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Koongie Park Project WA

Anglo Australian Resources NL 100%

The Koongie Park project, an advanced copper - zinc project consisting of 2 mining leases, two exploration licences and 15 prospecting licences is located 25km south-west of Halls Creek in the Kimberley region of Western Australia. The Company believes the resources of the project are robust and is working towards improving the development economics of the project. In 2008 the Company completed a Pre- Feasibility Study which has demonstrated the practicability of the project and the conditions under which it will be viable. A resource extension and exploration program consisting of 7214m of RC pre-collars, 2624.2m of diamond core tails was also completed

The project area covers several base metal prospects, which occur along a 15km contact of a volcano-sedimentary sequence. The area has been explored since 1972, with the discovery of several zinc-copper-lead-silver deposits, the main prospects being Sandiego and Onedin. Other known identified prospects include Atlantis, Gosford and Rockhole.

Upwards of $16 million has been spent by explorers on the project. Anglo Australian Resources has been associated with the property since 1989 and it is now wholly owned. In 1996-1997 Lachlan Resources N L, in joint venture with the Company, carried out extensive resource-definition type drilling and developed excellent geological and structural interpretations for both deposits. More recently Anglo Australian Resources NL, who has funded exploration on the project on a sole basis since 2002 and has completed an exploration program to collect material for metallurgical testwork, update the geological model, upgrade the resources to JORC standard and undertake an engineering assessment.

Regional Geology

The Koongie Park Project is located in the Halls Creek orogen formed in the Palaeoproterozoic due to the interaction of the Kimberley Craton to the northwest and the North Australian Craton to the east. The Palaeoproterozoic plutonic rocks and volcano-sedimentary sequence of the Halls Creek orogen have been defined as the Lamboo Complex. The Lamboo Complex has been divided in an Eastern, Central and Western tectonostratigraphic terrane and the Koongie Park Formation is located in the Central Terrane.

The Koongie Park Formation (1843+/-2Ma) postdates the Tickelara Metamorphics which consists of mafic volcanics, siltstones and mafic-ultramafic intrusions, thought to represent an oceanic island arc – backarc basin above a southeast-dipping subduction zone, or an ensialic basin along the margin of the Kimberley Craton above a northwest-dipping subduction zone (Sheppard et al., 1999).

In the project area, the Koongie Park Formation consists of a steeply dipping, highly deformed, sequence of spheroidal, felsic lavas, argillic sediments, volcanoclastics and various intercalated chemical sediments. In the south western part of the project area, the Koongie Park Formation is gradational into greywackes and sandstones similar to the Olympio Formation.

The sequence has been metamorphosed to green schist facies grade and four generations of folding have been documented. The first phase of isoclinal folding can often be recognised in the mineralised prospects and may have thickened the sulphide mineralisation. The main interpreted NE-SW trending double plunging antiform, with Rockhole and Onedin, is inferred to be related to an F3 fold event. Further to the south, at Atlantis and Mt Angelo prospects, NS trending F2 folds can be seen. Later shearing has affected the Sandiego and Onedin prospects and appears to have remobilised some of the sulphides.

The Koongie Park Formation consists of three members being from the base upwards, the Coolibah Tuff Member, the Camp Shale Member with a carbonate dominated lower portion known as the Mimosa Sub-Member and the Weldons Creek Lava Member.

Mimosa Sub-Member - hosts most of the base metal sulphide mineralisation and is characterised by its abundant carbonate content and consists of intercalated chert, chloritic schist, banded magnetite or pyrrhotite-chlorite rock, black shales (locally pyritic), impure dolomite, calc-silicates, with fine grained andesitic lavas and volcanoclastics. The carbonate at Onedin shows relics of glassy textures indicative of a hydrothermal system probably operating in a sea floor environment.

Camp Shale Member - forms the hanging wall to the mineralisation, and consists of a monotonous sequence of cleaved siltstones, and sericitic meta-siltstone which is carbonaceous at the base, and interbedded with fine grained andesitic to dacitic volcanoclastics and lavas, with rare thin (cm-dm) chert- BIF interbeds, which are locally mineralised.

Weldons Creek Lava Member - generally massive and coherent spherulitic dacite-rhyolite lava flows, aphyric to slightly quartz phyric, with minor thin banded iron formations and cherts. Interbedded siltstones and sandstones occur towards the top of the sequence.

Dolerite and granite bodies outcrop along the western and south margins of the Koongie Park prospect areas. In the east, granite intrudes the lower Coolibah Tuff Member of the Koongie Park Formation.

