PROJECTS

Croydon P

Polymetallic project background

Project location

The Company holds 8 Exploration Permits Mining (EPM) in the Croydon region of North Queensland, Australia that cover 10 priority¹ aeromagnetic and 3 gravity anomalies delineated during Government aerial surveys. The Company completed a detailed review of geophysical and drill core assay data from drilling conducted between 2006-08 at the A1 and A2 aeromagnetic anomalies. It was concluded that multiple massive sulphide² intercepts at the A2 aeromagnetic anomaly³ near Croydon, North Queensland are of economic importance and may indicate the presence of a major new mineral deposit (see figures 1 and 2 for location of the project, EPM’s and anomalies).

The drilling results at A2 are of particular interest, with discovery hole A2-001 returning a 5m massive sulphide intercept containing a weighted average of 8% Zn, 180g/t Ag, 0.58% Sn and 0.57% Cu (gold equivalent of approximately 9.9g/t Au⁴ ). Similar high value massive sulphide filled fracture zones are present in six of the other holes and all nine holes contain thick intercepts of strong Zn-Ag anomalism indicating the presence of a large mineralizing system (see table 1 and figure 5). Mineralisation is hosted by Proterozoic⁵ sediments (banded siltstones) and commences at approximately 130m vertical depth near an unconformity with overlying Mesozoic⁶ cover rocks.

A vertical projection plot and cross sections (see figures 6 and 7) of the more important massive sulphide zones from drilling at A2 show that the intercepts align in linear patterns with an east-west strike and apparent vertical dip. The hole spacing and pattern suggests a possibility for strike-dip continuity of the zones. The present hole spacing of 200m is too wide for certainty, but if proven the massive sulphide zones could represent a sizable polymetallic-tin deposit analogous to the Dajing deposits of Inner Mongolia that have been major producers of base metals, silver and tin for over 40 years.

¹ There are a total of 28 aeromagnetic anomalies of which 10 have been selected following geophysical interpretation as priority anomalies due to their apparent depth and/or strength of the anomalous response.
² Massive sulphide is a dense accumulation of sulphide minerals. At the A2 discovery, zinc, silver, tin, copper and lead (all minerals that are commercially mined) are associated with the iron sulphides pyrite and pyrrhotite. Pyrrhotite being magnetic is detectable by magnetometer surveys.
³ The A2 aeromagnetic anomaly is an abnormal magnetic response detected during an aerial survey that indicates the presence of elevated concentrations of magnetic minerals relative to surrounding strata.
⁴ The gold equivalent value is calculated using metal prices from the London Metal Exchange quoted on the 23-1-13 and will vary as the metal prices rise or fall.
⁵ A geological period from 542 million to 2.5 billion years old.
⁶ A geological period from 65 to 250 million years old.

Figure 1 Location Map showing the Polymetallic project area relative to Croydon and other major polymetallic mines in the Mt Isa Inlier.

Drilling History of the Polymetallic Project

Between 2006 and 2008 nine diamond drill holes tested an aeromagnetic anomaly designated A2 located northeast of Croydon, North Queensland (see Figure 4). Seven of the nine holes intercepted fracture zones containing massive sulphide varying from 2 to 13m in downhole width containing potentially economic concentrations of Zn (1.35 to 10.13%), Ag (32.7 to 642g/t), Sn (0.12 to 0.63%) ± Pb (0.25 to 2.1%) and/or Cu (0.13 to 0.57%).

Based on a minimum mining width of 2m the total tonnage of massive sulphide provides a geological target of approximately 6 million tonnes within the 800m strike and 240m vertical dip extent presently indicated by drilling. The potential quantity and grade is conceptual in nature, that there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will result in an estimation of a Mineral Resource.

Figure 2 Detailed location map of the A1 and A2 anomalies.

Figure 3 Location Map showing the Polymetallic tenements held by CGN and the aeromagnetic and/or gravity anomalies

Figure 4 Plan of the drill holes at the A2 anomaly. The traces of the holes are foreshortened and massive sulphide fractures intersected are projected vertically to surface showing east-west linearity that suggests possibility of continuity along strike. Note increasing tin and copper toward the east.

Table 1 Assay details of sulphide bearing fractures intercepted in drill core of 2m or greater downhole width at A2.

Plate 1 Photograph of massive sulphides intercept in drill core from the discovery diamond drill hole (A2-001) at the A2 aeromagnetic anomaly

The massive sulphide fractures in drill holes at A2 were found to be located within a thick sequence of banded shale-siltstone sedimentary rocks of Proterozoic age that are themselves also strongly anomalous in Zn (up to 0.5%) and Ag (up to 15g/t) due to being cut by other thin (millimetre thick – generally less than 1 centimetre) massive sulphide veins/fractures (see Plate 1).

