LOTUS RESOURCES LIMITED — Interim / Quarterly Report 2012

Apr 26, 2012

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ASX Announcement ASX Code: DLE Released: 27 April 2012

Quarterly Report

For the period ended 31 March 2012

For Further Information

Gang Xu Managing Director Tel: +61 8 9322 6009

Highlights

• Continued advancement of exploration and early development of the Pilbara Iron Project (the Rocklea and Nameless Projects), including:

Directors

Jie Chen Chairman

• RC drilling at the Nameless Project included 127 holes for 3,195m;

Gang Xu Managing Director

• Rocklea resource calculation near completion by Golder Associates;

Tim Williams COO, Executive Director

Anthony Ho Executive Director

• Nameless resource calculation commenced by CSA Global;

• Rocklea project negotiations commenced with the native claimants in relation to the mining lease application;

Qingyong Guo Director

• Flora and SRE environmental surveys completed at the Rocklea Project;

• studies and commercial negotiations of short term infrastructure transport options and port access continued;

Share Registry

Computershare Investor Services Level 2, Reserve Bank Building 45 St George’s Terrace Perth WA 6000

• DMP granted an additional two tenements of the Ashburton Project.

www-au.computershare.com

Contact Details

Dragon Energy Ltd Suite 8, 1297 Hay Street West Perth, WA 6005 PO Box 1968, WA 6872

Tel: +61 8 9322 6009 Fax: +61 8 9322 6128

www.dragonenergyltd.com

ABN: 38 119 992 175

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ASX: DLE

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Introduction

Dragon Energy Ltd (“Dragon”) is a mineral exploration company which controls a portfolio of exploration tenements in Western Australia.

Dragon presently holds 9 projects located in the Pilbara and Midwest regions of Western Australia. These projects comprise 31 tenements (including 18 applications), totalling 1,505km[2] in area. The primary exploration target is iron ore, with the potential for manganese, gold, base metals and uranium.

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Figure 1: Project Locations

Exploration activities during the quarter included the initiation of a revised resource calculation for the Rocklea Project, incorporating a recent infill and step-out drilling programme. An infill drilling programme of the Nameless Project was completed, and a resource calculation initiated.

Flora and SRE environmental surveys were finalised over the Rocklea Project, with further surveys planned in the September quarter, as part of the overall approval process for mining development.

Awaiting surface geochemistry sampling (soil and stream sediment) assays carried out on the Mt Gibson Project. The DMP granted two Ashburton tenements; E08/2209 and E08/2210.

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ASX: DLE

Quarterly Report to 31 March 2012

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Pilbara Iron Project- development of a DSO operation

Following the decision to pursue rapid development of the Pilbara Iron Project a number of studies and negotiations have been completed or are in the planning phase:

Completed

Scoping Study- conducted by GHD Limited on Dragon’s Pilbara Iron Project (Rocklea and Nameless projects) (‘the Project’) was completed December 2011. It assessed the potential viability of the Project and identified immediate priorities to advance the Project, and also assessed infrastructure and transport solutions. The Scoping Study highlighted the relevant environmental and approval issues associated with the development of the Project. It concluded that, subject to the identification and establishment of a suitable port operation, the Project may commence production through road transportation as early as the end of 2013. A conceptual timetable is shown below.

Environmental Studies- a Vertebrate, SRE and Flora surveys have been completed.

Detailed resource drilling- completed at Rocklea and Nameless, in January and February 2012 respectively

Ongoing and Planned

Environmental Studies- a Mine Waste study has been initiated. A Subterranean survey has been planned for the September quarter. A soil characterisation study will follow geotechnical drilling.

Water- a surface water study has been initiated. A hydrogeological drilling programme will be submitted to the DMP for approval in the following quarter.

Resource Estimation- a revised resource calculation of Rocklea, and a maiden resource calculation for Nameless project has been initiated.

Mining Lease Application- heritage negotiations initiated during the quarter.

Port- securing approvals for an export port suited to road transportation, while awaiting access to Anketell Port.

Finance- identifying and securing financial resources for the projects development.

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----- Start of picture text -----

2011 2012 2013 2014
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Approvals & Environmental Studies
Detailed Feasibility Study
Design & Construction
Production
----- End of picture text -----

Figure 2: Conceptual Development Timetable

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Rocklea Project is located 33km southwest of the mining town of Tom Price, and immediately north of Murchison Metals’ Rocklea Channel Iron Deposits (CID) project in the Pilbara.

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Figure 3: Rocklea Project RC Drilling

The Rocklea Project is located on the eastern margin of the Rocklea Dome where Archaean age Fortescue Group Formations dip to the east and are overlain by Tertiary age CID and other Cainozoic deposits of sand and gravels. The Rocklea CID comprises goethitic and hematitic detrital deposits of the Tertiary Robe Pisolites.

RC drilling by Dragon was completed in January 2012. Significant drilling intersections are summarised in Appendix 1. Golder Associates have been appointed to outline a revised resource calculation. This revised resource is expected to be completed end April- May 2012.

Flora and SRE environmental surveys were completed. A baseline assessment of Mine-Waste was initiated during the quarter. A Subterranean Fauna survey has been planned for the September quarter 2012.

The next phase of activity will include the design of geotechnical & hydrogeological drilling programmes, followed by a soil study.

Negotiations with the native landholders in relation to a mining lease application (M47/1471) were initiated in the March quarter.

Nameless Project is located 10km NW of Tom Price in the Pilbara.