The Deposits

The Sandiego deposit is a steeply plunging tabular mineralised zone that has been drilled on 40m sections over a strike length of 200m to a depth of 600m, and remains open at depth. Its substantial potential is illustrated by drillhole SRCD 7 roughly in the middle of the deposit which intersected 77m @ 1.65% Cu, 1.48% Pb. 9.7% Zn, 60.7 g/t Ag and 0.54 g/t Au (200-277m) and 20m @ 3.2% Cu, 0.05% Pb, 0.14% Zn, 16 g/t Ag and 0.31 g/t Au (292-312m).   Imaging the metal content of drill intersections appears to indicate that wider and higher grade zones of both copper and zinc lodes occur over a strike length of 80-100m and appear to have a steep southerly plunge. Recent drilling has shown there is potential for wide high grade zones of mineralisation at depth.The potential for near suface high grade copper and zinc mineralisation is highlighted by recent intersection in SRCD31 of  68m @ 6.8%Cu, 9.6% Zn, 98.7g/tAg, 0.34g/t Au.

At Onedin recent drilling has supported a simpler geological model. Zinc mineralisation at Onedin is for the most part stratabound, hosted within at least two zinc horizons or lodes. Mineralised strata are generally dipping moderately to grid south west but are locally folded. Higher zinc grades at Onedin occur at the intersection of these lodes and a steep grid north trending fault and in the supergene zone. Zinc sulphide mineralisation at Onedin is open at depth. Surface mapping appears to indicate these mineralised horizons extend at least 100m beyond the limit of current drilling (indicating there is potential to extend the Onedin mineralisation to the south). In addition another zone of gossanous lodes, mapped 500m metres further to the south, has been poorly tested. Copper mineralisation overprints the zinc mineralisation and is located predominately in the oxide and transition zones. Recent intersections include 16m @ 9.3%Zn, 198g/t Ag; 22.2m @1.1%Cu, 21%Zn, 78g/t Ag and 30.3m @ 1.1%Cu, 11.7%Zn, 94g/tAg . There is some potential to increase the copper oxide resource with additional drilling on the northern end of the Onedin deposit.

There is also potential for a small 50,000t to 100,000t resource @ 12% Zn at Atlantis

Resource Estimation

Following the 2008 drilling programe CSA Global have upgraded the resource estimations for both Sandiego and Onedin

The Sandiego Mineral Resource was estimated using ordinary kriging applied to designated wireframes which were created at cut-offs of > 3.0% Zn and > 0.8% Cu.

        Table 1.  Indicated and Inferred Resources at Sandiego September 2009

Note differences may occur due to rounding errors

The expansion of the resource model has resulted in an increase of 1.5Mt on the Sandiego 2008 Mineral Resource estimate. This potentially represents an additional 3 years of operation for a mine based on a 500,000 tpa processing plant. The new resource represents 57,000t of contained copper metal (a 93% increase on 2006 Mineral Resource estimates), 145,000t of contained zinc metal (an 18% increase on previous estimates), 2.4 million ounces of contained silver metal (a 23% increase on previous estimates) and 50,000ounces of contained gold metal.

The Zinc Zone is open at depth. The Copper Zone is open at depth and possibly to the north.

The Onedin Mineral Resource was was initially estimated using ordinary kriging applied to designated wireframes which were created at cut-offs of > 3.0% Zn and > 0.8% Cu. Recently it has been recognised that a lower cut-off grade could be applied to reflect cut off grades that may be applicable to an open pit operation treating oxide and transition ore by leaching methodologies. The Mixed Domain occurs where an overlap exists which contains both high-grade zinc and copper. The entire Onedin Mineral Resource is classified as an Indicated Resource.

Table 2. Indicated Resources at Onedin - April 2009 update  

Note: The CSA Mineral Resource was estimated within constraining wireframes based upon lower cut-off grade of > 3.0% Zn, > 0.8% Cu (Primary Zone) and >0.4% Cu (Oxide and Transitional Zones). The Mixed Zone occurs where an overlap exists which contains both high grade zinc and copper. Difference may occur due to rounding errors.

Reporting cut – off grades were as follows:

Oxide and Transitional: Copper Zone, Mixed Zone Cu>0.4; Zinc Zone, Zn>3

Primary Sulphide Zone: Copper Zone, Cu > 0.8; Mixed Zone, Zinc Zone, Zn>3

This new 2009 Mineral Resource represents 36,000t of contained copper metal (a 5% increase on previous estimates), 140,000t of contained zinc metal (a 21% increase on previous estimates) and 3.7 million ounces of contained silver metal (a 21% increase on previous estimates).

  Metallurgical Testwork

The Koongie deposit mineralisation is of complex polymetallic (Cu-Pb-Zn) type. Generally polymetallic deposits of primary (unoxidised) sulphides generally respond well to conventional flotation techniques to enable production of separate concentrates of saleable quality. This has been confirmed by our extensive testwork.

In the shallower parts of both deposits weathering has variably oxidised the Primary mineralisation. The completely oxidised material is designated the “Oxide” zone and the underlying partially oxidised material is designated the “Transition” zone.

Metallurgical testwork on Onedin and Sandiego sulphide ore types conducted by Optimet Laboratories in Adelaide have successfully produced copper concentrate grades of 24 - 26% Cu at 92 - 96% recovery and Zinc concentrate grades of 52 - 56% Zn at 86 - 92% recovery. Test work on Sandiego Zinc transition material and the Sandiego Copper material has also produced good results.  

Pre feasibility Study