CANNINDAH RESOURCES LIMITED — Interim / Quarterly Report 2021

Jul 28, 2021

ASX RELEASE 29 July 2021

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ASX Code: CAE

Quarterly Activities Report to 30 June 2021

Highlights

• During the quarter Cannindah Resources Limited commenced its planned drilling program at the Piccadilly project (ASX release 7[th] of June). Post the completion of successful trenching in the prospect area known as ‘the bend’ along with other areas of interest at Piccadilly the drilling program was commenced. This initial drilling program completed 36 reverse circulation percussion holes for a total of 2,437m of drilling resulting in 2541 samples (including QA-QC) being sent to the lab for assaying.(see ASX release 07 July 2021). The final results of these assays were not completed by the end of the quarter and our consulting geologists are currently compiling a report showing the location of the holes and gold grades achieved from this program which will be finalised in the next couple of weeks. The board was very pleased with the outcome of the Piccadilly drilling program being completed on time and under budget.

• Also during the quarter work continued on the significant Mt Cannindah copper gold project south of Gladstone. In keeping with our excellent relationship with the landholder, and our policy to employ local resources where possible we engaged his services to complete numerous drill pads at Mt Cannindah. During the quarter significant planning meetings occurred which produced a 3-D model of the existing drilling within the current resource area and outlined significant further areas of interest to be explored by the upcoming diamond drilling program. Approximately 1450m of diamond drilling will be completed in the coming weeks at the Mt Cannindah breccia and the Cannindah East copper/gold project area. The program will identify areas which may extend the current JORC resource, determine the continuity of higher grade copper and gold zones, and possibly locate new areas of follow up. At the time of writing this report the drill rig was on site at Mt Cannindah along with geologists Simon Beams and Mike Barr from Terra Search.

• The Mt Cannindah project is going to provide the company with a significant amount of target area to explore in the coming months. With the recent increase in the copper price, the significant exploration areas and the existing JORC resource determined in 2011 at 5.5MT @ .93% Cu demonstrates the underlying value of the significant Mt Cannindah copper gold project.

• The Piccadilly project consists of one mining lease (ML1442) and two EPMs (16198 and 18322). The project is well placed within the Charters Towers region, approximately 80km from Townsville and accessible from Harvey Range Road (sealed), with existing infrastructure giving easy access to power. The area has been historically mined for gold in multiple locations within the tenure. An extensive ground-based exploration program has been undertaken by Piccadilly Gold Mine Holdings Limited, and more recently has been further improved by Cannindah Resources Limited with trenching and we look forward to the outcome of the drilling reporting. The geochemical signatures of the rock chips and soil (namely elevated zinc, molybdenum, tungsten, and bismuth) confirm similarity with other intrusive related gold systems in North Queensland such as Kidston, Mt Leyshon, Mt Wright, Mungana, and Keelbottom.

• The board is excited to have exploration activity being conducted over the two high quality projects held by Cannindah Resources Limited. The board will be receiving significant data compiled during the quarter from our consulting geologists who will be providing a report in the coming days on the Piccadilly project drilling. Also forthcoming in the coming weeks will be data from drilling at the Mt Cannindah project. The board looks forward to providing shareholders with significant news flow regarding both project areas in the very near future.

• During the quarter the applications for the new EPMs at Percy Marlow were progressed with the Environmental authority approval being received for both EPM 27788 and EPM 27841.

Corporate

• In the last quarter the company indicated it had raised funds to complete drilling. This funding remains adequate for our planned and current programs across both projects.

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• In the last quarter the company expressed an intention to drill at Mt Cannindah we expect that this will be completed in the next month as the drill rig is now on site.

• Payments to related parties for the period (refer Section 6 of the Appendix 5B) totalled $40,453 and represented payments of director fees

• The cash balance at the date of this report (29 July 2021) is $1.22 million.

• The company remains debt free.

• The Board is currently working through the usual commercial discussions that occur when certain commercial transactions are contemplated both in terms of future commercial opportunities. The company will update shareholders on any discussions regarding any such developments as they occur.

PROJECTS:

New EPM application area

EPMA Percy Marlow abuts CAE’s Piccadilly project tenement package in the Burdekin Basin region, represented by granted EPMs 18322, 16198 and ML1442. The Percy Marlow EPMA is situated in the Townsville -Charters Towers Mining District within the Charters Towers Regional Local Government Authority and within UTM Zone 55 (MGA). EPMA is located 5km to 50 km to the north of Charters Towers.