The project is situated along the south-dipping northern limb of the Mt Turner Syncline within the South Pilbara Basin of the Hamersley Basin. Bedrock lithologies comprise volcano-sedimentary rocks from the Fortescue and Hamersley Groups, with the Marra Mamba Iron Formation paralleling the southern boundary of the tenement. Cainozoic cover sequences include the Robe Pisolite Formation.

Mapping by AusQuest Limited (“AusQuest”) delineated 15km strike of a prospective 200-600m wide palaeochannel, of which 12.5km was drill tested in 2006 and 2008 by AusQuest on 400m to 1200m spaced drilling traverses. CID mineralisation is up to 24m in thickness and infill drilling is required to define its continuity and calculate an inferred resource. An Exploration Target[1] of 140 to 190Mt of grade 48-52% Fe (54-56% caFe) has been defined by Dragon of CID and Marra Mamba detrital mineralisation.

An infill RC drilling programme was completed February 2012. All assay results have been received and a maiden resource is currently being calculated. Significant drilling intersections are summarised in Appendix 2.

Native landholder negotiations with regards to the mining lease application (M47/1452) are ongoing.

1 Exploration Targets are reported according to Clause 18 of the JORC Code. This means that the potential quantity and grade is conceptual in nature and that further exploration is required in order to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource.

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Figure 4: Nameless Project Exploration Target[2]

Lee Steere Project is located some 200km NE of Wiluna, in the Earaheedy Basin of the Midwest.

Previous exploration activities in the 1970s identified enriched hematite mineralisation of Banded Iron Formations and Superior-type iron within the Frere Formation; rock chips of up to 66.1% Fe were reported. The project contains 48km strike of the prospective Frere Formation, as identified from magnetics and outcrop. Dragon’s exploration focus has been on supergene enriched hematite/goethite and outcropping manganese mineralisation.

A drilling programme has been designed primarily to test an identified stratabound manganese unit adjacent to Superior-type iron mineralisation. New native title access agreements are in the negotiation process and require a resolution before heritage surveys can be undertaken, following which the Company will apply to the DMP for approvals for drilling.

2 Refer Note 1 on Page 6.

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Mt Gibson Project lies 80km NE of Wubin, 7-32km south and east of the Extension Hill Hematite/Magnetite Project, and partly hosts the Mt Gibson Gold Operation. The project is situated in the Midwest Region of the Yilgarn Craton.

E59/1686 incorporates a couple of open pits from the Mount Gibson Gold Operation (870,000oz mined), within the southern Retaliation Belt. Regional magnetics indicates that similar geological and structural features hosting gold mineralisation extend within E59/1686 and E59/1637, together with magnetic (BIF/ultramafic) units. A low-level surface geochemistry sampling programme has been designed to test various structural and geological targets. No activity this quarter.

A total of 25 stream sediment samples were taken from E59/1638 during the quarter, focussing on the southern Ninghan Belt greenstones.

33 broad spaced soil samples were taken from E59/1687.

Assay results are still outstanding.

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Figure 5: Mt Gibson Project Tenements

Carters Well Project is located 30km south of Mt Magnet, adjacent to the Great Northern Highway, in the Yilgarn Craton of the Midwest.

A total of 4 anomalous zones, including Au-Ag, Ce-Pb, Pb-Zn-Cu, Pb-Zn, were identified from MMI surface sampling in the previous quarter. The most notable is a 3.5km, NE striking gold and coincident silver anomaly to the southeast of the project area. The Ce-Pb anomaly may relate to felsic volcanic lithology contacts. In the Mt Magnet district potential gold pathfinder elements also includes Cu and Zn (Parkinson Pit) and Pb (Stellar & Quasar Deposits).

No exploration activities this quarter.

Ashburton Project is located in the Ashburton Basin, and is 10 to 40km from rail and other infrastructure associated with the Paraburdoo operations of Rio Tinto Iron Ore.

Approximately 50% of the project area has a Cainozoic cover which potentially conceals CID within the braided drainages of Turee and Seven Mile Creeks, which drain the ranges of the Brockman Iron Formation near Paraburdoo. Base metals and gold provide alternative exploration targets.

Exploration licences E08/2209 and E08/2210 were granted during the quarter. No exploration activities this quarter.

Milly Milly Project is located 196km west of Meekatharra, and 58km east of the Jack Hills iron operation in the northern Yilgarn Craton.

The project has the potential to host Jack Hills style, high quality magnetite iron ore deposits. BMR regional magnetic surveys indicate favourable host rocks of 42km strike within the tenement. GSWA mapping indicates 26km strike of BIF (quartz-magnetite) outcrop. Rock chip sampling returned Fe grades of up to 44% Fe. A chromite rich magnetite layer with an interpreted strike length of 1.6km provides an alternative exploration target.

No exploration activities undertaken as the tenement is currently progressing through the application process.

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Yamarna Project is located 120km NE of Laverton, within the Goldfields-Esperance Region.

The project is situated between two greenstone belts; the Cosmo-Newberry Greenstone belt to the west and the Yamarna Greenstone belt to the east. Gold mineralisation identified to the east is hosted by laminated quartz-mica-amphibole schist units- altered and sheared mafic volcanics and sediments.

Dragon’s project lies 5km to the south of Platina Resources & Global Nickel’s Mt Venn Cu-Ni-PGE Prospect. Regional magnetics indicate that the greenstone succession at Mt Venn is also present on E38/2665. The licence is in application, consequently no exploration activity this quarter.

