. Six of these features (AEM 2, 3, 4, 5, 7, & 8) fall within EL 24074 (Table 8, Figure 12).

Table 8: EL 23074 target summary for the Mount Peake AEM survey (from Sexton 2010).

Name Anomaly Tenor Ass. Magnetics Positives Negatives1 Ranking2

AEM 2 Moderate late-time conductor.

Associated magnetic low.

Discrete from early to late-time. Adjacent to major break in magnetics.

1

AEM 3 Moderate late-time conductor.

Subtle magnetic high.

Discrete from early to late-time. Associated magnetic high.

Near the edge of the survey. Possible edge affected

2

AEM 4 Strong late-time conductor.

Cross-cuts magnetic trends.

Unusual x-component response.

Early time association. Strike length.

2

AEM 5 Broad moderate late-time conductor. Two local highs within it.

Broad feature cross-cuts magnetic trends. 5a is

coincident with magnetic high. 5b coincident with circular feature.

5a is directly along strike with vanadium

deposit. 5b coincident with mag feature.

5 – 3 5a – 1 5b – 2

AEM 7 Broad late-time

moderate conductive zone with two elevated areas within.

Overall feature

cross-cuts magnetic trends. 7a coincides with magnetic low and 7b with weak magnetic high.

Magnetic

associations of 7a and 7b.

Early time

association.

7 – 3

7a – 3 7b – 3

AEM 8 Moderate late-time

conductor.

Coincident with a

magnetic low.

Discrete in late-

time. Associated magnetic response.

Broad early

time association.

2

1 Early time association refers to broad early-time features that are possibly indicative of surficial conductive

material The later response may be indicative of deeper or more conductive weathering or cover. 2 Targets are ranked 1(best) to 3 (not so good) on the basis of character through time, magnetic association and

shape.

22

Figure 12: z-component EM response with potential targets annotated and tenements outlined.

Each of these features will require review on the basis of known geology, geochemistry, regolith and drilling. It is recommended that features that cannot be accounted for, be surveyed by IP to ascertain whether or not there are any associated sulphides.

Southern Geoscience Consultants

The historical geophysical datasets (focussing on the 2003 GEOTEM survey) of the Mount Peake Project have been reviewed by Ben Jones of Southern Geoscience Consultants, for the purpose of identifying any new targets overlooked from previous work and assessing the potential of the area for nickel-copper mineralisation as well as other base-metal

targets. 35 targets were identified from the review. Five of these targets fall within EL 23074 (Table 9; Figure 8). None of these targets are classified as high priority, though some follow-up is

recommended (Table 9). A full report can be found in Appendix 3.

23

Table 9: Summary of targets identified within EL 23074 in the SGC review.

Target ID

AMGE AMGN Comments Priority Further Work

G18 317350 7610150 Part of a broad, mid-time Geotem anomaly but slightly more conductive zone

(FL 10800). No obvious direct mag signature.

Low

G19 318575 7611750 Possible late time Geotem anomaly within noise limit. Response is only on one line (FL 10780). No obvious mag signature. Probably associated with broader anomaly

that continues along strike rather than detached unit.

Low

G21 322250 7613050 Mid-time Geotem anomaly possibly detached from broader conductive trend, but most likely slightly more conductive

part of same trend. Coincident with Mike Sexton's AEM2 target. No obvious direct mag signature.

Low

G24 325725 7615175 Mid-time Geotem anomaly possibly detached from broader conductive trend. Coincident with Mike Sexton's AEM3

target. No obvious direct mag signature.

Moderate MLEM

G33 325800 7600625 Discrete, mid-time, double peaked Geotem anomaly suggesting conductor dipping towards west. No mag signature.

Moderate MLEM

Figure 13: Outline of GEOTEM survey showing original Discovery Nickel targets, thirteen anomalies identified by Sexton, 2010, and the 35 areas of interest identified as part of the

SGC study.

