REPORT FOR DECEMBER 2007 QUARTER PRINCIPAL POINTS DIRECTORS RECOMMEND SHAREHOLDERS REJECT TAKEOVER OFFER BY ZINIFEX • Allegiance Mining NL received a take-over offer by zinc producer Zinifex Limited. • Allegiance Directors have recommended that shareholders reject the Zinifex offer. AVEBURY NICKEL PROJECT IMPLEMENTATION • Avebury nickel mine development and production are well advanced. 45,200 tonnes of run-of-mine ore has been delivered to the mill stockpile. Ore geometry and grades encountered to date are as expected. • Mill construction is at full pace and commissioning is scheduled to commence by end 1st Quarter 2008. The main buildings are complete and key plant components are installed; pipework and wiring has commenced. • Stage 1 of the project is designed to mill 900,000 tonnes of ore annually producing 8,500 tonnes of nickel (“Ni”) in concentrates. The business plan currently extends to June 2016 but the project is expected to expand production and extend its mine life because resources are continuing to expand each year. MINE AREA RESOURCES • Resources have expanded by 10% during 2007 and were reported in January 2008 at 14 million tonnes grading 1.04% Ni containing 145,600 tonnes of Ni at a 0.7% Ni cut-off grade. Ore Reserves are being revised based on the new, expanded resources and are expected to expand significantly. • Drill hole A217 intersected 4.0m @ 1.8% Ni from a thick zone of 18.0m @ 1.1% at East Avebury, confirming the high prospectivity for mine extensions east of the current mine area. • A new mine exploration target called North Viking has been discovered in the western part of the mine area. This presents an exciting opportunity for major resource extensions. • Orebody widths are typically 10 metres to 40 metres in good ground conditions. REGIONAL EXPLORATION • At Melba Flats, Mining Lease ML 2M/2007 has been granted and drilling has intersected high grades of nickel and copper and precious metals. Exploration is proceeding well. FINANCE and CORPORATE • Mr Shi Peirong, Vice Chairman and CFO of Jinchuan Group Ltd of China appointed as Director. • Cash balance of $24 million as at 31 December 2007. • An A$73 million loan facility has been signed with Allegiance’s banks, Société Générale and ANZ, comprising a US$45 million project finance facility plus cost overrun and working capital facilities. • Project loan drawdown was approved by the banks and as at 31 December project debt stood at US$20 million (A$23 M). A further US$10 million (A$11 M) of project debt was drawn down on 9 January 2008. • In the twelve months to 31st December 2007 the Company lost $2.44 million from the disposal of trading investments, and today has determined that a further $5.44 million loss has been incurred as a result of the
For personal use only use personal For decline in world markets. SALES AGREEMENT US$3.7 billion offtake agreement (before smelter charges) with Jinchuan Nickel Group of China remains a cornerstone agreement that brings major benefits to the Avebury Nickel Project. This quarterly report is for the three months ending 31 December 2007.
December 2007 Quarterly Report Allegiance Mining NL
CORPORATE OVERVIEW
Allegiance Mining NL is an emerging Australian nickel mining company focused on: TasmaNiaNi Export to • Avebury Nickel Project located eight kilometres smelters west of Zeehan on the West Coast, Tasmania, Burnie Aluminium & Ferro- Iron Pelletising manganese Smelters Australia which is in the final stages of construction; Furnaces soon commissioning. Railway Highway Launceston Melba • Regional Nickel Exploration in the west coast Zeehan region of Tasmania. Avebury Nickel Project Hydro Power
• Geothermal Energy Tasmania Holdings Limited Zinc Refinery
(“GXT”), a company that has been incorporated to Hobart hold the Allegiance geothermal interests in Tasmania. 100 kms • On December 17, Zinifex Australia Limited made a takeover offer to purchase all of the ordinary shares Figure 1: Location - Avebury Nickel Project in Allegiance Mining. On 17 January 2008 Allegiance Directors unanimously recommended that shareholders REJECT the Offer.
Business Plan Update - Priorities and Progress: 1. Completed project financing for the Avebury Nickel Project. Progress: A capital raising of A$33.04 million was completed in early July 2007 as part of a A$38.49 million share placement to the company’s nickel customer, Jinchuan Nickel Group of China. A further placement of 6.8 million shares was made to Jinchuan in early October 2007 to extinguish the A$5 million subordinated loan (plus capitalised interest) by Jinchuan that had been made subsequent to the execution of an offtake sales agreement in April 2006. In late September 2007, a capital raising of A$30 million was completed by Merrill Lynch via an institutional placement to Australian and overseas institutions. In September 2007, Allegiance signed loan agreements for an A$73 million Project Finance facility to fund the project with its banks, Société Générale and ANZ. In December 2007, all conditions precedent were met and loan drawdowns have commenced. 2. Developed Avebury Nickel Project in a risk-managed manner. Progress: Construction commenced in 2006 prior to the major capital raisings to expedite commissioning, targeted for the 1st Quarter 2008. All construction tasks other than the ore treatment facility were completed by Allegiance on or ahead of schedule in early 2007 and all long-lead mill components were ordered well in advance, thus reducing risk of major construction delays. Engineering design for the ore treatment facility is 98% complete and site construction is nearing commissioning. 3. Expanded resources to allow production to expand to more than 10,000 tonnes of nickel per year. Progress: Resources have increased by 46% since late 2005 as the company continues to discover new ore zones which can supply ore to the Avebury Mill. The shallow eastwards extensions of the main Avebury lines of lode 1 to 2 kilometres east along strike is a significant positive development, including encouraging discoveries at Saxon-East Avebury, Bison and Bintje. A completely new line-of-lode has been discovered at Pontiac/Foundation Stone prospects located 1 to 3 kilometres north of the Avebury Mine. Exploration in this area is still at an early stage. Recently announced new ore-grade intersections demonstrate the potential for future resource expansions at North Viking in the western part of the Avebury mine area.
Offtake Agreement with Jinchuan Nickel Group For personal use only use personal For Allegiance has an agreement with China’s largest nickel company, Jinchuan Nickel Group Limited (“Jinchuan”) for the sale of nickel concentrates produced at favourable terms linked to the nickel LME price. Production estimates from Avebury over the current mine area resource-life exceed 140,000 tonnes of nickel metal contained in concentrates which, at 31st December 2007 nickel prices, will generate approximately US$3.7 billion (A$4.2 B) in gross revenue before smelter charges.
2 December 2007 Quarterly Report Allegiance Mining NL
New Director from the Jinchuan Nickel Group and New CFO Appointed As announced on 3 October 2007, Mr Shi Peirong, Vice President and Chief Financial Officer of the Jinchuan Group Limited has been appointed as a Director of Allegiance Mining NL. Jinchuan’s Chief Australian Representative, Mr Zhang Yimin is Mr Shi Peirong’s Alternate Director. As announced in mid December 2007, Allegiance appointed Mr Graham Hurwitz, BCom (Hons) CA as its Chief Financial Officer. Mr Hurwitz is a Chartered Accountant and is a Principal of WHK Horwath, a national firm of Chartered Accountants.
