ADMIRALTY RESOURCES NL. - Capital/Financing Update 2012

==> picture [246 x 48] intentionally omitted <==

ASX ANNOUNCEMENT Date: 29 June 2012

Supplementary high resolution ground magnetic survey reveals La Chulula as PRIORITY TARGET in Harper South

==> picture [238 x 202] intentionally omitted <==

The Board of Admiralty Resources NL (“ Admiralty ” or “the Company ”) has received with enthusiasm the very positive results from a supplementary high resolution ground magnetic survey performed at La Chulula target, located within the Harper South iron ore district, in the Atacama Region, Chile.

The survey, completed by Quantec Geoscience Chile, in March 2011 was designed a follow up of an initial survey performed in September 2011, which covered two of the targets within Harper South, Mariposa and La Chulula.

The results of Phase I showed the La Chulula Prospect could extend itself further south of the boundary of the surveyed lines, at horizontal UTM 6825400 and the 3D inversion of the results showed the potential ore body cut off.

Above: 3D inversion of the ground magnetic survey results, showing magnetic susceptibilities between 0.60 and 0.90 S.I. units.

Below: Slices of magnetic susceptibility in La Chulula at different elevations.

Phase II was carried out considering the size of the La Chulula anomaly and the potential extension of the magnetic response to extend itself further south of the boundary of the Phase I survey lines. Its purpose was to fully define the extension of La Chulula and clearly separate it from the Mariposa Prospect at the horizontal UTM coordinate 6826500.

==> picture [216 x 289] intentionally omitted <==

The combined results of Phase I and II has revealed La Chulula as a priority target for Admiralty and it has confirmed its important characteristics:

Lateral dimensions of 250m x 900m;
Depths up to 600m;
Magnetic susceptibility levels higher than 0.9 S.I. units between 600m and 0m elevations;
It is fully confined within the boundaries of Admiralty’s property in Harper South; and
It is located near the surface.

Admiralty Resources NL ABN 74 010 195 972 Tel: +61 3 9620 7144 | Fax: +61 3 8677 6949 Registered in Australia Email: [email protected] Registered Office: Level 16, 379 Collins Street, Melbourne Victoria 3000 Australia Website: www.ady.com.au

The board of Admiralty is satisfied that Phase II of the high resolution ground magnetic survey has confirmed the results of Phase I and the results of the 600m diamond drilling test hole that was sunk in La Chulula in February 2012 due to the availability of the drilling rig following the completion of the drilling programme in Mariposa.

A 10 hole / 2,650m reverse circulation drilling programme commenced at La Chulula in early June. Five holes and 1,350m of drilling had been completed up to 25 June, with the next 5 holes expected to be completed by mid July 2012.

The full report is attached to this announcement.

Yours faithfully, ADMIRALTY RESOURCES NL PER:

==> picture [125 x 57] intentionally omitted <==

Stephen C. Prior Managing Director

Below: Comparison of maps of magnetic susceptibility for Phase I and Phase I & II combined between 500m and 100m.

==> picture [447 x 339] intentionally omitted <==

ADY – ASX Announcement – 29 June 2012 – La Chulula revealed as PRIORITY TARGET by ground magnetic survey Page 2

About Admiralty Resources NL

Admiralty Resources NL is a public diversified mineral exploration company listed in the Australian Securities Exchange (ASX: ADY) with mineral interests in Chile and in Australia.

Admiralty’s flagship projects are three iron ore districts in Chile: Harper South (2,498 Ha), Pampa Tololo (3,455 Ha) and Cojin (600 Ha). The districts are located in prime locations, with close and easy access to the Panamerican Highway (a major route), a railway line and operating shipping ports.

Admiralty’s projects in Australia are the Bulman project, a lead and zinc project located in the NT and the Pyke Hill project, a cobalt and nickel project in WA whose mining lease is 50% owned by Admiralty.

About Admiralty in Chile

The Harper South district (“Harper South”) is the most advanced district in respect to exploration. To date, seven targets have been confirmed as carriers of magnetite mineralisation: Mariposa, La Chulula, Soberana, Media Soberana, Negrita, La Vaca and Mal Pelo.