The EPMA is transected by the Burdekin River. Access to the tenement is (1) on the south side via the Kennedy Development Rd (2) on the north and east side by the Flinders Highway, then the Dotswood - Marlow road from Mingela to Hervey Development Road then secondary roads and station tracks. The Dalrymple National Park, covering Mount Keelbottom, is excluded from the sub-blocks that overlap the EPMA area. The prospectivity of the Percy Marlow area for gold is highlighted by the following:

• For the past decade, CAE/PGMH has explored the Piccadilly region resulting in the development of a coherent intrusive related gold model which identifies the scale and gold prospective geological, geophysical and geochemical features.

• CAE will now adopt the same approach to explore the Percy Marlow area, CAE is in a unique position to utilize the Piccadilly experience to apply scale , geophysical modelling of magnetics and IP and multi-element zoning patterns through the EPMA area.

• Terra Search managed previous exploration over the Marlow area. In the late 1980s this led to delineation of high grade gold zones at the nearby Keelbottom Prospect and the discovery of a buried strong magnetic feature at Marlow.

• Subsequent drilling of the Marlow magnetic high revealed it to be gold bearing with a very high grade intersection of 2m @ 85 g/t Au , elevated copper 500ppm to 2350 ppm Cu and some other intersections of anomalous gold.

• In the past few years Terra Search has also been involved in enhancing the ground magnetic coverage of the area utilizing high resolution walking magnetometers, which have brought out key structural controls of mineralisation.

• Other prospective areas are highlighted by a number of old gold mines and known gold mineral occurrences such as Sandy Creek within the sub-blocks of the EPMA and Keelbottom and Percy Springs prospects adjacent to the EPMA.

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• CAE plans to leverage off their exploration consultant, Terra Search’s understanding of the geology of the area. For example, to the south, recent geological mapping updates carried out on behalf of the Geological Survey Queensland (GSQ) by Terra Search (Beams et al.,2016) have reinterpreted many of the Ravenswood Batholith granitic units in the area. This association is also enhanced by Terra Search’s unique store of geological and mineralisation knowledge of the Charters Towers – Ravenswood district, built up over decades of exploration through the district which documents published research and unpublished reports in this regard.

• A further enhancement is the reprocessing of regional geophysical data sets undertaken during desk top studies related to CAE’s assessment of the district.

• CAE has access to all surface geochemical, drill, and geological data that Terra Search has collated and compiled across the Charters Towers-Ravenswood region in the past 30 years, eg 1980’s projects onwards with compilations for explorers & DNRME.CAE/Terra Search will now apply the lesson learned, from Explorer 3 data interrogation to (1) target potential gold and copper systems which are coincident with prospective geological units and (2) to use surface geochemical sampling and geological prospecting to screen the area for multi-element signatures of large scale intrusive related mineral systems.

• CAE’s exploration approach will be to utilize proven surface geochemical exploration methods, that our experience shows work for the Charters Towers-Ravenswood region, such as stream sediment (-80 mesh and -2mm samples), soil, rock chip sampling, geological prospecting, and integrate these with innovative exploration such as associated stream sediment sampling of the coarse fraction (-5mm +2mm) or mixed media Lag, Bulk Cyanide Leach samples and Heavy Mineral Concentrates.

• Such an approach will ensure that, in addition to sensitive gold analysis, many of the previously un-sampled critical metals, will be picked up. Data processing will extend to sophisticated statistical analysis (eg Principal Component Analysis).

• CAE /Terra Search is in a position to initially deploy a range of geophysical surveying instruments such as high-resolution magnetometers and gravity meters. These geophysical instruments will be particularly relevant to tracking prospective geological units having magnetic and density contrasts. Shoot controls are of particular interest to the initial exploration stage.

• Exploration of this EPMA would be directed primarily to drill testing of targets that are likely to have been enhanced with electrical geophysics (IP and EM).

