PEEL MINING LIMITED

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SEPTEMBER 2011 QUARTERLY REPORT

31 October 2011

ASX code: PEX ACN: 119 343 734

Unit 1, 34 Kings Park Rd West Perth, WA 6005

Highlights for June quarter 2011

4-Mile Cobar-style discovery:

– High-grade base and precious metals mineralisation intersected in 4MRCDD006.

Ph: (08) 9382 3955 Fax: (08) 9388 1025 E: [email protected] Web: www.peelmining.com.au

Contact:

Rob Tyson Managing Director [email protected]

About Peel Mining Limited:

The Company’s six 100%-owned projects cover approximately 500 km[2] of highly prospective tenure in NSW and WA.
4-Mile Cobar-style discovery at May Day/Gilgunnia project offers exciting exploration potential.
The Apollo Hill gold project is a major, protruding, shear-hosted, gold mineralised system that remains open down dip and along strike.
Ruby Silver project contains several historic high-grade silver mines with minimal modern exploration.
Attunga Tungsten Deposit – a high grade tungsten deposit located near excellent infrastructure.

– FLEM and DHEM surveys indicate moderate-strong conductor open along strike and down dip.

– Interpreted as sited on the “nose” of an anticline - a suitable high-stress structural location.

Apollo Hill updated resource estimate
completed:
17.2 Mt at 0.9 g/t Au for 505,000 oz gold
at a 0.5 g/t cutoff.
Apollo Hill deposit extends to surface
and remains unexploited.

– Mineralisation at the Apollo Hill and Ra deposits remains open at depth and along strike to the south of both deposits.

Metallurgical testwork underway.
Ruby Silver drill planning completed.
Rights issue underway.

Plans for December quarter 2011

Follow-up RC and diamond drilling at 4-
Mile discovery.
Initial drill programme at Ruby Silver.
88 million shares on issue.
$13 Market Cap at 31 October 2011.
Commence scoping study at Apollo Hill.
RC drilling at Ruby Silver project.

Peel Mining Limited – Quarterly Report September 2011

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Exploration

May Day/Gilgunnia Project: Gold, Silver, Lead, Zinc, Silver, Copper; Western NSW (PEX 100%). Tenements: ML1361 (May Day), EL7461 (Gilgunnia).

Targets: Volcanogenic Massive Sulphide mineralisation.

4-Mile Cobar-style polymetallic discovery

In early 2011, Peel identified a coincident late time conducting anomaly and magnetic high, located near the historic 4-Mile goldfield area, about 10 km east of the May Day deposit.

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Figure 1: 4-Mile Magnetic (TMI) and Airborne EM (late time).

Systematic exploration by Peel involving multiple rounds of drilling and multiple downhole geophysical (DHEM) surveys yielded encouraging results.

During the September quarter, this work culminated in discovery drillhole 4MRC007 intersecting multiple zones of strong copper-dominated polymetallic mineralisation including massive sulphides. Follow-up diamond tail drillhole 4MRCDD006 intersected high-grade mineralisation including a 10m zone averaging more than 20% combined lead-zinc plus silver-gold, and a 6.65m zone averaging better than 3% copper plus silver-gold.

Drillhole 4MRCDD006 intersected multiple intervals of massive sulphide and stringer mineralisation, including chalcopyrite, sphalerite, galena, pyrrhotite, pyrite, and arsenopyrite. The mineralisation occurs within a package of variably sheared and brecciated turbidite volcaniclastic sediments comprising siltstones and mudstones and is interpreted as occurring as a shoot-like structure dipping moderately to the west and plunging south. Drill intercepts are construed as being close to true.

Peel Mining Limited – Quarterly Report September 2011

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4-Mile is interpreted to be positioned in a favourable geological and structural position, sited on the “nose” of an anticline – a suitable high-stress environment, and occurring in a geological unit interpreted to be age equivalent of the Chesney and Great Cobar Slate Formations found in the immediate Cobar region. Results to date show 4-Mile to be a highly promising exploration target in a world-class mineral province.

Also during the quarter, Peel completed further ground-based geophysics including high-resolution magnetic and gravity surveys, and additional downhole and fixed loop EM surveys. These surveys have indicated that the 4-Mile anomaly remains open along strike and down-dip and follow-up RC/diamond drilling is planned to commence in mid-November.