Mariposa is the most developed target and it has a JORC compliant resource. A 3,000m diamond drilling programme was performed in early 2012 and upgraded resource statement is expected in the 3[rd] quarter of 2012. An engineering mine plan (or Prefeasibility Study) for an initial production of 1.2 million tonnes of finished product per annum has been commissioned to Redco Mining Engineers and final reports are expected in September 2012.
La Chulula . A high resolution ground magnetic survey carried out in 2011 showed it as the ore body with highest susceptibility and depth within Harper South. A 600m test drill hole was sunk in February 2012 and a 2,650m reverse circulation drilling campaign is currently taking place, with a resource statement being expected in the third quarter and a reserve statement in the fourth quarter of 2012.
Soberana . Redco Mining Engineers are working on an early mine production study out of Soberana and results are expected in the third quarter of 2012.

The Pampa Tololo district. A high resolution ground magnetic survey carried out in 2011 identified three targets: Cochrane, O’Brien and Simpson. A reverse circulation drilling campaign is scheduled to commence at Simpson in July 2012, with a resource statement expected in the fourth quarter of 2012.

The Cojin district. It is the least advanced of the Admiralty’s projects in Chile, with the first piece of exploration work being a high resolution ground magnetic survey carried out in 2012. The survey identified 5 targets in total with 3 of them showing great depth and high susceptibility.

ADY – ASX Announcement – 29 June 2012 – La Chulula revealed as PRIORITY TARGET by ground magnetic survey Page 3

==> picture [612 x 105] intentionally omitted <==

QUANTEC GEOSCIENCE LTD 3D MAGNETIC INVERSION REPORT

HARPER SOUTH DISTRICT LA CHULULA PROSPECT HILE (C ) ON BEHALF OF ADMIRALTY MINERALS CHILE PTY LTD AGENCIA EN CHILE

==> picture [292 x 127] intentionally omitted <==

KEVIN KILLIN, PGEO JIMMY STEPHEN, PH

QUANTEC GEOSCIENCE LTD 146 SPARKS AVE, TORONTO, ONTARIO, M2H 2S4, CANADA PHONE: (416) 306‐1941 / FAX: (416) 306‐1949 WWW.QUANTECGEOSCIENCE.COM

15/06/2012

QUANTEC GEOSCIENCE LTD

EXECUTIVE SUMMARY

INTRODUCTION

A high resolution ground magnetic survey was carried out by Quantec Geoscience over the La Chulula Prospect, in the Harper South District area located southwest of town of Vallenar, in the Atacama region, Chile, on behalf of Admiralty Minerals Chile Pty Ltd. Agencia en Chile during August‐September 2011 (Phase I) and February‐March 2012 (Phase II).

The results of Phase I of the ground magnetic survey performed in the NE area of the Harper South District were presented in a single report that delineated a strong magnetic response with regions of high and low magnetic intensity in two clearly identifiable targets: Mariposa and La Chulula , separated by horizontal UTM coordinate 6826500.

Phase II was carried out following a review of the first phase and considering the size of both targets and the potential continuation of magnetic response on the west of Mariposa and south of La Chulula and its purpose was to fully define the extension of these anomalous zones and issue separate reports for each of the prospects.

This report discusses the 3D inversion results of La Chulula Prospect where the ground magnetic survey consisted of 25 EW trending lines, having a maximum length of about 750m, spaced at 50m apart, covering an approximate area of 0.8 km[2] . Figure 1‐2 on page 9 of this report shows the lines surveyed over the La Chulula Prospect in both phases, with the lines in Phase II being south of the lines on those on Phase I and between horizontal UTM coordinates 6825150 to 6825550.

The magnetic data were recorded every 10 meters during Phase I and continuously recorded using a walking magnetometer during Phase 2 along the lines. A hand‐held Garmin GPS unit was used to collect positioning information at each station. A magnetic base station was used to correct diurnal magnetic variations.