Financial Position Cash on hand at 31 December 2007 totalled $24 million. Cash balance as at 25 January 2008 is $24 million (after drawdown of US$10 million (A$11 million) on 9 January 2008). During the September quarter, the company signed an A$73 million loan facility with its banks, Société Générale and ANZ, comprising a US$45 million project finance facility plus cost overrun and working capital facilities. In December 2007, after all conditions precedent had been satisfied, loan drawdowns on the project facility commenced and as at 31 December 2007, the company had a corporate debt totalling US$20 million (A$23 M). In the 12 months to 31 December 2007 the company lost $2.44 million (including unrealised losses of $0.18 million based on market value at 31 December 2007) from investments held for trading. Subsequent Finance On 9 January 2008, a further US$10 million (A$11 M) was drawn down bringing total corporate debt to A$34 million. This debt funding facility from Societé Generale and ANZ banks completes all funding arrangements required to take Allegiance into production early in 2008 and to aggressively progress both regional and near mine exploration. Allegiance has today determined that a loss of $5.44 million (including unrealised losses of $0.58 million based on market value at 25 January 2008) occurred this month from investments held for trading due to the decline in world markets . Aside from the holding in Gullewa Limited, the company held shares with a market value of $0.76 million at 25 January 2008. New Intersections at North Viking On 24 January 2008, Allegiance announced its latest drill-hole intersection below the Viking Resource zone. The intersection vindicates the company’s stated optimism regarding continued growth in the Avebury resource base, which could underpin future major expansion of the Avebury operation. Drill hole A218 (17m @ 1.4% Ni) lies 100 metres beneath the Viking resource zone. It is 200 metres east of drill hole A053 (14m @ 2.5% Ni). There are no other drill holes in between or below these holes so this presents an exciting opportunity for major resource extensions in this area.
Hedging Contracts Nickel prices for Allegiance’s future nickel production remain unhedged and Allegiance’s project financing facility has no mandatory nickel metal price hedging requirements. Allegiance has foreign exchange and interest rate hedging in place sufficient to provide prudent levels of cover
for a proportion of the project loan as required under the project loan facility agreement. For personal use only use personal For
3 December 2007 Quarterly Report Allegiance Mining NL
CHAIRMAN’S COMMENTS The Zinifex Offer I am sure that you will, by now, be aware that the Zinifex Takeover Offer is currently $1.00. I would advise you to read both the Offer Document, dated 17 December, 2007, and the Allegiance Target Statement, dated 17 January, 2008. In the latter your Directors recommend that shareholders REJECT the unsolicited opportunistic Offer as inadequate. Since the discovery of Hole A001 a decade ago, Allegiance has made steady progress in evaluating the potential of the Allegiance Nickel Province while concentrating on developing the Avebury, Viking and associated deposits to production. Process plant completion is scheduled for the March, 2008 quarter, with first concentrate shipments in the June, 2008 quarter. Your Allegiance team believes the potential of the Allegiance Nickel Province lies initially with the Avebury mine. The mine exploits a significant nickel resource containing several deposits, and the nickel mineralisation is open along strike to the east and west, across strike and indeed to depth also. We believe that there is tremendous potential for this resource to be progressively increased over the next few years. Further potential lies in the Allegiance Nickel Province as a whole. At Godkin (dropped by Zinifex in August, 2007), a buried ultramafic was discovered carrying pentlandite (nickel suphide) over a decade ago. At Melba Flats, significant shallow intersections high in nickel and copper, carrying cobalt, platinum and palladium, have been intersected in a number of prospects (Gennets, Nickel Reward and Devereaux) over a 3 kilometre strike. As a result of persistent, but limited, exploration effort by Allegiance over the past decade, Melba has emerged as an exciting opportunity at depth for the discovery of major nickel-copper-gold-platinum group metals and further exploration potential. Other prospects include East Renison and Trial Harbour, which are both highly prospective for nickel. At the latter, nickel was mined in small quantities in the last century. The value of these specific prospects and the Allegiance Nickel Province is much enhanced by your Allegiance geological team’s expertise and ability to locate and define additional deposits within the Province, if they are there to find. Our discovery cost is a low 5c per lb of nickel in the ground, and our expected site cash cost including shipping is A$4.42 per lb payable nickel, which compared to the nickel price at 31 December 2007 of A$13.4 per lb gives a very healthy margin. This cash flow, commencing in the June 2008 quarter, will permit a much enhanced exploration program where I believe our expertise and Province experience will ensure continued exploration success in a most cost effective fashion. December Quarter Achievements Your company achieved some significant milestones in the quarter ending 31 December, 2007: - Avebury nickel mine development and production are well advanced - 45,200 tonnes of run-of- mine ore has been delivered to the mill stockpile. - Mill construction is on schedule - Resources continue to expand - High prospectivity for mine extensions - North Avebury Extended discovered, a new mine exploration target - Mining lease granted at Melba Flats – high grades of nickel intersected - Mr Shi Peirong with Mr Zhang Yimin, as his alternate, join the Board - $24 million cash in hand - $73 million loan facility including Project Debt of US$45 million concluded with first drawdowns of US$20 million ($A23 M) As I complete these notes for this Quarter’s Report, stock markets have fallen significantly around the world. This makes careful consideration of the Offer, and the Directors’ REJECT recommendation, important to you. It is possible, but by no means certain, that Allegiance’s share price will soften in the short term should the Offer close unsuccessfully. You should seek professional advice, bearing in mind the state of stock markets at the time – make sure this advice relates to your situation. Such volatility in the stock markets, whilst alarming, can be expected (as always) to pass. I cannot forecast the nickel price, but the rapid industrialisation of large population countries including China, India, Brazil and Russia will continue. As it
For personal use only use personal For does so, the demand for nickel will increase. Meanwhile we will continue to take Allegiance and Avebury forward for the benefit of all our shareholders for the medium and long term. Mining has a long term horizon. Over the last decade you have trusted your Allegiance team to deliver and, to date, I believe we have!
Tony Howland-Rose MSc, DIC, FGS, FIMMM, FAusIMM, MAICD, FAIG, CEng Chairman 4 December 2007 Quarterly Report Allegiance Mining NL
Allegiance has discovered what we believe to be a new nickel province in Tasmania’s mineral rich West Coast. Avebury, the first deposit, is now developed and the mill is under construction. This deposit is of simple metallurgy and capable of being upgraded to a premium concentrate. Nickel resources at Avebury are being regularly expanded and the regional exploration to date indicates a favourable environment for the location of additional deposits.
