METALLICA MINERALS LIMITED ABN 45 076 696 092 GPO Box 122, Brisbane QLD 4001 Tel: +61-7 3299 2329 Fax: +61-7 32992329

Partial Relinquishment Report

for EPM 14406 - Prospect

NORTH

HELD BY: ORESOME PTY LTD

MANAGER: METALLICA MINERALS LIMITED

AUTHOR: Patrick Smith

PROJECTS: PROSPECT

COMMODITIES: Ni, Cu, Ti, V, Au

MAP SHEETS: 1:250,000 CROYDON 1:100,000 PROSPECT (7360)

GEOGRAPHIC COORDS: Latitude: -18.89º Longitude: 142.25º

DATE: March 2006

Prospect EPM 14406 – Partial Relinquishment Report 1 1.0 Summary

The Prospect Project (EPM 14406) is located approximately 80 kilometres south of Croydon on Prospect Station, in North-West Queensland. The EPM is held by Oresome Australia Limited (Oresome) a wholly owned subsidiary of Metallica Minerals Ltd (Metallica). The tenement was granted for a period of 5 years from the 12th of December 2005.

In the first year of tenure Oresome completed a literature search of the Prospect Area and compiled a report on the past exploration within the tenement. The company also flew an Airborne EM survey over the eastern part of the prospect covering a number of magnetic highs identified by two previous airborne magnetic surveys. The survey identified ten EM conductors within the tenement with two considered to be of high priority.

As a result of the survey Oresome has decided to relinquish 59 of the 83 sub-blocks which make up the original tenement, Oresome also applied for an additional 17 sub-block (EPM 15206) around the most prospective EM anomalies.

This report summarise the work completed by Oresome on the relinquished sub-block which included a literature search, review of previous data and parts of the relinquished area was flown by the Airborne EM survey.

Prospect EPM 14406 – Partial Relinquishment Report 2 Table of Content

1.0 Summary...... 2 2.0 Introduction...... 4 2.1 Location, Access and Infrastructure ...... 4 2.2 Climate, Vegetation and Topography...... 4 2.3 Tenure ...... 4 2.4 Previous Tenure...... 6 2.5 Native Title...... 10 2.6 Landholders...... 10 3.0 Geology...... 11 3.1 Regional Setting...... 11 3.2 Geology of EPM 14406 ...... 13 4.0 Previous Exploration ...... 16 4.1 Ford, Bacon and Davies...... 17 4.2 Strategic Metal Corporation and Minplex Joint Venture...... 18 4.3 Strategic Metals Corporation and Golden Plateau Joint Venture ...... 19 4.4 North Exploration Limited...... 21 4.5 WMC Limited...... 21 5.0 Work Complete by Oresome Australia Pty Ltd in 2004 – 2005 ...... 24 6.0 References...... 28

Table of Figures

Figure 1 Prospect Location Map – Original Tenement – Prior to Relinquishment ...5 Figure 2 EPM 14406 Showing Relinquished and Retained Sub-Blocks ...... 7 Figure 3 Basement Geology of EPM 14406 ...... … 16 Figure 3 Airborne Magnetic Map...... 20 Figure 4 EPM 14406 Area of the Original EPM Covered by the AEM Survey ...... 26 Figure 5 EPM 14406 Results of the EPM Survey over the Relinquished area...... 27

Table of Tables

Table 1 List of Sub-Blocks to be Retained ...... 6 Table 2 List of Sub-Blocks to be Relinquished ...... 6 Table 3 Previous Exploration Tenure and Relevant Company Reports ...... 8 Table 4 Landowner Details...... 10 Table 5 Geological Sequence in the North-Western Georgetown Inlier ...... 12 Table 6 Summary of Drilling completed by Golden Plateau N.L in 1987 ...... 22 Table 7 Summary of Drilling 1971...... 22 Table 8 PB1 to PB 26 Drilled By the Golden Plateau ...... 23

Prospect EPM 14406 – Partial Relinquishment Report 3 2.0 Introduction

2.1 Location, Access and Infrastructure

The Prospect Project (EPM 14406) is located on Prospect Station, approximately 80 kilometres South of Croydon in North-West Queensland, (Figure 1). It is accessed via formed dirt roads through Esmeralda Station SSE of Croydon. The track is un-trafficable during, and for a time after, the northern wet season. The project is contained within the Croydon (SE54-11) 1:250,000 and the Prospect (7360) 1:100,000 map sheets and is centred on 142.25ºE – 18.89ºS.

2.2 Climate, Vegetation and Topography

Topography of the Prospect area comprises flat open country with medium to dense scrub with localised open forests, the main drainage systems are the north-westerly flowing Roper River and Warigal Creek and the prosect is bisected by numerous shallow branches of these rivers. The whole tenement is covered by deep sandy silty and clay rich topsoils and is subject to flooding during the northern wet season.

2.3 Tenure

The tenement was granted on the 12th December 2004 for a period of 5 years, details of the tenement are included in the first annual report for the tenement. The sub-block which have been retained are listed in Table 1 and Table 2 lists those blocks which have been relinquished.