• Percy Marlow EPMA rationale has been formulated by CAE/Terra Search as a local exploration group with decades of expertise and practical knowledge across north Queensland and elsewhere, CAE/Terra Search are still hungry to repeat past exploration successes. The attraction of CAE’s strategic Percy Marlow project is that any discovery will be ideally located, close to the mining centre of Charters Towers and extremely welcome at a time when mined resources in the district are diminishing faster than new discoveries have been replacing them.

• In summary, as Percy Marlow EPM title holders, CAE/PGMH will add immediate value to the project. Cost effective and innovative exploration will begin immediately the EPM is granted, as CAE/Terra Search “hit the ground running” following up targets and concepts that we have developed from years of experience in the region.

• With the benefit of its pre-existing knowledge base and data sets, CAE/Terra Search rates the chances of making a discovery of economic benefit to this region of Queensland as high and looks forward to the progress of this EPM application.

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Piccadilly Project

Cannindah Resources Limited has purchased Piccadilly Gold Mine Holdings Limited to gain access to 174.35 km[2] surrounding the mining lease at Piccadilly. As a result of this deal being completed, EPMs 16198 and 18322 are now under the operational control of Cannindah Resources Limited (see Figure 1 below).

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Figure 1: Location of EPM’s and Piccadilly Mining Lease.

The EPMs surrounding the mining lease have already had significant exploration work completed on them. Cannindah now has the benefit of reviewing this data and complimenting it with the data obtained from exploration completed within the mining lease to date. The high-grade quartz vein material from the mining lease was at first thought to be the only significant gold-bearing material. However, recent work completed by Cannindah Resources Limited has found that the mineralised area is in fact much larger than first thought, and runs across significant widths (e.g. 8m @ 6.99g/t Au from ASX release 25[th] of August 2017). This discovery prompted further consideration of the existing exploration model that Cannindah Resources’ consultants Terra Search and Klondike have developed for the Piccadilly Mining District, in which the ultimate source of the gold mineralising fluid is an interpreted intrusive centre located approximately 1.5 km to the south of the mining lease. With the purchase of Piccadilly Gold Mine Holdings Limited, we have now secured the right to explore this area for a further 5 year term as the EPMs 16198 and 18322 have only just been renewed.

Terra Search have been involved in the exploration of the surrounding EPMs for Piccadilly Gold Mine Holdings Limited from the early stages of the program. Dr Gregg Morrison from Klondike Exploration Services has directed his extensive international gold exploration experience to understanding and interpreting the Piccadilly Gold Mining District. Dr Morrison has previously developed mineralisation and zoning models for north Queensland intrusive related gold mines such as Kidston, Mt Leyshon, and Mt Wright, which have cumulatively produced over 7 million ounces of gold. Figure 2 below is the schematic exploration model that Dr Morrison has interpreted for the Piccadilly Mining District on the basis of existing exploration data. Cannindah Resources’ consultants consider that the multi-element,

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geochemical zoning pattern that occurs over several kilometres at Piccadilly is similar in style and scale to the other major north Queensland intrusive gold systems.

Figure 2: Schematic Model of Interpreted Intrusive Related mineral system at Piccadilly. Note idealised geological north south cross section, looking west (after Beams & Morrison, 2015)

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Figure 2 shows the Piccadilly Mining Lease to the north, with suggested mineralisation dipping to the south towards the intrusive related source. It is interesting to note that this figure was created some years ago by Dr Morrison, on behalf of Piccadilly Gold Mine Holdings Limited, and that the recent work completed by Cannindah Resources Limited has confirmed that the high-grade gold in the Mining Lease does indeed dip to the south towards this area.

Given the cross-sectional dimension in Figure 2, the interpreted intrusive related gold system target potentially presents Cannindah with a very large, bulk-tonnage gold target area that is drill ready and kilometres in scale. A number of geological, geochemical and geophysical surveys have been completed across the EPMs surrounding the mining lease:

• Rock chip sampling

• Soil sampling

• Geological mapping

• PIMA mineralogical determination

• Ground based magnetic geophysical survey

• Induced Polarisation geophysical survey

• Portable XRF analysis

Cannindah Resources Limited has undertaken to review this data in conjunction with work currently being evaluated within the mining lease area to establish a targeted drilling program. Some 34.8km of IP surveying has been completed, resulting in a clearly defined target zone for the intrusion-centred gold system. Figure 3 below shows an image of the IP chargeability anomaly modelled at 106m. The image is a predictive model of the intensity of sulphide development that appears concentrated in and south of the ML.