At A2, the nine holes were drilled toward the north on section lines 200m apart (see figure 4). The distance between holes is too wide to be certain the strike continuity of the massive sulphide filled fractures and to establish the true dip of the fractures. Assuming a vertical dip, the massive sulphide fractures could have a true width in excess of 2m and if continuous could extend for a strike length in excess of 800m. A further 600 to 800m of strike of the anomaly toward the east has not yet been drilled (see also sections figures 6 and 7).

In terms of vertical extent the shallowest intercept of a massive sulphide filled fracture is at the unconformity surface approximately 130m below a cover of much younger Mesozoic sediments and the deepest intercept in hole A2-008 is approximately 380m from surface indicating a mineralisation could extend vertically for in excess of 250m. Mineral deposits with very similar tin-polymetallic sulphide mineralisation and hosted by fractures in China have been mined vertically for over 1000m (Dajing, Inner Mongolia and Dachang, South China). Assuming lateral and vertical continuity of the massive sulphide filled fractures a large a valuable multi-metal deposit could be present at A2.

Figure 5 Section showing vertical projection of massive sulphide filed fractures that demonstrate how adjacent holes on section could have missed the same fractures.

Figure 6 Section showing vertical projection of massive sulphide filed fractures that demonstrate how adjacent holes on section could have missed the same fractures.

Figure 7 Plan of the drill holes and projections of intercepted massive sulphide fractures at the A2 anomaly overlain on the original airborne aeromagnetic anomaly that was the target of drilling. The anomaly is reverse in polarity with the “blue” coloured low located NW of the “red” coloured high.

Figure 8 Plan of the drill hole traces (holes are foreshortened and projected to surface) and massive sulphide fractures overlain on the plot of ground magnetic data from a survey conducted post drilling. Note continuation of strong anomaly toward the east of present drill holes.

In addition to drilling at the A2 anomaly, two holes were also completed to determine the cause of the A1 anomaly located approximately 7 km to the northeast. Both holes at A1 intercepted wide zones of anomalous copper-silver within wider envelopes of tungsten ± tin mineralisation (see figure 3), but the depth and low grade of this mineralisation did not provide encouragement for further drilling.

Figure 9 Section of drill holes at the A1 anomaly. Drilling shifted to test the A2 anomaly sine the depth and low grade of mineralisation at A1 discouraged further drill testing.

Similarities to Tin-Polymetallic Deposits in China and Inner Mongolia

Two world-class tin-polymetallic mining districts in China have very similar geological settings and tin sulphide mineral compositions to the metals contained in the massive sulphide fractures at A2. The deposits with the closest similarities are those at Dajing, Inner Mongolia where mining has been underway for well over 40 years. Published metal production from multiple underground narrow vein mines to vertical depths of greater than 1 km over the 40-year period to 2006 is reported as;

260,000 T of copper
75,000 T of tin
1.87 MT of lead + zinc
3,340 T of silver

A second mining district in South China (Yunnan Province) is Dachang where again tin and base metals are produced. At both Dajing and Dachang epigenetic tin and massive sulphide filled fractures of granitic magmatic origin occur within older sedimentary rocks. At Dajing, the source granites do not outcrop, but at Dachang some deposits have been found at or very near the contacts of the source granite while others are distal from the presumed source. At Dachang both stratabound and vein-style deposits are being mined.

Typical vein style deposits at Dachang are 1,250m in length, 500m in vertical extent and average 2.07m in width (approximately 4,000,000T). At Dajing over 600 massive sulphide fractures have been located since mining commenced in an area approximately 1 km in width and 2 km in length.

Aside from the similarity of the tin-polymetallic sulphide mix and the presence of pyrite-pyrrhotite as principal iron rich sulphides, the deposits are all located adjacent to major regional fault structures. A2 is located immediately west of a major NW trending aeromagnetic lineament interpreted to be a detachment fault zone.

Croydon Graphite Project

Graphite at Golden Gate

In July 2004 the Company, then named Gold Aura Ltd, undertook preliminary assessment of a large graphite deposit located at the Golden Gate mine. The graphite deposit was systematically drilled as part of a regional gold exploration program in the late 1980’s by Central Coast Exploration (CCE). Three vertical reverse circulation holes were later drilled by the Company between 2005 and 2007 that confirmed a thick graphite zone was present at Golden Gate (see Figures 10, 11, 12 and 13).