Prospect EPM 14406 – Partial Relinquishment Report 4 Figure 1 Prospect Location Map – Original Tenement – Prior to Relinquishment

7,930, 000m N

7,925, 000m N

7,920, 000m N

7,915, 000m N

7,910, 000m N

7,905, 000m N EPM14406 610,000mE 615,000mE 620,000mE 625,000mE 630,000mE 635,000mE

012345 Km

1 :100, 00 0

METALLICA MINERALS LTD Cairns # EPM14406 PROSPECT Townsville Mt Isa ∃ # # Rockhampton # LOCATION MAP

! BRISBANE

0500Km

COMPILED B Y P. SMI TH J A N06 SCA LE 1: 100 ,000 QUEENSLAND FIGURE D R AF TED BY K.J.CORRIE JAN 06 Pr oj . :A GD66 (z one5 6) 1 INDEX MA P REVISED DWG No :

Prospect EPM 14406 – Partial Relinquishment Report 5 Table 1 List of Sub-Blocks to be Retained:-

Region Block Sub Blocks No

NORMANTON 2427 Q, R, V, W, X 5 NORMANTON 2499 C, D, H, J, N, O, P, T,U, Y, 11 Z NORMANTON 2500 Q, V 2 NORMANTON 2571 D, E J, K, 4 NORMANTON 2572 A, F, 2 TOTALS 24

Table 2 List of Sub-Blocks to be Relinquished:-

Region Block Sub Blocks No

NORMANTON 2353 O, P, T, U, Y, Z 6 NORMANTON 2354 L, M, N, Q, R, S, V, W, X 9 NORMANTON 2425 E, K, 2 NORMANTON 2426 A, B, C, D, F, G, H, J, L, M, 22 N, O, Q, R, S, T, U, V,W, X, Y, Z NORMANTON 2498 D, E, K, P 4 NORMANTON 2499 A, B, F, G, L, M,Q, R, 12 S,V,W,X NORMANTON 2571 A, B, C, H 4 TOTALS 59

Figure 2 shows which sub-blocks have been retained and relinquished by Metallica and the new EPM which is under application.

2.4 Previous Tenure

Several companies including, Ford, Bacon and Davis, Esso, Chevron, Strategic Minerals and Western Mining Corporation have previously held tenements which cover all or part of what is now EPM 14406. Previous A to P’s and EPM’s over the tenement include A to P 953 (Ford Bacon and Davis), A to P 2872M, (Strategic Minerals), and EPM 10327, Clara River (WMC). A list of previous exploration licences and relevant company reports is presented in table 2 below.

Prospect EPM 14406 – Partial Relinquishment Report 6 Figure 2 EPM 14406 Showing Relinquished – Retained and the Additional Sub-Blocks under Application

2,281# 2,282# 2,283# 2,284# 2,285#

EPM14406 (Relinquished Portion) YAPPAR 18°40' S

R IV E R

2,353# 2,354# 2,355# 2,356# 2,357# o###plmn##

t###uqr##s

18°45' S yz###v w##x

### # # R e a b c d EPM14406 IV BORER E R kf##g###hj

2,425# 2,426# 2,427# 2,428# 2,429# lm# ###no

qs# r#####t u q r# su##t ###qr

18°50' S vw# ####xyz v# w##x yz # ##vw #

d# e# a# bc##de # ##a b #cd # #

# # ## # k f gh j EPM15206 2,497# 2,498# 2,499# 2,500# 2,501# p# l# mn# # o# p#

q# r##s tu# ##q

18°55' S v# w##x yz # ##v w # ! ProspectProspect

a# bc##de# ##a b #

h# #j k##fg #

2,569# 2,570# 2,571# 2,572# 2,573# 142°00' E 142°00' 19°00' S 142°10' E 142°10' 142°05' E 142°05' E 142°15' E 142°20'

0246810 Km

1:250,000

METALLICA MINERALS LTD Cairns # EPM14406 - EPM15206 PROSPECT Townsville Mt Isa ∃ # # Rockhampton # SUB BLOCK LOCATION MAP showing ! BRISBANE RELINQUISHMENT EPM14406

0 500Km

C OMPILED BY P.SMITH FEB 06 SC ALE 1: 250,000 QUEENSLAND FIGURE DRAFTED BY K.J.CORRIE FEB 06 Proj.:LATLONG (AGD66) INDEX MAP 1 R EVISED DWG No :

Prospect EPM 14406 – Partial Relinquishment Report 7 Table 3 Previous Exploration Tenure and Relevant Company Reports

EPM NUMBER COMPANY DATE REPORT NUMBER TITLE 940M, 952M, Ford Bacon and 1/03/1972 CR3957 Progress Report on A to P 953M, 954M Davis 952M Croydon Area QLD 940M, 952M, Ford Bacon and 1/03/1972 CR3960 Progress Report on A's to P 953M, 954M Davis 940M, 952M, 953M, 954M

940M, 952M, Ford Bacon and 1/01/1973 CR4445 Progress Report on A's to P 953M, 954M, Davis 940M, 952M, 953M, 954M, 1063M, 1067M, 1063M,1067M 1068M, 1068M Croydon Area QLD (1973) 1189M ESSO 1/10/1973 CR4600 Final Report - Yappat River – A to P 1189M 1248M Chevron 1/05/1974 CR4820 Rotary Drilling Project - Clara River Area, Queensland 1245M Chevron 1/11/1974 CR5026 Authority to Prospect 1245M, Rotary Drilling Project, Clara River Area Queensland 2872M Strategic Minerals 1/10/1981 CR9684 Half Yearly report A to P 2872M, Croydon, NW Queensland, Period to August 1981 2872M Strategic Minerals 1/05/1982 CR10629 Half Yearly report 2nd August to 1st February 1982 Croydon,

2872M Strategic Minerals 1/10/1982 CR11197 Half Yearly Report to 1st August 1982 A to P 2872M Croydon, Queensland 2872M Strategic Minerals 1/02/1983 CR11514 Half Yearly Report 2nd August 1982 to 1st February 1983 A to P 2872M, Croydon, Queensland

