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FENIX RESOURCES LTD Interim / Quarterly Report 2011

Apr 28, 2011

64910_rns_2011-04-28_4d593a4a-bb62-4ca9-bfe3-abb149dfb0c8.pdf

Interim / Quarterly Report

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ASX QUARTERLY REPORT for the Period Ending — 31[st] March 2011

HIGHLIGHTS

EMERGENT REOURCES LIMITED

2011 GROWTH STRATEGY UNVEILED

“An emerging Western Australian mineral resource company focused on iron, gold, base metals and uranium”

ASX Code: EMG

Total shares on issue 80,076,767 Unlisted options 4,746,443

Directors

Mr Wolfgang Fischer – Executive Chairman Mr Robert Boylan – Non Executive Director Mr Nick Martin – Non Executive Director

Nathan Lude – Chief Executive Officer

Projects

Beyondie Iron Project :

Working to develop the project into a world class, long term, high grade iron ore mining operation.

Glengarry Base Metal Project : Comprising 2500 square kilometres of highly prospective ground for Cu, Pb, Zn, precious metals and uranium.

Gold At Beyondie Project: Extension to the Plutonic Well Greenstone Belt with previous drilling for Au

  • Updated growth strategy released on March 21, targeting significant increase in company value and commercialisation of its quality assets.

BEYONDIE IRON PROJECT

  • Exploration focus to double the magnetite JORC inferred resource at Beyondie from 561 Mt to more than 1 Billion tonnes

  • Progressing exploration of hematite mineralisation to establish a JORC resource sufficient to underpin a hematite mining project at Beyondie

  • Moving to consummate strategic partnerships that will advance the commercial development of both Beyondie’s hematite and magnetite deposits.

  • Near-surface hematite provides potential options for the Company to deliver early positive cash flow from the project.

GOLD AT BEYONDIE

  • Significant gold potential lies in the eastern parts of Emergent’s Beyondie Tenure

  • Joint Venture with Raven Resources Pty Ltd

  • Emergent directly controls 21 km of the rich Plutonic Well Greeenstone Belt through two 100% owned tenements

  • Numerous +2 g/t gold intercepts in historical drilling never previously followed up

  • Shallow covers have masked much of the prospective geology

GLENGARRY PROJECTS

Mt Narryer Gold, Copper, Uranium Project: Exploring high order anomalies in important geological setting.

Marble Bar Copper, Gold Project: Potential for gold and VMS deposits.

Paterson Uranium, Copper, Gold Project: Potential for Kintyre, Maroochydore and Nifty style deposits.

  • 2011 field exploration commenced with MMI soil geochemistry and stream sediment surveys to be conducted

  • • Testing of priority base metal and uranium exploration targets, identified in the collaborative study with the CSIRO’s Minerals and Environmental Sensing Group

  • Drill targets to be delineated from soil sampling and geochemical survey results

  • Soil sampling completed at Mt Bartle and Diamond Well

  • Drilling to commence upon positive results being received

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QUARTERLY REPORT for the Period Ending — 31[st] March 2011

CORPORATE

2011 GROWTH STRATEGY:

On March 21, Emergent released its 2011 Growth Strategy, which is focussed on commercialising the huge potential of the Company’s iron ore project at Beyondie and unlocking the value of its base metal asset portfolio.

Emergent’s strategy for 2011 is focused on:

  • Doubling the Magnetite JORC inferred resource at Beyondie from 561 Mt to more than 1 Billon tonnes*.

  • Progressing exploration of Hematite mineralisation to establish a JORC resource sufficient to underpin a Hematite mining project at Beyondie.

  • Consummating strategic partnerships that will advance the commercial development of both Beyondie’s Hematite and Magnetite deposits.

  • Increasing the value of the non-ferrous assets by advancing the projects, either via more exploration and drilling by Emergent, joint venture partners, or through spin off.

  • Advancing the Company’s quality assets which host strong material upside potential in the short term

  • Building on a successful implementation of the short-term strategy introduced at the 2010 AGM.

  • As part of the 2011 strategy, Emergent has entered into preliminary and confidential discussions regarding accelerated commercialisation of its assets.

  • The Board’s confidence in Emergent’s strategic directions was highlighted by the acquisition of an additional 3 million shares by the Company’s Chairman.

