DEVELIN CREEK PROJECT

EPM 16749

PARTIAL SURRENDER REPORT For Period Ending 7 March 2016

Author A D’hulst Date April 2016 ZNC Report No 0089

Project Name: Develin Creek

Tenement Number: EPM 16749

Tenement Operator: Zenith Minerals Ltd

Tenement Holder: Kalicoal Pty Ltd

Report Type: Partial surrender

Report Title: Develin Creek Project EPM 16749, Partial Surrender Report – 7 March 2016

Report Period: 8 October 2009 to 7 March 2016

Author: A D’hulst

Date of report: April 2016

Sheet 1:250 000: SF55-16

Sheet 1:100 000: Duaringa 8850

Target commodity: Copper, zinc, gold, silver

Keywords: Volcanogenic-Hosted Massive Sulphides, HeliTEM survey, Soil Sampling

Prospects drilled: NA

Lists of Assays: NA

ABSTRACT: Location: 60km west of , 50km south of Marlborough

Geology: VHMS copper-zinc-gold-silver mineralization hosted by Permian Rookwood Volcanics

Work Done: Historical Review, HELITEM survey, Systematic Soil Sampling

Results: Completed exploration did not return any significant result. Most of the relinquished sub-blocks cover low priority rock units

Conclusions: 17 sub-blocks were relinquished

Zenith Minerals Limited EPM 16749 Partial Surrender Report 2016

CONTENTS

SUMMARY ...... - 1 -

1.0 INTRODUCTION ...... - 2 -

2.0 TENURE ...... - 3 -

2.1 Tenement Details ...... - 3 -

3.0 GEOLOGY ...... - 4 -

3.1 Regional Geology ...... - 4 -

4.0 PREVIOUS EXPLORATION ...... - 7 -

4.1 Pre-2008 Exploration ...... - 7 -

4.2 Exploration over the 17 sub-blocks within EPM 16749 ...... - 7 -

5.0 CONCLUSIONS AND RECOMMENDATIONS ...... - 11 -

REFERENCES ...... - 12 -

Zenith Minerals Limited EPM 16749 Partial Surrender Report 2016

LIST OF FIGURES

Figure 1. EPM 16749 location (tenement shape before relinquishment) ...... - 2 - Figure 2. Map of EPM 16749 relinquished sub-blocks ...... - 3 - Figure 3. Develin Creek project tenements over geology ...... - 5 - Figure 4. HELITEM conductivity (channel 5) over surrendered blocks ...... - 9 - Figure 5. Zenith Minerals 2014 Soil Sampling. Cu in Soils ...... - 10 - Figure 6. Zenith Minerals 2014 soil Sampling. Zn in soils ...... - 10 -

LIST OF TABLES

Table 1. HELITEM Survey Specifications ...... - 7 -

LIST OF APPENDICES

Appendix I. HELITEM Survey Conductivity Images

Zenith Minerals Limited EPM 16749 Partial Surrender Report 2016

SUMMARY

EPM 16749 covers the southern part of the Develin Creek Volcanic-Hosted Massive Sulphide (VHMS) Project. It comprises the southern extension of the Permian aged Rookwood Volcanics which host the Develin Creek copper-zinc deposits further to the north. The under-explored volcanic terrane has the potential to host significant VHMS mineralisation.

Limited exploration was completed over the relinquished sub-blocks.

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1.0 INTRODUCTION

EPM 16749 is located approximately 60km west of Rockhampton and 50km south of Marlborough in Central . (Figure 1).

This report documents exploration completed on 17 sub-blocks from EPM 16749 relinquished on 7 th of March 2016. This tenement is part of the broader Develin Creek Project comprising EPM 17604, EPM 16749, and EPM 18845. Limited exploration was completed over the relinquished sub-blocks.