Table 2 Example of CCE graphite drilling results at Golden Gate

Graphite Deposit Classification at Golden Gate

Graphite mineralisation at Golden Gate is probably of hydrothermal or magmatic origin and is located along the contact between granitic rocks that intruded rhyolitic volcanics. The drill intercepts indicate the deposit has a north-westerly strike and shallow easterly dip. Hydrothermal or magmatic graphite deposits are an important source of graphite with examples being mined in Sri Lanka and Sweden that produce both flake and amorphous graphite.

Since the Golden Gate graphite deposit is reasonably well defined by past drilling the exploration program to be conducted by CGN will involve collection of fresh drill core samples for metallurgical testwork. Should a commercial graphite deposit be proven at Golden Gate, the area is well served by infrastructure with the port of Karumba on the Gulf of Carpentaria that services the Century Pb-Zn mine being within 150 kilometres from the town of Croydon.

Figure 10 Location Map of showing the Golden Gate graphite deposit as well as principal gold exploration targets of the Croydon Graphite and Gold Projects

Figure 11 Location Map of the Golden Gate graphite deposit showing relationship historical drill hole locations and contours of graphite thickness.

Figures 12 & 13 Cross sections through the Golden Gate graphite deposit based on drilling by CCE 1989.

Croydon Gold Project

Introduction

The geology of the Croydon Goldfield consists of the mid Proterozoic Esmeralda Granite and the co-magmatic Croydon Volcanics while the gold mineralisation is much younger at 300Ma (similar in age to the Mt Leyshon or Kidston gold deposits). Approximately 80% of past production has come from granite-hosted veins known as granite lodes up to 9m thick and controlled by shallow NE dipping reverse faults. Lodes in volcanic host rocks had a maximum thickness of 4.5m in sub-vertical faults.

Gold mineralisation occurs in planar quartz veins, stockworks and breccias. The granite lodes are also spatially associated with graphite and base metals with the most significant graphite development known to date being at the Golden Gate mine. The largest producer in the Croydon Gold Field, the Golden Gate Lode (480,000 ounces of gold) is located within EPM18616 and EPM9438, tenements owned 100% by the Company.

The acquisition of EPM18616 by the COmpany consolidates the length of the Golden Gate lode within tenements held by CGN. Five priority exploration targets along the trend of the Golden Gate lode have been identified as shown by the cross-hatch areas on figure 10. These areas were selected as having potential for gold mineralisation under shallow cover. Future exploration will involve ground geophysics (IP & EM surveys) across target trends followed by drilling.

The Company also holds three other EPM’s in the Croydon Goldfield of North Queensland that provide exploration and development rights over several historical gold prospects, namely Gilded Rose-Jumbo and Jolly Tar that along with EPM18616 collectively form the Croydon Gold project.

Gilded Rose – Jumbo Prospect

The Gilded Rose-Jumbo prospect (EPM10302) is reported in Government records as the largest gold producer (2,690 ozs) in the Carron River area. Gold was first identified in steeply dipping east-west trending stacked quartz veins hosted by rhyolitic volcanics and shale’s.

During the 2011 field season dipole-dipole IP surveys at 50m electrode spacing were undertaken on four lines crossing the Gilded Rose-Jumbo prospect. Results of these surveys were inconclusive due to the presence of a highly resistive surface zone above the water table that prevented effective resolution of conductivity associated with sulphides present within the mineralizing system. It had been hoped that mapping of the sulphide zones would provide assistance in targeting gold mineralisation in the next phase of drilling.

The IP results provided encouragement for additional exploration. The geophysical consultant concluded that gradient array IP would be more effective given the large prospective area covered by the prospect. Detailed review of the assay data from previous exploration drilling campaigns showed broad strongly anomalous to commercially significant gold bearing zones accompany the “higher” grade quartz veins (see tables of important intercepts below).

Gold is present from surface to vertical depths in excess of 200m and appears to be preferentially distributed in SW plunging shoots within the system, a concept that has yet to be explored by drilling. Although the prospect has been subjected to several phases of exploration drilling this work was undertaken when gold prices were substantially lower than presently prevail. The past drilling produced a large number of strong gold intercepts often within much wider, but lower grade gold envelopes.

Table 3 Summary significant of Gold and Silver intercepts at the Gilded Rose & Jumbo Prospects. Results are weighted averages of assay intervals. They are drill core widths and do not represent true widths.

Figure 14 Location Map of historical drill holes and surface projection of gold “zones” at the Gilded Rose & Jumbo Prospects

Figure 15 Drill traces and Gold intercepts at Gilded Rose.

Figure 16 Long section showing Gold intercepts at the Jumbo Prospect.

In combination with the higher gold bearing quartz veins, the broad zones of lower grade gold now present an opportunity to outline much larger tonnages of mineralisation than previously targeted. The next phase of exploration at Gilded Rose will focus on resource definition of this bulk tonnage gold potential.