The strategy was developed through a series of meetings of the Company’s board, management, and technical team, along with its corporate advisers and respected mining industry consultants.

EXECUTIVE CHAIRMAN PURCHASES 3 MILLION SHARES:

Executive Chairman, Mr Wolfgang Fischer, has purchased 3,000,000 shares in the Company at an average share price of 26c. This equates to a $780,000 investment made by Mr Fischer in the Company. A number of the board members and management have significant ‘skin in the game’ and this is viewed as a positive stance for the company.

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West Leederville, Perth, 6007 Western Australia
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NEW EXPERIENCED BOARD APPOINTMENT:

In the quarter the Company made the appointment of Nicholas (Nick) Martin to its Board as a NonExecutive Director. Mr Martin brings 20 years of mining industry experience with proven expertise in exploration, project development and financing. With a 1[st] class Honours in geology from Adelaide University, Mr Martin began his career in 1991 working as a geologist undertaking regional exploration and near mine resource development for gold, base metals, mineral sands and gem projects and mines in Australia and Indonesia for a number of leading mining companies.

After obtaining a Master of Business Administration in 1998, Mr Martin spent 10 years in investment banking focused on the resource sector holding senior position with N M Rothschild & Son (Australia), Westpac Banking Corporation, WestLB AG and Natixis Australia Ltd. His roles included the execution of structured project and mezzanine financing on minerals projects in Australia, New Zealand and Emerging Asia-Pacific markets.

Currently, Mr Martin provides strategic investment advice aimed at linking Chinese metal consumers and investors with mining assets, globally.

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EMERGENT RESOURCES MOVES TO NEW PERTH OFFICE:

Emergent Resources has moved to larger office space which is at a lesser cost than previous office premises. The new registered office is at Level 1, 43 Oxford Close, West Leederville, WA, 6007. The company has seen an increase in productivity with the increased functionality of the new office premises.

COMPANY OVERVIEW:

BEYONDIE IRON PROJECT:

E52/1806, E52/2215 (80% EMG) and E52/2474, E69/2625, E69/2669 (100% EMG)

The Beyondie Project currently comprises:

  • Magnetite Inferred JORC Mineral Resource of 561 million tonnes grading 27.5% Fe in tenement E52/1806

  • Magnetite Exploration Target of 480 to 520 million tonnes grading 27.0 to 28.5% Fe in E52/1806, and

  • Magnetite Exploration Target of 3.7 to 4.2 billion tonnes grading 27.0 to 28.5% Fe at outside of E52/1806

  • Hematite Exploration Target of 70 – 120 million tonnes grading 52 – 57% Fe in tenement E52/2215

NB: The potential quantity and grade of the above Exploration Targets is conceptual in nature. There has been insufficient exploration to define a Mineral Resource, and it is uncertain if further exploration will result in the determination of a Mineral Resource.

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Figure 1: Beyondie Iron Project Magnetics Map

The current Mineral Resource and Exploration Targets confirms the large scale, world class potential of the Beyondie Project, and positions the project as potentially one of the most significant new iron projects in Australia.

Beyondie metallurgical test work:

The focus of activities during the quarter was extensive metallurgical test work on the transitional zone that sits above the fresh magnetite resource on E52/1806 and the bedded hematite mineralisation in tenement E52/2215 (See Figure 2: Hematite discovery location). The extensive metallurgical test work is focused on establishing optimum processing pathways and potential iron products available from the near surface hematite and the weathered transitional materials that overlie the magnetite ore body. Successful metallurgical test work has the potential to add significant additional resources to the existing resource. Emergent is now moving towards doubling the magnetite JORC inferred resource to over 1 Billion tonnes. Tenement E52/1806, hosts a JORC Inferred Magnetite Mineral Resource of 561 million tonnes at 27.5% Fe and an Exploration Target of 480–520 million tonnes grading 27.0%–28.5% Fe. The hematite enrichment has an exploration target of 70 -120 Mt grading 52-57% Fe and is located above the magnetic trend in E52/2215, which hosts an additional magnetite Exploration Target of 3.7–4.2 billion tonnes grading 27.0%–28.5% Fe.