Note: Sections of this report relating to the reporting of resources and exploration information were written by Tony Howland-Rose, Lindsay Newnham and Tim Callaghan in accordance with the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“JORC Code”). Messrs Callaghan and Howland-Rose are full-time employees of the Allegiance Group. Mr Newnham is a long-term consultant to Allegiance. All three are corporate members of The Australasian Institute of Mining and Metallurgy (“AusIMM”) and/or the Australian Institute of Geoscientists; have a minimum of fifteen years experience in the field of activity being reported on and are the Competent Persons as defined in the JORC Code. This announcement accurately summarises and fairly reports their estimations and assessments and where required, they have consented in writing to the report in the form and context in which it appears.
Release date: 31 January 2008
Figure 2: Location of the Avebury Nickel Project
and Exploration Licences in Tasmania, Australia For personal use only use personal For
For Further Information Contact:
Tony Howland-Rose, Chairman: +61 2 9397 7777 or +61 (0)418 972 112. Subscribe for immediate updates and view electronic copies of reports on our website www.allegiance-mining.com.au
5 December 2007 Quarterly Report Allegiance Mining NL
AVEBURY NICKEL PROJECT
Avebury Nickel Project Status
Avebury Mill, December 2007
Project development is on schedule for commissioning in 1st Quarter 2008 as follows:
Calendar Year: 2005 2006 2007 2008 Task Quarter: Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Mine Access Decline Establishment Completed Regulatory Approvals Completed Resource-Reserve Infill Drilling Completed Feasibility Study Completed Trial Mining and Milling Tests Completed Expansion of project scale by 50% to 900,000 tpa ore Completed Infrastructure (roads, power, water, office & accommodation) Completed Ventilation & Service Shafts, Pump Station & Mine Power Completed Mine Contract and Mobilisation Completed Mine Development & Ore Production Mill Site, Water Management & Tailings Storage Facility Completed Mill Design & Engineering MillProcurement Completed Mill & Process Plant Construction Mill & Process Plant Commissioning
Nickel Production For personal use only use personal For
6 December 2007 Quarterly Report Allegiance Mining NL
Project Description MINE Infrastructure: The mine delivers broken ore to the roads, power, water, Completed Ore Stockpile surface stockpile. The ore will be offices, accomm- fed to 3 crushers that reduce it to 3-stage Crushing to odation, mine less than 9mm. Under construction contract, engineering 9mm size The large Primary Ball Mill will contract & staff grind the ore to 100 microns (0.1mm) and during this process, a Primary Ball Mill “flash flotation” device will extract Regrind any coarse-grained nickel Cyclone Flash Flotation sulphides into the concentrates. Magnetic Finely ground ore will pass through Separator 3-stages of flotation to float-off Non-magnetic Tailings 3-stage Flotation Flash nickel sulphide concentrates. Flotation Regrind Ball Magnetics Nickel Nickel Concentrates A magnetic separator, regrind mill Mill Concentrates and retreat flotation cells will recover nickel sulphides locked in Nickel Retreat Concentrates Concentrate magnetite. Thickener Flotation Nickel sulphide concentrates get Tailings filtered to 8% moisture, ready for export to China. Tailings Concentrate Filter Thickener . Final Nickel Concentrates EXPORT & SALE Tailings Dam Mine Fill TO CHINA
Completed components are coloured green. Work-in-progress is coloured yellow.
Figure 3: Avebury Nickel Project Components For personal use only use personal For
7
Figure 4: Detailed Process Flow Diagram for the Avebury
Nickel Project For personal use only use personal For
8 December 2007 Quarterly Report Allegiance Mining NL
Safety Underground mining contractor Barminco achieved a noteworthy 1 year lost-time-injury (LTI) free period during December, although subsequently 1 LTI was incurred by Barminco, together with 1 LTI to a Metplant construction contractor. Nevertheless, safety procedures continue to be strictly enforced to ensure that a safe working culture prevails especially as on site manpower numbers increase.
Mine Avebury mine is a large, operating nickel mine. Mine development and ore production commenced in December 2006 with Barminco Limited as mining contractor. Production statistics are as follows: Mine Development Metres
Metres Advanced This Quarter Dec. ’06 to Date Comments metres metres Decline Development 189 639 Excludes 1,150 metres of decline developed prior to Dec 2006 Incline Development 194 542
Level Development 288 1,175 Excludes 373m prior to Dec 2006
Sill Development on ore 563 946 Excludes 50m prior to Dec 2006
Total Jumbo Development 1,234 3,302 Excludes 1,573 prior to Dec 2006
Vertical Development - 543 3 raise bore shafts
Ore Production This Quarter Dec. ’06 to Date Tonnes and Grade Grade Grade Comments Tonnes Tonnes % Ni % Ni
Viking 25,350 0.9% 28,250 0.9% Includes remainder of 2006 trial Central Avebury - - 7,450 0.6% milling of ore from Central Avebury.
North Avebury 3,050 1.2% 9,500 1.4% Approx 3,730 tonnes reclassified as Central ore. Others - - - 0.0%
Total 28,400 0.9% 45,200 0.9%
ROM Ore Stockpile This Quarter Dec. ’06 to Date Tonnes and Grade Grade Grade Comments Tonnes Tonnes % Ni % Ni
Opening Stockpile 16,800 1.0% 3,700 0.6% Includes trial ore from 2006
Ore Delivered from Mine 28,400 0.9% 41,500 1.0% Mined since 1 January 2007
Ore Milled - 0.0% - 0.0%
Closing Stockpile 45,200 0.9% 45,200 0.9% For personal use only use personal For
9 December 2007 Quarterly Report Allegiance Mining NL
The mine work is proceeding well. Two declines are under construction: 1. North Avebury decline to access the North Avebury orebody and eastward extensions; and 2. Viking Decline to access the Viking orebody and westward extensions. The mine has now accessed all three main orebodies: North Avebury, Viking and Central Avebury. Ground conditions are being described as being “good for mining”.
Infrastructure and Services Tasmanian State Grid electrical power is reticulated throughout the mine and the underground pump station is operating well within design – water flow rates are easily managed. All site roads and water management systems are complete. Water dams and wetlands are operational. The Viking ventilation shaft and fan is fully operational and the smaller services shaft is equipped and servicing mine operations as designed. The third 190 metre deep Avebury ventilation shaft was successfully raise-bored during the September Quarter and an exhaust fan is scheduled to be installed in April.
Processing Plant Foundations are effectively complete, steel fabrication is largely completed and erection of the steel structures has proceeded well during the Quarter. Installation of key mill equipment is substantially complete. All long-lead items for both the mine and the processing plant have been secured via fixed price contracts in time to meet the construction completion timetable which currently has a target date of late 1st Quarter 2008. The major primary ball mill has been installed on schedule and within budget and construction of the crushers, thickeners and filtration components is well underway.
Tailings Dam Construction of the tailings dam was completed on schedule during the March quarter, thus completing on schedule all engineering tasks managed by Allegiance’s staff and Project Management Team.