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Figure 3. Image of modelled IP Chargeability at a depth slice of 106m below surface , overlain with surface rock chip colour coded gold values .

The IP anomaly show above overlaps with an even more extensive area of gold anomalies in both rock chip and soil samples. The line of proposed drill holes outlined in Figure 3 commences from the area where Cannindah has confirmed mineralisation within the Mining Lease boundary and steps to the south across the set veins and the southdipping master structure that is highlighted by the more intense IP anomaly. Given the high-grade gold material obtained in the recent exploration and announced to the ASX over recent months, Cannindah is very excited to be planning the exploration of this potentially company-making target – a target that has many times been described by consultants as sharing similar geochemical zoning patterns to major North Queensland intrusive related gold systems such as Kidston, Mt Leyshon, and Mt Wright.

The focus of the company is to develop a drilling program to confirm the existence of a large-scale, bulk-tonnage target that is currently expressed as being kilometres in scale. Cannindah Resources Limited will continue to work through the significant amount of existing data sets covering the Piccadilly Mining District to ensure that the upcoming drilling is highly targeted and expands outwards from known mineralisation. Recently a request for further reports on the area which were not contained in the open file with the department was made to the DNRME. After some discussion by Dr Simon Beams on the company’s behalf the report was released to Cannindah Resources Limited. This report contains previously unknown drilling data from many years ago and Terra Search are currently entering the drill hole assay data into the data set for Piccadilly.

We are very focussed on delivering a great outcome for shareholders over the coming months ahead as further work occurs in relation to the EPM area along with the ML.

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Figure 4: Location of Second Trench Relative to Western Slot

Mount Cannindah Project

Located approx. 100km south of Gladstone, Qld

• The Mt Cannindah Project represents a large (greater than 9km2) high level “porphyry style” Cu-Mo-Au mineralised system. Of particular interest is the potential for gold mineralisation within the existing mining lease area which has previously been underexplored on top of its existing resource. Geological interpretation of key targets within this gold bearing porphyry copper system reveal similarities to the style of mineralisation at Newcrest’s Cadia and Ridgeway Cu/Au deposits in NSW.

• Historical drilling within the area of Mt Cannindah North returned very interesting gold grades worthy of further investigation as it relates to the gold system at Mt Cannindah, such as QMCMDD025 ( 20cm @ 46.4 g/t Au & 98.2 g/t Ag at 245m), in QMCMRC016 ( 2m @ 2.54 g/t Au , 8.9 g/t Ag & 0.39% Cu from 16 to 18m, and 3m @ 5.28 g/t Au , 7.2 g/t Ag & 0.32% Cu from 25-28m) and in RC53 ( 4m @ 1.8 g/t Au from 116 to 120m), and in CM21 ( 10m @ 2.29 g/t Au , 12.6 g/t Ag & 0.33% Cu from 12 to 22m ).

• The company intends to continue this desktop review and will plan a gold focussed exploration program within the target areas that are identified. The company is very fortunate to have these high quality prospect areas that it is able to pursue once discussions surrounding funding and corporate transactions have concluded.

The following summary of the prospect areas provides an insight into some of the potential for the known target areas within the Cannindah project for further exploration:

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Figure 5: Mt Cannindah Project – Map of Potential Target areas

Little Wonder-Midway-Cannindah East Prospects

The presence of a significant breccia fault structure has been confirmed between Little Wonder (LW) and Cannindah East (CE). This structure hosts felsic dykes that have introduced hydrothermal fluids, which have altered and mineralised the fault breccia in proximity to the felsic dykes. High grade Au-Ag veins are known at LW and CE within strong alteration. Both these areas (and Midway) are now drill targets for extensions to mineralisation and to possibly locate high grade veins that could be mined by underground methods.

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North Mt Cannindah

It is apparent that the potential northerly extension of the Mt Cannindah mineralisation has not been adequately tested. Several historical shallow holes in this area may not have been deep enough (or were poorly positioned) to test for plunging mineralisation. A very deep angle hole drilled from the west (CARCD003) may not have gone far enough or could be too deep at this location (about 550m below surface) for a realistic test. The presence of weak mineralisation in DDH017 is encouraging for possible mineralisation continuing to the north or north-east.