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Air-core drilling intersects thick bands of near surface detrital hematite:

Two prospective targets were explored: one lying adjacent to the established JORC inferred magnetite resource of 561Mt @ 27.5% Fe; the other located some 20 km east along strike from the magnetite resource defined within the Beyondie Magnetite Schist (BMS). In the west, 383 holes for 3,388 metres were drilled in tenement E52/1806 along with 1,296 metres in 70 holes in tenement E52/2215.

The objective of the drilling programme, which was completed in the December quarter and results released on 2[nd] February 2011, was to evaluate the potential near surface detrital hematite that is distributed along the flanks of the Beyondie magnetite deposit in addition to the iron enriched subcrop material on the ridges. The programme aimed to map the distribution, thickness and grade of the near surface detrital hematite.

Intercepts from the air-core drilling on E52/1806 include: 26 metres @ 33.5% Fe from surface in BGA0270; 19 metres @ 32.1% Fe from 7 metres in BGA0231; 16 metres @ 35.8% Fe from 7 metres in BGA0230; 13 metres @ 35.5% Fe from 1 metre in BGA0246; 12 metres @ 41.7% Fe from 1 metre in BGA0269, 12 metres @ 39.3% Fe from 5 metres in BGA0229; and, 11 metres @ 41.9% Fe from surface in BGA0139.

Intercepts in drilling on E52/2215 include: 39 metres @ 33.4% Fe from surface in WGM0076; 37 metres @ 31.4% Fe from 9 metres in WGM0069; 20 metres @ 40.3% Fe from surface in WGM0041; 19 metres @ 37.3% Fe from surface in WGM0092; 17 metres @ 38.5% Fe from surface in WGM0098; 12 metres @ 31.9% Fe from surface in WGM0040; and, 11 metres @ 29.9% Fe from surface.

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Figure 2: Multiple iron potential products at the Beyondie Iron Project

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50% of the drill-holes intersected greater than 20% Fe (lower cut), generally over widths of several metres (Refer ASX release 2[nd] February, 2011). The average grade for all intersections exceeding 20% Fe is 29.58% Fe . The intersected mineralisation was contained in one or more of the 3 encountered, variably thick, magnetic detrital hematite horizons. The lowest horizon generally provided the thickest intersections and the most consistent results.

The Beyondie Iron Project has significant scalability with a 60+km strike length and effectively less than 20% of the project explored. There is additional significant potential upside in the multiple iron products that may be derived at the Beyondie Iron Project. Emergent is now moving to advance further exploration, focused on developing hematite resources and significantly increasing the established magnetite resource.

The Beyondie Project is located adjacent to the Great Northern Highway and Goldfields Gas Pipeline in the northern part of WA’s mid-west iron ore precinct. Currently the company is extensively investigating the potential for shared rail and port infrastructure developments through strategic partnership alliances. Emergent plans to develop the Beyondie Project into a long term, large scale, high grade iron ore mining operation. Currently the company is in Joint Venture discussions with a number of parties, and discussions are focused around commercialising the Beyondie Iron Project.

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Figure 3: Project Locations Map

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GOLD POTENTITAL IDENTIFIED AT BEYONDIE PROJECT:

The Company has identified significant gold exploration potential in the extensions of the rich Plutonic Well Greenstone Belt that lies in the eastern parts of the Company’s Beyondie tenure in Western Australia. The Company controls a 21km length, or approximately 25%, of the Plutonic Well Greenstone Belt, which has produced some 5 Moz’s of gold since the 1990’s and hosts Barrick Gold Corporations’ Plutonic deposit, along with Dampier Gold’s Marymia Gold Deposit. Emergent identified the gold potential within its Beyondie leases as part of a detailed geological assessment of its current asset portfolio. This forms part of Emergent’s strategy of unlocking value in the tenements the company currently holds.

Beyondie Gold Project:

The northeast-trending Plutonic Well Greenstone Belt (Plutonic Belt) is the sixth largest gold region in Western Australia. The gold resources identified are at least 7 Moz’s, sourced from over 50 gold deposits of various sizes and grades belonging to the Marymia and Plutonic Gold mines.

The 21 km extension to the Plutonic Belt, northeast of the Marymia gold deposit, is covered by two 100% Emergent exploration licences 52/2474 and 52/2559. Unlike southern parts of the Plutonic Belt, this northern extension has not been subject to any systematic or modern exploration since the early 1990’s.