SURVEY OBJECTIVES

The results of Phase 1 showed the La Chulula Prospect could extend itself further south of the boundary of the surveyed lines, at horizontal UTM 6825550 and the 3D inversion of the results showed the La Chulula Prospect cut off. The purpose of the Phase II of the ground magnetic survey was to determine the full extension of potential iron mineralization both at depth and along strike for drill targeting, the identification of structural trends and the detection and definition of magnetite style mineralization and alteration patterns.

RESULTS

The ground magnetic survey conducted over the La Chulula Prospect was successful at detecting and delineating very strong positive and negative anomalous patterns. The 3D inversion results obtained with the MAG3D UBC code suggested the presence of one potential targets of interest for the economic exploration of iron mineralization, which is named as La Chulula .

The results of Phase I showed the target La Chulula as being a NS trending vertical body with maximum lateral dimensions of 250m x 750m, located near the surface and registering magnetic susceptibility

QUANTEC GEOSCIENCE LTD

levels higher than 0.9 SI units, with potential to extend itself further south of the boundary of the surveyed lines.

Phase II has confirmed the continuation of the La Chulula ore body towards the south of the grid, up to the line L44N, maintaining high susceptibility levels as discussed in this report.

In general, the combined results of Phase I and Phase II of the ground magnetic survey defined La Chulula as an important target yielding lateral extensions of 250m x 900m and a maximum depth of about 600m, registering magnetic susceptibility levels higher than 0.9 SI units between 600m and 0m elevations and confined within the boundaries of Admiralty Minerals Chile Pty Ltd Agencia en Chile.

Based on the 3D inversion results of magnetic data over the prospect, it is recommended to further integrate this result with other available geophysical / geological information to choose test drill sites to validate any potential economic mineralization.

QUANTEC GEOSCIENCE LTD

LE OFCONTENTS	LE OFCONTENTS
List of Figures ........................................................................................................................................ 5
List of Tables .......................................................................................................................................... 5
1	Introduction ............................................................................................................................. 6
1.1	Survey Objectives ............................................................................................................. 6
1.2	General Survey Information ............................................................................................. 6
2	Results and Interpretation ..................................................................................................... 10
2.1	Description Mag3D inversion procedure ....................................................................... 10
2.2	Data and Mag3D parameters ......................................................................................... 10
2.3	Digital Archive ................................................................................................................ 11
2.4	Discussion of Results ...................................................................................................... 11
	2.4.1 Depth (Elevation) Slices .......................................................................................... 16
	2.4.2 Vertical Cross‐Sections ........................................................................................... 16
	2.4.3 Susceptibility Iso‐surfaces ...................................................................................... 16
	2.4.4 Targets .................................................................................................................... 22
3	Conclusions and Recommendations ...................................................................................... 23
4	Statement of Qualifications and Competent Person Statement ........................................... 24
A	Geosoft Plan Maps of the 3D magnetic Susceptibility Models .............................................. 26
B	References.............................................................................................................................. 35

QUANTEC GEOSCIENCE LTD

LIST OF FIGURES

Figure 1‐1: General project location. .................................................................................................... 8 Figure 1‐2: Location map and survey layout. ........................................................................................ 9 Figure 2‐1: Residual magnetic anomaly (upward continued to 25m) of the La Chulula Prospect (a) and calculated susceptibility voxel model (b). ............................................................................ 12 Figure 2‐2: Combined horizontal plan slices and vertical sections (NW looking). .............................. 13 Figure 2‐3: Plan map slices of magnetic susceptibility at different elevations. .................................. 14 Figure 2‐4: Selected vertical sections of magnetic susceptibility. ...................................................... 15 Figure 2‐5: Plan maps of magnetic susceptibility at every 100m elevation. ...................................... 17 Figure 2‐6: Vertical sections of magnetic susceptibility along selected lines. .................................... 18 Figure 2‐7: Susceptibility iso‐surfaces for 0.6 SI, 0.7 SI, 0.8 SI, and 0.9 SI units. ................................. 19 Figure 2‐8: 3D view of the La Chulula Prospect from susceptibility iso‐surfaces at 0.75 SI, 0.85 SI, 0.90 SI and 0.95 SI units, all NE looking. ...................................................................................... 22

LIST OF TABLES

Table 2‐1: 3D magnetic inversion parameters for La Chulula Prospect. ............................................. 11

QUANTEC GEOSCIENCE LTD

1 INTRODUCTION

This report presents the 3D inversion results of the ground magnetic survey carried out in August‐ September 2011 (Phase I) and February‐March 2012 (Phase II) over the La Chulula Prospect, in the Harper South District, on behalf of Admiralty Minerals Chile Pty Ltd. Agencia en Chile.

