WORK PROGRAMME AusQuest has a portfolio of iron, nickel, gold and diamonds projects (Figure 1) across Australia with a focus on bringing an innovative and scientifically rigorous approach to exploration targeting the discovery of world-class deposits and new mineral provinces. During the quarter, field work included: q reverse circulation (RC) and diamond drilling at the Drummond gold project in Queensland, q geological mapping and sampling at the Nameless iron prospect near Tom Price and within other drainage systems in the Tom Price-Paraburdoo region of WA; q trial gravity surveying at the Rocklea iron prospect, also in the Pilbara region of WA; q site clearance work for future drilling programs at the Rocklea and Nameless prospect areas; and q the acquisition of airborne magnetic and radiometric data over the Sylvania project, Field work planned in the December 2005 quarter will include: q detailed mapping and sampling of the iron pisolite mineralisation at the Nameless prospect, q reconnaissance mapping and sampling at the Sylvania iron and nickel project near Newman; q GEOTEM surveying (7,000 line kms) at the Table Hill nickel project, q mapping and sampling nickel prospects within the Bellary project, and q initial field work (sampling and ground magnetics) at the Plenty River diamond project, east of Alice Springs. WORK PROGRAMME AusQuest has a portfolio of iron, nickel, gold and diamonds projects (Figure 1) across Australia with a focus on bringing an innovative and scientifically rigorous approach to exploration targeting the discovery of world-class deposits and new mineral provinces. During the quarter, field work included: q reverse circulation (RC) and diamond drilling at the Drummond gold project in Queensland, q geological mapping and sampling at the Nameless iron prospect near Tom Price and within other drainage systems in the Tom Price-Paraburdoo region of WA; q trial gravity surveying at the Rocklea iron prospect, also in the Pilbara region of WA; q site clearance work for future drilling programs at the Rocklea and Nameless prospect areas; and q the acquisition of airborne magnetic and radiometric data over the Sylvania project, Field work planned in the December 2005 quarter will include: q detailed mapping and sampling of the iron pisolite mineralisation at the Nameless prospect, q reconnaissance mapping and sampling at the Sylvania iron and nickel project near Newman; q GEOTEM surveying (7,000 line kms) at the Table Hill nickel project, q mapping and sampling nickel prospects within the Bellary project, and q initial field work (sampling and ground magnetics) at the Plenty River diamond project, east of Alice Springs. WORK PROGRAMME AusQuest has a portfolio of iron, nickel, gold and diamonds projects (Figure 1) across Australia with a focus on bringing an innovative and scientifically rigorous approach to exploration targeting the discovery of world-class deposits and new mineral provinces. During the quarter, field work included: q reverse circulation (RC) and diamond drilling at the Drummond gold project in Queensland, q geological mapping and sampling at the Nameless iron prospect near Tom Price and within other drainage systems in the Tom Price-Paraburdoo region of WA; q trial gravity surveying at the Rocklea iron prospect, also in the Pilbara region of WA; q site clearance work for future drilling programs at the Rocklea and Nameless prospect areas; and q the acquisition of airborne magnetic and radiometric data over the Sylvania project, Field work planned in the December 2005 quarter will include: q detailed mapping and sampling of the iron pisolite mineralisation at the Nameless prospect, q reconnaissance mapping and sampling at the Sylvania iron and nickel project near Newman; q GEOTEM surveying (7,000 line kms) at the Table Hill nickel project, q mapping and sampling nickel prospects within the Bellary project, and q initial field work (sampling and ground magnetics) at the Plenty River diamond project, east of Alice Springs. PROJECTS IRON ORE Nameless Prospect (100% AQD) The Nameless iron prospect is located 5 kilometres north west of Tom Price in the Pilbara region of WA. Reconnaissance mapping and sampling during the quarter identified outcropping channel-fill pisolitic iron mineralisation over a strike length of 15 kilometres from the south eastern corner of the tenement to the Nannutarra-Wittenoom road (figure 2). The channel appears to vary in width from 200 metres in the east, where it cuts through the Marra Mamba Iron Formation, up to 500 metres over the majority of its strike length. In places detrital iron mineralisation