Emergent has identified several noteworthy, shallow, gold intersections within its tenure during its compilation of historical drilling results, including:

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3m @ 10 g/t Au from 13m vertical in MRB95 2m @ 5.77 g/t Au from 32m in MRB655 2m @ 34.09 g/t Au from 46m in MRC532 16m @ 1.48 g/t Au from 48m in MRC565 9m @ 12.23 g/t Au from 11m in MRC54 2m @ 5.66 g/t Au from 58m in MRB126 4m @ 1.34 g/t Au from 48m in MRB691 2m @ 3.92 g/t Au from 48m vertical in MRC241 2m @ 1.72 g/t Au from 86m in MRC593 6m @ 5.07 g/t Au from 16m in MRC19 3m @ 7.4 g/t Au from 45m in MRB577 4m @ 1.5 g/t Au from 8m in MRC18 6m @ 2.96 g/t Au from 79m in MRC588

The intercepts are described as supergene gold enrichment in saprolite. Importantly, primary sources have yet to be identified for these intersected gold occurrences and Emergent is eager to progress these potential opportunities. The drilling, completed by Great Central Mines in 1991 just prior to the company refocusing its efforts on diamond exploration, targeted shallow oxide resources, with very little drilling exceeding a vertical depth of 60 m.

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Figure 4: Historical gold intercepts

Much of the greenstone belt in the northern extension lies under sand cover or shallow sediments associated with the Bangemall Basin. Outcrop of the underlying greenstone is limited. Consequently, historic exploration in the area is largely inadequate and has left gold targets untested with significant scope to explore using modern exploration techniques and an integrated multidisciplinary approach. Emergent is now scoping for these exploration programs and preparing to advance a program of works.

Joint Venture with Raven Resources:

Emergent Resources has entered into a Joint Venture arrangement with Raven Resources on tenements E69/2685 & E52/2525. The Joint Venture gives Emergent the right to earn an 80% interest in tenements E69/2685 & E52/2525 by meeting tenement expenditure commitments of $190,000 and the issue of Emergent ordinary fully paid shares to the value of $40,000. The 20% interest held by Raven Resources is free carried through to the decision to commence bankable feasibility. The Joint Venture with Raven Resources targets gold zones lying in the interpreted extension of the Plutonic Well Greenstone Belt which has hosted over 7 Moz’s of gold resources.

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GLENGARRY PROJECT:

The Company commenced its 2011 exploration program at Glengarry with Mobile Metal Ion (MMI) and soil geochemistry to test priority base metal and uranium exploration targets identified in a collaborative study with the CSIRO’s Minerals and Environmental Sensing Group. The targets are concentrated in the Mount Bartle area, adjacent to international base metals miner Ivernia’s Magellan Lead Deposit. Other targets to be tested in this initial phase include parts of the Company’s Diamond Well and North Pool Projects, which will be undertaken with Bulk Cyanide Leach (BCL) stream sediment geochemistry.

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Figure 5: Glengarry Projects made up of Mt Bartle, Diamond Well and North Pool

Mt Bartle and Diamond Well:

The initial MMI[1] survey involved the collection of 2500 soil samples (including standards and duplicates) on 5 separate 100 x 200 m grids. Each grid lies over a specific target, which includes redox and pH-driven uranium mineralisation and several spot occurrences of alunite, which is possibly associated with base metal mineralisation.

MMI soil geochemistry surveys have been completed at Mt Bartle and Diamond Well and laboratory results are expected in late May and targets will be further delineated from the soil sampling geochemical survey. While the heavy rains in February and March delayed the exploration programme, Emergent is set to commence a targeted drill campaign upon receipt of positive results from the MMI survey.

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The current Board of Emergent Resources Limited is:

Mr Wolfgang Fischer – Executive Chairman

Mr Robert Boylan – Non Executive Director

Mr Nick Martin – Non Executive Director

ENDS

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For further information please contact:

Nathan Lude Wolfgang Fischer Chief Executive Officer Executive Chairman Emergent Resources Limited

Ph: +61 8 9380 9122 E: [email protected] Website: www.emergentresources.com.au

MEDIA

David Brook Professional Public Relations (PPR) Ph: 08 9388 0944 E: [email protected]

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Competent Persons Statements

Technical information in this report has been prepared under the supervision of Mr Jonathan King, Chief Geologist for the company and a member of the Australasian Institute on Mining and Metallurgy (AusIMM). Mr King has sufficient experience which is relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (the JORC Code). Mr King consents to the inclusion in this report of the Information, in the form and context in which it appears.