Staff Recruitment Manpower at site currently stands at: 93 construction team, 63 mine contractors, 30 staff; a total of 186. All key senior operations management staff have been recruited, the recruitment of the mining staff has been completed successfully. The Mill workforce and other operational staff are scheduled to commence training in early 2008,
ready for the commissioning phase of the project. For personal use only use personal For
10 December 2007 Quarterly Report Allegiance Mining NL
AVEBURY RESOURCE STATEMENT
Resources Increased 10% and Significant Upgrade to Measured Category As foreshadowed in the last quarterly report, Allegiance has successfully completed its infill drilling program to upgrade and expand Mineral Resources at its Avebury Nickel Project located near Zeehan, West Coast Tasmania. This annual resource statement incorporates results received until December 2007 and the resulting revised Ore Reserves will be announced within a few weeks. Resources Are Increasing Strongly Total contained nickel in resources increased by 14,000 tonnes to 172,000 tonnes of nickel during 2007, which continues the pattern whereby resources of nickel (“Ni”) at Avebury have increased by 46% since late 2005. Resources at the Avebury Nickel Project have been increasing at a solid rate as exploration has proceeded and as the mine is being developed – see Figure 5 and 6 below. This encouraging trend in the company’s nickel resource base has been achieved at a highly creditable exploration cost of 5 cents per pound (A$110 per tonne) of Ni in the ground, and despite the exploration emphasis being on the Avebury mine and near-mine extensions during the development of this, our first nickel mine.
200 8.9% growth
180 19.7% growth 160 11.9% growth 172kt 140 158kt
120 132kt 100 118kt kt Ni 80
60
40
Figure 5: Annual Avebury 20 Global Resource Increase 0.4% Ni cut off [Nickel - 0 thousands of tonnes (Kt Ni)] 2005 2006 2007 2008
200
180 10.7% growth 160 14.9% growth 140 145kt 120 131kt 100 114kt kt Ni 80 Not available 60
40
For personal use only use personal For Figure 6: Annual Avebury Global Resource Increase 20 0.7% Ni cut off [Nickel - 0 thousands of tonnes (Kt Ni)] 2005 2006 2007 2008
11 December 2007 Quarterly Report Allegiance Mining NL
High Exploration Potential During 2007, Allegiance Mining discovered its first ore-grade intercept of 8 metres averaging 1.0% Ni outside the main Avebury horizon at the Foundation Stone prospect, located some 1,500 metres north of the mine. The Company has also recently announced the commencement of a major regional exploration drilling program, which has been long-planned and includes delineation drilling of the known nickel-copper-platinum resources at Melba Flats some 24 kilometres northeast of Avebury. New ore-grade intercepts have been reported. Finally, recent drilling in the North Viking ore zone has demonstrated the extension at depth of Avebury style mineralisation well below the current Viking resource. The three new discoveries at Foundation Stone, Melba Flats and North Viking Extension amply illustrate that only a small proportion of Allegiance’s nickel province has so far been explored and that the potential for a major expansion in the size of the company’s nickel business through exploration success in coming years is very high. Details of New Resource Statement The Avebury nickel sulphide system is known to extend in an east-west direction for more than 2,000 metres and the Company’s first mine at the Avebury Nickel Project, is being developed in the central one-third of that system (see Figures 7 and 8 below). The recently reported intersection at the Foundation Stone is still at the exploration stage and is excluded from resource estimates reported herein. Upgrade of Resources in Avebury Mine During 2007, close-spaced underground infill drilling from the extensions to the mine development openings was completed ahead of schedule. As a result, the strike length of the ore-body that has been infill-drilled within the immediate mine area was increased by 200 metres to 800 metres. Furthermore, within that 800 metre strike-length, drives on ore and other ore accesses have been developed on several levels in all the main ore zones over a 300m strike length, thus exposing large sections of ore and providing bulk samples. The underground mine drilling program proceeded ahead of schedule, allowing additional detailed pre-production drilling to be completed – ore delineation and mine development remains well ahead of production. This infill drilling and extensive development on ore has significantly improved geological confidence, therefore allowing the conversion of over 2 million tonnes of Inferred and Indicated Resources to the most rigorously defined Measured Resource category. Near-Mine Resources Surface drilling used two and, at times, three drill rigs to explore and extend resource zones to the east of the Avebury Nickel Project area and down-dip below the current mine area using longer surface drillholes drilled at broad spacings, sufficient for Inferred Resource estimation. Data Quality All drill holes are diamond core holes and core recoveries are generally good due to good ground conditions. Recent ore mining at the Avebury Nickel Project has been consistent with resource model widths and grades. Ore Widths The nickel ore-bodies are typically 10 to 40 metres in width, much wider than the typical Western Australian nickel deposits and suited to highly mechanised mining methods. Cut-Off Grades Metallurgical testwork consistently demonstrates that low grade nickel mineralisation is readily processed to produce high quality concentrates at high recovery rates. Mineral Resources are reported at a minimum 0.4% Ni cut-off grade which is approximately the natural break between nickel mineralisation and background grades. Resources for 0.7%Ni cut-off grade are also reported herein to allow comparisons with For personal use only use personal For Ore Reserves.
12 December 2007 Quarterly Report Allegiance Mining NL
Avebury Nickel Project Area Resources at Various Cut-Off Grades 0.4% Ni Cut-off Grade: Mineral Resources (inclusive of Ore Reserves) - this resource estimate
Contained Nickel Tonnes Resource Grade Tonnes Previously Category % Ni This report % Increase in reported 31/12/07 Ni Tonnes 31/03/07
Inferred 9,760,000 0.88
Indicated 6,050,000 1.01
Measured 2,370,000 1.03
Total 18,180,000 0.95 172,000t Ni 158,000t Ni 9 %
0.7% Ni Cut-Off Grade: Mineral Resources (inclusive of Ore Reserves)
Contained Nickel Tonnes Resource Grade Tonnes Previously Category % Ni This report % Increase in reported 31/12/07 Ni Tonnes 31/03/07
Inferred 6,880,000 0.99
Indicated 4,900,000 1.09
Measured 2,220,000 1.06
Total 14,000,000 1.04 145,000t Ni 131,000t Ni 11 %
Note: Ore Reserves will be based on the 0.7% Ni cut-off grade mineral resources, commensurate with the efficient, low-cost nature of the highly mechanised Avebury nickel mine. The solid increase in the resources at the 0.7% cut-off grade is considered most encouraging as the Avebury Nickel Project moves towards
commencing production in the near future. For personal use only use personal For
13 December 2007 Quarterly Report Allegiance Mining NL
Avebury Resource Plan
Mineral Resources 0.4% Ni cut off. Inferred 9.76Mt @ 0.88% Ni Indicated 6.05Mt @ 1.01% Ni Measured 2.37Mt @ 1.03% Ni Total 18.18Mt @ 0.95% Ni North Avebury 5357500N
Central Avebury East Avebury
Viking Bintje
Saxon Bison
5357000N north Measured and Indicated Resource Scale 250m 355000E 354000E 356000E
Figure 7: Plan View of Avebury Resources, January 2008 Resource Statement
East West AVEBURY LONG PROJECTION