Figure 1. EPM 16749 location (tenement shape before relinquishment)

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2.0 TENURE

2.1 Tenement Details

The permit (originally 100 sub-blocks) was granted on 8 October 2009, for an initial period of three years to Stonebase Pty Ltd. A transfer of ownership to Kangaroo Minerals Pty Ltd was lodged in September 2009. Renewal of the EPM for a further two year term was granted in October 2012 following a 50 sub-block surrender in February 2012. A transfer of ownership to Fitzroy Copper Pty Ltd was lodged in March 2012. Kalicoal Pty Ltd, wholly owned subsidiary of Zenith Minerals, acquired 51% of the permit in September 2014 and the permit was granted renewal for a further 2 years in October 2014.

The tenement lies on the Duaringa 8850 1:100 000 mapsheet, part of the Duaringa SF55-16 1:250 000 mapsheet and now comprises 33 sub-blocks. This report documents the surrender of 17 sub-blocks that occurred on 7 March 2016 (Figure 2).

Figure 2. Map of EPM 16749 relinquished sub-blocks

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3.0 GEOLOGY

3.1 Regional Geology

The Develin Creek Project (formerly Rookwood Project) is located approximately 20km south of the township of Marlborough and the southern part of the project some 60km west of the regional centre of Rockhampton in Central Eastern Queensland. The Develin Creek Project consists of three contiguous exploration permits, EPM17604, EPM 18845 and EPM 16749 which are very well located with respect to population centres, power, water and transport infrastructure. The Develin Creek Project is geologically dominated by the Rookwood Volcanics which form a narrow, discontinuous north-south orientated belt that extends the length of the Project and host the known mineralisation (Figure 3). There are two main areas of known mineralisation within the project area: the Develin Creek area in the north and Comanche area in the south, both within EPM 17604.

The geology and tectonics of the Rockhampton-Marlborough region was reviewed by Fergusson et al. (1994) and Fielding et al. (1994). The Rookwood Volcanics which comprise the predominant basement lithology within EPM 16665 are discussed in some detail by Clare (1993), with part of the sequence to the south of the tenement investigated by O’Connell (1995) as part of an honours study. The eastern portion of the Rookwood 1:100,000 map sheet was also incorporated in the Geological Survey of Queensland Yarrol Mapping Project.

To date no real consensus exists regarding the tectonic setting of the Rookwood Volcanics. The elongate, north-south trending Grantleigh Trough, in which the Rookwood Volcanics lie, was first described by Kirkegaard et al. (1970) and since then has been widely regarded as a fault-bounded pull-apart basin or marginal sea associated with incipient rifting (Day et al., 1983). Fielding, Holcombe and Stephens, 1994 argued that the Grantleigh Trough was a misnomer and that it simply represented the eastern part of the Bowen Basin. They argued, largely on sedimentological grounds, that the sediments and by inference the volcanics, were deposited in a shallow shelf sea during a period of thermal recovery following an initial extensional tectonic phase which heralded the beginning of the Bowen Basin.

The presence of VHMS deposits, and thick basaltic sequences with only minimal sediment components suggests however that the Rookwood Volcanics were deposited in a relatively

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deep marine basin (Bendall, 1996), and interpretation of the available lithogeochemical data may imply a back-arc or mid-ocean ridge setting.

At Develin Creek, the Rookwood Volcanics are exposed in a restricted outcrop window, but the majority of the mineralised sequence is concealed by Tertiary laterized sediments, with lithologies and stratigraphic relationships interpreted from drilling. The Develin Creek Resource, which is currently estimated at 2.57Mt @ 1.76% Cu, 2.01% Zn, 0.24g/t Au and 9.6g/t Ag (Zenith ASX Release 15 th February 2015), is interpreted to comprise two discrete mineralising systems: the Window-Scorpion and Sulphide City systems with the Window- Scorpion system being partly eroded prior to the deposition of Tertiary sediments. Sulphide City, on the other hand, appears mostly preserved and consists of a zone of massive sulphide mineralisation which occurs stratigraphically above a zone of disseminated and stockwork sulphide mineralisation.

Figure 3. Develin Creek project tenements over geology

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At Develin Creek significant potential exists to extend the currently defined mineralisation including:

• Delineation of near-surface supergene mineralisation above the Scorpion and upper Sulphide City lens.