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Figure 6: Yamarna Project Tenement

Meekatharra Project is located 13km SE of Meekatharra, within the Midwest Region of the Yilgarn Craton.

The project lies in the Archaean Meekatharra greenstone belt, a regional N-NE trending synclinal structure. Gold was discovered in the area in the 1890s, with mineralisation generally structurally hosted and associated with quartz veining. Arsenic anomalies have been found to be associated with gold mineralisation (eg. Jones Prospect).

Limited exploration activities in the project area identified linear northerly trending arsenic anomalies with coincident weakly anomalous gold mineralisation to the north, and gold anomalies on lithological contacts with strongly anomalous arsenic to the south. The licence is in application, consequently no exploration activity this quarter.

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Figure 7: Meekatharra Project Tenements

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Corporate Development

Tim Williams joined the company as Chief Operating Officer and Executive Director.

Discussions with a number of Chinese parties regarding different modes of cooperation were continued during this quarter. These discussions are still preliminary and are ongoing, but the interests shown by these parties continue to be encouraging.

The Company remains focused on the objective of early development of the Pilbara Iron Project and realisation of shareholder values.

Authorised by:

Gang Xu Managing Director

For further information or corporate opportunities please refer to our website www.dragonenergyltd.com or contact:

Gang Xu Tim Williams Managing Director COO/Executive Director Telephone: +61 8 9322 6009 Telephone: +61 8 9322 6009 Mobile: +61 411 039 645

Mark Hafer Exploration Manager Telephone: +61 8 9322 6009

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Competent Person’s Statement

The information in the report to which this statement is attached that relates to Exploration Results is based on information compiled by Mr Mark Hafer, who is a Member of The Australian Institute of Geoscientists.

Mr Hafer is a full-time employee of the company. Mr Hafer has sufficient experience which is relevant to the style of mineralisation and type of deposit 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’. Mr Hafer consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

About Dragon Energy

Dragon Energy Limited (“Dragon”) listed on the Australian Securities Exchange (ASX) in February 2009 ( ASX: DLE ).

Dragon’s flagship projects are the Rocklea and Nameless iron projects in the Pilbara with a sizeable JORC Resource defined at the Rocklea Project and significant CID exploration target at the Nameless Project. Dragon Energy’s portfolio of tenements has numerous multi-commodity targets, including Fe, Mn, Au, base metals and U in Western Australia.

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Appendix 1: Rocklea Project Significant RC Drilling Intersections (>50% Fe)

Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	LOI (%) (1000°C)
11RIRC132	6	8	2	53.80	62.49	4.02	1.78	0.03	13.900
11RIRC133	20	22	2	53.80	61.00	6.44	3.88	0.04	11.800
11RIRC134	2	6	4	51.05	59.19	6.21	3.43	0.04	13.750
11RIRC134	14	28	14	53.81	60.67	9.03	1.66	0.03	11.293
11RIRC135	0	4	4	51.40	58.31	10.90	1.76	0.02	11.850
11RIRC135	10	30	20	54.55	61.68	7.07	2.07	0.04	11.565
11RIRC136	0	6	6	54.57	61.68	6.44	3.41	0.03	11.533
11RIRC136	10	38	28	52.94	59.47	10.13	2.34	0.03	10.980
11RIRC137	10	32	22	53.79	60.57	8.88	1.79	0.03	11.195
11RIRC137	36	40	4	51.80	58.93	7.64	4.89	0.03	12.100
11RIRC149	0	10	10	52.00	59.69	6.32	2.84	0.03	12.880
11RIRC149	14	16	2	53.30	61.33	4.67	3.60	0.04	13.100
11RIRC150	2	4	2	50.00	58.00	6.24	2.48	0.03	13.800
11RIRC150	20	22	2	52.70	59.48	8.86	3.37	0.04	11.400
11RIRC151	20	26	6	52.97	60.35	7.16	2.88	0.03	12.233
11RIRC151	34	40	6	51.97	58.85	9.69	2.50	0.16	11.700
11RIRC152	14	16	2	54.20	61.38	6.98	1.98	0.03	11.700
11RIRC152	20	36	16	52.68	59.82	7.67	3.44	0.02	11.950
11RIRC153	16	18	2	51.20	58.31	8.87	3.69	0.03	12.200
11RIRC153	24	40	16	53.53	60.75	6.83	3.27	0.03	11.888
11RIRC153	44	46	2	53.60	61.12	5.98	4.00	0.03	12.300
11RIRC153	52	54	2	52.80	59.13	9.09	3.41	0.07	10.700
11RIRC154	14	46	32	53.33	60.28	7.01	3.94	0.03	11.544
11RIRC155	12	38	26	53.46	60.80	6.85	2.89	0.03	12.065
11RIRC155	40	42	2	53.10	60.41	6.73	4.30	0.05	12.100
11RIRC156	12	32	20	55.08	62.17	6.94	1.89	0.03	11.410
11RIRC156	40	46	6	51.37	57.95	8.48	5.31	0.05	11.367
11RIRC157	12	32	20	54.25	61.40	7.16	2.65	0.04	11.650
11RIRC157	36	38	2	51.60	58.84	6.73	5.77	0.05	12.300
11RIRC157	42	46	4	52.55	59.85	7.25	4.25	0.02	12.200
11RIRC158	10	28	18	55.43	62.67	5.86	2.41	0.04	11.561
11RIRC159	8	14	6	52.57	59.71	8.38	2.95	0.04	11.967
11RIRC163	18	22	4	53.15	60.29	7.61	2.08	0.02	11.850
11RIRC164	12	24	12	53.27	60.07	9.70	1.49	0.02	11.325
11RIRC165	16	30	14	51.39	58.05	10.67	2.86	0.02	11.471
11RIRC165	32	34	2	50.60	57.83	7.47	6.17	0.04	12.500
11RIRC166	14	16	2	54.20	61.38	6.47	2.97	0.03	11.700
11RIRC166	18	32	14	51.57	58.06	11.03	3.02	0.03	11.170
11RIRC167	16	20	4	57.20	64.16	4.61	1.91	0.04	10.850