Also encouraging is that core hole QMCMDD017 shows good Cu-Au-Ag mineralisation at depth below very low grades in DDH019, RC52, CM21 & QMCMRC016, indicating that good mineralisation is deepening to the north-north-east. To test for deeper northerly extensions of the mineralised zone, it is proposed that one or two angle holes be drilled from east to west, to “scissor” the known intercepts in QMCMDD010 & 025. If successful, additional drilling could be done on 25m intervals to provide extensions to the known Cannindah resource area. These E to W holes would also test the Au-Ag intercepts in QMCMDD025 (20m @ 46.4 g/t Au & 98.2 g/t Ag at 245m), in QMCMRC016 (2m @ 2.54 g/t Au, 8.9 g/t Ag & 0.39% Cu from 16 to 18m, and 3m @ 5.28 g/t Au, 7.2 g/t Ag & 0.32% Cu from 25-28m), in RC53 (4m @ 1.8 g/t Au from 116 to 120m), and in CM21 (10m @ 2.29 g/t Au, 12.6 g/t Ag & 0.33% Cu from 12 to 22m).

East Ridge (Blockade) Prospect

The significance of the three MIM holes and Newcrest’s MC002 is that they show the East Ridge contains sporadic anomalous gold, silver, and copper mineralisation within the altered angular breccia that makes up much of this East Ridge. Combined with the presence of old gold workings (Blockade), local anomalous soils, and a deep IP anomaly, this makes this East Ridge area a potential target for deeper Cu-Ag-Au mineralisation. It is possible the altered breccia over the East Ridge is actually an upper “alteration plume” that could zone downward into significant mineralisation with higher sulphide content in breccia and veins.

It is surprising that west azimuth angle holes were not used in the past to test the Mt Cannindah “ore zone” by drilling under the East Ridge (Blockade Mine). It is proposed that reconnaissance and research be done in this area, including two or three IP lines. If further encouragement can be raised for this Blockade area, then two or three angle holes could be drilled to the west under the central part of this ridge.

South Mt Cannindah & Mt Theodore

South Mt Cannindah: The previous drilling immediately south of the “ore body” at Mt Cannindah shows narrower zones of weak copper and gold mineralisation (about 0.40 to 0.60% Cu and 0.1 to 1.0 g/t Au & 3 to 5 g/t Ag) extending for about 50 to 75m south (see DDH012 & 032 and QMCMDD009 and CARCD001). There is a short gap due to a failed drill hole (DDH013), before mineralisation picks up from 150 to 250m in three holes close to Mt Theodore (see DDH016 & 027 and CARCD004). The intercept in hole DDH016 is the most significant with 14.3m @ 1.64% Cu, 0.67 g/t Au & 28.4 g/t Ag (including8.2m @ 2.33% Cu, 0.73 g/t Au & 32.6 g/t Ag). This DDH016 intercept is at 200m vertical depth and lies beneath a much weaker zone in DDH015, which is at 50m vertical depth. This provides encouragement that the grade and thickness of mineralisation is increasing with depth. The intercept in DDH027, which is located 65m south of DDH016, continues this zone with 18.5m @ 0.75% Cu, about 0.2 g/t Au, & ~11 g/t Ag at 100m vertical depth. Within the DDH027 intercept there are three narrow high-grade intervals (0.5 to 1.0m) with 2.4 to 6.6% Cu, 0.31 to 1.55 g/t Au, & 28 to 54 g/t Ag. The mineralised zone in CARCD004 appears to be a separate zone, which is more a gold zone rather than a copper and silver zone as in DDH016 & 027. This broad gold zone in CARCD004 could be related to the alteration centred on Mt Theodore (see below). The mineralised zone in DDH016 should have been intersected deep in CARCD004 at about 300m vertical depth. The fact that this did not happen means that the mineralised zones in DDH016 & 027 have either been faulted out of this projected position, or it has weakened considerably at this

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location. This could be a case of fluids just not accessing the “structure” at this location due to lack of dilation or other controls such as dyke emplacement.

Mt Theodore: Although Mt Theodore is made up of strongly brecciated rock, it is a relatively high hill due to the strong alteration that has healed the breccia and made it resistant to erosion. This alteration is related to at least two felsic dykes that intrude the breccia on Mt Theodore. The altered breccia contains significant sulphide mineralisation that, based on analysis, would appear to be mostly pyrite. However, there is some gold anomalism that is present in the soils, and locally in the rock, that was the focus of early miners. Some low-level copper is also present in soils. The presence of sulphides at depth is supported by two IP lines that show moderate chargeability responses under Mt Theodore.

