CONICO LTD — Interim / Quarterly Report 2009

Jan 26, 2010

ACN 119 057 457

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ASX QUARTERLY REPORT FOR PERIOD ENDED 31ST DECEMBER 2009

HIGHLIGHTS

MT THIRSTY PROJECT (WA)

Mt Thirsty Co-Ni-Mn Oxide Resource

• Metallurgical process development work continuing with favourable results.

• Current elevated cobalt prices (~$US40/lb) enhance project economics.

Nickel Sulphide Exploration

• Nickel sulphide exploration continues, footwall attitude determined, deepening of hole MTDD008 planned.

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Woodcutters
Prospect
E63/373
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Figure 1: Mt Thirsty project location and regional geology.

Level 40, Exchange Plaza 2 The Esplanade, Perth, Western Australia 6000 Telephone: (08) 9282 5889 Facsimile: (08) 9282 5855 Website: www.fissionenergy.com.au

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Report for December Quarter 2009

MT THIRSTY Co -Ni -Mn PROJECT (Fission 50%)

The Mt Thirsty Cobalt –Nickel -Manganese oxide project covering an area of 54km[2] is located 20km north-northwest of Norseman (Figure 1). Fission through its wholly owned subsidiary Meteore Metals Limited owns 50% of the project in joint venture with Barra Resources Limited. The Mt Thirsty deposit has the potential to emerge as a significant world cobalt supplier. Metallurgical testwork indicates that high recoveries of cobalt, nickel and manganese can be achieved through low temperature atmospheric leaching.

Mt Thirsty has a current JORC Indicated Resource of 14.8 million tonnes at 0.14% Cobalt, 0.59% Nickel and 0.99% Manganese and a JORC Inferred Resource of 14.2 million tonnes at 0.11% Cobalt, 0.52% Nickel and 0.77% Manganese over a length of 1.3 kilometres and a width of up to 850 metres.

As well as the Cobalt-Nickel–Manganese oxide resource, the Mt Thirsty joint venture tenements have potential for nickel sulphide mineralisation at greater depth within the same ultramafic sequence which hosts the near surface oxide deposit.

Mt Thirsty Ni –Co- Mn Oxide Deposit

Process Development and Feasibility Study

Process development testwork continued during the quarter under the direction of IMO (Independent Metallurgical Operations Ltd) and will be completed in February 2010. (IMO were specifically selected by the joint venturers to carry out this work in view of their particular experience and expertise in the processing of nickel – cobalt oxide deposits as well as broader commercial aspects of these businesses.)

A simplified version of the base line flowsheet, developed by IMO, is shown in Figure 4. A processing plant designed on this flowsheet would produce a mixed sulphide precipitate (MSP) containing cobalt and nickel and a separate manganese carbonate product.

Initial tests by IMO indicated that a two stage leach involving separate high and low Fe feed stocks would give optimal results. The latest testwork suggests that a simpler and more cost effective single stage leach can be achieved with SO2 injected to minimise Fe[2+] generation while maintaining favourable metal recoveries (Figure 5).

A pre-feasibility study is scheduled to commence in August 2010 following preparation of a process package and selection of the successful tenderer.

[2]

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Report for December Quarter 2009

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Figure 4

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100 4.0
90
80 3.2
70
Ni Co
60 2.4
Fe Mn
50
Free Acid Fe (II)
40 1.6
30
20 0.8
10
0 0.0
0 5 10 15 20 25
Time (hrs)
Fe(II) Tenor (g/L)
Extraction (%) or Free acid (g/L)
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Figure 5: Single Stage Leach – Extraction/Time curves for Ni, Co, Mn & Fe

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Report for December Quarter 2009

Nickel Sulphide Exploration

Background

Primary nickel sulphide mineralisation was discovered in the first diamond hole MTDD008, drilled by the joint venture partners in the June quarter 2009 to test a strong EM anomaly. The hole was drilled to 1,080m (the depth capacity of the drill rig) due to the continuing presence of sulphides. The aim was to intersect the lower basal footwall contact where the best concentration of nickel might be expected. Basal lava channel embayments located on ultramafic-basalt contacts are a preferred location for nickel sulphide accumulations eg. in the Kambalda region.