East Avebury Nth and Sth Viking Nth Avebury Bintje Bison And Saxon
2000 RL
Avebury Resources 0.4% Ni Cutoff 1500 RL Measured and Indicated resource Inferred 9.76Mt @ 0.88 % Ni Indicated 6.05Mt @ 1.01 % Ni Measured 2.37Mt @ 1.03% Ni Total 18.18Mt @ 0.95% Ni
Scale 250m 356000 mE 354000 mE 355000 mE
For personal use only use personal For
Figure 8: Avebury Resource Long Section Projection looking north, January 2008 Resource Statement
14 December 2007 Quarterly Report Allegiance Mining NL
Appendix 1 for January 2008 Resource Statement Detail Avebury Resource Figures, 0.4% Ni Cut Off Inferred Resources MTonnes Ni % As ppm Co ppm Nth Avebury 2.31 0.78 75 185 Nth Viking 1.52 1.17 875 236 Sth Viking 1.12 1.09 644 192 Other 0.38 0.72 151 119 East Avebury 4.43 0.78 321 252 Total Inferred 9.76 0.88 379 223
Indicated Resources MTonnes Ni % As ppm Co ppm Nth Avebury 2.13 1.09 183 281 Nth Viking 1.14 0.93 363 242 Sth Viking 1.74 0.99 665 270 Central Avebury 0.66 0.97 110 204 Other 0.38 0.87 117 162 Total Indicated 6.05 1.01 338 250
Measured Resources MTonnes Ni % As ppm Co ppm Nth Avebury 0.60 1.11 161 241 Nth Viking 1.63 1.01 311 221 Sth Viking 0.12 0.86 239 172 Central Avebury 0.02 0.90 61 189 Total Measured 2.37 1.03 345 231
Total Resources 18.18 0.95 362 233 containing 172,000t Ni
Explanatory Notes for Resource Statement: Competent Person and JORC Code The resource report was prepared in accordance with the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“JORC Code”) by Mr Tim Callaghan a full-time employee of Allegiance Metals Pty Ltd who is a Member of The Australasian Institute of Mining and Metallurgy (“AusIMM”); has a minimum of fifteen years experience as a geologist, five of which are in the estimation, assessment and evaluation of Mineral Resources of this style and is the Competent Person as defined in the JORC Code. This announcement accurately summarises and fairly reports his estimations and he has consented in writing to the resource report in the form and context in which it appears. Estimation Procedures All Resources quoted in this report were estimated from 3 dimensional block models created with Surpac® Software. Mineral Resources are modelled on geological boundaries and/or a minimum 0.4% Ni cut off boundary which approximates the natural break between nickel mineralisation and background grades. Ni, As and Co grades were interpolated using an ordinary kriging algorithm for all resources with the exception of the East Avebury Resource. Geostatistical parameters for resource estimation were derived in early 2006 by Quantitative Geoscience consultants of Perth. The East Avebury Resource was estimated with an inverse distance squared algorithm. Nickel mineralisation at Avebury is hosted in two rock types, each with distinct bulk density properties. Bulk
Density values were interpolated using an indicator technique and inverse distance squared algorithm. For personal use only use personal For Checks of the resource estimates were as follows: 1. Volume checks on wire frames. 2. Comparisons between the original drill hole data and the resource block model. 3. Traditional manual polygonal estimation of tonnage. 4. At the time of reporting, a technical review of the resource estimate by independent consultants was in progress.
15 December 2007 Quarterly Report Allegiance Mining NL
AVEBURY DISTRICT EXPLORATION
Drilling continued in the Avebury district during the Quarter with three surface drill rigs and two underground rigs for a total of 7,593 metres drilled, which is well above expectation due to good drilling productivity. Exploration drillhole results are listed in Tables 1 - 4.
Mine Area Drilling Underground Drilling continued with two rigs reducing to one rig by mid-November, mainly doing resource definition infill holes from the Central Avebury footwall drive to the east of the March 2007 ore reserve boundary. Some preproduction drilling was also completed for the mine. Surface Drilling included near mine exploration and resource exploration drilling within the Nth Avebury Extended, Viking Extended, Bison, Bintje, Pontiac and East Avebury Areas (see Figure 9). North Viking Extensions - New Target Early in the quarter, drill hole A210 unexpectedly intersected a deep extension to the North Viking ore zone. Whilst the intercept in A210 was only 3 metres averaging 0.4% Ni (“3m @ 0.4%Ni”), it justified follow-up drilling. Diamond hole A218 intersected 3.0m @ 4.7% Ni within a thick zone of mineralisation assaying 17.0m @ 1.4% Ni, 100m below the base of the current Viking Resource (Figures 9, 10 & 11). Due to the success of hole A218, a wedged (or sidetracked) hole A218B was drilled off the parent hole and intersected a similar zone assaying 2.3m @ 2.1% Ni within a thick zone assaying 19.3m @ 0.8%. Hole A218B also intersected additional mineralised zones in Central Viking (8m @ 1.2% Ni) and South Viking (assay results pending). Both holes A218 and A218B clearly demonstrate the depth extension of the thick, continuous Avebury style mineralisation well below the base of the current Viking Resource. Hole A218 is located 200m east along strike from hole A053 which intersected 14.0m @ 2.5% Ni. The Viking Resource zone remains untested below these two heavily mineralised drill holes. A218 and A053 are very important intersections, not only for their high grades but also for the significant width of mineralisation. The high grades, wide mineralised zones and large areas surrounding these intersections combine to present an exciting opportunity for major resource extensions in this area. The intersections, while highly significant, are not by themselves sufficient to enable the Company to report an increase in resources. However, they are encouraging in the context of the possibility of a major resource extension at Viking which would compliment other similar resource extension opportunities at North Avebury, East Avebury and Pontiac (see below), all of which will be rigorously pursued in the near future. Anticipated success in these areas will provide a sound foundation for the expansion options of the Avebury operation which are currently under investigation. Further holes will be targeted at North Viking when rigs become available after the summer exploration drilling program. This presents an exciting opportunity for resource extensions in this area. East Avebury / Saxon - Strong Ore Zone Extensions Drill hole A217 intersected a thick zone of mineralisation to the west of the East Avebury Deposit (ie. between East Avebury and the Avebury Mine – see Figures 9 and 12). The hole returned 4.0m @ 1.8% Ni from a thick zone of 18.0m @ 1.1% Ni. This significant intercept demonstrates the prospectivity of this area. This intercept has been included in the January 2008 Resource estimation reported above. Further drilling is planned along strike to the west. Bison and Bintje Results from two holes completed in the Bison and Bintje area immediately south-east of the Avebury Deposit were returned during the quarter (Figures 9 and 12). Drill hole A208 returned 6.0m @ 1.1% Ni from a larger intercept of 13.0m @ 0.8% Ni in the Bison Deposit. The
hole continued on through a second mineralised zone returning a further intercept of 10.0m @ 0.6% Ni. For personal use only use personal For Drill hole A211 intersected two mineralised lenses in the Bintje deposit returning a thin zone of 5.4m @ 0.7% Ni before intersecting a thicker zone of 18.0m @ 0.8% Ni. Drill hole A214A intersected the Bintje deposit returning a low grade intercept of 10.0m @ 0.6% Ni. These intercepts are included in the January 2008 Resource Estimation reported above.