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	LOI (%) (1000°C)
11RIRC167	26	36	10	53.44	60.59	7.03	3.67	0.03	11.800
11RIRC167	40	44	4	52.40	59.78	6.67	4.78	0.03	12.350
11RIRC167	48	50	2	51.60	58.70	7.98	4.70	0.06	12.100
11RIRC168	10	12	2	50.50	58.79	6.41	3.18	0.04	14.100
11RIRC168	18	34	16	57.03	64.69	3.88	1.96	0.03	11.844
11RIRC168	38	40	2	50.50	57.58	7.56	6.44	0.05	12.300
11RIRC168	46	48	2	51.40	58.08	8.13	5.28	0.03	11.500
11RIRC169	14	30	16	56.51	63.94	4.91	1.83	0.03	11.613
11RIRC169	34	38	4	52.45	59.74	6.33	5.42	0.05	12.200
11RIRC170	16	26	10	53.51	60.31	9.16	1.83	0.03	11.280
11RIRC170	32	34	2	50.10	57.06	8.36	6.48	0.05	12.200
11RIRC170	40	44	4	51.25	58.30	7.99	5.66	0.04	12.100
11RIRC171	14	26	12	52.02	58.42	11.54	2.29	0.03	10.968
11RIRC172	10	20	10	54.63	61.67	7.17	2.47	0.04	11.420
11RIRC173	12	20	8	50.45	56.97	10.42	4.68	0.02	11.438
11RIRC173	22	24	2	51.90	58.31	10.80	2.62	0.02	11.000
11RIRC174	12	22	10	52.31	59.57	8.22	2.62	0.02	12.180
11RIRC175	22	24	2	51.30	57.77	11.40	3.11	0.02	11.200
11RIRC176	18	28	10	51.59	58.03	11.52	2.48	0.03	11.092
11RIRC177	20	28	8	53.70	60.99	7.18	3.16	0.03	11.950
11RIRC178	10	18	8	51.38	58.13	10.42	2.94	0.03	11.625
11RIRC178	20	28	8	53.80	60.71	8.27	2.46	0.03	11.375
11RIRC179	10	12	2	53.30	60.64	6.54	3.92	0.04	12.100
11RIRC179	16	24	8	53.46	60.50	8.60	2.49	0.03	11.625
11RIRC179	34	42	8	51.73	58.93	7.83	4.85	0.03	12.225
11RIRC180	6	28	22	52.49	58.86	11.69	1.73	0.03	10.815
11RIRC180	36	38	2	55.00	62.79	4.44	3.67	0.04	12.400
11RIRC181	14	24	10	53.16	60.09	8.14	3.48	0.04	11.540
11RIRC181	28	32	4	51.05	57.36	12.45	2.59	0.02	11.000
11RIRC181	34	40	6	50.23	57.37	8.59	6.15	0.05	12.433
11RIRC181	42	50	8	50.60	57.16	8.39	5.27	0.03	11.475
11RIRC182	12	24	12	53.57	60.68	7.69	2.85	0.04	11.719
11RIRC182	36	38	2	51.00	58.22	7.87	5.66	0.04	12.400
11RIRC182	42	44	2	55.30	62.63	4.78	3.40	0.03	11.700
11RIRC182	48	52	4	50.80	57.27	9.10	5.81	0.09	11.300
11RIRC183	8	10	2	52.70	59.28	9.12	3.11	0.04	11.100
11RIRC183	18	30	12	51.46	57.30	14.51	1.07	0.03	10.190
11RIRC183	34	46	12	52.18	59.12	7.36	4.93	0.04	11.733
11RIRC184	16	26	10	51.98	58.99	8.33	4.14	0.04	11.880
11RIRC184	38	44	6	51.20	58.12	8.10	5.68	0.04	11.900

Dragon Energy Ltd

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Quarterly Report to 31 March 2012