• Distal bedded sulphide horizons extending down-dip from the Scorpion sulphide breccia and Sulphide City massive sulphide lenses.

• Untested prospective stratigraphic intervals forming part of a complex stacked system (at least two mineralised horizons have been intersected at Sulphide City, but only the upper interval effectively tested at Scorpion 500m to the west).

• Concealed mineralisation under extensive cover (existing electrical geophysical coverage terminates approximately 300m to the west of Window-Scorpion).

• Concealed mineralisation to the east of Sulphide City (untested IP chargeability anomalies).

At Comanche (EPM 17604), in the south of the project, an elongate ridge of Zinc-Cobalt- Arsenic anomalous gossan is hosted by a sequence of volcanic rocks, underlain by fine- grained carbonaceous sedimentary rocks. Drilling at Comanche has identified low level copper and zinc mineralization within a large alteration halo that is poorly understood.

Other identified prospects with anomalous base metal surface geochemistry include Huntsman, Dungbeetle, Develin Creek East and Ten Mile Creek-South Yards (EPM 17604). Those with anomalous base metal results from limited open hole percussion drilling include Planet Pyrite, Sulphide Suburb, Redback and Tarantula (EPM 17604). These prospects all require further work to be considered sufficiently tested.

The Wilson Prospect is located within EPM 16749 and is represented by Cu-Zn-Au anomalous gossan outcrops within the Rookwood Volcanics, close to its contact with the younger Back Creek Group sediments.

The remainder of the Rookwood Project is underexplored for VMS style base metal mineralisation.

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4.0 PREVIOUS EXPLORATION

4.1 Pre-2008 Exploration Exploration has been conducted in the licence area by QMC, MIM, GFA, CRA, Resolute, and Conquest, with stream sampling (by BCL for gold and minus 80 mesh for base metals), prospecting and airborne surveys. Soil sampling, rock sampling and drilling has also been conducted in this area. QMC completed 9 drill holes (1 diamond, 8 percussion) over the Wilson Prospect. Exploration over the 17 relinquished sub-blocks was limited.

4.2 Exploration over the 17 sub-blocks within EPM 16749 During this period of time, only limited exploration was completed over the 17 surrendered sub- blocks. Historical reviews were completed at different times by both Fitzroy Resources and Zenith Minerals ltd.

In 2011, Fitzroy Resources completed a HELITEM survey covering 2,800 line kilometres (most of EPM17604, EPM 16749, and EPM18845). Survey specifications are indicated in Table 1; survey conductivity images are included in Appendix I. It was designed to locate conductors associated with volcanogenic-hosted massive sulphide mineralisation (VHMS) similar in nature to the resource at Develin Creek (Dix, 2011). Resource Potentials was commissioned by Zenith in 2014-15 to reprocess the survey results. A conductivity image (channel 5; reprocessed by Resource Potentials) covering the 17 subblocks is shown in Figure 4.

Table 1. HELITEM Survey Specifications

Aircraft: AS 350 B3 Helicopter Operator: United Aero Helicopters Registration: VH-IPW Survey Speed: 55 knots / 65 mph / 30 m/s Magnetometer: Scintrex CS-3 cesium vapour, attached to transmitter loop, sensitivity = 0.01 nT, sampling rate = 0.1 s, ambient range 20,000 to 100,000 nT. The general noise envelope was kept below 0.5 nT. The nominal sensor height was ~35 m above ground. Electromagnetic system: HELITEM® 30 channel multicoil system Transmitter: Vertical axis loop slung below helicopter Loop area 708 m2 Number of turns 2 Nominal height above ground 35 m Receiver: Multicoil system (X, Y and Z) with a final recording rate of 10 samples/second, for 30 channels of X, Y and Z component data.