2872M Strategic Minerals 1/10/1983 CR12650 Half Yearly Report 2nd February 1983 to 1st August 1983 A to P 2872M Croydon Nth Queensland 2872M Strategic Minerals 1/04/1984 CR12976 Half Yearly Report 2.08.83- 1.02.84 2872M Strategic Minerals 1/11/1984 CR14168 Half Yearly Report A to P 2872M 2.02.84 - 1.08.84 Croydon, N Qld 2872M Strategic Minerals 1/09/1986 CR16049 Half Yearly Report 2nd February to 1st August 1986 A to P 2872M Croydon Nth Queensland 3805M Strategic Minerals CR14574 Half Yearly Report 17/8/84 - 16/02/85 A to P 3805M, Croydon N. QLD

Prospect EPM 14406 – Partial Relinquishment Report 8 3806M Strategic Minerals 1/05/1985 CR14531 Half Yearly Report 17th August 1984 to 16th February 1985 A to P 3806M Croydon 3620M Strategic Minerals CR14696 Half Yearly Report A to P 3620M 21/5/84 - 20/11/84 Croydon North QLD 3647M Strategic Minerals 1/03/1986 CR16050 Half Yearly Report 16/6/85 - 15/12/85, A to P 3647M Croydon Area 3647M Golden Plateau 1/09/1986 CR16051 Prospect Bore Project, Half and Strategic Yearly Report 16th Resources December to 15th June 1986 2872M, 3647M Golden Plateau 1/11/1986 CR16052 Report on Drilling of A's to P 2872M and 3647M Croydon North Queensland 2872M, 3647M, Golden Plateau 1/05/1987 CR16663 Prospect Bore Project Half 4429M and Strategic Yearly Report Resources 2872M, 3647M, Golden Plateau 1/09/1989 CR16664 Final Report (February '87- 4429M, 4785M, and Strategic August'87) Prospect Bore 4786M Resources Project 4540M Central Coast 1/12/1987 CR18498 A to P4540M Croydon Exploration Queensland Report for the Six Months ended 1 July 1987 4853M Strategic Minerals 1/05/1988 CR17174 Half Yearly report on A to P 4853M (Prospect Bore, Queensland) Period 6 Aug 1987 - 6 Feb 1988 4853M Strategic Minerals 1/03/1990 CR21053 Final and Annual report A to P 4853M (Period 07/08/88- 06/08/89) 8815M, 8817M, Geopeko 1/07/1993 CR24719 EPM 8815 "Clara North", 8836M EPM 8817 "Clara South", EPM 8836 "Clara Central" Annual Report for Period Ending 21-6-93 8815M, 8817M, North Exploration 21/06/1994 CR26170 EPM 8815 "Clara North", 8836M EPM 8817 "Clara South", EPM 8836 "Clara Central" Annual and Final Report for Period Ending 21-6-94 EPM10327 Western Mining 1/02/1996 CR27460 EPM 10327, Clara River, Corporation Ltd Annual Report for the period 31/10/94 to 30/10/95 EPM10327 WMC Resources 28/02/1997 CR28953 EPM 10327, Clara River, Ltd Annual Report for the period 31/10/95 to 30/10/96

Prospect EPM 14406 – Partial Relinquishment Report 9

2.5 Native Title

The land is subject to native title and the native title claim number over the EPM is QC01/22. The claim is by the Tagalaka people. The Takalaka people have been notified and have identified a Nominated Body who will represent the group in discussions with Oresome.

2.6 Landholders

The EPM covers four properties, which are used primarily for breeding and grazing cattle. Details of the properties and their relevant owners are listed in table 2.

Table 4 Landowner Details

#1 #2 #3 #4 Property Active Active Active Active Status District Far North Far North Far North Far North Office FNTH Cairns FNTH Cairns FNTH Cairns FNTH Cairns LG/Div 2600 Croydon 2600 Croydon 2250 Carpentaria 2600 Croydon Prop ID 5045803 5045775 5206063 40279897 WTR 261/5 240 988 229 Previous Ref NA NA NA 40000491 Prop Name Ridley Holdings, Unknown Road, Prospect Mittori Holding, Croydon QLD Address Claraville QLD Esmeralda QLD Holding, 4871 4871 4871 Savannah QLD 4890 Owner Joan Ellen and Denis Michael & Joan Ellen & Laglan Pastorral Co Pty Ltd Kelvin John Trisha Natalie Kelvin John Jensen Sheahan Jensen Address "Debella", Julia Esmeralda "Debella", Julia Laglan Station, Clermont, Creek, QLD Station, Creek, QLD QLD 4721 4823 Croydon, QLD 4823 4871 RPD L2641 L75 PH1698: PTB L3881 L2 LA5:PH 34/2447 MITTORI PH1909:PH PH 34/75:PAR PH1911 PT PH HOLDING:PAR BLACK & 34/2641 Ridley Berrima 34/3881 L2429 PH1699:PH 34/2429 Holding: Par Prospect MITTAGONG HOLDING: Cadogan, Holding: PAR PAR BLACK & L2635 PH others & PTA Monkleigh 1702:PH 34/2635 COOMBER L3881 HOLDING:PAR BLACK & PH1911:PT PH L2676 PH2056 34/2878 34/3881 BLACKBUTT SPRINGS Prospect HOLDING:PAR BLACK & Holding::PAR L2677 PH2066:PH Cadogan, 34/2677:PAR BLACK, Others DORKING & L2437 PH866:PH 34/2437 BIRKENHEAD HOLDING:PAR BLACK Area/Vol 83,500 HA 399,000 HA 7,800 HA 227,790 HA Zoning not zoned not zoned not zoned not zoned SMA 2 2 70 2