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Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	LOI (%) (1000°C)
11RIRC184	48	50	2	52.00	59.16	7.78	5.04	0.02	12.100
11RIRC185	20	26	6	53.40	60.96	6.59	2.81	0.04	12.400
11RIRC185	34	46	12	50.68	57.67	8.37	5.75	0.04	12.117
11RIRC186	14	16	2	51.90	58.12	12.20	2.01	0.03	10.700
11RIRC186	20	24	4	52.25	58.97	9.34	3.71	0.04	11.400
11RIRC186	36	44	8	52.25	59.60	6.95	4.95	0.04	12.325
11RIRC187	16	28	12	53.01	59.62	10.08	2.26	0.04	11.087
11RIRC187	36	48	12	51.80	59.13	7.07	5.38	0.04	12.400
11RIRC188	16	24	8	54.71	61.85	6.62	2.65	0.04	11.538
11RIRC188	34	36	2	50.60	57.70	7.94	6.16	0.04	12.300
11RIRC188	40	46	6	51.40	58.39	7.93	5.39	0.04	11.967
11RIRC189	14	28	14	52.11	58.72	10.10	3.02	0.03	11.264
11RIRC189	32	34	2	50.50	57.58	7.71	6.40	0.05	12.300
11RIRC189	38	46	8	52.18	59.36	6.92	5.25	0.03	12.100
11RIRC192	12	14	2	51.30	58.49	8.46	3.98	0.03	12.300
11RIRC193	14	20	6	51.88	58.76	9.96	2.65	0.03	11.700
11RIRC194	16	22	6	51.88	59.24	7.66	3.76	0.03	12.417
11RIRC195	6	8	2	50.10	57.92	7.54	4.16	0.04	13.500
11RIRC195	18	30	12	53.31	60.32	7.84	3.21	0.03	11.625
11RIRC196	8	10	2	53.10	60.55	6.35	4.64	0.05	12.300
11RIRC196	20	32	12	53.03	59.44	10.79	1.85	0.04	10.783
11RIRC196	40	42	2	51.30	58.36	7.70	5.99	0.04	12.100
11RIRC197	22	26	4	53.90	61.08	7.34	2.85	0.04	11.750
11RIRC197	40	48	8	52.43	59.54	6.90	4.94	0.04	11.950
11RIRC198	20	26	6	52.37	59.15	9.46	3.18	0.04	11.467
11RIRC198	32	34	2	50.20	56.72	10.80	4.63	0.03	11.500
11RIRC198	46	48	2	50.50	57.58	8.47	5.70	0.04	12.300
11RIRC199	18	22	4	51.58	58.19	10.02	3.50	0.04	11.375
11RIRC199	26	28	2	50.30	56.45	13.40	2.96	0.03	10.900
11RIRC199	34	42	8	51.73	58.45	7.70	5.47	0.04	11.500
11RIRC199	44	46	2	50.00	57.01	8.33	6.30	0.04	12.300
11RIRC203	2	4	2	51.30	57.97	8.69	3.70	0.03	11.500
11RIRC205	14	16	2	51.50	57.80	11.40	3.18	0.04	10.900
11RIRC205	18	20	2	50.45	56.09	13.50	3.52	0.02	10.050
11RIRC206	20	26	6	52.37	58.86	9.93	3.02	0.04	11.033
11RIRC207	12	14	2	51.20	59.12	6.97	2.72	0.02	13.400
11RIRC207	18	34	16	52.44	59.25	8.73	3.88	0.03	11.494
11RIRC208	14	16	2	50.90	57.00	13.70	1.98	0.03	10.700
11RIRC208	20	36	16	51.93	58.81	9.01	4.03	0.04	11.700
11RIRC208	44	46	2	50.00	56.82	8.94	6.28	0.04	12.000

Dragon Energy Ltd

12

Quarterly Report to 31 March 2012

==> picture [64 x 16] intentionally omitted <==

Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	LOI (%) (1000°C)
11RIRC209	22	38	16	51.70	58.92	7.71	4.61	0.05	12.250
11RIRC209	44	50	6	51.77	58.32	7.60	5.18	0.03	11.233
11RIRC210	22	38	16	51.14	58.25	7.86	5.29	0.05	12.213
11RIRC210	44	46	2	52.40	59.61	6.56	4.86	0.04	12.100
11RIRC211	14	16	2	50.30	57.03	10.20	5.11	0.04	11.800
11RIRC211	22	34	12	51.75	58.92	7.33	5.24	0.05	12.167
11RIRC211	38	46	8	51.23	57.95	7.81	5.73	0.03	11.600
11RIRC211	48	50	2	50.20	56.72	9.12	5.61	0.07	11.500
11RIRC212	12	18	6	52.70	59.73	9.55	2.18	0.04	11.767
11RIRC212	22	28	6	52.50	59.73	7.08	4.64	0.05	12.100
11RIRC212	32	38	6	50.37	57.23	8.29	6.27	0.04	12.000
11RIRC212	40	42	2	50.70	57.03	8.25	6.78	0.03	11.100
11RIRC219	26	28	2	50.60	57.63	8.14	5.99	0.06	12.200
11RIRC220	16	28	12	52.45	59.69	6.92	4.39	0.04	12.125
11RIRC221	16	34	18	52.11	59.41	7.83	3.76	0.05	12.289
11RIRC221	38	40	2	51.60	57.59	7.77	6.17	0.03	10.400
11RIRC226	0	2	2	51.30	58.49	8.91	3.50	0.03	12.300
11RIRC226	4	12	8	51.75	59.47	6.80	2.97	0.03	12.975
11RIRC227	2	22	20	52.67	60.21	6.84	2.66	0.03	12.535
11RIRC228	14	22	8	51.88	58.97	8.19	3.98	0.04	12.025
11RIRC229	4	12	8	53.83	61.43	5.22	2.79	0.03	12.375
11RIRC230	12	18	6	53.50	60.54	6.23	3.56	0.03	11.633
11RIRC241	8	10	2	55.30	62.91	5.58	1.82	0.01	12.100
11RIRC242	18	20	2	53.15	59.79	9.79	2.08	0.02	11.100
11RIRC243	18	22	4	52.83	59.74	8.93	2.53	0.03	11.575
11RIRC244	18	22	4	51.75	58.67	9.06	3.24	0.03	11.800
11RIRC249	8	16	8	51.68	59.28	7.19	3.18	0.02	12.825
11RIRC250	16	18	2	52.70	59.55	9.15	2.54	0.03	11.500
11RIRC251	8	10	2	50.20	58.37	6.68	2.56	0.02	14.000
11RIRC251	14	18	4	51.90	58.84	8.19	4.11	0.04	11.800
11RIRC252	14	18	4	52.00	59.09	8.53	2.84	0.03	12.000
11RIRC253	10	12	2	50.70	58.34	8.29	1.99	0.02	13.100
11RIRC255	12	16	4	51.50	58.19	9.91	3.55	0.04	11.500
11RIRC257	14	16	2	50.50	57.32	8.86	5.95	0.04	11.900
11RIRC258	2	4	2	50.40	57.67	7.73	6.06	0.03	12.600
11RIRC260	8	12	4	50.35	57.54	8.39	5.19	0.04	12.500
11RIRC260	16	20	4	50.95	57.21	9.52	5.61	0.06	10.940
11RIRC260	24	26	2	51.80	58.53	10.60	3.15	0.04	11.500
11RIRC261	14	18	4	50.45	56.62	11.60	4.48	0.05	10.900
11RIRC261	22	28	6	53.33	60.22	8.37	2.81	0.04	11.433