16 December 2007 Quarterly Report Allegiance Mining NL
Pontiac/Foundation north
P014 250m P012 5358500N P013 P008
Nth Avebury 5kms to Trial Harbour East Avebury prospect A218 A218A A220 A219 5357500N Bintje
Nth Viking
A214A A217
Sth Viking Saxon Bison A208 A211 354000E 355000E 356000E
Figure 9: Avebury Mine Area - deposits and prospects with recent mine exploration drillhole locations
North Viking Long Projection West East
Viking Decline
2000 mRL
Nth Viking Resource
Top of Ultramafic A218B 2.3m @ 2.1%Ni Legend from 100m 19.3m @ 0.8% Ni Recent DDH 100m A218B 8.0m @ 1.2%Ni Proposed DDH A218 A053 3m @ 4.7% Ni AAlllleeggiiaannccee MMiinniinngg NN..LL.. 14m @ 2.5% Ni
1500 mRL from COMPILED : T. Callagha For personal use only use personal For Z EEHA N NICKEL PROJECT DATE : 20/1/2008 17m @ 1.4% Ni DRAWN : Figure 2. REVISIONS : Section NORTH VIKING 354150E LONG PROJECTION FILE : Nth Viking Long P 354500mE 354000 mE Figure No.
Figure 10: North Viking Long Projection and drill intercepts
17 December 2007 Quarterly Report Allegiance Mining NL
Section 354150E
350m Below Surface Long Projection ↓ Looks North ←
A052
A045 A218B 1750 mRL 2.3m @ 2.1% Ni from 19.3m @ 0.8% Ni
A218B A141A 8.0m @ 1.2% Ni A218 3m @ 4.7% Ni from 17m @ 1.4% Ni A218B assays pending A218B Avebury Resource Area
Additional Mineralisation A218
100m
Alllleeggiiaannccee Miinniinngg N..LL.. COMPILED : T. Callaghan 1500 mRL ZEEHAN NICKEL PROJECT D ATE : 21/1/2008 DRAWN : T Callaghan
R EVISION S : Figur e 1 Section 354150
FILE : 57000N
57250 N 57500 N Figure No.
Figure 11: Cross Section through North Viking
Pontiac / Foundation Stone Three short drill holes were drilled to locate the eastern extension of the Foundation Stone Prospect and intersected a shear structure containing a thin zone of ultramafic rock before ending in a large gabbro rock (less mafic) with no significant nickel mineralisation. Further drilling testing the Foundation Stone mineralisation identified previously in hole P008 (8.0m @ 1.1% Ni) is planned for mid 2008 when the surface exploration drill rigs become available (see Figure 9). This exploration project is still at an early stage but has significant prospectivity. Trial Harbour - New Target This target is located some 5 kilometres west of Avebury mine and contains an historical nickel-copper diggings called “Nickel Reward” at surface. Exploration of this large prospect area is at a very preliminary stage because the focus to date has been on the Avebury mine area. Early exploration work is designed to define the geometry of the host rock that can contain nickel sulphide mineralisation called the Trial Harbour ultramafic. The first of three drill holes testing the large magnetic anomaly associated with the Trial Harbour ultramafic were completed during the Quarter. The hole testing the southeast edge of the anomaly intersected the ultramafic well below the surface (>300m), almost at the capacity of the drill rig. The hole ended in ultramafic but no sulphide mineralisation was present.
For personal use only use personal For Two more holes testing the centre of the anomaly will be completed in the first quarter of 2008.
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East West AVEBURY LONG PROJECTION
East Avebury Nth and Sth Viking Nth Avebury Bintje Bison And Saxon
A217 Measured and Indicated resource 15m @ 1.1% Ni A219 2000 RL nsa
A211 18m @ 0.8% Ni
A220 assays pending
A218B 2.3m @ 2.1% Ni A214A from 10.0m @ 0.6% Ni 19.3m @ 0.8% Ni
Avebury Resources 0.4% Ni Cutoff 1500 RL A218B A208 Inferred 9.76Mt @ 0.88 % Ni A218 8.0m @ 1.2% Ni 13m @ 0.8% Ni Indicated 6.05Mt @ 1.01 % Ni 3m @ 4.7% Ni from Measured 2.37Mt @ 1.03% Ni 17m @ 1.4% Ni Total 18.18Mt @ 0.95% Ni
Scale 250m 356000 mE 354000 mE 355000 mE
For personal use only use personal For Figure 12: Avebury Long Projection Section looking northwards with recent mine exploration drill hole locations
19 December 2007 Quarterly Report Allegiance Mining NL
Western Tenements – Allegiance Nickel Province
Table 1: North Viking Resource Extension Drilling Results
Intersection Est. Drill Collar Intersection Width True % Ni % S % As % Co Hole Details (m) Width (m)
A210 354,444.3 E Nth Avebury 5,357,793.8 N Did not intercept 2184.8 RL host ultramafic Brg 176 Dip -60o Nth Viking Length 707m 3.0 3.0 0.4 0.9 <0.01 0.01
A218 354,196.7 E Nth Viking 5,357,612.7 N 581.0 – 584.0 3.0 3 4.7 5.9 0.20 0.10 2177.5 RL From Brg 180 581.0 – 598.0 17.0 15 1.4 1.7 0.05 0.03 Dip -60o Length 727m
A218B 354,196.7 E Nth Viking 5,357,612.7 N 559.7 – 562.0 2.3 2 2.1 2.3 <0.01 0.05 2177.5 RL from Brg 180 559.7 – 579.0 19.3 16 0.8 1.0 <0.01 0.02 Dip -60o Length 738.8m Central Viking 626.0 – 634.0 8.0 7 1.2 1.0 <0.01 0.02
Sth Viking pending
For personal use only use personal For
20 December 2007 Quarterly Report Allegiance Mining NL
Table 2: Bintje / Bison Exploration Drilling
Intersection Est. Drill Collar Intersection Width True % Ni % S % As % Co Hole Details (m) Width (m)
A208 355,113.5 E Bison 5,357,030.6 N 376.5 – 389.5 13.0 11 0.8 1.3 0.15 0.05 2124.2RL Inc. 379.5 – 385.5 6.0 4 1.1 1.9 0.17 0.05 Brg 0 Bison Dip -65.3o 466.0 – 476.0 10.0 7 0.6 0.3 0.01 0.01 Length 593m
A211 355,113.3 E Bintje 5,357,029.3 N 421.6 – 427.0 5.4 4 0.7 0.5 <0.01 0.01 2124.2RL and Brg 358.4 571.0 – 589.0 18.0 14 0.8 0.6 <0.01 0.02 Dip -45.0o Length 601.6m
A214A 355,170.7 E Bintje 5,357,208.1 N 494.0 – 504.0 10.0 7.0 0.6 0.6 0.01 0.02 2165.4 RL Brg 1.5 Dip -65.5o Length 623.4m
