Merlin Orbit Tenements

The Merlin Orbit properties consist of 14 tenements covering 4,600sq km surrounding the Merlin mining lease. Of primary importance is the Tintagel project area to the south of Merlin where significant numbers of alluvial diamonds in drainages provides strong evidence for the potential to discover new diamond-bearing kimberlite pipes. This is supported by diamond provenance studies which indicate that numerous diamonds recovered from this area have not come from the known Merlin kimberlites. Initial exploration by the previous owners of the Merlin Orbit tenements recovered commercial size diamonds in the Glyde River. These results were repeated and improved upon by NADL’s exploration work with both macro and micro diamonds and indicator minerals being recovered in a geographically constrained area. In addition to the Tintagel project, the surrounding orbit tenements contain a number of high interest anomalies. A review of the Merlin exploration sampling data has identified 25 indicator mineral and diamond anomalies of which 17 are considered to be high priority exploration targets. Follow-up sampling and ground inspection was carried out and further exploration programmes are planned on the targets. The Company continues to strengthen its land holdings in the area.

Borroloola
The Borroloola tenements cover an area of approximately 1,150sq km, located some 100km north of the Merlin kimberlite field. It is at the point where the high energy hinterland drainage, specifically McArthur River meets the coastal plain, and represents a significant energy inflection point. As there are no significant alluvial developments between Merlin and the coastal plain, it is considered that this inflection point would represent a possible alluvial trap for both gravel and any diamonds which have escaped from the Merlin hinterland. There is an elevation differential of 200m between Merlin and the coastal plain.

Initial bulk sampling of the alluvial gravels was undertaken during the 2006 field season using a Caldwell bucket drill. In excess of 100 tonnes of gravels have recovered from the drilling and transported to the Merlin mine site for processing through the Company’s MKIII DMS plant.

A total of 7 diamonds were recovered for a combined weight of 0.225cts, with the largest diamond having a weight of 0.052cts. These results are important evidence for the potential of the alluvial gravels to hold significant diamond mineralisation.

Bulk Sampling of Borroloola Alluvials		Excavated alluvials