Relinquishment Report for part EPM 14125,

to 13th October 2012

Cape York, , .

Barry Woodhouse Kendall Resources Limited 2nd May 2013

2

Table of Contents

Summary.

1.0 Location

2.0 Title History.

3.0 Geology.

4.0 Lateritic Iron Oxide and Bauxitic Laterite, T & Oa Units

5.0 Bauxite Potential of EPM14125.

6.0 Work Completed

7.0 Area Relinquished

8.0 Conclusions.

9.0 References

3

Summary

Highly significant large areas of T & Oa units are located on EPM14125. This unit typically indicates the existence of “aluminous laterite and thin sand cover" suggesting a promising area for bauxite exploration. However historic drilling results so far have been less than encouraging, and the Pacminex Pty Ltd 1971 conclusion suggest that bauxite deposits in the Kendall River, Sinclair Creek Area are “thin, sparse and discontinuous”. These early results appeared to have been confirmed by Gulf Clay Pty Ltd 1985 drilling.

Gulf Minerals Limited continue to evaluate the potential of the Kendall River Kaolin Deposit and have joint ventured the interest in the bauxite potential to Sunrise Minerals Pty Ltd. Sunrise Minerals have been active in pursuing the prospectivity of the EPM's 14125 and 14125.

Work completed by Sunrise Minerals covering EPM14125 has included:

1. Compilation of data and peer review by Dr A White targeting potential areas for preferential bauxite development.

Based on this activity, Sunrise then engaged the services of Terrasearch in Townsville to 2. Plan and implement a drill program including all logistical, native title and geological controls. This was achieved and drill contracts were signed. Initial scouting activity in late June suggested that access to the area was restricted due to wet conditions following the excessive wet season observed in early 2011. Major issues were faced and the team returned to base. A geological team including camp and technicians was mobilised in early August 2011 to commence preparation. Early wet weather activity in early September 2011 suggested that progressing forward with the program including drill testing would be fraught with high risk. Accordingly it was decided to hold the drill testing till the next field season to allow better access.

3.Planning for the next field season will include a scout field trip in a helicopter to allow for better access.

From observational data complied during the period it was determined that the appropriate relinquishment of 44 sub blocks as per the grant document requirements was suitable.

4

1.0 Location

EPM 14125 lies immediately west of the Kendall River Project and is located approximately 500 km north-west of Cairns on Cape York in , Australia. The Kendall River Kaolin Project is centred on EPM 10179 and EPM 10180 lies 90 km south-east from the Aurukun Aboriginal Community on the mouth of the Archer River.

The Kendall River Kaolin Project lies 70 km inland from the western coast of Cape York at 1420 E, 140 S, on Kendall River Station (pastoral lease). Access to EPM14125 is via Aurukun.

The area comprises a flat featureless savannah country, typical of Western Cape York, covered almost entirely with a thin veneer of poor quality bauxitic laterite.

The vegetation is 20 metre high Darwin Stringybark Eucalypts and Ironwoods, many of which are hollow and termite infested. The climate is a typical Western Cape York wet-dry monsoonal climate. There is abundant water in flowing creeks and rivers, and even in the height of the dry season abundant aquifers continue to flow. From a pastoral perspective there is trace element deficiency in the soil. A secondary effect is the diminished size of local wallabies.

An initial advice statement by C & B Consultants, 1999, states that no species of conservation significance were found during either the flora or fauna investigations.

2.0 Title History.

Between July 2003 and March 2005, Sigma Resources Limited applied for EPM 13818, EPM 13819, EPM 13820 and EPM 14113 and EPM 14125 surrounding EPM 10180 and EPM 10179 and EPM 14125 and following the termination of the Sigma joint venture these EPM’s were transferred to Kendall Resources Limited. It should be noted that EPM 10180 and EPM 10179 taken out by Gulf Clay Pty Ltd and the surrounding block of EPM 13818, EPM 13819, EPM 13820 and EPM14113 and EPM 14125 taken out by Sigma Resources Limited were originally taken out for their potential to contain high quality kaolin deposits, not for bauxite.

EPM’s north of EPM 14125 originally taken out by Sigma Resources Limited were transferred to Metallica Limited and subsequently to Cape Alumina Limited .

From March 2005 Kendall Resources held EPM 10180 and EPM 10179 and the surrounding EPM 13818, EPM 13819, EPM 13820 and EPM14113.

In mid 2007 the entire package of EPM 10180 and EPM 10179 and surrounding EPM’s comprising EPM 13818, EPM 13819, EPM 13820 and EPM14113 was transferred to Gulf Minerals Limited. Gulf Minerals has become the development company for the Kendall Kaolin Project.