Table 3: East Avebury Exploration Drilling
Intersection Est. Drill Collar Intersection Width True % Ni % S % As % Co Hole Details (m) Width (m)
A217 355,483.2 E East Avebury 5,357,288.8 N 125.3 – 140.4 15.1 11 1.1 1.2 0.12 0.03 2172.4 RL Inc. 135.7 – 140.4 4.7 3 1.8 2.5 0.2 0.06 Brg 359.2 East Avebury Dip -44.9o 557.5 – 562.5 5.0 3.0 0.7 0.3 <0.01 0.04 Length 618m
A219 356,078.9 E East Avebury 5,357,492.3 N No significant 2193.6 RL results Brg 179.9 Dip -45.3o Length 490.0m
A220 355,580.3 E East Avebury 5,357,567.1 N Assays pending 2181.9 RL Brg 183.1 Dip -50.2o Length 572.2m
For personal use only use personal For
21 December 2007 Quarterly Report Allegiance Mining NL
Table 4: Pontiac / Foundation Exploration Drilling
Intersection Est. Drill Collar Intersection Width True % Ni % S % As % Co Hole Details (m) Width (m)
P012 354,834.7E Pontiac 5,358,583.8 N No significant 2190.0 RL assays Brg 347 Dip -55o Length 269.5m
P013 354,834.7E Pontiac 5,358,583.8 N No significant 2190.0 RL assays Brg 347 Dip -68.6o Length 269.5m
P014 354,950E Pontiac 5,358,610 N No significant 2190.0 RL assays Brg 0 Dip -50.0o Length 309.7m
Table 5: Trial Harbour Exploration Drilling
Intersection Est. Drill Collar Intersection Width True % Ni % S % As % Co Hole Details (m) Width (m)
A221 350,836.3 E Trial Harbour initial 5,355,895.6 N geological drilling. 2127.5 RL No significant Brg 240.2 assays Dip -50.8 Length 485.0m
For personal use only use personal For
22 December 2007 Quarterly Report Allegiance Mining NL
REGIONAL EXPLORATION Following the successful commissioning of the Avebury Nickel Project, Allegiance has turned its attention to the next part of its strategy, the discovery of new nickel deposits. The initial exploration strategy was to define the Avebury Nickel Project and move quickly towards a cash generating operational mine to fund the exploration of the Allegiance Nickel Province which extends for some 30km of highly prospective terrain as shown in Figure 2 on page 5. It consists of the western tenements close to the Avebury deposit with potential for a similar size deposit in the Trial Harbour area and the eastern tenements close to the long-life Renison and Rosebery base metal mines. The stage is now set to build on the early exploration successes which have provided a strong platform for significant future growth. With Avebury now rapidly approaching production, major drilling programs recently initiated at Trial Harbour, Melba, East Renison and Godkin are designed to accelerate the realisation of this larger potential, with very encouraging early drill results from Melba. Melba Flats Project EL 43/1992, ML 2M/2007 Nickel and copper sulphide deposits at Melba formed within a series of gabbro dykes, genetically associated with a large adjacent mass of altered ultramafic rocks. Mineralisation occurs as deposits of disseminated sulphides and sporadic lenses of very high grade massive sulphides, enriched in gold and platinum group metals. It has been traced intermittently over a strike length of 3km. Within this 3km zone, massive sulphide lenses, which typically assay 8–12% Ni and 4–6% Cu, outcrop in seven locations. Intermittent exploration by others during the period 1950–1995 was focused on searching for shallow extensions of these high grade massive sulphide lenses, and there was no drilling deeper than 50m below surface. In the late 1990s Allegiance commenced a steady but limited drilling program at Melba aimed at testing the broader potential of the area. This initial drilling was concentrated around the Nickel Reward and North Cuni- Genets prospects and achieved the following: – Identified modest shallow resources at both prospects: − Nickel Reward: 30,000 tonnes 3% Ni − North Cuni-Genets: 95,000 tonnes 0.8% Ni, 1.0% Cu – Confirmed the elevated levels of gold, platinum and palladium in the massive sulphide zones, which typically average 1–2 g/t Au and 2–3 g/t Pt and Pd – Demonstrated that the sulphide mineralisation extended at Nickel Reward to at least 100 vertical metres, thereby dispelling the long-held concept that mineralisation at Melba stopped around 50m depth Encouraged by these early drilling results, Allegiance expanded its drilling program at Melba through 2006– 2007 and the results continue to be very positive. Highlights of this more recent work are: – Extensions of mineralisation at Nickel Reward to vertical depths of at least 200m, in two parallel gabbro dykes, including a massive sulphide zone in DDH MF 81A, which assayed 0.7m (drill width) 10.8% Ni, 3.81% Cu – Intersection in DDH MF 83 of 4.7m (drill width) 1.3% Ni, 0.94% Cu, 120 vertical metres beneath the former Devereaux Mine workings, 800m west of Nickel Reward; this is a new and exciting discovery in an area in which the only previous testing was three shallow (<20m) drill holes in the 1950s – Confirmation that the North Cuni-Genets host gabbro dykes are not limited to 2–3 narrow dykes but are present as multiple dykes up to 100m thick, extending undiminished to much greater depths (>300 vertical metres) than previously thought As a result of this persistent, but limited, exploration effort by Allegiance over the past decade, Melba has emerged as an exciting opportunity for the discovery of major nickel-copper-gold-platinum group metals and For personal use only use personal For further exploration potential.