24

4.3 Metallurgy

TNG’s metallurgical consultants, Mineral Engineering Technical Services (METS) have

confirmed that a high-grade vanadium pentoxide (V2O5) concentrate can be produced from the Mount Peake mineralisation. Further test work was aimed at optimising the grade and recovery, and exploring processing options.

Results from initial magnetic separation beneficiation test work were highly encouraging. The ore responded well to coarse cobbing, giving an upgrade from 0.3% V2O5 to 0.5-0.8% V2O5. High V2O5 recovery at 85-97% was obtained. Re-grinding the cobbing magnetic concentrate to P100 75 µm resulted in an increase of the V2O5 grade to 0.9-1.2%. Once

again, a high recovery of V2O5 at 80-94% was achieved.

Additional testing improved the results again producing a vanadium-rich titanomagnetite grading 1.0-1.3% V2O5.

Overall, the initial test work has demonstrated that the Mount Peake deposit has no

mineralogical issues that would inhibit the response of the ore to magnetic separation beneficiation. Additional research by METS resulted in the development of a new hydrometallurgical

process suitable for extracting all three key commodities (V, Ti, Fe) from the ore. The new processing route has been successful in recovering the three principal commodities from bulk samples of Mount Peake ore. Further optimisation tests are currently underway.

Following this success, TNG and METS have submitted a joint Patent Application to protect the invention and allow commercialisation at a later date.

TNG has also commissioned METS to undertake a new Scoping Study to take into account the new hydrometallurgical processing technique, which will identify new CAPEX and OPEX parameters for the Project. TNG will continue to advance the test work with METS to

optimise the process prior to a decision on whether to proceed with a full Feasibility Study. Final METS reports are attached as Appendix 4. 4.4 Geochemical Review

In July 2010 previously analysed drillhole samples were sent for additional analyses to assist in the completion of a full geochemical review of the project. The main aim of this review was to outline the nickel prospectivity of the area. An interim review has been completed by Nigel Brand from Geochemical Services Pty Ltd and the report is contained in

Appendix 5. Table 10 outlines the analysis process.

Table 10: Additional analyses performed on existing drillhole samples.

Samples Previously Analysed For New Analyses

MP1001-1122 from ARD02 (122 samples)

Fe, SiO2, TiO2, Mn, V2O5, Cr2O3, Cu, Zn, Co, Ni, As

MgO, NaO, K2O, CaO, REEs PGEs – Pt, Pd, Ir, Os, Ru,

Rh, Dy

Stirling Deeps Diamond Drilling Samples (221

samples from 2 diamond holes).

Al, As, Cr, Cu, Fe, Ni, P, S, Th, Ti, U, V, V2O5, Au, Pt,

Pd

MgO, NaO, K2O, CaO, SiO2, REEs

MPDD01 (83 samples),

MPDD02 (61 samples) – every second sample was analysed for this study.

No initial analysis

undertaken.

MgO, NaO, K2O, CaO, REEs

PGEs – Pt, Pd, Ir, Os, Ru, Rh, Dy

25

4.4.1 Results from ARD02

Samples from ARD02 were initially analysed by NAGROM Laboratories in Kelmscott, WA in August 2008. Analysis for additional oxides, rare earth elements and platinum group elements was performed at a later date. The results of this analysis are included in

Appendix 1, and these results have been used as part of the interim geochemical review on the Mount Peake project (Section 4.4.4). 4.4.2 Results from Stirling Deeps Diamond Drillholes

A total of 223 samples (1 sample per metre in mineralised intervals) were submitted to ALS in Alice Springs for sampling in November 2009. Additional analysis was undertaken by ALS in July 2010. Full results are included in Appendix 1. These additional results were

forwarded direct to Nigel Brand at Geochemical Services to use in the interim geochemical review. 4.4.3 Results from MPDD01 and MPDD02

Additional analyses on samples collected from MPDD01 and MPDD02 were completed by Amdel, with the process being overseen by METS. An initial report by METS on the REE results from MPDD001 and MPDD002 show that the rare earth elements are strongly associated with the poorly magnetic materials rather than the highly magnetic materials.