Sunrise Mineral Ltd maintains the rights to the bauxite potential of EPM14125. 5

3.0 Geology

EPM14125 is located on the the Aurukun 1 to 250,000 Scale Geological Map Sheets. The distribution of bauxite bearing T&Oa units overlying the Bulimba Formation KTi. is shown below.

Geology of EPM14125

The lateritic and lateritic bauxite bearing units are indicated as T&Oa, which form 1 to 3m thick discontinuous flat-lying units which form a surface carapace overlying the Tertiary Bulimba Formation KTi.

The Bulimba Formation KTi, comprises poorly sorted clayey felspathic sandstone, grits and conglomerates, and numerous argillaceous beds. It is these aluminous rich sediments which form the source rocks from which the lateritised bauxitic cap-rocks T & Oa and the underlying kaolin deposits are formed. These are derived during the process of tropical climate weathering and bauxitisation. The chemical process of bauxite formation is described in Berner 1971 whereby tropical groundwater flow leaches all elements except alumina, leaving some residual iron-oxides and silica. In some areas bauxitic laterites predominate, whereas in other areas iron oxide rich laterites are formed, dependent upon rainfall and leaching conditions.

In the Kendall River and Sinclair Creek areas the poorly sorted clayey felspathic sandstone, grits and conglomerates, and numerous argillaceous beds of the Bulimba Formation KTi, are the aluminous rich host and source rocks for the blind, non- outcropping, large lenticular deposits of high-quality paper coating kaolin termed the 6

Kendall River Kaolin Deposits. These kaolin deposits have been independently proven to contain kaolin with world competitive paper coating specifications. These have been extensively drilled, tested as described in reports from Hopwood, March 1995 to Hopwood September 2007 for Gulf Minerals Limited.

These kaolin deposits have been formed within aquifers in the aluminous Bulimba Formation KTi, below the lateritic carapace defined by the surface T&Oa laterite unit. It is thought that the elevation, relative to the coastal plain at Aurukun of these T&Oa laterite units has resulted in modification by tropical climate weathering and groundwater leaching subsequent to their formation, and as a consequence these T&Oa units compared with the coastal Aurukun and Weipa T & Oa Units contain more iron oxides and silica rather than bauxite, and this has downgraded their quality as a source of bauxite. This is particularly seen in the area of outcrop of T & Qf to the south-east of the Kendall Blocks.

4.0 Lateritic Iron Oxide and Bauxitic Laterite, T & Oa Units

The surface laterites comprise hydrated iron oxides, haematitic and goethitic clays containing some lateritised bauxite. These comprise the T & Oa Units which form a thin discontinuous flat lying surface deposit varying from 1m to 3m in thickness unconformably overlying the aluminous Bulimba Formation KTi. Iron oxide cementation occurs locally as a surface-hardened cap up to 1m thick and some local zones of cementation occurs in the lower part of the deposits as irregular blocks or bars. The surface soil is generally brown or reddish-brown sandy loam with occasional patches of pisolitic bauxitic limonite.

Drillhole 37, drilled by Pasminex in 1971 “on the thickest part of the carapace” there is only about 15% of bauxite (gibbsite + boehmite) in the T & Oa unit, the remainder is quartz and kaolinite. Pacminex Pty Ltd was looking for mineable bauxite deposits in this area.

A drill line traverse was drilled by Gulf Clay Pty Ltd southwards from the Holroyd - Aurukun - Kendall River Road to EPM 10180. This drill line was 26.4 km long comprising 110 drllholes 400m apart from K1 to K110, through the lateritic iron oxide and lateritic bauxite bearing surface units as T&Oa. Less than 10% of these drillholes intersected bauxitic laterite, most lateritic intersections comprised haematitic or goethic altered clays, see.Hopwood 1995.

5.0 Bauxite Potential of EPM 14125 including Comments by Andrew White.

Dr Andrew White was engaged by Sunrise Minerals Limited as an Independent Consultant Geologist to assess the bauxite potential of EPM14124 and EPM14125.

Andrew White, who was formerly Exploration Manager for Comalco Limited, based in Weipa, has considerable local knowledge of bauxite on Cape York, was very much influenced by the concepts and ideas put up by Patrick MacGeehan (1972) who observed that large thicknesses of bauxite were derived from former thick sequences of arkose which occurred in deep former stream channels. 7

The report highlights the following

8

7.0 Work Completed on Relinquished Area

Initial activity focussed on the review of available data by Dr A white pertaining to this area. The conclusions included that the bauxite potential of EPM14125 has not been adequately tested and that further evaluation can only be completed via drill testing of target areas.

Initial planning of scout drill testing comprised at total of 25 holes to a nominal depth of 30m for an estimated 700 m of drilling. A 2500m pattern was established over the area which could be infilled on a 500m basis pending positive results. The planned drilling is shown below.