23 December 2007 Quarterly Report Allegiance Mining NL
This view is supported by the following: – The host gabbro dykes are far more extensive than previously thought – Mineralisation exists in several dykes, rather than one – Mineralisation is not terminated at shallow depths (<50m) but continues undiminished at least to 250 vertical metres (limit of current drilling) – The width and abundance of host gabbro dykes increases with depth – Alteration of these dykes at depth is intense, suggesting proximity to either the parent ultramafic body or the underlying interpreted granite ridge Allegiance believes that Melba represents a strong opportunity for future growth of the Company and has put in place a two-pronged strategy to assess and realise this opportunity: – Develop the identified shallow resources at Nickel Reward and North Cuni-Genets, by way of modest open-cuts, as a supplementary feed into the Avebury Mill – Accelerate the drill evaluation of the larger, deeper, long-term potential of the area Work to give effect to this strategy is already well advanced: – Mining Lease 2M/2007 has been granted to facilitate development of the shallow resources – Permitting procedures for shallow open-cuts and underground developments have commenced with respect to operations at North Cuni-Genets and Nickel Reward – Planning of deeper drilling at Nickel Reward is complete and drilling is scheduled to commence mid- January 2008 – Planning of more extensive drilling at Devereaux is complete and scheduled to commence late February 2008 – Planning of deeper drilling at North Cuni-Genets is in progress with drilling due to commence March 2008 Godkin Project EL 50/2007 One of the crucial factors in the Avebury discovery story was the early recognition that Avebury was hosted by an altered ultramafic that did not outcrop. The top of the deposit was 100–150m below surface. This precluded or reduced the chances of discovery by previous explorers. It was, therefore, logical to expand the search in the 30km long high prospectivity belt identified by Allegiance for similar concealed ultramafic bodies. A high resolution aeromagnetic survey completed by Allegiance located one such opportunity at Godkin, to the east of Melba. The survey defined a large 3,000m long magnetic anomaly within an area mapped as nonmagnetic sediments. Drilling by previous explorers in the early 1980s was too shallow and two drill holes by RGC in the late 1980s intersected a large body of ultramafics containing fine-grained nickel sulphide but the core was not assayed for nickel. Following completion of the aeromagnetic survey, Allegiance was very keen to acquire the area. However, it was held under licence by Zinifex. When it relinquished its licence in 2007, Allegiance successfully tendered for the area and immediately commenced planning a substantial helicopter supported drilling program. This program commenced in early January 2008 and is due for completion in March 2008. The Godkin area is regarded as highly prospective for Avebury style nickel sulphide deposits for the following reasons: – Aeromagnetics has identified a major 3km long anomaly
For personal use only use personal For – Drilling has identified the source of this anomaly as a large altered ultramafic – Mineralogical studies of this drill core have identified significant nickel sulphides and pyrrhotite – Geochemistry and geophysics suggest the source of the alteration is an underlying granitic intrusion.
24 December 2007 Quarterly Report Allegiance Mining NL
East Renison Project EL 5/2002 Allegiance regards the East Renison area as highly prospective for a range of targets, including: – Nickel sulphide deposits in altered ultramafics – Silver-lead-zinc deposits in altered gabbros – Copper-tungsten deposits in altered sediments and altered gabbros – Tin deposits in vein and fault structures Drilling by others in the 1970s and 1980s identified resources of tin and silverlead- zinc in the altered western gabbro formation, and intersected major copper-tungsten skarn zones in altered sediments in the eastern section of the licence area. Allegiance regards the East Renison area as not only highly prospective for a range of commodities and target styles but also very underexplored. Drilling programs are currently in place to further test the Colebrook Hill skarn zone at depth for copper and tungsten mineralisation, and also the Salmon zone for silver-lead-zinc, tungsten and nickel sulphide deposits. This program commenced in early January 2008 and will continue for the remainder of the year.
Nymagee, NSW (Allegiance Mining NL 10%, Ausmindex NL 10% and Triako Resources Limited 80%)
No new developments reported by the Joint Venture operator, Triako (now part of CBH Resources). For personal use only use personal For
25 December 2007 Quarterly Report Allegiance Mining NL
GEOTHERMAL ENERGY TASMANIA Three Special Exploration Licences were granted during the December Quarter. Geothermal Energy Tasmania Holdings Limited (GXT), a wholly-owned subsidiary of Allegiance Mining NL (Allegiance) now holds 3 Category 6 (Geothermal) Minerals Licenses in western Tasmania. The portfolio consists of: – SEL 19/2007 (granted 12 November 2007): West Coast Project, covering 2,792 sq kilometres. Licence conditions Burnie Devonport include a minimum expenditure Australia of $150,000 over two years. Launceston – SEL 36/2007 (granted 12
November 2007): Northern Hobart Project, covering 3,495 sq Queenstown kilometres. Licence conditions include a minimum expenditure of $350,000 over two years. – SEL 42/2007 (granted 24 October 2007): Pieman Area, Hobart covering 2,205 sq kilometres. 90km Licence conditions include a minimum expenditure of $350,000 over two years. Figure 13: GXT portfolio, Western Tasmania
A total of 8,492 sq kilometres is under grant (Figure 13). Deep Hot Rocks Work to investigate the potential of deep hot rocks in western Tasmania to generate geothermal energy has commenced. Generation of renewable zero emission power from deep hot rocks is rapidly emerging around the world as a potential major source of base load electrical energy, with operations in several countries approaching commercialisation. The energy produced is environmentally friendly, renewable, sustainable and emission-free. Tasmanian Advantage Work to date, although preliminary, indicates that the granites underlying our areas have high energy producing mineral content sufficient to act as the heat generator at depth. Also in significant sections the overlying rocks are considered to be satisfactory insulators. Work continues to select the first drilling targets.
For personal use only use personal For
26 December 2007 Quarterly Report Allegiance Mining NL
CORPORATE INFORMATION
Directors Terminology Anthony Howland-Rose Chairman In this report the words Allegiance Mining, “the David Deitz Director / Co. Secretary Company” or the “the Group” are used to refer to Shi Peirong Director Allegiance Mining NL and/or its related parties. Barry Sullivan Director Eddie Lee Director Allegiance Mining’s financial year ends on 31 Zhang Yimin Alternate Director (Shi Peirong) December. All currency is expressed in Australian Elan Slater Company Secretary dollars, weights are metric tonnes and distances are metric metres or kilometres, sometimes Senior Management abbreviated to “m” and “km” respectively. Paul Richardson General Manager Operations Disclaimer Graham Hurwitz Chief Financial Officer Some of the statements contained in this report Issued Capital are not historical facts but may be forward- looking statements such as forecasts, estimates At the end of the Quarter, Allegiance Mining NL had and statements describing the Company’s future on issue 774.93 million ordinary shares and 32.17 plans, objectives or goals. Actual results could million unlisted options at various exercise prices differ materially from those expected. This report ranging from 17 to 98.57 cents per share. should not be relied upon as the sole basis for Stock Exchange Listings any investment in Allegiance Mining. Independent financial advice should be sought Allegiance Mining NL’s shares trade on the before making any investment in Allegiance Australian Stock Exchange (ASX) with the stock Mining NL. code AGM. Further Information on Allegiance Mining Visit www.allegiance-mining.com.au or contact: Mail: Level 11, Quantum House 49-51 York Street, Sydney NSW 2000 Australia Tel: +61 2 9397 7777 Fax: +61 2 9397 7788 Email: [email protected] Register for immediate email updates: www.allegiance-mining.com.au Shareholder Register Enquiries Computershare Investor Services Pty Limited manages the share register for Allegiance Mining. Queries regarding number of shares held, change of address and other matters regarding your shareholding should be directed to Computershare. You can access required forms and information regarding your shareholding on their website at Shareholder Enquiries: www.computershare.com, or contact If you have any queries regarding Zinifex’s Computershare at: Offer, please contact the Allegiance Mail: Level 3, 60 Carrington Street Shareholder Information Line on 1300 135 871 For personal use only use personal For Sydney NSW 2000 (from within Australia) or +61 3 9415 4395 (from outside Australia) from 9:00am to 5:00pm Tel: 1300 850 505 (within Australia) ESDT Monday to Friday. +61 3 9415 5000 (outside Australia) Fax: +61 3 9473 2500
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