Tenement Details and Geology

In 2010, independent geological consultants Geos Mining reviewed all mineral tenements including current and historical exploration data held by SML in north-eastern Victoria. Their review identified several key target prospects for further exploration programmes:

MIN4921 (Glen Wills – Sunnyside goldfields),
Exploration Licence 3916 (Merrimac prospect, Wombat Creek),
Exploration Licence 4744 (Granite Flat prospect),
Exploration Licence 4717 (Omeo goldfield, Mt Murphy area), and
Exploration Licence 4818 (Wattlebird prospect).

SML immediately began to explore specific target areas identified as having higher potential to host economic mineralisation. The priority 1 target areas are the Granite Flat prospect (EL4744) and the historic Omeo gold field, located within EL4717.

Exploration activities were also begun in other areas that are considered prospective such as Wattlebird. Further information on the exploration activities are described under the respective Mining Lease and Exploration Licences.

The Company has not employed any executive to manage its operations. Geos Mining was appointed in December 2009 to assist the Company in the day to day management of SML’s tenements and exploration activities.

Mining Lease – Glen Wills -Sunnyside Project (Min4921)

Figure 1 : MIN4921 Glen Wills - Sunnyside Project

The Glen Wills – Sunnyside project covers the Glen Wills and Sunnyside gold fields (Figure 1). An Inferred Mineral Resource (totalling 525,800 tonnes averaging 6.11 g/t Au for 103,250 ounces of gold) has been previously announced for this project. Historically, the Glen Wills and Sunnyside gold fields produced more than 217,000 ounces gold at an average grade of 23g/t Au. There is some evidence to indicate that both gold fields are linked structurally, giving rise to the possibility that a mineralised corridor of more than 5 kilometres exists within the gold fields.

Work during the year has concentrated on defining zones with the highest potential to add to the Inferred Mineral Resource within the mining lease and planning of drilling programmes to evaluate those zones.

The Geos Mining review concluded that:

Drill testing the “Centre Country” between the two goldfields offers good potential to increase the resource inventory for the Glen Wills project.
Further drilling is required to upgrade the gold resource in the Maude South section to an Indicated Resource classification in preparation for commencement of mining operations.

Exploration Licences

Figure 2 : EL3916 Prospects

EL3916, which surrounds the Glen Wills – Sunnyside project, contains the Merrimac and Wombat Creek prospects (Figure 2). Highly gold anomalous surface geochemistry has been defined over an area of more than 5 square kilometres, possibly sourced from a sheeted auriferous quartz vein system. Further exploration is being planned, including a Reverse Circulation (RC) drilling programme to define mineral resources at Merrimac.

Additional areas of anomalous geochemistry have been identified adjacent to the Glen Wills – Sunnyside goldfield. Compilation of past exploration data has identified anomalous gold stream sediment results within the Wombat Creek drainage (NE of Glen Wills) that will be followed up with mapping and soil sampling programmes.

Figure 3 : EL4744 Granite Flat & EL5300 Underlying image shows airborne magnetic data that highlight the Banimboola Pluton. Gold anomalous stream sediment sampling results are shown as red and yellow dots.

EL4744, to the north of EL3916, covers the Granite Flat gold-copper prospect. Drilling by previous explorers intersected significant gold +copper mineralisation, associated with quartz veins in NE- and NW-trending shear zones hosted by the multi-phase Banimboola Pluton (Figure 3). A stream sediment sampling programme was completed during the year to in-fill sampling coverage over those parts of the Granite Flat prospect that had not been covered by previous explorers. This programme identified additional anomalous areas worthy of follow-up soil sampling programmes. Further data compilation, including re-logging of available drill core, is being undertaken to define drilling targets.

Review of past results in the Granite Flat – Banimboola area has highlighted the mineralisation potential of the Banimboola Pluton within vacant ground to the north of Granite Flat. Application for an exploration licence over this area has been lodged with the Victorian Department of Primary Industries. The new area, known as EL5300 – Banimboola, covers 52 sq km and exploration activities will focus on the gold, silver and base metals potential.

Figure 4 : Omeo Goldfield – Geology & Workings Pinks = Silurian granitoids; blue = Ordovician metamorphic; grey = Siluro-Devonian shear zone

EL4717 is a large tenement covering the Benambra – Omeo districts, centred approximately 25km southeast of Glen Wills. A review of past exploration data identified two target areas for follow-up exploration, being the Omeo Shear Zone, in the southwest of the EL, and near Mt Murphy, in the northeast.
At Omeo, historical mining recorded high grade gold mineralisation in quartz veined shears (Figure 4). Compilations of old mine records and geological data indicate extensions to the mineralisation along strike and down dip are valid drilling targets.

In the Mt Murphy area, gold and tungsten stream sediment anomalies (up to 5,000 ppb Au and 930 ppm W) have been recorded in Cocky Creek and Derek Creek. The streams drain occurrences of the Silurian Mt Misery Granite and contain gossanous quartz vein float.
EL4818 adjoins Jabiru Metals Limited’s Stockman project, which contains the Currawong and Wilga copper-zinc-lead-silver-gold massive sulphide deposits. Jabiru’s deposits are currently at the mine scoping study stage.

Figure 5 : Wattlebird Prospect (WMC Soil Results – Zn)

At the Wattlebird prospect in EL4818, previous exploration by Western Mining Corporation Ltd (WMC) defined lead-zinc-copper-arsenic anomalies in soil samples within an area measuring approximately 4km x 2km (Figure 5). The style of mineralisation is interpreted to be hosted by structurally-controlled quartz veins emanating from nearby granite intrusions.

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Murray Hutton, who is a Member of the Australian Institute of Geoscientists. Mr Hutton is employed by Geos Mining and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Hutton consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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