Initial proposed drill program designed by Terrasearch

Following a major wet season event access to the area was attempted in late June 2011 via a team based out of Townsville office. Major logistical issues were encountered including wash outs, bogging and inability to gain appropriate access without earthworks.

Native title clearance discussions were completed and a second attempt was made in late August early September 2011. Heavy rainfall hampered activities and it was decided that the risk was too high from an OH and S perspective, a cultural heritage perspective and an environmental perspective with the amount of activity that was required not just for access but for demobilisation. This proved to be the correct decision with the early advent of the wet season. 9

8.0 Area Relinquished

A total of 44 sub blocks are relinquished in EPM14125. The basis of relinquishing these sub blocks is that robust geological mapping has adequately determined the geological locations of the remnant and most prospective components of the bauxite plateau that remains. This remaining area will be the focus of attention in the future. The area relinquished is described below.

Exploration Licence Application Area: Relinquishment14125

Map Sheet | | 1:1,000,000 | BIM & Block | Sub-Blocks ------Mitchell River| 1340 | o p r s t u w x y z Mitchell River| 1341 | l m q r v w Mitchell River| 1413 | a b f g h j m n o p s t u y z Mitchell River| 1414 | q r s v w x y z Mitchell River| 1486 | a b c d e

Total Number Of Sub-Blocks: 44

Total Area Of Application: 146.874 (sq km)

Datum: GDA94

This area is shown below.

Area relinquished shown in Yellow

10

9.0 Conclusions

Research has shown through geological mapping and compilation that the area relinquished has restricted potential for the development of significant volumes of high quality bauxite.

The area relinquished is interpreted to be less prospective for the development of significant bauxite.

10.0 References

Berkman, D.A., 1989: Field Geologists Manual, AusIMM, Melbourne, 382pp.

Berner, R.A. 1971: Principles of Chemical Sedimentology. McGraw Hill, New York.

Deer,W.A. Howie, R.A. and Zussman, J. 1962, Rock Forming Minerals, Vol 5, Non- Silicates, Longmans, Green and Co Ltd, London.

Earthrowl, J.A. 1980: Bauxite Potential of Northern Australia, unpublished report by Pacific Exploration Consultants, West Perth, Western Australia, 51pp.

Evans, H. J., 1970: Bauxite Deposits of Weipa, in McAndrew (Editor) Geology of Australian Ore Deposits, Volume 1, pp 396 to 401, AusIMM, Melbourne, 1970.

Grimes, K., 1972: 1 to 250,000 Geological Map of Holroyd, Geological Survey Queensland, and Bureau of Mineral Resources, Canberra, ACT.

Hopwood, T P, 1995 Report on Exploration Drilling, Kendall River Project, Northern Cape York, Queensland. Second Six Monthly Exploration Report, 8 March to 7 September 1995.

Hopwood, T P, 2009: Kendall River Kaolin, Queensland, Australia, Extraction Process Testwork QDEX Report No60701, September 2009. Lilley, G.J., Hartshorn, R., Sands, G. K., 2005. EPM 13949 to EPM 13957, Final or End of Tenure Report, Cape York Project, Holroyd Special SD54-11, QLD. Rio Tinto Exploration Pty Ltd, ER 27187,QDEX, Qld Depat of Mines and Energy, Unpubl report.

Queensland Government Mining Journal, Autumn 2008, No 1230.

Queensland Mining Journal, September 2007: Aurukun Bauxite Project, p14.

MacGeehan, P., 1972 A to P 549M Final or End of Tenure Report. CR 4244, Open File Report, Qdex, Qld Dept of Mines and Energy unpublished report. 11

MacGeehan, P., 1972 A to P 493M Final or End of Tenure Report. CR 4391, Open File Report, Qdex, Qld Dept of Mines and Energy unpublished report.

Pacminex Pty Ltd, 1971: Exploration Report on AP 926M, QDME, Queensland Department of Resource Industries, Mineral Occurrence data sheet 267, recorded 14/05/90.

Schaap, A.D., 1990: Weipa kaolin and Bauxite Deposits, in Hughes, F.E. (Editor) Geology of the Mineral deposits of Australia and Papua New Guinea, pp 1669 to 1673 AusIMM, Melbourne, 1990.

Schellman, W., 1975: Formation of and prospecting for tropical silicate rocks, Min. Mag., July 1975, pp 33 to 39.

Smart, J., 1977: 1 to 250,000 Geological Map of Aurukun, Queensland, Bureau of Mineral Resources, Canberra, ACT.

Smart, J., Grimes, K.G. Doutch, H.F. and Pinchin, J. 1980: The Mesozoic Carpentaria Basin and the Cainozoic Karumba Basin, North Queensland. Bulletin 202, Bureau of Mineral Resources, Canberra, ACT.