For both drill holes, the most abundant rare earth element in samples is Cerium (Ce) followed by Neodymium (Nd) and Lanthanum (La), (Figure 14 & 15). Results for the additional oxides and PGMs are still outstanding.

Figure 14: REE analysis of MPDD001.

26

Figure 15: REE analysis of MPDD002. 4.4.4 Interim Geochemical Review

Magmatic Ni-sulphide systems include high-value ore deposits that are economically attractive exploration targets. In addition to nickel many deposits contain significant concentrations of copper, cobalt, gold and the platinum group elements. Economic mineralisation is generally localised within active flows and sub-volcanic conduits. The

associated initial melts range in composition from basalt to komatiite. An interim geochemical review (Appendix 5) was completed on REE results from ARD02

and samples from the Stirling Deeps drill holes. REE results from MPDD001 and MPDD002 have since been forward to Nigel Brand and additional results from these holes are awaited. A summary of the report is included below.

Data plotted on an AFM diagram indicates the Mount Peake lithologies are in the tholeiitic range (Figure 14).

Figure 14: AFM diagram showing the geochemical position of the Mount Peake samples.

27

A total alkalie vs silica (TAS) plot is a convenient starting point for the assessment of most

common extrusive and equivalent intrusive igneous rocks (Figure 15). Data distribution movement diagonally across the diagram may reflect simple fractionation and/or assimilation and concurrent fractional crystallisation. Sub-alkaline rocks plot in the regions

labelled picrobasalt, basalt, basaltic-andesite and andesite. Alkaline rocks plot in the regions labelled trachy-basalt and trachy-andesite. Mount Peake rocks are classified as alkaline (Figure 18).

Figure 15: TAS (total alkalie vs silica) classification diagram with the Mount Peake data plotting in the bottom left corner.

Figure 16: Alkaline vs Sub-alkaline classification diagram. Mount Peake rocks display a very distinct and unique signature.

ALKALINE

SUB-ALKALINE

28

Figure 19 shows the position of typical mafic and felsic rocks on a Jensen Cation Plot. This

plot classifies volcanic rocks, and is of most use when there are elements involved which are immobile under most conditions of hydrothermal alteration and moderate grades of metamorphism. Titanium is one of these elements, and is abundant in the Mount Peake

rock suite. Figure 20 shows that the Mount Peake rocks do not fall within the typical mafic/felsic range.

Figure 17: Jensen cation plot showing typical mafic and felsic rock compositions.

Figure 18: Jenson cation plot showing the position of the Mount Peake rock suite.

29

The REE data analysed for this review showed minimal variation, a limited degree of LREE

enrichment and no dynamic variability. The Mount Peake REE’s have a mid-ocean ridge basalt (MORB) signature (Figure 19) and indicate a very uniform lithology.

Figure 19: The Mount Peake REE's exhibit a mid-ocean ridge basalt (MORB) signature. The study concluded that from the Mount Peake data made available for assessment there was no indication of Ni fertility or prospective Ni-sulphide mineralisation. The lithologies

have a very distinct geochemical signature which is more in line with a mid ocean ridge basalt (MORB) from a rift setting. This is not a tectonic setting favourable for Ni-sulphide generation.

A full review of the data will be completed once all necessary data is available. 4.5 Resource Estimate

An updated Inferred Resource Estimate was completed by Snowden Mining Industry

Consultants Pty Ltd in February 2010. The estimate of:

139 Mt @ 0.29% V2O5, 5.3% TiO2, 23.7% Fe, 32.5% SiO2 and 8.2% Al2O3

represents a 30% increase from the previous resource estimate of 107Mt with improved

concentrate grades.

The estimate has been completed using a V2O5 cut-off of 0.1 % together with the estimated DTR concentrate recovery and grades shown in Table 11. The resource has been reported

in accordance with the 2004 JORC Code and Table 12 includes details of the resource at a range of cut-offs.