Raw data of the logistics and geophysical reports have been previously submitted to Admiralty Minerals Chile Pty Ltd. Agencia en Chile shortly after the completion of the survey.

This report reflects the results of the 3D magnetic inversion performed with 3D UBC magnetic inversion code[1] developed by UBC‐GIF. The results are presented as horizontal depth slices at different elevations, vertical sections and iso‐surfaces of susceptibility solid model at different calculated susceptibility values.

1.1 SURVEY OBJECTIVES

The explorations objectives of the survey are the identification of structural trends and the detection and definition of magnetite style mineralization and alteration patterns and to define extensions of potential targets for iron mineralization both at depth and along strike for drill targeting.

The Harper South District is located south of the magnetic equator where the geomagnetic field has an inclination of ≈‐28°, a declination of ≈0.5° and average amplitude of 23600 nanoTesla (nT).

The ground magnetic survey should provide excellent means of delineating highly magnetic target mineralization including magnetite and other magnetic minerals. In addition, the ground magnetic survey can be used as a mapping tool for mapping geological contacts and mafic and ultramafic intrusive bodies.

1.2 GENERAL SURVEY INFORMATION

Quantec Project No.: CH00697C Client: Admiralty Minerals Chile Pty Ltd. Agencia en Chile Client Address: Padre Mariano 87, Oficina 101 Providencia, Santiago Chile Client representative: Claudio Ferrada V. Project Name: La Chulula Prospect (within the Harper South District)

1 MAG3D ver.4.0

QUANTEC GEOSCIENCE LTD

Survey Type: Ground magnetics Project Survey Period: Phase I: August‐September, 2011 Phase II: February‐March 2012 General Location: Approximately 13 km southwest of Vallenar Province Atacama Region District Harper South Nearest Settlement: Vallenar Datum & Projection: PSAD56 UTM Zone 19J Latitude & Longitude: Approx. 070°49’12”W, 28°41'05”S UTM position: Approx. 322370m E, 6825935m N List of Claims Surveyed 25 Lines

QUANTEC GEOSCIENCE LTD

==> picture [420 x 431] intentionally omitted <==

Figure 1‐1: General project location[2] .

2 Image downloaded from Google Earth™, 2012/06/01

QUANTEC GEOSCIENCE LTD

==> picture [352 x 173] intentionally omitted <==

==> picture [352 x 172] intentionally omitted <==

‐ Figure 1 2: Location map and survey layout.

QUANTEC GEOSCIENCE LTD

2 RESULTS AND INTERPRETATION

2.1 DESCRIPTION MAG3D INVERSION PROCEDURE

The 3D magnetic inverse problem is formulated as an optimization problem where an objective function of the model is minimized subject to certain constraints. For magnetic inversion, the first question that arises concerns definition of the "model". Two possible choices are the susceptibility K and In (K), but any function g (K) can, in principle, be used. In general, K is used since the field anomaly is directly proportional to the susceptibility that varies on a linear scale. But depending upon the expected dynamic range of susceptibility and the physical interpretation attached to its value or variation, it may be that In (K) is more desirable. To perform a numeric solution the model objective function is discredited using finite difference approximation on the mesh defining the susceptibility model and then defining a 2‐norm misfit measure. The inverse problem is then solved by finding a model m which minimise the objective function Φm and misfits the data by a pre‐determined amount. In summary the methodology providing a basic components for the 3D magnetic inversion consist in forward modeling, a model objective function that incorporates a depth weighing, a data misfit function, a trade‐off parameter that ultimately determines the quality of the fit and the logarithmic barrier method to obtain the solution with positivity, although this last option is no longer necessary in the latest version of the software in which upper and lower bounds can be defined. By default the program uses susceptibility bounds of [0, 1]. While it is true that some rocks have susceptibility greater than 1.0 S.I. units MAG3D assumes small susceptibilities. However, in the case of very high magnetic susceptibilities, the relation between the incident and induced magnetization is no longer linear and the problem becomes more complicated. This, inverting the data in the presence of very high susceptibilities is still a topic of research, and the current version of MAG3D (4.0) does not allow for high susceptibilities in the solution.

