Nickel Exploration

The focus of the Company's nickel sulphide exploration is the Bullfinch North Project covering the northern 60km of the Southern Cross greenstone belt. The Company believes this area holds some of the best under-explored nickel ground in WA. This same greenstone belt hosts two of the highest grade nickel deposits in the world - the Flying Fox deposit, with an estimated 2Mt resource at an average grade of 4.7% nickel, and the Spotted Quoll deposit with a resource estimated at 2Mt at an average grade 6.2% nickel, owned by Western Areas NL. These deposits lie approximately 190km to the south of the Company's Bullfinch North Project.

In addition, the high grade nickel sulphide discovery to the north of the Company's Trough Well prospect at Mt Alexander further attests to the potential for widespread nickel sulphide in the CYGNP.

Western Areas may elect to clawback up to 55% equity in any nickel sulphide discovery on certain parts of Bullfinch North (up to September 2010), by taking over exploration and free carrying the Company to decision to mine.

Bullfinch North Nickel Project

The Bullfinch North project is an under-tested nickel area, in particular the northern part of the package where extensive thin transported cover makes geochemical sampling of limited use and where previous drilling has been very wide spaced, generally 500-1000m by 100m.

Re-evaluation of these tenements is thus a priority and data is currently being collected and compiled into the Company's exploration database. A preliminary re-assessment has been initiated as data is updated and several high priority nickel sulphide targets have been identified.

Three of these targets were selected for ground moving loop electromagnetic (MLEM) surveying including Lady Agnes, Colreavy and Sunset. Significant conductors were identified in favourable geological positions at Lady Agnes and Colreavy.

Trough Well Extended

Drill testing of Trough Well Extended prospect continued, following on from mineralisation identified there in early 2008. Assay results from the Company confirm a significant nickel sulphide mineralisation system, with multiple nickel sulphide zones. Significant nickel sulphide mineralisation was confirmed at Zone 2, with intercepts of 20m @ 0.6% nickel including 4m @ 1.4% nickel and 16m @ 0.5% nickel including 3m @ 0.9% nickel confirming a thick channel with multiple nickel sulphide shoots. Zone 3 has also been proved to contain significant nickel sulphides with a best intercept of 2m @ 1.2% nickel. Downhole MLEM suggests off-hole conductors are present in zones 2 and 3.

Results are encouraging and suggest potential for massive nickel sulphides is good in this area. For comparison, shallow nickel sulphide intercepts in the Flying Fox district were of comparable tenor, prior to Western Areas identifying targets at greater depths beneath barren granite dykes.

Lady Agnes

Several strong MLEM conductors with responses interpreted by the Company's consultant to be typical of massive sulphides were identified at Lady Agnes, possibly merging into a single, plus 1000m anomaly open to the north. This anomaly is coincident with the interpreted lower contact of a major ultramafic flow unit which is largely obscured by laterite. Surface soil sampling and very limited previous drilling in the area (none within the anomaly) returned elevated nickel (to 0.9%) and copper (to 0.06%). The top of the conductor is interpreted to be between 140m and 170m below the surface.

Two other weaker conductors have also been identified here. The first is located approximately 300m east of, and parallel to, the main anomaly. This is interpreted on two lines and may have a strike of up to 300m.

The second conductor is located approximately 1,200m east of the main anomaly in a similar stratigraphic position on the opposite limb of a regional fold structure. It is approximately 300m north of gossan sampled during the 1970s which returned assays of up to 0.46% nickel and 0.05% copper. A fixed loop electromagnetic survey (FLEM) was conducted as follow-up but this failed to return any significant conductors. While this is disappointing, the source of the elevated nickel and copper and the weak MLEM conductor remain to be explained.

North Ennuin Dome

Ongoing data compilation and interpretation has highlighted several significant nickel and copper anomalies in previous very broad spaced vertical RAB drilling consisting of 400m to 1000m spaced drill traverses and 100m spaced drill-holes along these traverses.

In particular, the following intervals were identified:

ENR286

16m @ 0.51% Ni, 0.01% Cu from 8m (NED1 prospect).

ENR362

24m @ 0.50% Ni, 0.02% Cu from 16m (NED2 prospect).

ENR214

16m @ 0.32% Ni, 0.01% Cu from 16m (NED2 prospect).

ENR096

2m @ 0.70% Ni, 0.01% Cu from 22m (NED4 prospect).

The copper assays (up to 275ppm) supporting good nickel assays are highly encouraging and follow-up of these targets is a high priority.

Marda Nickel Project

Marda is also considered prospective for nickel sulphides, with large volumes of ultramafic rocks known to be present throughout the area. Historical exploration records indicate that prospective targets have still to be adequately tested.

RAB drilling has identified two significant gold anomalies plus the potential for nickel sulphide mineralisation at Red Boomerang. These results provided a breakthrough in opening up the whole of the Marda District for nickel sulphide potential, as well as pointing to a direct nickel sulphide target at Red Boomerang.

The Red Boomerang RAB drilling intersected considerably more ultramafics (suitable host rocks for nickel sulphides) than anticipated, much of this with elevated nickel and copper values. Four drill holes returned over 0.3% nickel and 0.01% copper. The holes are located toward the interpreted base of a 200-400m thick ultramafic flow unit which can be traced over at least 2km of strike. Several other drill-holes also returned between 0.1 and 0.2% Ni (well within the ultramafic range) and between 0.01% and 0.03% copper. These results are very significant and open up the whole of the Marda district for nickel sulphide potential as well as representing a direct nickel sulphide target.

A single hole on the end of a drill line returned 8m grading 0.19% copper in a porphyry or meta-sediment. This suggests potential for other base metals such as copper lead and zinc may also be present in the district.

Parker Range Project

At least 5km of ultramafic stratigraphy prospective for nickel sulphides has been identified within the Parker Range tenements. This is supported by enriched nickel in the weathering profile, up to 1.4% Ni, and the identification of low order nickel sulphides associated with significant iron sulphides in previous drilling along strike to the south of the Greenmont tenement package.

Significant ultramafic units with elevated nickel and copper in soils and RAB drilling have also been identified within the Toomey Hills tenement.

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