occurs along the margins of the channel. Analyses of 12 pisolitic iron samples collected along the strike length of the channel returned high iron grades (55 to 58% Fe) with variable Al2O3 (1.4 to 5.5%) and SiO2 (2.1 to 5.9%) levels and low phosphorous (<0.05%). Wood fragments identified within these samples are diagnostic of channel- or valley-fill material and confirm correlations being made with the Robe Pisolite which is mined elsewhere in the Pilbara. The Company is very encouraged by these surface results, particularly in light of their close proximity to existing infrastructure (rail, road and power) and iron ore mining operations. The Nameless tenement is currently in the application stage although a Heritage agreement has been signed with the Native Title claimants to enable it to be granted early in 2006. Site clearance work has already been completed to allow drilling to commence shortly thereafter. A comprehensive follow-up program of sampling and mapping has commenced with results expected during the December 2005 quarter. Planning is also underway to commence a drilling program covering the entire 15km length of the channel as soon as possible after title is granted. Rocklea Prospect (75% AQD) The Rocklea iron ore prospect is located 40 kilometres west of Tom Price and straddles the Nannutarra-Wittenoom road. Whilst the initial drilling program completed during the June 2005 quarter only intersected good iron, alumina and silica grades on one of the three sections drilled, the channel was shown to continue both east and west of the present drill coverage. Further assessment of drill results and compilation of geological and digital terrain data carried out during the September quarter has better defined potential extensions to the pisolitic channel and further scout drilling is planned to test these extensions. A trial gravity survey over the prospect helped to define the channel. Site clearance work for drilling has been completed with drilling scheduled to be incorporated as part of the planned drilling program at the Nameless prospect in early 2006, as outlined above. Tom Price – Paraburdoo Prospects Initial reconnaissance mapping and sampling at the Tom Price South, Panhandle and Airport prospects has identified sporadic outcrops of pisolitic iron mineralisation highlighting further potential for channel iron-style deposits in the region. Available data are being collated to outline possible channels for further ground checking and scout drilling in 2006, once titles are granted. The Company controls approximately 30 kilometres of potential pisolite iron bearing channels in this region (figure 3). Sylvania Project (100% AQD) The Sylvania Project is located 10 kilometres south of Newman in the east Pilbara region of WA. It covers a major drainage system which the Company believes has potential to contain channel iron mineralisation, immediately south of the Whaleback iron ore mining district. The drainage system is approximately 25 kilometres long and has no previously recorded history of iron exploration. During the quarter, detailed aeromagnetic and radiometric data were acquired with the magnetic data outlining a number of channel-like features which will be the focus of reconnaissance mapping and sampling in November. Digital imagery and terrain data were acquired to assist in definition of the potential channels. NICKEL Beasley Project (100% AQD) The Beasley project is located 50 kilometres west of Tom Price in WA. Analyses of core from diamond drilling completed during the previous quarter returned a best assay of 0.61% Ni, 0.26% Cu, 254ppm Co, 341ppb Pd and 62ppb Pt from hole BNDH07, the westernmost hole drilled during the programme. The above analysis occurs within a 15 metre section of ultramafic containing patches of disseminated magmatic sulphides (1 to 5%), and reflects the high metal tenor of the sulphides intersected. Comparisons between Beasley and the Raglan nickel district in Canada continue to emerge, both in their geological setting and now in the metal tenor of the sulphides identified. At Raglan similar disseminated sulphides occur marginal to their massive sulphide deposits. Interpretation of down hole electromagnetic data has identified a subtle off-hole anomaly north of, and down dip from, hole BNDH07. This hole was sited on the eastern flanks of a strong magnetic response which drilling data (a direct correlation between MgO content and magnetic susceptibility) now indicate may be a major channel-way within the ultramafic sequence and, as such, represents a prime target area for massive nickel sulphide mineralisation (figure 