Prospect EPM 14406 – Partial Relinquishment Report 10 Prim L/Use 64 cattle grazing 64 cattle grazing 64 cattle grazing 64 cattle grazing & breeding & breeding & breeding & breeding Sec L/Use none none none none Prop Type issuing issuing issuing issuing Prop Tenure leasehold leasehold leasehold leasehold Valuation $144,000.00 $1,100,000.00 $12,800.00 $590,000 Date Issue 25/02/2002 25/02/2002 25/02/2002 1/04/2003 Associated 5212799 21004446 5221994 5221995 5221996 Properties 5229480 5221998 5221999 21004444

3.0 Geology

The application covers a portion of the Croydon 1:250,000 geology and the Prospect 1:100,000 topographic sheets

3.1 Regional Setting

EPM 14406 is located approximately 45 km west of the outcropping Georgetown Inlier close to the divide between the Mesozoic Carpentaria and Eromanga Basins. Tertiary Sediments of the Karumba Basin overly the Mesozoic sequences. The Georgetown Inlier to the east is dominated by outcrops of the 1540 Ma Croydon Volcanic Group and coeval Esmeralda Granite, both are essentially undeformed. The sequence is underlain by sediments of the Langlovale Group and overlain locally by the Inorunie Group. Further to the east metasediments of the Etheridge Group dominate. Very minor Permian volcanics and intrusives are also present.

The Proterozoic is overlain by Mesozoic and Tertiary sediments which are preserved as outliers within the Georgetown Inlier and extend as flat lying cover sequence up to 300 metres in thickness westward to the margins of the Mount Isa Inlier.

The stratigraphy of the north-western portion of the Georgetown Inlier and overlying sedimentary cover is summarised in Table 3 below.

Prospect EPM 14406 – Partial Relinquishment Report 11 Table 5 Geological Sequence in the North-Western Georgetown Inlier

UNIT AGE LITHOLOGY Quaternary Sand, gravel, silt and mud - alluvial and channel deposits

Tertiary-Quaternary Residual and alluvial sands, gravels, silt and soil Tertiary-Quaternary Ferricrete, alluvium and colluvium Wallumbulla Cretaceous Sandstone and mudstone Formation Gilbert River Jurassic-Cretaceous Dominantly sandstones, lesser finer clastics Formation Eulo Queen Group Jurassic Sandstone and siltstones, minor conglomerates Permian Rhyolites, local andesites and granodiorites Inorunie Group Mid to Late Dominantly sandstones and orthoquartzites, minor siltstones Proterozoic and mudstones Esmeralda Granite Middle Proterozoic Dominantly biotite granites, some with muscovite, garnet and minor granites Croydon Volcanic Middle Proterozoic Dominantly rhyolites and dacites, minor sediments and Group andesites Forest Home Middle Proterozoic Biotite trondhjemite Trondhjemite Langlovale Group Middle Proterozoic Sandstones overlain by finer clastics

Etheridge Group Middle Proterozoic Dominantly fine clastics including carbonaceous shales

Comparison between the Eastern Succession of the Mt Isa Inlier and the Georgetown Inlier

The Eastern Succession of the Mount Isa Inlier which outcrops 350 km west of the Georgetown Inlier and is characterised by the presence of significant Cu-Au deposits commonly associated with Fe oxides. The most significant deposits are relatively recent discoveries and the largest occur under shallow cover (Ernest Henry, Osborne, Cannington and Eloise) marginal to the exposed portions of the Eastern Succession. A comparison of the age, stratigraphy, tectono-metamorphic and intrusive histories of the two provinces indicates many broad similarities, although D3-D4 events of the Eastern Succession are not recorded at Georgetown, and the latter province due to its proximity to the Palaeozoic

Prospect EPM 14406 – Partial Relinquishment Report 12 Tasman Province, records major Palaeozoic magmatic events (Siluro-Devonian and Permo- Carboniferous). Both Palaeozoic magmatic events have metallogenic significance in the exposed portions of the Georgetown Inlier, the Etheridge Gold Field is associated with Siluro-Devonian magmatism, and the Kidston Au deposit and other low grade porphyry systems and associated polymetallic deposits with the Permo-Carboniferous event. A significant difference between the Mount Isa and Georgetown provinces is the preservation of sedimentary sequences between the main deformation events (Langlovale Group), and the thick volcanic cover associated with co-magmatic granites associated with the late orogenic magmatic event (Croydon Volcanic Group and Esmeralda Granite).

The mineral endowment associated with the Proterozoic sequence of the exposed Georgetown Inlier is significantly less than that of the Eastern Succession, and evidence of major hydrothermal systems in the form of widespread alteration, brecciation and local iron-metasomatism is lacking. Hence this province is considered to have low residual potential for economic Cu-Au-Fe oxide deposits of the style of the Eastern Succession. However selected portions of its covered flanks to the west have atypical geophysical signatures considered to be associated with more prospective geology for this style of mineralisation. One such area is the Prospect EPM.

3.2 Geology of EPM 14406

Due to the absence of outcropping basement rocks on EPM 14406 the geology of the prospect has been interpreted from drill hole data.

Exploration drilling indicates that depth to basement varies from between 34m at the southern end of the prospects and gradually increases to 124m at the northern end. The cover sequence comprises Tertiary sands and gravels overlying red-brown gritty clays, and locally a soil profile preserved in the basement. The underlying Mesozoic sequence commences with a sequence dominated by laminated carbonaceous shales (Wallumbilla Formation), this overlies a lenticular sandier sequence which may yield artesian water flows. The sands and shales are commonly inter-bedded and occasionally thin coal seams are recorded.