A very thick sequence of originally olivine-rich, cumulate - textured ultramafic rocks comprising at least three separate units was intersected in MTDD008. These rocks contain variable amounts of disseminated, vein and stringer-style sulphide mineralisation. The footwall contact was not reached in the drill hole due to likely thickening of the unit.

Drilling Results

Nickel sulphide exploration continued during the quarter with another two diamond holes drilled to test the basal footwall contact at shallow depth within E63/373 (Figure 2) at Mt Thirsty and one hole to test an off hole EM conductor at the Woodcutters prospect, 6km to the north west.

Hole MTDD010 collared at (GDA94) 6447400N/37127E (Az. 270[o] , incl. -65[o] ) was drilled on the same section as MTDD008 but much further up dip and encountered thick flows of olivine cumulate rocks. A narrow zone of stringer and disseminated sulphide mineralisation was intersected at 276m. The hole was terminated at 529.3m after entering a thick (+120m) pegmatite intrusion and failed to intersect the footwall contact.

MTDD011 was collared 420m to the south of MTDD010 at 6446980N/371200E (Az. 270[o] , incl. -65[o] ). This hole passed through a thicker sequence of cumulate rocks and a narrow (0.45m) zone of heavily disseminated and stringer sulphides (pyrrhotite, pyrite and chalcopyrite) was intersected at the base of a cumulate flow at 312.5m. The footwall contact was intersected at 478m implying an overall dip of 50[o] . A 10m thick zone of 5-8% disseminated sulphides was intersected above the footwall contact however no significant Ni assays were obtained from this interval. The hole was terminated at 588m.

Both holes MTDD010 and 011 also intersected thin (<1m) zones of zinc mineralisation, up to 6.25% Zn over 0.6m from 312.0 to 312.6m in hole MTDD011.The elevated zinc assays are associated with the presence of a massive black Zn bearing oxide? mineral which is believed to be franklinite. The latter may have formed as a skarn mineral related to the intrusion of the nearby pegmatites. The economic significance of this unusual style of zinc mineralisation within the ultramafics is uncertain at this stage. Zinc assays for the mineralised intervals are displayed in Table 1.

Table 1: Zn Assays

Hole No	From m	To m	Interval m	Zn Assay %	Total Depth m
MTDD010	275.91	276.67	0.76	1.20	529.3
MTDD011	312.00	312.60	0.60	6.25	588.0
	485.46	485.62	0.16	1.60

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Report for December Quarter 2009

At the Woodcutters prospect hole WCDD002 (6451232N/367556E, Az. 290[o] , Incl. -70[o] ) was drilled to target the strong off hole conductor detected in hole WCDD001 at 255m depth. This latest hole intersected a thick sequence of peridotite with minor pegmatite intrusions above the footwall contact at 241.9m. No sulphide mineralisation was observed however a 2m thick sulphidic black shale unit is present at the footwall contact and is most likely the cause of the off hole EM anomaly in WCDD001.

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Figure 2: Mt Thirsty diamond drill hole locations over TMI magnetic image showing interpreted footwall contact. Black dots are previous holes testing oxide resource.

Forthcoming Program

Exploration in the March quarter will include extending hole MTDD008 which was drilled in mid 2009 to 1,084m, the depth capacity of the drilling rig, and failed to reach the footwall contact. A larger capacity rig will be used to test the footwall target zone as shown in Figure 3. Should any signficant nickel sulphides be intersected near the footwall it may be possible to track these to shallower depths.

MTDD008 intersected several zones of disseminated and stringer sulphide mineralisation including some minor nickel sulphides. Of some encouragement was the intersection of a 6 centimetre thick fragment of massive sulphide including pentlandite (Ni bearing sulphide) caught up in a much younger Proterozoic aged mafic dyke. Narrow Proterozoic dykes are common in the Norseman-Kambalda area but don’t normally contain nickel sulphide mineralisation. It is thought that during its emplacement from depth the dyke may have picked up nickel sulphides from the basal footwall contact.