Table 1: Significant 4-Mile Drilling Results

Hole ID	Northing	Easting	Azimuth (true)	Dip	Final Depth	From (m)	To (m)	Interval (m)	Cu (%)	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)
4MRC001	6413351	415281	090	-60	225	165	168	3	0.03	9	0.06	0.65	0.50
						194	199	5	0.27	21	0.15	0.87	1.88
						205	206	1	0.09	22	0.24	1.49	1.50
4MRC002	6413348	415326	090	-60	219	138	143	5	0.04	11	0.15	1.28	2.10
						164	165	1	0.01	4	0.82	0.10	0.15
						173	174	1	0.03	7	0.18	0.32	0.59
						213	214	1	0.15	20	0.05	0.95	1.23
4MRC003	6413352	415359	090	-60	219	110	120	10	0.03	24	0.09	1.17	2.20
						133	134	1	0.09	26	0.02	1.22	0.24
						176	179	3	0.11	14	0.15	0.85	1.55
						205	208	3	0.01	8	0.07	0.43	0.97
4MRC004	6413353	415243	090	-65	255	197	216	19	0.17	13	0.15	0.42	0.47
4MRC005	6413348	415404	105	-60	147	138	143	3	0.04	5	0.45	0.24	1.16
4MRCDD006	6413377	415179	090	-70	345.1	253	312	59	0.64	19	0.31	1.78	2.16
including						253	263	10	0.14	41	0.77	9.01	11.00
and						267.35	274	6.65	3.10	34	0.93	0.65	0.13
and						293.70	303	9.30	1.20	19	0.14	0.28	0.17
and						306	311	5	0.15	30	0.15	1.21	2.76
4MRC007	6413365	415210	090	-70	270	187	188	1	-	-	3.59	-	-
						218	266	48	0.74	24	0.21	0.48	0.49
including						219	220	1	1.65	90	1.48	9.99	2.00
and						226	230	4	1.42	18	0.21	0.39	0.20
and						235	242	7	0.27	15	0.15	0.51	1.75
and						248	256	8	1.94	55	0.3	0.16	0.29
and						262	266	4	1.49	59	0.18	0.26	0.21

Notes

All drillholes were drilled reverse circulation using face sampling hammer except for 4MRCDD006 which had an NQ diamond core tail from 240-345.1m.
Drill chips were collected in plastic bags at 1m intervals. Sample recoveries were considered adequate for all samples.
Drill chips/core was logged in detail based on lithology, mineralisation, and alteration.
Samples for analysis were collected by hand spearing rock chip material except for 4MRC007 where the interval 216m-270m was gained via a 1:8 riffle splitter and 4MRCDD006 where samples were collected by sawing core in half.
Samples were submitted as 1m or 4m composite intervals for RC or as 1m half-core intervals unless a geological contact was used for diamond.
Samples were analysed at ALS Chemex utilising methods: Au‐AA25 for Au (fire assay); ME‐ICP61 for multi-element including Ag, Cu, Pb, Zn; Ag-OG62 for > 100 g/t Ag; Cu-OG62 for >1% Cu; Pb-OG62 for >1% Pb; and Zn-OG62 for >1% Zn.
Standards for Au and base metals were included (approximately 2% of all samples). Duplicates were also included (approximately 2% of all samples).
Drillhole collars were surveyed by handheld GPS (Garmin GPS72).
Downhole surveys were routinely run.

Peel Mining Limited – Quarterly Report September 2011

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Figure 2: 4-Mile Cross Section.

Peel Mining Limited – Quarterly Report September 2011

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Figure 3: 4MRCDD006 - galena-rich massive sulphides (4-Mile).

Apollo Hill Project: Gold; Northeastern Goldfields WA (PEX 100%).

During the September quarter, Peel completed an updated resource estimate at Apollo Hill. The updated resource estimate – which was estimated by Hellman and Schofield Pty Ltd (H&S) and incorporates the results of a programme of RC and diamond drilling undertaken by Peel – highlights the potential of the Apollo Hill Project for future economic extraction. Planning of additional exploration is advanced, with a preliminary in-house scoping study to commence during the December quarter. Further work will be aimed at obtaining a better understanding of the controls/vectors for mineralisation at Apollo Hill, as well as generating new regional exploration targets. The updated resource estimate at a range of gold cut-off grades is shown in Table 2:

Table 2: Apollo Hill Inferred Resource estimates to 180 metres depth (190mRL)

Cut Off		Ra			Apollo Hill	Apollo Hill		Total
Aug/t	Mt	Aug/t	koz	Mt	Aug/t	koz	Mt	Aug/t	koz
0.2	2.4	0.7	54	43	0.5	691	45.4	0.5	745
0.4	1.5	1.0	48	22	0.8	566	23.5	0.8	614
0.5	1.2	1.1	42	16	0.9	463	17.2	0.9	505
0.6	1.0	1.2	39	12	1.0	386	13.0	1.0	424
0.8	0.7	1.4	32	7	1.2	270	7.7	1.2	302
1.0	0.5	1.6	26	4	1.4	180	4.5	1.4	206
1.2	0.4	1.8	23	2	1.6	103	2.4	1.6	126

Note: The significant figures in Table 1 reflect the precision of estimates and include rounding errors.