2.2 DATA AND MAG3D PARAMETERS

The magnetic data were presented in Geosoft database with X, Y coordinates in UTM zone 19S (WGS84 datum) and raw data and diurnally corrected data. The coordinates were then re‐projected into Psad56 /UTM zone 19S coordinate system. The data underwent further processing including despiking using a non‐linear filtering followed by a smoothing filter (upward continuation of 25m). The residual magnetic anomaly was calculated by removing the regional component (IGRF) from the corrected data. The elevations derived from the SRTM were used for station elevations.

The input data for the MAG3D inversion code[3] was the filtered residual magnetic anomaly with station location and a topographic file derived from the SRTM. This report discusses the data and inversion results within the La Chulula Prospect. However, the 3D inversion used other magnetic data available around this prospect to achieve a better 3D solution. The size of the mesh in the horizontal direction (EW and NS) was fixed at 20m, whereas it was variable in the vertical direction, starting from 10m and increasing gradually up to 100m. The inversion was carried out with no constraints using a homogenous half space of 0.001 SI.units (Système International). The inversion assumes the following assumptions:

The magnetic susceptibility varies within a range of [0, 1] and there is no negative susceptibility.
Only induced magnetization is in effect and there is no remnant magnetization.

3 UBC‐GIF, 2005

QUANTEC GEOSCIENCE LTD

A comprehensive overview about the inversion theory can be found in the papers listed in the References section of this report.

The inversion parameters are provided in Table 2‐1 below.

Table 2‐1: 3D magnetic inversion parameters for La Chulula Prospect.

*Table 2‐1: 3D magnetic inversion parameters for La Chulula Prospect.*	*Table 2‐1: 3D magnetic inversion parameters for La Chulula Prospect.*

UBC 3D Magnetic Inversion Parameters
No. of inverted data points	3,031
Mesh size	109 x 122 x 145
EW cell size	20m
NS cell size	20m
Vertical mesh size	Variable(startingfrom 10m)
Weightingoption	depth
Mode	Chi factor(=1)
Initial model	Half‐space(0.001 SI)
Iterations	6

2.3 DIGITAL ARCHIVE

The DVD attached to this report contains a copy of all the inversion results, Geosoft files including the 3D voxel, 3D inversion results in XYZ format, and an electronic copy of this report.

2.4 DISCUSSION OF RESULTS

Figure 2‐1 illustrates the residual magnetic anomaly (upward continued to 25m) used for the inversion and the susceptibility voxel model (3D solution) of the lower boundary of which is clipped at 0.25 SI. The residual magnetic anomaly shows very strong anomalous patterns with alternating strong negative (<‐ 2400 nT) and strong positive anomalies (>4400 nT). The main feature seems to be roughly trending north‐south in the survey grid. The entire grid is presumably depicting this linear structure and no other prominent features are evident. The same anomaly is well modelled in the 3D inversion as seen in the voxel model. The top and bottom of the voxel model in Figure 2‐1 is clipped at 500m and 0m elevations respectively for better illustration of the highly susceptible zones.

In order to analyze the 3D results, a series of plan maps (elevation slices) and vertical sections were generated from the voxel model. Figure 2‐2 shows a 3D view of a combination of some horizontal slices and vertical sections. Separate figures are also included for elevation slices and vertical sections in Figure 2‐3 and Figure 2‐4 respectively for reference.

QUANT E C GEOSCIENCE LTD

==> picture [58 x 64] intentionally omitted <==

==> picture [59 x 64] intentionally omitted <==

==> picture [58 x 64] intentionally omitted <==

==> picture [42 x 88] intentionally omitted <==

==> picture [27 x 147] intentionally omitted <==