PEEL MINING LIMITED — Interim / Quarterly Report 2011

Apr 28, 2011

MARCH 2011 QUARTERLY REPORT 29 April 2011

Peel Mining Limited ASX code: PEX ACN: 119 343 734

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

Ph: (08) 9382 3955 Fax: (08) 9388 1025 E: info@peelex.com.au Web: www.peelex.com.au

Contact:

Rob Tyson Managing Director rtyson@peelex.com.au

About Peel Mining Limited:

The Company's five 100%-owned projects cover approximately 500 km2 of highly prospective tenure in NSW and WA.

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• These projects comprise Apollo Hill, May Day, Attunga, Yerranderie and Ruby.
• The Apollo Hill gold project is a major, protruding, shear-hosted, gold mineralised system that remains open down dip and along strike.
• Peel's asset base also includes the Attunga Tungsten Deposit – a high grade tungsten deposit located near excellent infrastructure.
• May Day gold-lead-zinc VMS deposit on granted mining lease near Cobar offers exciting exploration potential.
• 88 million shares on issue.
• $11.5 Market Cap at 29 April 2011.

Highlights for March quarter 2011

High-grade Ruby silver project secured:

EL7711 covering historic Ruby-Tulloch-Rockvale granted 22 February 2011.

Ruby silver mine produced 350,000 oz silver at 620 g/t Ag.

Tulloch silver mine produced 50,000 oz silver at 6,200 g/t Ag.

Drill intercept of 5.08m at 6,700 g/t Ag from 90.5m at Ruby in 1968; never followed up.

Minimal modern exploration.

IP geophysical survey currently underway.

Apollo Hill metallurgical, infill and extensional drilling currently underway.

4-Mile zinc-lead discovery:

Sphalerite and galena intersected in all RC drillholes.

Fixed-loop EM survey confirms moderate-strong conductor.

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Final assays pending.

Plans for June quarter 2011

IP geophysical survey and RC drilling at Ruby silver.

Follow-up downhole EM and RC drilling at 4-Mile zinc-lead discovery.

Metallurgical testwork and resource upgrade at Apollo Hill.

Exploration

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

During the quarter, Peel announced that it had been granted a 21 unit (~60 km2 ) exploration licence covering the historic Ruby-Tulloch-Rockvale silver-field. EL7711 is located approximately 30 km east of Armidale in north-eastern New South Wales.

Figure 1 – Ruby silver tenement location plan

EL7711 encompasses much of the central part of the Rockvale Adamellite which hosts silvergold-arsenic mineralisation both at its margin and within the intrusion on northeast/northwest fracture zones, possibly associated with aplite dykes. Major known deposits are the Ruby and Tulloch silver mines and the Rockvale arsenic mine. There are, however, many other underexplored prospects and anomalies within EL7711, adding to its prospectivity for silver and gold.

The Ruby silver mine, associated with an outcropping aplite dyke, has a lode up to 1.4 metres wide and was worked to a depth of 120 metres between 1895 and 1905. Historic production is estimated to be about 350,000 ounces silver at a recovered grade of ~20 ounces per ton (~620 g/t Ag).

In 1968, a nine-hole diamond drill program was undertaken by Silver Valley Minerals to test the main workings at Ruby. Records of this work are poor, but it is known that the first hole intersected 5.08 metres at a grade of 216 ounces per ton (~6,700 g/t Ag) from 90.5 metres downhole. True width was estimated at about 3 metres. Three of the other drillholes intersected old workings, while values in a further three were reported only as "low". No results were recorded for the other two drillholes. No further drilling has been completed at Ruby.

Results from an IP geophysics survey completed in 1969 suggest that sulphide mineralisation possibly extends well beyond the known silver-rich shoot at Ruby, and presents future exploration targets.

At the Tulloch mine, mined between 1913 and 1928, an estimated 50,000 ounces silver at a recovered grade of ~200 oz/t (~6,200 g/t Ag) have been won. The silver mineralisation is developed in fissures associated with three obliquely intersecting sets of shears near the contact of sediments.

The Rockvale arsenic mine was discovered in 1923, and in the period to 1928, produced 2,950 tonnes of ore containing about 600 tonnes of white arsenic. Mineralisation occurs as irregular shoots in altered aplite within the Rockvale Adamellite. Mineralisation is predominantly pyrite-arsenopyrite, but silver-gold-lead mineralisation (similar to both the Ruby and Tulloch mines) is recorded.

The Silver Point prospect lies about 2 kilometres along strike from the Ruby silver mine and comprises a pipe-like body of aplite approximately 50 metres in diameter. Previous exploration has identified highly anomalous silver-gold mineralisation in surface rock chips. Peel believes that Silver Point has bulk tonnage potential and should be drill tested accordingly.

The Happy Valley and G Reef prospects lie along strike to the west of the Tulloch silver mine. These prospects also contain historic workings, along with highly anomalous silver-gold mineralisation in surface rock chips. A strong IP anomaly between the Tulloch mine and Happy Valley which has an associated magnetic anomaly also remains untested.