30

Table 11: February 2010 Mount Peake Inferred Resource at a 0.1 % V2O5 cut-off grade.

Head grades

Category Tonnes (Mt)

V2O5 %

TiO2 %

Fe %

SiO2 %

Al2O3 %

Inferred 139 0.29 5.3 23.7 32.5 8.2

DTR Concentrate grades

Mass

Recovery %

V2O5 %

TiO2 %

Fe %

SiO2 %

Al2O3 %

18.2 1.19 14.7 54.1 3.5 2.6

Table 12: February 2010 Mount Peake Inferred Mineral Resource – grade tonnage report.

Cut-off grade

V2O5 (%)

Tonnes (Mt)

Density (tm-3)

V2O5 (%)

TiO2 (%)

Fe (%)

SiO2 (%)

Al2O3 (%)

0.10 139 3.0 0.29 5.3 23.7 32.5 8.2

0.15 123 3.0 0.31 5.7 24.6 31.7 7.7

0.20 100 2.9 0.34 6.2 25.7 30.5 7.2

0.25 82 3.0 0.36 6.6 26.6 29.8 6.9

0.30 64 3.0 0.39 7.1 27.6 28.8 6.6

0.35 42 3.1 0.42 7.6 29.0 27.6 6.3

0.40 25 3.1 0.45 8.2 30.3 26.7 6.0

Snowden incorporated the results of the most recent metallurgical testwork into the estimate for the first time to provide an estimate of concentrate recovery and grade. This

has improved on the previous results that were incorporated in the initial Scoping Study carried out by Snowden which resulted in a positive assessment of the potential economics of the Mount Peake Project.

Additional metallurgical work has been undertaken since this estimate was completed and it is expected that a new estimate and updated scoping study will be completed early in the new reporting year. The full Snowden Resource Report is attached as Appendix 6.

5. EXPENDITURE

Expenditure for this reporting period is $972,596.27 as shown in Table 13.

Table 13: Expenditure for the period 22/07/09 - 21/07/10.

EXPENDITURE AMOUNT

Contractors/Consultants $398,134.04

Airborne Surveys $14,130.00

Drilling

Assaying

Metallurgy

Vehicle Costs

Acces and Rehabilitation

Freight/Couriers/Storage/Equipment

$193,509.29

$196,505.60

$34,372.93

$20,444.15

$8,300.00

$5,951.21

Travel/Accommodation/Food $22,371.80

Administration and Management $78,877.25

TOTAL $972,596.27

31

6. PROPOSED 2011 PROGRAM

The work undertaken during the 2009-2010 reporting year has ensured that there is plenty

of scope for further exploration to take place. Follow-up of geophysical targets will be a priority in 2010-2011. Metallurgical work will continue and a new scoping study undertaken by metallurgical consultants METS. A full geochemical review of the Mount Peake data will provide information on the Ni-sulphide prospectivity of the area and whether this warrants

follow-up.

6.1 Proposed Expenditure:

The proposed expenditure for the next reporting year is shown in Table 14.

Table 14: Proposed Expenditure

EXPENDITURE AMOUNT

Travel and Accommodation $3,000

Geophysical Survey $20,000

Geophysical Interpretation $5,000

Metallurgical $185,000

Scoping Study $40,000

Administration and Management $10,000

TOTAL $263,000

32

APPENDIX 1

DIGITAL DATA

33

APPENDIX 2

DRILLING REPORTS

34

APPENDIX 3

GEOPHYSICAL REPORTS

35

APPENDIX 4

METS REPORTS

36

APPENDIX 5

GEOCHEMICAL REVIEW

37

APPENDIX 6

UPDATED RESOURCE ESTIMATE REPORT

Documents

Mount Peake 23074 2010 AR - geoscience.nt.gov.au · 2 Executive Summary During the reporting period TNG completed a 14 hole RC programme and a 4 hole diamond drilling programme. Two