4). Further work in this area, including drilling, is being planned as a matter of priority. Discussions have been initiated with several companies which have expressed interest in the project with regard to potential future funding of work in this area. Bellary Project (AQD 75%) The Bellary project is located 20 kilometres north west of Paraburdoo in WA and covers a 40 kilometre long belt of untested ultramafic rocks which correlate, at least in part, with the prospective ultramafic sequence at Beasley. The important geological information being gathered at Beasley is also being applied at Bellary. The use of magnetic data to identify prospective channel locations along the ultramafic strike, and stream geochemistry to highlight areas of anomalous Ni-Cu-PGE’s, has enabled areas to be prioritised for follow-up. Digital imagery and terrain data were acquired during the quarter to assist geological mapping and sampling in these areas, which will be undertaken during the December 2005 quarter. Table Hill Project (100% AQD – Falconbridge Farm-in) The Table Hill project is located 200 kilometres east of Newman in WA. Exploration is targeting Noril’sk style nickel sulphide mineralisation within a feeder system to the regionally extensive Table Hill volcanics. Boundaries and specifications for a GEOTEM survey were finalised during the quarter with approximately 7,000 line kilometres of airborne electromagnetic data scheduled to be acquired during the December quarter. The GEOTEM technique, which was tested by AusQuest in late 2004, was found to work extremely well for massive sulphide target determination in this area. It is anticipated that the planned survey, which covers approximately 2400 km² of the project area, will provide a bank of targets for follow-up drilling in 2006. Antrim Project (100% AQD) The Antrim project is located in the East Kimberley region (WA) and the Kalkarindji region (NT). Exploration is targeting Noril’sk style nickel sulphide mineralisation associated with the extensive Antrim Plateau basalts. Regional gravity data acquired over the Neave fault and the Birrindudu 1:250,000 sheet to the south were received and processed to identify possible intrusive rocks beneath the Antrim basalts which could be targets for nickel sulphide mineralisation. Several target areas were outlined. GOLD Drummond Project (100% AQD - Rio Tinto claw back) The Drummond gold project is located 300 kilometres southwest of Mackay in central Queensland. Reverse circulation and diamond drilling (total of 7 holes/1060 metres) was completed during the quarter to test the Wildhorse prospect where sulphidic quartz drill chips containing 1.2 g/t Au had previously been found at an old water bore site. No significant gold assays were reported from the drilling, which intersected a thick sequence of conglomerates, sandstones and black shales with no sign of quartz vein material or associated alteration. The highest assay value of 0.2 g/t Au occurred within a pyritic conglomerate unit and may reflect nearby mineralisation. The gold-bearing pyritic quartz vein material targeted by this program appears to occur as pebbles within the conglomerate rather than as veins, as had been predicted. The project is currently under review although a number of targets which were originally identified for follow-up, still remain to be tested. Horsetrack Project (100% AQD) The Horsetrack gold project is located 120 kilometres south of the +27 moz Telfer gold mine in WA. No field work was undertaken during the quarter but discussions were held with several companies which expressed interest in the project. A low order gold anomaly extending over 12 kilometres and coincident with interpreted faults and magnetic intrusions had been identified by earlier reconnaissance sampling. DIAMONDS Plenty River Project (100% AQD - Rio Tinto Farm-in) The Plenty River project is located 230 kilometres east of Alice Springs (NT) on the north west margin of the Simpson Desert. AusQuest is targeting a new diamond field with more than 50 potential kimberlite targets interpreted from detailed aeromagnetic data. Initial field work over 15 targets involving surface sampling and ground geophysical surveys is scheduled to commence in November 2005 pending the outcome of site clearance work currently underway and the grant of the tenements, which is expected early in the December 2005 quarter. This will enable targets to be prioritised for drilling in 2006. CORPORATE The company’s cash balance as at 30 September 2005 was approximately $2.5 million. Graeme Drew Managing Director
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