INVESTORS

Polymetallic Project

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.