Dragon Energy Ltd

13

Quarterly Report to 31 March 2012

==> picture [64 x 16] intentionally omitted <==

Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	LOI (%) (1000°C)
11RIRC262	16	18	2	52.90	59.71	8.99	2.98	0.04	11.400
11RIRC262	22	26	4	51.35	57.54	12.45	2.33	0.04	10.750
11RIRC263	14	26	12	52.96	59.83	8.49	3.41	0.04	11.492
11RIRC264	0	2	2	50.00	56.43	10.30	5.62	0.03	11.400
11RIRC264	16	26	10	51.55	57.98	10.49	3.81	0.04	11.088
11RIRC265	2	4	2	50.20	58.24	6.15	4.83	0.04	13.800
11RIRC265	14	20	6	51.07	58.15	8.29	5.21	0.04	12.183
11RIRC266	0	2	2	52.50	58.86	9.02	4.27	0.04	10.800
11RIRC266	4	6	2	50.00	57.94	6.56	4.89	0.04	13.700
11RIRC266	18	20	2	52.70	59.89	6.91	4.64	0.05	12.000
11RIRC267	4	6	2	50.70	58.48	6.36	3.95	0.05	13.300
11RIRC267	14	20	6	55.02	62.47	5.47	3.05	0.04	11.933
11RIRC268	10	14	4	55.90	63.56	4.98	1.53	0.03	12.050
11RIRC270	6	20	14	51.99	59.71	6.48	3.91	0.04	12.929
11RIRC271	0	14	14	52.26	59.96	5.86	3.89	0.04	12.843
11RIRC272	0	2	2	51.60	59.58	6.02	3.69	0.04	13.400
11RIRC273	0	12	12	53.20	60.53	6.64	3.48	0.04	12.117
11RIRC274	0	10	10	52.90	60.58	5.99	3.94	0.03	12.680
11RIRC275	4	8	4	50.85	58.31	7.58	5.07	0.04	12.800
12RIRC278	0	2	2	56.90	62.07	6.12	2.61	0.03	8.330
12RIRC278	6	12	6	53.63	60.79	6.05	2.85	0.03	11.767
12RIRC278	18	22	4	53.48	60.91	6.71	3.71	0.05	12.200
12RIRC278	32	42	10	55.78	63.33	4.78	2.90	0.04	11.920
12RIRC279	0	4	4	53.45	60.18	5.93	3.34	0.03	11.190
12RIRC279	8	38	30	52.46	59.68	6.93	4.65	0.04	12.103
12RIRC280	10	12	2	54.90	61.69	5.75	3.24	0.04	11.000
12RIRC280	14	22	8	54.05	61.67	5.53	3.19	0.04	12.350
12RIRC282	0	6	6	51.40	58.27	8.09	3.84	0.03	11.797
12RIRC282	10	12	2	57.50	63.52	4.72	2.22	0.04	9.480
12RIRC282	14	22	8	52.34	59.87	6.63	4.28	0.04	12.575
12RIRC282	28	40	12	53.07	60.35	6.93	4.17	0.04	12.067
12RIRC283	4	10	6	56.47	64.34	3.81	2.28	0.05	12.233
12RIRC284	0	6	6	54.70	61.27	6.18	3.77	0.04	10.730
12RIRC284	10	18	8	51.75	58.96	7.54	4.35	0.04	12.225
12RIRC284	22	24	2	50.60	57.57	8.22	6.07	0.05	12.100

**caFe% = Fe / (100 – LOI) x 100

Dragon Energy Ltd

14

Quarterly Report to 31 March 2012

==> picture [64 x 16] intentionally omitted <==

Appendix 2: Nameless Project Significant RC Drilling Intersections (>50% Fe)

Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	S (%)	LOI (%) (1000°C)
NAM12RC091	12	14	2	50.50		20.10	4.05	0.03	-0.005	1.280
					51.15
NAM12RC092	10	12	2	52.00	58.89	6.32	6.57	0.03	0.014	11.700
NAM12RC092	16	18	2	54.80	60.80	5.44	5.11	0.03	0.016	9.870
NAM12RC094	10	12	2	50.40		6.77	6.77	0.05	0.018	11.700
					57.08
NAM12RC099	14	18	4	52.75	58.52	7.01	6.26	0.03	0.011	9.855
NAM12RC104	12	16	4	56.20		4.75	3.85	0.03	0.019	10.310
					62.66
NAM12RC106	0	8	8	54.30	57.98	6.13	8.02	0.03	0.013	6.340
NAM12RC111	6	18	12	52.45		7.35	5.44	0.03	0.024	11.267
					59.11
NAM12RC112	10	16	6	50.37	57.13	7.18	7.76	0.04	0.070	11.833
NAM12RC118	8	12	4	50.95		7.27	6.68	0.03	0.012	12.200
					58.03
NAM12RC118	24	26	2	52.80		7.11	7.39	0.03	0.012	8.380
					57.63
NAM12RC119	10	12	2	50.90	56.28	7.59	7.80	0.04	0.022	9.560
NAM12RC130	8	10	2	50.10		9.43	8.37	0.02	0.019	9.580
					55.41
NAM12RC135	12	14	2	50.70	57.42	7.27	7.54	0.02	0.040	11.700
NAM12RC136	16	18	2	50.90		7.57	7.18	0.03	0.011	11.500
					57.51
NAM12RC136	24	26	2	54.70		4.58	4.37	0.03	0.010	11.800
					62.02
NAM12RC137	10	12	2	50.40	56.44	8.41	7.68	0.03	0.011	10.700
NAM12RC139	0	6	6	51.90		8.60	4.98	0.06	0.021	11.233
					58.47
NAM12RC143	14	18	4	51.80	58.47	7.09	6.27	0.04	0.011	11.400
NAM12RC144	8	14	6	52.07		7.04	5.87	0.04	0.010	11.367
					58.74
NAM12RC145	2	18	16	52.26	59.14	7.40	5.38	0.06	0.017	11.625
NAM12RC149	10	12	2	50.60		8.74	7.12	0.03	0.010	10.600
					56.60
NAM12RC150	10	16	6	53.00	59.20	7.54	5.26	0.06	0.011	10.467
NAM12RC151	2	18	16	53.85		6.38	4.26	0.06	0.013	11.550
					60.88
NAM12RC152	0	10	10	52.12	58.37	10.15	3.89	0.04	0.016	10.708
NAM12RC156	4	6	2	52.80		7.12	5.34	0.02	0.016	10.800
					59.19
NAM12RC157	2	4	2	51.90	58.18	7.14	6.87	0.02	0.039	10.800
NAM12RC160	12	16	4	50.90		7.24	6.43	0.03	0.009	12.400
					58.11
NAM12RC161	4	6	2	51.00	56.67	8.40	7.10	0.03	0.014	10.000
NAM12RC164	4	10	6	52.20		6.63	6.57	0.04	0.009	11.000
					58.65
NAM12RC167	14	16	2	50.90	57.58	7.07	7.39	0.06	0.023	11.600
NAM12RC168	0	10	10	53.94		6.45	5.67	0.04	0.033	9.556
					59.64
NAM12RC169	0	4	4	53.25	58.17	7.20	6.87	0.03	0.013	8.455
NAM12RC175	0	12	12	52.38		7.11	6.38	0.03	0.014	10.178
					58.32
NAM12RC176	0	24	24	54.03	60.09	6.00	5.65	0.04	0.012	10.080
NAM12RC177	6	22	16	55.55		5.15	5.17	0.04	0.010	9.213
					61.19
NAM12RC178	4	10	6	52.07	56.29	10.02	6.72	0.03	0.010	7.510
NAM12RC178	24	28	4	57.65	64.74	3.74	2.24	0.14	0.006	10.950
NAM12RC182	0	14	14	53.80		8.23	3.68	0.04	0.050	10.614
					60.19