Prospect EPM 14406 – Partial Relinquishment Report 13 Within the Proterozoic basement, several different lithological groups have been recorded in previous exploration including:

• Mafic Rocks – a range of gabbroic intersections are generally associated with elliptical to curvilinear weak magnetic highs. The gabbros include layered fractionated intrusions with significant titano-magnetite in the Prospect Bore area. The gabbros are anomalous

in TiO2, V and platinoids and occasionally Au and can contain several zones containing in excess of 100 ppm Cu as chalcopyrite.

Where gold is present it is associated with quartz-carbonate veins. The gabbros appear to intrude fractured arkoses and quartzites, which show no sign of re-crystallisation or metamorphism. Composite core samples from three holes drilled into this layered

gabbroic body indicate 3.28-4.22% TiO2 and 14.0-20.7% Fe2O3 (total Fe). Titaniferous

intervals average up to 15.5% TiO2. Drilling of a number of weak to moderate anomalies did not replicate oxides found at Prospect Bore. Magnetite, titano-magnetite and ilmenite account for the magnetic anomalies. Limited whole rock analysis indicates some very

iron rich gabbros with 18-32% Fe2O3 (total Fe).

• Porphyritic felsic intrusives and volcanics – these occur in a number of holes possibly intruding a gabbro in PB10, and in a fault contact with coarse clastic sediment in the Prospect Bore area. Thin sections of intrusives are described as porphyritic micro-granite and graphitic granite, phenocrysts include quartz, k-feldspar, plagioclase and biotite. Accessory ilmenite is common and graphite occurs as inclusions. Locally weakly magnetic volcanics were intersected

• Granites – granite probably related to the Esmeralda Granite occurs northeast of Clara River and possibly in Hailstone Bore to the northwest. At Plain Bore the granite also contains apatite, allanite and zircon and is on the southern margin of a magnetic plateau. PDHC1-1 which was drilled into an elliptical magnetic anomaly intersected granite with trace relic magnetite associated with aggregates of limonite and sphene and lacked graphite inclusions typical of the Esmeralda Granite.

Prospect EPM 14406 – Partial Relinquishment Report 14 • Mixed Granite and Shale – two holes intersected a sequence of brecciated granite in a matrix of quartz, feldspar and graphite clots with some relic shale. The log poorly describes the sequence and no description of the minerals, which may have caused the magnetic anomaly, is included.

• Quartzites and arkoses – fractured quartzites with chlorite and carbonate bands, arkoses with heavy mineral lamination and gritty sandstone are present in the Prospect Bore area, possibly intruded by gabbros and in fault contact with porphyritic felsic intrusives. One petrological sample indicates no sign of re-crystallisation or metamorphism. This sequence may have affinity with the Inorine Group or Langlovale Group which overlay and underlay the Croydon Volcanic Group respectively.

• Metamorphic sequences – quartzose, chloritic and mica schists were intersected in one hole (Lily Bore) in the northeast of EPM 14406 indicating the presence of older metamorphic basement in the area or local higher grade shear zones

The structural history of the basement intersected in and around Prospect Bore is unknown, however the area is characterised by a number of regional lineaments including the NW trending Cooralie Structure and the parallel complex Borer River Fracture Zone. A basement geology map of the prospect area is included as Figure 2; the map was produced by the Geological Survey of Queensland using data from exploration drilling.

Prospect EPM 14406 – Partial Relinquishment Report 15 Figure 3 Basement Geology of EPM 14406 – (Tenement – Prior to relinquishment)

7,930, 000m N

7,925, 000m N

7,920, 000m N

7,915, 000m N

7,910, 000m N

7,90 5, 000m N EPM14406 635,000m E 630,000mE 625,000mE 620,000mE 615,000m E 610,000m E

012345 Km

1 :100, 00 0

METALLICA MINERALS LTD Cairns # EPM14406 PROSPECT Townsville Mt Isa ∃ # # Rockhampton # REGIONAL GEOLOGY

! BRISBANE

0500Km

COMPILED B Y P. SMI TH J A N06 SCA LE 1: 100 ,000 QUEENSLAND FIGURE D R AF TED BY K.J.CORRIE JAN 06 Pr oj . :A GD66 (z one5 6) 2 INDEX MA P REVISED DWG No :

4.0 Previous Exploration

EPM 14406 has a history of exploration dating back to the early 1970’s when work was carried out to determine the source of anomalous fluorine which occurs in water bores in

Prospect EPM 14406 – Partial Relinquishment Report 16 the area. The Hailstone, Plain, Lily and Prospect bores were extended and additional holes were drilled to locate the source of the fluorine, but with no success. The drilling did however intersect anomalous Titanium – Vanadium in gabbros and a Tantalum and Niobium anomaly in a quartzite.

An aeromagnetic survey over the Prospect area in the early 1980’s identified several magnetic anomalies. These anomalies were thought to be possible intrusives. Coupled with structural interpretation which recognised the Borer River fracture zone (which strikes for several 100km) and the high fluorine content found in bores along this structure the area was thought to have the potential to host Kimberlites and Carbonatites. Fluorine rich waters in a stable shield environment associated with a major structure are conducive to Kimberlites and or Carbonite emplacement.

Over the past 20 years exploration at Prospect Bore has concentrated on drilling the various magnetic anomalies to determine whether they are Kimberlites, Carbonatites or mineralised gabbros. Drilling has targeted several postulated Kimberlite pipes, two carbonatites and various other magnetic anomalies. Drilling at one magnetic anomaly near Prospect Bore intersected wide zones of anomalous Titanium (Ti) and Vanadium (V) mineralisation. Four additional holes drilled in the same area also returned elevated Ti and V assays. These holes also intersect narrow zones of anomalous platinum, palladium and gold geochemistry.