IP Geophysical Survey and Mapping/Sampling

Subsequent to the quarter's end, Peel commenced field activities at the Ruby Silver project with an approximately 15 line kilometre IP geophysical survey covering the Tulloch and Rockvale mine areas now underway. This survey is being completed to aid in the delineation of sulphide-bearing quartzcarbonate veins in preparation for follow-up drilling.

Peel also recently completed a first-pass reconnaissance geological mapping and sampling programme over the Tulloch, Rockvale and G Reef/Happy Valley areas. This mapping has delineated the Rockvale line of lode at surface for more than 750m, and on strike with the Ruby silver mine. Peel is now seeking relevant regulatory approvals in anticipation of an upcoming drill programme.

Figure 2 – Ruby silver - disseminated aggregates of coarse galena and minor sphalerite developed within a laminated quartz vein

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

In November 2010, Peel became the 100%-owner of the Apollo Hill gold project in the North Eastern Goldfields of Western Australia. The Apollo Hill gold project, located about 50 kilometres southeast of Leonora, is focused on the advanced Apollo Hill gold deposit, an extensively mineralised gold system.

In December 2010, Peel reported a maiden resource estimate for the Apollo Hill and Ra deposits. The highlights of this work were: a resource at Apollo Hill and Ra deposits estimated at 11.1 Mt at 1.0 g/t Au for 341,000 ounces of gold (using 0.5 g/t gold cut off); maximum depth of the resource estimate is 150m below surface; the Apollo Hill deposit extends to surface and remains unexploited; mineralisation at Apollo Hill and Ra deposits remains open at depth and along strike to the south of both deposits; and good potential exists to increase resources with minimal further drilling.

Apollo Hill and Ra Deposits

At Apollo Hill, two zones of mineralisation have been identified: West (or Main) Zone and the East Zone (see Figure 3). The current resource extends for 600m in strike length and Peel expects to increase this to the south-east with further drilling. The gold mineralisation dips to the north-east at 45-60 degrees and is accompanied by quartz veins and carbonate-pyrite alteration associated with a structurally deformed mafic-felsic lithological contact. Mineralisation is present at surface.

Figure 3 – Apollo Hill and Ra Deposits

The Ra gold deposit is covered by a layer of transported material, with mineralisation hosted by dolerite rock and dipping 30- 60 degrees to the northeast. The current resource at Ra has a strike length of approximately 300m (see Figure 3), with mineralisation open along strike and at depth.

Diamond and RC Drilling

Subsequent to the end of the quarter, diamond and RC drilling commenced at the Apollo Hill gold project. The aim of this drilling is twofold: to provide representative gold-mineralised material for broad metallurgical testwork; and to increase sample density to allow for the extension of the Apollo Hill resource model a further 200m (grid) south and to a minimum depth of about 150 metres below surface. Peel plans to update the current resource upon completion of this drilling and receipt of final assay results.

Metallurgy

Preliminary testwork completed by Peel in 2010 yielded excellent overall gold extraction including greater than 80% gravity recoverable gold and rapid cyanide leach kinetics. Peel plans to complete additional testwork designed to assess the following metallurgical characteristics of Apollo Hill ore:

• Gold leaching/gravity separation characteristics of oxide, transitional and fresh ore types;
• Bond Crushing Work Index of fresh ore;
• Bond Ball Mill Work Index of fresh ore;
• Bond Abrasion Index of fresh ore, and;
• Immersion SG testwork.

May Day Project: Gold, Lead, Zinc, Silver, Copper; Western NSW (PEX 100%).

Tenements: ML1361 (May Day), EL7461 (Gilgunnia) Targets: Volcanogenic Massive Sulphide mineralisation.

4-Mile Zinc-Lead Discovery

During the quarter, Peel completed a programme of three RC drillholes (for a total of 663m) targeting a newly-recognised coincident (EM and magnetic) geophysical anomaly at the historic 4- Mile goldfield prospect located within Peel's 100%-owned May Day-Gilgunnia project.

Peel is very encouraged to report the discovery of base metal sulphide mineralisation (galena and sphalerite) in zones up to 10m wide, within all three drillholes. True width is unknown at this stage. Handheld XRF analysis confirms the presence of zinc and lead mineralisation with visual estimates via geological logging indicating individual metres containing up to 5% combined sphalerite and galena.

Other accessory sulphide minerals observed includes pyrrhotite, pyrite, arsenopyrite and chalcopyrite. The sulphides occur within a package of sediments comprising carbonaceous shales and siltstones. Final assay results are pending and will be reported as soon as they are received and compiled.

Prior to drilling, Peel refined the Four-Mile EM anomaly by completing a ground-based fixed-loop TEM survey. This survey confirmed the existence of a moderate-strong conductor. Peel is now planning to complete a downhole EM survey to further refine the EM conductor prior to additional exploration planning.

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.

Corporate

During the quarter, Peel held a General Meeting of Shareholders at which ratification of a prior issue of shares was carried along with a change of name to Peel Mining Limited.

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.