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Report for December Quarter 2009

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MTDD011
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Figure 3: Mt Thirsty Interpreted East-West Geological Cross Section through drill hole MTDD008 showing projected location of hole MTDD011, and spot Niton* readings of stringer sulphide veins and interpreted basal footwall target zone.

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Greg Solomon Executive Chairman

• Note: The nickel grade estimates for diamond hole MTDD008 shown in Figure 3 were estimated using a Niton XLT 592 portable XRF analyser. These spot estimates are indicative only and have been provided to demonstrate that some highly anomalous nickel values are present in the core. Niton XRF analysis is not considered a substitute for conventional analytical methods.

The interpretations and conclusions reached in this report are based on current geological theory and the best evidence available to the authors at the time of writing. It is the nature of all scientific conclusions that they are founded on an assessment of probabilities and, however high these probabilities might be, they make no claim for complete certainty. Any economic decisions that might be taken on the basis of interpretations or conclusions contained in this report will therefore carry an element of risk.

The information in this announcement, insofar as it relates to Mineral Exploration activities, is based on information compiled Michael J. Glasson and Robert N Smith, who are members of the Australian Institute of Geoscientists, both of whom have more than five years experience in the field of activity being reported on. Mr Glasson and Mr Smith are consultants. Mr Glasson and Mr Smith have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Glasson and Mr Smith consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.

It should not be assumed that the reported Exploration Results will result, with further exploration, in the definition of a Mineral Resource.

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Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

FISSION ENERGY LTD

ABN 49 119 057 457

Quarter ended (“current quarter”) 31 December 2009

Consolidated statement of cash flow

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid – GST Refunds Received 1.7 Other (provide details if material)- Net Operating Cash Flows	Current quarter $A’000	Year to December (6 months) $A’000
	26 (364) (168) 20 39	33 (654) (347) 37 64
	(447)	(867)
Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c)other fixed assets 1.9 Proceeds from sale of: (a) prospects (b)equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	(405) (1) 3	(405) (1) 30
	(403)	(376)
	(850)	(1,243)

1.13 Total operating and investing cash flows (brought forward)	(850)	(1,243)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Share Application Monies Net financing cash flows	(73)	1,147
	(73)	1,147
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(923) 3,067 -	(96) 2,240 -
	2,144	2,144

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		185
		0
1.25	Explanation necessaryforanunderstanding ofthe transactions
	Placement fees were paid during the quarter to a company of which Mr GT Le Page and Mr James Richardson are directors Management Fees, as per agreement, were paid during the quarter to a company of which Mr GH Solomon and Mr DH Solomon are directors. Legal Fees were paid during the quarter to a firm of which Mr GH Solomon and Mr DH Solomon are partners. Directors Fees and Superannuation paid during the period. Reimbursement ofbona-fide expenses.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Not applicable

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available	Amount used
		$A’000	$A’000
3.1	Loan facilities	Nil	Nil
3.2	Credit standby arrangements	Nil	Nil

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development	$A’000
	300
Total	300

Subsequent to end of quarter additional capital has been raised to fund part of this expenditure.

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	2,144	3,067
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	2,144	3,067

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions	NOT APPLICABLE
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Increase release from Escrow (b) Decreases through returns of capital, buy-backs	126,930,258	126,930,258
	1,400,000	1,400,000	$0.16 per share (with 1 free attaching option for every 2 shares)	$0.16 per share
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	NOT APPLICABLE
7.7 Options 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	1,000,000 44,824,992 1,000,000 511,508 3,000,000 500,000	NIL 44,824,992 NIL NIL NIL NIL	Exercise price 20 cents 20 cents 20 cents 20 cents 13.75 cents 19 cents	Expiry date 18 June 2010 28 February 2011 31 March 2011 16 April 2012 20 Nov 2012 26May2013
	700,000 3,000,000	700,000 3,000,000	20 cents 13.75 cents	28 February 2011 20 Nov 2012
7.11 Debentures (totals only)	NOT APPLICABLE
7.12 Unsecured notes (totals only)	NOT APPLICABLE

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

AARON PHILIP GATES COMPANY SECRETARY / CFO Date: 27 January 2010

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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