A summary of the exploration work completed by various companies over the Prospect Bore Area are detailed below and a list of the holes drilled on the prospect with details of the rock type and mineralisation intersected are included as table 4 and 5.

4.1 Ford, Bacon and Davies

Early exploration work at Prospect was carried out by Ford, Bacon and Davis between 1970 and 1973. Ford, Bacon and Davies completed the initial drilling programmes aimed at identifying the source of the fluorine found in the water bores in the area.

Exploration was directed at the Hailstone, Plain, Lily and Prospect Bores and these bores were extended in an attempt to locate the source of highly anomalous fluorine present in

Prospect EPM 14406 – Partial Relinquishment Report 17 artesian water at base of Mesozoic strata. Basement was at 48m and comprised of quartz porphyry. Prospect drill hole No 3 was drilled 61m from Drill hole No. 2 and reached bedrock at 31m which comprised a fractured weakly mineralised quartzite containing goethite and disseminated pyrite and minor wilkeite (red rose to yellow colour mineral from the apatite group). At a depth of 94m the hole intersected a quartz porphyry which was altered and bleached. Prospect Drill Hole No 4 was located about 460m from No 3 and intersected fractured mineralised quartzite. At Prospect Bore, 2 km NNE of the Prospect Homestead, an assay of a 20m interval of quartzite showed concentrations of niobium and tantalum pentoxide to 680ppm and molybdenum to 56ppm. A composite sample from hole

No 3 (51-70m) recorded 0.042% Nb2O5+Ta2O5 but no gold, silver or uranium was intersected.

4.2 Strategic Metal Corporation and Minplex Joint Venture

In 1981 Strategic Mineral Corporation and Minplex completed a limited airborne magnetic survey over the Prospect area. The survey identified a large magnetic anomaly immediately west of Prospect Bore. This anomaly was subsequently accurately delineated by a ground magnetic survey and later that same year two percussion holes (PB 1 & 2) were drilled into the anomaly. An ilmenite and titano-magnetite rich layered gabbro was intersected in one of the holes (PB2) which assayed; 98m @ 15% TiO2 and 0.64% V2O5 from a depth of 34m.

In 1983 a Landsat study was undertaken by Australian Photo-geological Consultants over the Prospect – Hailstone Bore area to identify any major linear features and equate to the existing geological data. The study identified 4 main structures, the Carolie Structure and 2 northwest – southeast trending structures, the Borer river fracture Zone, and an unnamed structure. The structures link the bores which contain anomalous fluorine. An east-west striking fault zone, the Yapper Zone, was also identified.

Later that year Geoterrex Australia Pty Ltd flew a more widespread airborne magnetic survey over the Prospect area. The survey identified a large number of magnetic anomalies which could be attributable to the presence in the basement of titaniferous and vanadiferous gabbro, kimberlite and carbonatite. Anomalies were designated as either a possible carbonatite (C), Kimberlite (K) or gabbro (G).

Prospect EPM 14406 – Partial Relinquishment Report 18

In 1984 12 line kilometres of ground magnetics was completed over the various C, K and G anomalies, and one hole was drilled into the C2 anomaly, this hole intersected 40m of gabbro from 96m, no anomalous mineralisation was intersected by the hole.

4.3 Strategic Metals Corporation and Golden Plateau Joint Venture

In 1986-7, eight percussion holes (total 886m) were drilled. Three (K1/1, K3/1, K4/1) of which were sited on anomalies interpreted as possible kimberlites, two holes (G2/1 – intersected altered rhyolite and G2/5) on anomalies interpreted as gabbro's, two holes (C1/1 – basement 126m extremely altered granitic and C2/2-gabbroic basement) on anomalies considered to be caused by carbonatite-type bodies and one hole (Prospect Bore - PB3) to test for gold and platinoids in the ilmenite and titano-magnetite rich layered gabbro intersected in the 1983 drilling.

The high TiO2 assays were not duplicated in PB 3, however platinum and palladium values were anomalous with the platinum and palladium concentration increasing down the hole. PB 3 recorded 4m (49-53m) @ 0.30 Pd, 0.11 Pt and 0.05 ppm Au.

Prospect EPM 14406 – Partial Relinquishment Report 19 Figure 3 Airborne Magnetic Map – (Tenement – outline Prior to Relinquishment)

In 1987 Austrex were contracted to complete an additional aero magnetic survey, results of which were integrated with the 1983 Geo-Terex survey.

Prospect EPM 14406 – Partial Relinquishment Report 20 In 1987-88, 26 percussion holes (PB1-PB26) were completed for 2110m of which 18 (PB1- 18) had diamond tails which totalled 933m. At Prospect Bore three holes with diamond tails (PB1-3) were drilled into the Prospect Bore magnetic anomaly. All holes intersected a variably hydro-thermally altered Ti-rich layered gabbro which is underlain by a quartzite. Anomalous gold is associated with epithermal quartz-carbonate veins assaying up to 0.68 g/t Au over a 1m interval.

Strategic Minerals Corporation relinquished this area shortly after the completion of this drilling programme.

4.4 North Exploration Limited

North Exploration held EPM 8836 and 8817 which covered part of what is now EPM 14406, In 1994 North drilled 9 holes totalling 782m, the holes intersected weak to un- mineralised gabbros

4.5 WMC Limited

In 1995 Western mining Corporation (WMC) completed a limited gravity survey over the area, a total of 972 readings were collected which were taken on 1 km centres using a Lacoste Romberg gravity meter coupled with a GPS and Barometer.

