Ann: Quarterly Activities/Appendix 5B Cash Flow Report, page-24

I sent the following email to management the other day:

Hi,

I am a long term investor in the business, having participated in the IPO and added to my holdings several times since. I would appreciate any info/clarification you could provide me, on the following:

In the most recent quarterly report, on page 5, there is the following statement.

"The geochemical anomaly has NE-SW orientation coincidental with the Webbs Consol Leucogranite and Emmaville Volcanics contact. It is quite possible that superimposition of sinistral strike slip structures semi-parallel to the primary contact structure between the Webbs Consol Leucogranite and Emmaville Volcanics is an import mineral emplacement factor, especially where contact structure undulations create tension regimes within secondary structures due to differing competency of the two rock units."

Could you please tell me, in laymans terms what this means?

Most of your holders are not geologists and as such, this paragraph is impenetrable for most people.

Is this suggesting that it is possible/suspected there is a contiguous mineral feeder system linking the two targets, at depth?

Many thanks

Got the following response today:

Hi,

Thank you for your inquiry.

To explain the technical paragraph you mentioned - at Webbs Consol North there are structures such as faults and veins that are oriented at the same orientation as the contact between two rock units, the Emmaville Volcanics and the Webbs Consol Leucogranite - in this case the general orientation is Southwest- Northeast.

Sinistral strike slip movement is simply the horizontal left movement of the rock on the other side of a structure relative to the position of the observer (dextral strike slip is the right movement). Often structures such as faults and veins are not just one plain but a zone of structures as it appears to be the case here. Also the difference in competency of the volcanics, which is more ductile, and the granite, which is more brittle, means movement along these structures is not consistent.

So when you have multiple structures moving at different speeds there are often secondary cross cutting structures which form as the stress is transferred between the major structures. The diagram below shows this process as simply as possible. We think we have the bottom right hand box scenario where the transition zone has created a negative pressure (pull-apart) zone and that is good for the emplacement of minerals from metal rich solutions travelling up the structure from depth. It is highly likely that the source of metals is all from the same feeder system, how deep that is and how concentrated the metal could be is completely unknown. Hope this all helps.

Regards

Ted