The potential for gold mineralisation under Mt Theodore is enhanced by hole CARCD004 which is located about 150m NNE of Mt Theodore. CARCD004 contains an intercept of 75m @ 0.23 g/t Au, at a vertical depth of 250m. It could be this is the outer fringe of what may lie beneath Mt Theodore. The high Cu-Au-Ag intercepts in holes DDH016 & 027 lie just to the north-east of Mt Theodore, and may be present at depth along the east side of Mt Theodore.

No drill holes have tested under Mt Theodore, and no explanation is made for the large volume of alteration. It is possible this alteration is a cap or plume above significant Au-Ag and Cu-Au-Ag mineralisation in a vein-breccia system associated with felsic dykes. It is proposed that a significant effort be made to test for deeper mineralisation to the south of Mt Cannindah, and in particular under Mt Theodore. This should entail the use of an IP/resistivity survey looking to depth (~300m), followed by moderately deep drilling to test chargeability anomalies and specifically under the alteration zone at Mt Theodore.

Apple Tree

The Apple Tree prospect is a broad fault breccia zone that has been intruded by multiple felsic dykes that have released hydrothermal fluids into the breccia, adjacent to the dyke contacts. The fluids have provided significant copper, silver, gold, and molybdenum into the re-fractured and brecciated altered rock. The zone of known mineralisation is up to 800 metres long and 50 metres wide and none of the earlier drilling has tested below about 36 metres depth. A deep IP chargeability response is present, opening up the possibility for a deeply mineralised system. It is proposed that a detailed IP survey be conducted over Apple Tree with the aim of defining drill targets at depth and along strike.

United Allies

The United Allies prospect has several historical high-grade copper drill intercepts that appear to be associated with felsic dykes and related hydrothermal alteration and mineralisation. The dykes have intruded into structures within a broad polymict breccia zone that is thought to trend NE-SW.

The breccia has undergone variable argillic to phyllic alteration with local silicic alteration that has healed the breccia. It is noted that the alteration in the Newcrest core hole (MC004) appears to be stronger and more widespread than the alteration seen in the trenches. Almost all of the breccia in the MC004 appears to be strongly altered, whereas the surface trenches show local zones of alteration within larger areas of clayey matrix breccia (thought to be a fault breccia). Hence, the more pervasive alteration in MC004 may indicate a strengthening of alteration with depth.

A very deep IP response occurs beneath United Allies on the IP sections produced by GeoDiscovery in 2011. This needs further reprocessing work.

The presence of higher copper assays with maroon coloured limonite at around 100m downhole in MC004 (est. ~70m vertical depth), may indicate deep oxidation and supergene copper mineralisation. This possibility appears to be supported by several of the MIM holes in the vicinity of MC004, where significant copper mineralisation is present to over 40m depth. The possibility for deeper supergene copper could improve the resource potential of this area.

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Most of the early drilling was vertical and did not target the dyke/alteration structures. Hence many holes only returned modest copper results. Where drill holes did intersect dyke edges, the copper grade was generally quite high. It is proposed to drill several angled drill holes to test the dyke/structure contacts at about the level of supergene enrichment. This could add significant resource tonnes for the prospect. An IP survey would also be helpful in trying to define the deep chargeability response seen below United Allies.

Lifesaver, Monument, South Monument, & Dunno

These four prospects contain significant vein and breccia mineralisation related to structures and felsic dykes that have introduced the hydrothermal solutions. These mineralised structures are closely related to very strong soil assays for copper, gold, and molybdenum throughout the greater area. It is apparent that many of the ridges in this area are underlain by similar mineralised structures.

The presence of good copper and local gold mineralisation in trenches and shallow drill holes a Monument, Lifesaver, and Dunno raise the possibility that these areas could be considered potential open pit targets, as well as possible underground targets for high grade Cu-Au-Ag veins.

It is proposed that shallow angle drilling be done on all of these prospects to better define the mineralised structures. Assuming encouraging results, the shallow drilling could be followed by an IP/resistivity survey to define the mineralised structures to depth. This could then be followed by deeper drilling to test the mineralised structures at depth.