Peel Mining Limited – Quarterly Report September 2011

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Apollo Hill, 100%-owned by Peel Mining, is located about 50 kilometres south-east of Leonora and comprises a package of mineral tenements covering an area of about 360 km[2] within the highly mineralised North-Eastern Goldfields of Western Australia ( see Figure 4 ).

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Figure 4: Apollo Hill location.

Resource Estimation Summary

The Apollo Hill Project comprises two deposits, the main Apollo Hill deposit in the north of the project area, and the smaller Ra deposit in the south ( see Figure 5 ). Gold mineralisation at the project is associated with quartz veins and carbonate-pyrite alteration along a north-east dipping contact between felsic rocks to the west, and mafic dominated rocks to the east. The combined mineralised zones extend over a strike length of about 1.4 kilometres, and have been intersected by drilling to a maximum depth of about 350 metres below surface.

Within the area covered by the current model, the study database contains 136 aircore, 214 reverse circulation (RC), and 59 diamond holes for 26,761 metres of drilling. An additional 135 RAB holes in this area were not included in the resource dataset. Peel's RC and diamond drilling provides approximately 18 per cent of the mineralised composites used for resource estimation.

Mineralised domains used for the current estimates were interpreted by H&S. Outlines capturing zones of continuous mineralisation with composited gold grades above approximately 0.1 g/t were digitised on cross sections aligned with the drilling traverses and linked to form closed three dimensional wireframes. In addition to the mineralised domain, the current estimates include a background domain which contains only rare, isolated mineralised drill results.

Peel Mining supplied H&S with a set of strings representing the interpreted base of oxidation and top of fresh rock. Triangulations produced from these strings were used to define the oxidation subdomains used for the current estimates.

Peel Mining completed a total of 52 immersion density measurements from samples obtained from diamond core drilling. These spatially clustered samples are of uncertain representivity. The current estimates assume densities specified by Peel and range from 1.8 t/bcm for oxidised Ra mineralisation to 2.8 t/bcm for fresh mafic Apollo Hill mineralisation.

Peel Mining Limited – Quarterly Report September 2011

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Figure 5: Apollo Hill Project drill hole location map showing mineralised domains.

Peel Mining Limited – Quarterly Report September 2011

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H&S estimated the resources for the Apollo Hill Project by Multiple Indicator Kriging, with block support correction to reflect likely open pit mining selectivity, a method that has been demonstrated to provide reliable estimates of gold resources recoverable by open pit mining for a wide range of mineralisation styles. Although the model estimates extend to around 290 metres depth, the reported resources only include estimates to about 180 metres below surface to reflect realistic extraction depths.

Peel Mining believes that the shallow and extensive nature of mineralisation at the Apollo Hill gold project suggests that the project has reasonable prospects for eventual economic extraction.

At the time of reporting, follow-up metallurgical testwork was underway and a preliminary in-house scoping study was planned to commence in the December quarter.

Ruby Silver Project: Silver, Gold; Northeastern NSW (PEX 100%).

Ruby Silver project is located approximately 30 km east of Armidale in north-eastern New South Wales and comprises a 60 km[2] exploration licence (EL7711), 100%-owned By Peel Mining Ltd, covering the historic Ruby-Tulloch-Rockvale silver-field. The area contains numerous historic silver mines, workings and prospects including: the Ruby silver mine which produced 350,000 ounces silver at 620 g/t silver; and the Tulloch silver mine which produced 50,000 ounces silver at 6,200 g/t silver.

During the September quarter, Peel completed planning for an initial drill programme aimed at testing previously identified IP chargeability anomalies. This drilling is planned to commence in December, subject to rig availability.

Attunga Project: Gold, Tungsten, Molybdenum, Copper; Northeastern NSW (PEX 100%).

Tenements: EL6883 (Mt Patterson), EL6884 (Attunga).

Targets: Intrusive-Related Gold System and/or Orogenic style gold mineralisation; skarn style tungsten-molybdenum mineralisation and skarn-style precious/base metals mineralisation.

No fieldwork was undertaken during the quarter.

Yerranderie: Silver, Lead, Gold; Central NSW (PEX 100%).

Tenement: EL7356.

Targets: Silver-lead-gold mineralisation in surface waste and tailings dumps.

No fieldwork was undertaken during the quarter.

For further information, please contact Managing Director Rob Tyson on mobile 0420 234 020.

The information in this report that relates to Exploration Results is based on information compiled by Mr Robert Tyson who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Tyson has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Tyson, consents to the inclusion in this report of the matters based on their information in the form and context in which it appears.

Peel Mining Limited – Quarterly Report September 2011

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PEEL MINING LIMITED Interim / Quarterly Report 2011

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SEPTEMBER 2011 QUARTERLY REPORT

31 October 2011