A combined gravity and magnetic anomaly was identified which is centred on 623000E and 7913000N. The anomaly was modelled as a southwest plunging polygonal body with a density of 3.2 g/cc. Results suggest that the cause of the anomaly is due to a gabbro. A second gravity anomaly centred on 610000E and 7919000N is thought to be due to a similar source and the two mafic bodies may be joined at depth. The results of the airborne magnetic survey are presented in Figure 3 which also show locations of drill holes targeted at the anomalies identified

Prospect EPM 14406 – Partial Relinquishment Report 21 Table 6 Summary of Drilling completed by Golden Plateau N.L in 1987 Hole No. Depth (m) Basement Basement Rock Type Mineralisation Comments PDHK1-1 126 108 Diorite, trace pyrite, contains magnetic chips, Au, Pt, Pd < detection, Cu, Pb, Zn, Co, Cr, Magnetic Anomaly tested As, to 18,15,55,15,50,30,5 ppm respectively PDHK3-1 130 N/A N/A Hole abandoned PDHK4-1 132 108 Micaceous schist Au, Pt, Pd < detection, Cu, Pb, Zn , Co, Cr, No explanation for mag anomaly As. To 34,510,400,30,300,98,<50 ppm remains untested respectively and 0.48% Ti PDHG2-1 86 60 Acid Volcanics - trace pyrite, weakly Au, Pt, Pd < detection, Cu, Pb, Zn , Co, Cr magnetic As. To 98,100,1100,15,25,<50 ppm respectively and 0.32% Ti PDHG5-1 66 45 Shale to 48m, from 48m to 66m Gabbro Au < detection, Pt, Pd to 0.02 and 0.01 ppm trace pyrite , weakly magnetic Cu, Pb, Zn , Co, Cr, As. to 150,300,478,70,230,554,<50 ppm respectively and 0.65% Ti PDHC1-1 156 33 Shale to 88m, Sandstone to 126, Intrusion Au, Pt, Pd < detection, Cu, Pb, Zn , Co, Cr igneous rock to 156m As. to 32,24,230,50,50,268, <50 ppm respectively and 0.54% Ti PDHC2-2 90 84 Gabbro Au, Pt, Pd < detection, Cu, Pb, Zn , Co, Cr Hole collapsed at 90m hole As. to 50,12,310,40,60,400, <50 ppm abandoned respectively and 0.59% Ti PDHP3 100 35 Gabbro Au to 0.05, Pt to 0 .06, Pd to 0.025, Cu Pb, Increasing Pt and Pd geochem Zn , Co, Cr, As. to 620, 22,200,80,54,120 downhole, hole averages and 18 ppm respectively, and Ti to 2.65% >2.3%Ti over 100m

Table 7 Summary of Drilling completed by Ford, Bacon & Davies November 1971 Total Basement Hole Number depth (m) Depth (m) Basement Rock Type Mineralisation Comments Prospect No. 1 34.14 25.30 Hard massive quartzite Water Bore extended Prospect No. 2 83.21 48.77 Quartz porphyry Water Bore extended Prospect No. 3 113.69 49.07 Fractured quartzite Goethite, disseminated pyrite Water Bore extended Prospect No. 4 78.18 43.59 Fractured mineralised quartzite Water Bore extended Lily Bore 190.80 108.51 Pre Cambrian Schist Water Bore extended

Prospect EPM 14406 – Partial Relinquishment Report 22 Table 8 PB1 to PB 26 Drilled By the Golden Plateau - Strategic Metals Corporation Joint Venture in 1987 - 1988

Pre Hole Northing Easting Approx Collar Sample Sample Diamond Total Basement LITHOLOGY No. RL (m) (m) From To (m) Tail (m) Depth (m) PB1 7910000 631500 129 49.80 42.00 49.80 109.95 159.75 42.00 Magnetite gabbro PB2 7909950 631500 129 37.37 32.00 37.00 128.73 166.10 32.00 Gabbro PB3 7909900 631500 129 53.00 43.00 53.00 126.00 179.00 40.00 Gabbro PB4 7899000 639300 145 49.60 47.00 50.00 18.40 68.00 42.00 Magnetite gabbro PB5 7896100 640650 150 85.00 79.00 85.00 30.00 115.00 79.00 Porphyritic felsic volcanics PB6 7895750 640150 150 91.50 95.00 90.50 36.50 128.00 85.00 Magnetite gabbro PB7 7895450 639700 150 82.00 74.00 82.00 49.00 131.00 73.00 Sandstone PB8 7894700 641600 153 98.90 94.00 99.00 35.10 134.00 94.00 Magnetite gabbro PB9 7901200 639350 145 83.00 77.00 82.50 18.00 101.00 77.00 Fine grained chloritised gabbro PB10 7904950 641000 142 92.50 90.00 92.00 32.50 125.00 89.00 Gabbro + porphyritic felsic intrusive PB11 7906900 636500 137 93.60 34.00 93.50 24.60 118.20 55.00 Quartzite PB12 7912200 628000 123 85.10 79.00 85.50 93.90 179.00 79.00 Oxidised gabbro PB13 7899750 640900 149 77.00 73.00 76.60 17.75 94.75 72.00 Porphyritic felsic volcanics PB14 7896400 641100 150 82.00 77.00 82.00 15.00 97.00 77.00 Porphyritic felsic volcanics PB15 7907600 630600 130 78.00 74.00 78.00 32.00 110.00 78.00 Gabbro / Pyroxenite PB16 7918800 622050 117 98.00 95.00 98.00 45.00 143.00 95.00 Graphitic Breccia PB17 7918750 623800 117 83.00 78.00 84.00 66.00 149.00 78.00 Graphitic Breccia PB18 7918600 627200 120 73.00 69.00 73.00 55.00 128.00 69.00 Graphitic Breccia PB19 7893400 643650 157 109.60 109.00 112.00 109.60 108.00 Graphitic Felsic Volcanics PB20 7891700 643200 157 88.75 88.75 Basement > 89m PB21 7918000 619350 115 98.20 98.20 98.00 Sandstone PB22 7907850 631400 130 55.70 51.00 56.00 55.70 51.00 Quartz Diorite PB23 7895150 639350 150 86.00 79.00 86.00 86.00 79.00 Granite PB24 7893500 641800 153 101.40 91.00 98.00 101.40 95.00 Micaceous shale PB25 7892500 643300 157 94.00 94.00 uncertain Weathered Basement PB26 7892400 646400 160 84.00 78.00 84.00 84.00 Porphyritic granite with abundant graphite