The information in this statement that relates to Mineral Resources and Exploration Targets is based on information compiled by Sharron Sylvester who is a full time employee of AMC Consultants Pty Ltd and a Member of the Australian Institute of Geoscientists and has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration to qualify as a Competent Person as defined in the JORC Code (2004). Sharron consents to the inclusion of this information in the form and context in which it appears.

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Appendix 5B Mining exploration entity quarterly report

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 Quarter ended (“current quarter”)
31 March 2011
Quarter ended (“current quarter”)
31 March 2011
Emergent Resources Limited
ABN
68 125 323 622
Consolidated statement of cash flows
31 March 2011
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
1.7
Other – R&D tax refund
NetOperating Cash Flows
Current quarter
$A’000
Year to date (9
months)
$A’000
-
(834)
-
-
(437)
-
23
-
-
-
-
(2,601)
-
-
(1,320)
-
67
-
-
-
(1,248) (3,854)
Cash flows related to investing activities
1.8
Payment for purchases: (a) prospects
(b) equity investments
(c) other fixed assets
(d) environmental bonds
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)
-
-
(39)
-
-
-
-
-
-
-
-
-
(49)
(25)
-
-
-
-
-
-
(39) (74)
(1,287) (3,928)
  • See chapter 19 for defined terms.

Appendix 5B Page 1

31/03/11

Appendix 5B Mining exploration entity quarterly report

1.13
Total operating and investing cash flows
(brought forward)
(1,287) (3,928)
Cash flows related to financing activities
1.14
Proceeds/(refunds) 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 – capital raising costs
Net financing cash flows
-
-
-
-
-
-
4,554
-
-
-
-
(314)
- 4,240
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 ofquarter
(1,287)
2,478
-
312
879
-
1,191 1,191

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
70
-
1.25 Explanation necessaryfor an understandingof the transactions
Item 1.23 - Remuneration of Directors.

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

  • N/A

  • 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

  • N/A

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1
Loan facilities
3.2
Credit standby arrangements
Amount available
$A’000
Amount used
$A’000
- -
- -
  • See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Estimated cash outflows for next quarter

Estimated cash outflows for next quarter
4.1
Exploration and evaluation
4.2
Development
4.3
Production
4.4
Administration
Total
$A’000
540
-
-
360
900

The company is currently reviewing its near term capital raising options and has commenced discussions with a number of parties with a view to entering into a capital raising mandate agreement. The timing of future exploration expenditure is dependent on the progression of these discussions.

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)
1,191 2,478
- -
- -
- -
Total: cash at end of quarter(item 1.22) 1,191 2,478

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
- - - -
- - - -
  • See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

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
- -
-
-
-
-
7.3
+Ordinary
securities
7.4
Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns of
capital, buy-backs
(c) Released from
Escrow
80,076,767 80,076,767
-
-
-
-
-
-
7.5
+Convertible
debt securities
(description)
7.6
Changes during
quarter
(a) Increases
through issues
(b) Decreases
through securities
matured,
converted
- -
-
-
-
-
7.7
Options
(description and
conversion factor)
7.8
Issued during
quarter
7.9
Exercised during
quarter
7.10
Expired during
quarter
3,700,000
300,000
1,046,443
125,000
125,000
125,000
-
-
-
-
-
-
Exercise price
$0.20
$0.26
$0.26
$0.50
$1.00
$1.50
Expiry date
31/08/2012
08/09/2012
27/10/2012
30/09/2011
30/09/2012
30/09/2013
- - - -
- - - -
- - - -
7.11
Debentures
(totals only)
- - - -
  • See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

7.12
Unsecured notes
(totals only)
- - -

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.

==> picture [136 x 43] intentionally omitted <==

Sign here:

Date: 29 April 2011

(Company secretary)

Print name: Kevin Hart

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 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Cash Flow Statements 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.

== == == == ==

  • See chapter 19 for defined terms.

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