Monument Ridge

Monument Ridge contains two types of hydrothermal breccia that are associated with faulting and the intrusion of felsic dykes. Gold in soils are strongly anomalous on the central part of the ridge, and an IP chargeability anomaly appears to underlie the ridge. It is likely that altered sulphide-bearing structures occur in the core of Monument Ridge and possibly in several nearby ridges.

The Monument Ridge and other nearby ridges need to be mapped and sampled in more detail to better understand the structural control on potential deeper mineralisation. IP lines could be run at right-angles to ridges at strategic locations, to better define the chargeability responses under the ridges. Ultimately angled drill holes should be used to test for mineralisation underlying the ridges.

Barrimoon Vein

The sheer size of the Barrimoon vein and alteration structure makes it a viable target for a potential epithermal to mesothermal gold/silver deposit. The length is about 4 kilometres and the width of the shear/vein zone appears to be in the tens of metres.

The other positives for the Barrimoon vein are:

• The moderately anomalous assays for gold (0.05 to 0.21 g/t Au) and arsenic (100s of ppm As) from many rock chip samples at various locations along the vein.

• The presence of gold in gossan shears and veins in Carboniferous sediments at the Golden Crown gold prospect on the east end of the Barrimoon structure.

• The highly anomalous bismuth and tellurium in the rock and trench samples at Golden Crown.

• The presence of felsic dykes intruding into the Barrimoon structure, similar to that seen at Cannindah. This tends to support the connection of the Barrimoon vein to the Cannindah intrusive complex.

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 No drilling has tested the vein at the unconformity between the older sediments and younger overlying volcanics (other than at Golden Crown, which is 3-4 km from Cannindah).

Given the apparent high level of this vein in the epithermal-mesothermal system, it is suggested that this vein needs to be tested between 200m to 350m below the present surface. Ideally, drill holes should test just above and just below the level of the unconformity between the Carboniferous sediments and the overlying Triassic andesitic volcanics. The initial drilling could use RC holes angled north-west from the lower slopes on the south side of the vein.

Kalpowar Fault

If the Kalpowar Fault formed before or during the emplacement of the Cannindah Intrusive Complex, then there is a possibility it could be mineralised. More recent movement on this fault has allowed erosion to form the present river valley. Oxidation can be expected to be quite deep in a large fault occupying such a river valley. Thus, any sulphides present would also be oxidised to great depth and would be difficult to detect by IP.

If evidence arises showing the Kalpowar Fault is younger than the Cannindah intrusive complex, then nothing need be done. If, on the other hand, it remains debatable, then further work should be considered to resolve the question and target possible mineralised areas. This work could include the re-assessment of the Newcrest IP/resistivity data, followed by a new IP survey of two or three lines attempting to look deep on the most likely sites. If successful in finding a chargeability anomaly, then drilling could be contemplated.

For further information, please contact:

Tom Pickett Executive Chairman Ph: +61 7 5557 8791

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APPENDIX

TENEMENT TABLE

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TENEMENT TENEMENT
PROJECT NAME LOCATION
TYPE NUMBER
EPM 14524 Barrimoon Queensland
EPM 15261 Mt Cannindah 2 Queensland
ML 3201 Mt Cannindah Queensland
ML 3202 Mt Cannindah Queensland
ML 3203 Mt Cannindah Queensland
ML 3204 Mt Cannindah Extended 1 Queensland
ML 3205 Mt Cannindah Extended 2 Queensland
ML 3206 Mt Cannindah Extended 3 Queensland
ML 3207 Mt Cannindah Extended 4 Queensland
ML 3208 Mt Cannindah Extended 5 Queensland
ML 3209 Mt Cannindah Extended 6 Queensland
ML 1442 Piccadilly Queensland
EPM 16198 Piccadilly Queensland
EPM 18322 Piccadilly Queensland
EPMA 27788 Percy Marlow Queensland
EPMA 27841 Percy Windsor Queensland
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The Piccadilly mining lease and EPM’s are held by Piccadilly Gold Mines Holdings Limited a 100% owned subsidiary of CAE.

All tenements are 100% held by CAE with no farm in / farm out arrangements in existence at the end of the quarter and at the date of this statement.