Dragon Energy Ltd

15

Quarterly Report to 31 March 2012

==> picture [64 x 16] intentionally omitted <==

Hole ID	From (m)	To (m)	Interval (m)	Fe (%)	*caFe* (%)**	SiO2 (%)	Al2O3 (%)	P (%)	S (%)	LOI (%) (1000°C)
NAM12RC185	10	24	14	53.32	60.10	5.34	6.16	0.08	0.022	11.284
NAM12RC186	8	20	12	51.58		6.53	6.96	0.04	0.017	11.444
					58.25
NAM12RC189	18	20	2	50.00	55.08	15.35	3.39	0.04	0.014	9.230
NAM12RC189	24	28	4	52.90	59.11	10.35	2.98	0.05	0.018	10.500
NAM12RC191	6	18	12	52.90		7.06	4.87	0.09	0.017	11.367
					59.68
NAM12RC191	20	22	2	53.40		6.64	4.07	0.09	0.016	11.600
					60.41
NAM12RC192	6	16	10	53.16	59.33	6.48	6.24	0.04	0.017	10.392
NAM12RC192	20	36	16	56.43	63.46	4.97	2.55	0.09	0.018	11.088
NAM12RC193	10	16	6	51.43		7.19	7.07	0.04	0.016	11.000
					57.79
NAM12RC194	12	16	4	50.75	56.80	8.13	7.22	0.03	0.019	10.650
NAM12RC194	24	26	2	50.30	57.55	6.51	7.33	0.05	0.014	12.600
NAM12RC194	40	42	2	50.50	51.11	20.20	4.03	0.03	-0.005	1.200
NAM12RC195	10	12	2	50.70		7.63	8.17	0.05	0.028	10.300
					56.52
NAM12RC195	16	18	2	55.00		3.89	4.41	0.04	0.024	12.000
					62.50
NAM12RC195	20	28	8	53.03		5.79	5.10	0.04	0.025	12.000
					60.26
NAM12RC196	4	6	2	50.70	56.40	8.12	7.88	0.04	0.018	10.100
NAM12RC196	8	12	4	51.95	58.87	6.70	6.30	0.03	0.020	11.750
NAM12RC196	16	30	14	54.18	61.31	5.35	4.29	0.06	0.018	11.636
NAM12RC197	8	10	2	50.70		7.79	7.47	0.03	0.025	11.000
					56.97
NAM12RC198	4	24	20	56.18	62.59	4.51	4.11	0.05	0.018	10.235
NAM12RC199	2	16	14	52.96		8.15	4.08	0.04	0.013	10.886
					59.43
NAM12RC199	20	30	10	52.82		10.05	3.92	0.08	0.012	9.890
					58.62
NAM12RC201	4	8	4	52.40	59.48	6.47	4.51	0.05	0.016	11.900
NAM12RC201	12	14	2	49.70	56.09	10.30	6.27	0.03	0.013	11.400
NAM12RC201	18	28	10	52.36	58.09	11.08	3.64	0.08	0.009	9.868
NAM12RC202	6	12	6	52.20		6.99	5.77	0.04	0.016	11.300
					58.85
NAM12RC202	16	22	6	53.92		6.74	3.77	0.05	0.036	10.723
					60.39
NAM12RC203	0	8	8	54.35	60.80	7.46	3.42	0.04	0.020	10.610
NAM12RC203	12	18	6	51.67	58.47	7.68	6.05	0.06	0.013	11.633
NAM12RC203	22	26	4	52.55	58.98	9.08	4.26	0.07	0.010	10.900
NAM12RC205	2	8	6	50.40		7.37	6.01	0.03	0.015	12.733
					57.75
NAM12RC205	12	14	2	51.60		5.78	6.97	0.05	0.011	12.600
					59.04
NAM12RC206	4	16	12	52.82	59.69	6.95	5.14	0.07	0.010	11.517
NAM12RC206	18	22	4	51.95	57.70	10.87	3.98	0.08	0.001	9.960
NAM12RC213	10	12	2	50.50		7.57	7.22	0.02	0.024	11.800
					57.26
NAM12RC217	8	12	4	50.85	57.65	7.52	6.31	0.02	0.022	11.800

**caFe% = Fe / (100 – LOI) x 100

Dragon Energy Ltd

16

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

DRAGON ENERGY LTD

	ABN 38 119 992 175 Consolidated statement of cash flows		Quarter ended (“current quarter”) 31 March 2012	Quarter ended (“current quarter”) 31 March 2012
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & 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 (provide details if material) Net Operating Cash Flows		Current quarter $A’000		Year to date (9 months) $A’000
		- (2,693) - - (219) - 164 - - -		- (4,287) - - (853) - 407 (1) - -
		(2,748)		(4,734)
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)		- - - - - - - - -		- - (5) - - - - - -
		-		(5)
		(2,748)		(4,739)

• See chapter 19 for defined terms.

17/12/2010Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(2,748)	(4,739)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. (net of issue costs) 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) Net financing cash flows	- - - - - -	- - - (40) - -
	-	(40)
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	(2,748) 13,415 -	(4,779) 14,708 738
	10,667	10,667

1.22 Cash at end ofquarter 10,667 10,667	1.22 Cash at end ofquarter 10,667 10,667	1.22 Cash at end ofquarter 10,667 10,667	1.22 Cash at end ofquarter 10,667 10,667
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
			(245)
			-
1.25 Explanation necessaryfor an understandingof the transactions Executive directors’ remuneration (245) 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 reportingentityhas an interest N/A		Explanation necessaryfor an understandingof the transactions
		Executive directors’ remuneration (245)
	N/A
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest
	N/A

• See chapter 19 for defined terms.

Appendix 5B Page 2

17/12/2010

Appendix 5B Mining exploration entity quarterly report

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
	-	-
	-	-

Estimated cash outflows for next quarter

4.1 Exploration and evaluation (including acquisition costs) 4.2 Development 4.3 Production 4.4 Administration	$A’000
	(525)
	-
	-
	(300)
Total	(825)

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as	Current quarter	Previous quarter
shown in the consolidated statement of cash flows) to	$A’000	$A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank	1,172	3,063
5.2 Deposits at call	9,495	10,352
5.3 Bank overdraft	-	-
5.4 Other (provide details)	-	-
Total: cash at end of quarter(item 1.22)	10,667	13,415

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
	-	-	-	-
	E08/2210 E08/2209	Granted Granted	0% 0%	100% 100%

• 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	206,426,374	206,426,374
	- -	- -	- -	- -
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	11,150,000 47,460,245	- 47,460,245	Exercise price $0.30 $0.35	Expiry date 31 May 2012 18 November 2014
	-	-
	-	-
	-	-
7.11 Debentures (totals only)	-	-
7.12 Unsecured notes(totals only)	-	-

• See chapter 19 for defined terms.

Appendix 5B Page 4

17/12/2010

Appendix 5B Mining exploration entity quarterly report

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 5).

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

Sign here: ............................................................ Date: 27April 2012 (Executive Director)

Print name: Anthony Ho

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: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting 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.

17/12/2010Appendix 5B Page 5