Prospect EPM 14406 – Partial Relinquishment Report 23 5.0 Work Complete by Oresome Australia Pty Ltd in 2004 – 2005

Airborne EM Survey

In the 2004 – 2005 year of tenure Oresome completed an airborne EM survey over the eastern part of the prospect area. The survey was flown by Fugro using a specialised CASA 212 aircraft with the EM attached in a loop around the body of the aircraft, all the data gathering equipment is contained within the aircraft. A photograph of the aircraft is included as plate 1.

The survey was designed to cover those areas of the tenement which were identified as being the most prospective to host mineralisation using data from a previous airborne magnetic survey and drill hole data. The survey was completed in September 2005 and a total of 454 line km were flown. A total of 35 E-W lines were flown and 2 tie lines were also flown, the survey was bounded by the following coordinates, 18.80˚S, 142.09˚E and 18.92˚S, 142.29˚E

Prospect EPM 14406 – Partial Relinquishment Report 24 Results of the Survey

The survey identified 10 anomalies. All the anomalies were ranked from 0 to 4; a rating of 0 assigned the anomaly as a spurious conductor and a rating of 4 as a very good EM target. No anomalies rating 0 or 4 were identified at Prospect. Three anomalies occurred with a rating of 3, Six anomalies had a rating 2 and one anomaly had a rating of 1. A summary of the location of the anomalies and relevant notes is presented in table 8.

All data were processed and interpreted by Fugro’ geophysicist at their office in Perth. All the anomalies are in ground still held by Oresome so they are not detailed in this relinquishment report.

Results and Recommendations

After assessing the data Fugro identified a number of targets which they recommend for follow up work. They noted that the western side of the survey area is dominated by overburden and has an estimated conductance of between 10- 50 Siemens, while the eastern side has a conductance of between 1-5 Siemens. All the anomalies picked were on the eastern side of the survey area. The majority of the sub-blocks relinquished were at the northern and southern end of the tenement. The area covered by the survey is included as Figure 4 and the results of the survey over the relinquished sub-blocks are shown in Figure 5.

Oresome has decided to reduce the size of the tenement in order to concentrate its exploration efforts on the EM anomalies identified by the survey, a ground EM survey followed by drilling will is planned to commence at Prospect once the 2005-2006 wet season is finished.

Prospect EPM 14406 – Partial Relinquishment Report 25 Figure 4 EPM 14406 Area of the Original EPM Covered by the AEM Survey

Prospect EPM 14406 – Partial Relinquishment Report 26 Figure 5 EPM 14406 Results of the EPM Survey over the Relinquished sub-blocks

Prospect EPM 14406 – Partial Relinquishment Report 27 6.0 References

Anon, 1972, Progress Report on Authority to Prospect 940M, 952M, 953M and 954M Croydon Area, Qld. Ford, Bacon and Davis Incorporated, report to the Department of Mines and Energy Queensland, (CR 3957).

Archibald, N.J. 1987, Prospect Bore Project Final Report, ATP 2872M, 3647M, 4429M, 4785M & 4786M (February’ 87 – August’ 87) Golden Plateau N.L and strategic Minerals Corporation Pty Ltd, unpublished report to the Department of Mines and Energy Queensland, (CR 16664).

Binns J, 2003: Prospect Prospect, EPM 14406 “A Review of Literature” December 2003. Unpublished report held by the Metallica Minerals Ltd.

Binns J, Smith P: February 2006, Annual Report for EPM 14406 Prospect for the First year of Tenure, 12th December 2004 to the 11th December 2005 unpublished report held by the Metallica Minerals Ltd.

MacKenzie, D.E., Henderson, G.A.M., Warnick, J.V, and Bain, J.H.C 1985 Geology of the Croydon Region, Queensland, 1:250,000 Geological Special Map. Bureau Minerals Resources Canberra.

Morris, L. 1994 Report No. QB94/11s EPM 8815 “Clara North”, EPM 8817 “Clara South” EPM 8836 “Clara Central” Annual and Final report for the Period Ending 21st June 1994, North Exploration, Annual report to the Department of Mines and Energy Queensland, (CR 26170).

Upphill R, and Harris B, 1997, Annual and Final report Clara River EPM 10327 for the period 31/10/95 to 30/10/96. W.M.C, Annual report to the Department of Mines and Energy Queensland, (CR28953) .

Wolfgram P, and Sykes M, 2005: Job 1746: Geotem Survey for metallica Minerals Ltd,Anomaly Picking Notes. Fugro Unpublished report for Metallica Minerals Ltd.

Prospect EPM 14406 – Partial Relinquishment Report 28