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The nominal height above ground was ~63 m. Base frequency: 25 Hz Pulse width: 4 ms Pulse delay: 0.078 ms Off-time: 15.977 ms Point value: 9.77 µs Transmitter Current: 1415 A Dipole moment: 2x106Am²

Optimum survey elevations for the helicopter and instrumentation during normal survey flying are: Helicopter 83 metres HELITEM Receiver 63 metres Magnetometer 35 metres HELITEM Transmitter 35 metres

Noise Levels Electromagnetic Data The noise levels of the EM data as indicated on the raw traces of dB/dt & B field channel 30 shall not exceed the following tolerances continuously over a horizontal distance of 1000 meters under normal survey conditions: dB/dt X and Z < +/- 5 nT/s and B-Field X and Z < +/- 12.5 pT.

Airborne High Sensitivity Magnetometer Magnetic total-field intensity data will be recorded on-board the aircraft as follows: - Sample interval will be 0.1 second (10 samples/second) - Magnetometer sensitivity will be 0.1 nT Magnetometer noise level will not exceed ±1.0 nT for a distance of 1 km or more.

Ground Base Station Magnetometer Base station magnetometer information will be recorded digitally at 1.0 second intervals. For acceptance of the magnetic data, non-linear variations in the magnetic diurnal should not exceed 10 nT over a chord of 60 seconds.

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Figure 4. HELITEM conductivity (channel 5) over surrendered blocks

In late 2014, Zenith collected 27 soils samples as part of a broader systematic soil sampling programme. Samples from approximately 10-30cm depth were collected on a 200m x 50m grid. Unsieved samples were stored in paper packets and sent to Perth for assay. After heat treatment (part of the quarantine process), samples were released from the laboratory and assayed using an Innovex Delta Premium 2000 portable XRF analyser. Figure 5 and Figure 6 show Cu and Zn results respectively.

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Figure 5. Zenith Minerals 2014 Soil Sampling. Cu in Soils

Figure 6. Zenith Minerals 2014 soil Sampling. Zn in soils

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5.0 CONCLUSIONS AND RECOMMENDATIONS

The ground covered by the 17 sub-blocks has only low prospectivity for VHMS mineralisation and was therefore relinquished.

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REFERENCES

Bendall C 1996. Comparative Study of an Ancient VHMS Deposit and a Modern Seafloor Sulphide Deposit. James Cook University Department of Earth Sciences. Unpublished Honours thesis

Clare A.P 1993. Subaqueous basaltic volcanism in the Early Permian Grantleigh Trough, central eastern Australia. In: Aitchison, J.C. and Flood, P.G. eds. New England Orogen, eastern Australia, NEO '93 Conference Proceedings, University of New England, 599-608

Day R.W, Whitaker W.G, Murray C.G, Wilson I.H and Grimes K.G 1983. Queensland Geology - a companion volume to the 1:2 500 000 scale geological map (1975). Geological Survey of Queensland Publication 383

Dix W 2011. Annual Report for the period 21 October 2010 to 20 October 2011 – rookwood 1 – EPM17604, Queensland Department of Natural Resources and Mines, Unpublished

Fergusson C.L, Henderson R.A and Leitch E.C 1994. Tectonics of the New England Fold Belt in the Rockhampton-, . Field Conference '94 Capricorn Region, geological Society of Australia, Queensland Division, Brisbane, 1-16

Fielding C.R, Holcombe R.J, Stephens C.J 1994. A Critical evaluation of the Grantleigh Trough, east-central Queensland. Field Conference '94 Capricorn Region, geological Society of Australia, Queensland Division, Brisbane, 17-30

Kirkegaard A.G, Shaw R.D and Murray C.G 1970. Geology of the Rockhampton and Port Clinton 1:250 000 sheet areas. Geological Survey of Queensland, Report 38, 126pp

O’Connell E 1995. Geology and Structure of the Aeroview Area, , Central Queensland: Implications for Mineralisation of the Lower Permian Rookwood Volcanics. University of Queensland Department of Earth Sciences. Unpublished Honours thesis

Queensland Metals Corporation Ltd 1992. Fitzroy Project 1992 Annual Report. Queensland Department of Minerals & Energy, Unpublished

Queensland Metals Corporation Ltd 1994. Fitzroy Project 1994 Annual Report. Queensland Department of Minerals & Energy, Unpublished

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