Annual Exploration Report – Year 12
Mineral Lease ML1154
“Merlin”
14th June 2009 to 13th June 2010
Holder: Merlin Diamonds Pty Ltd
Operator: North Australian Diamonds Limited
Reporting Period: 14th June 2009 to 13th June 2010
Sheet Reference: Bauhinia Downs 1:250,000 (SE53-03)
Due Date: 14th August 2010
Author: Tom Reddicliffe
Date: 10th September 2010 Report No: 10-030 Copies To: Dept. of Primary Industry, Fisheries and Mines
Merlin Diamond Mine NADL Office
The contents of this Report remain the property of North Australian Diamonds Ltd. and may not be published in whole or in part, nor used in a company report without the written consent of the company.
North Australian Diamonds Ltd Annual Exploration Report MLN1154
i
TABLE OF CONTENTS
LIST OF FIGURES......................................................................................................................................... ii
SUMMARY.......................................................................................................................................................1
1.0 INTRODUCTION..............................................................................................................................2
2.0 LICENCE DETAILS.........................................................................................................................2
3.0 GEOLOGY.........................................................................................................................................4
4.0 EXPLORATION COMPLETED DURING CURRENT REPORTING PERIOD......................4
4.1 Resource Drilling .......................................................................................................................4 4.2 Drill Core Sampling ...................................................................................................................4 4.3 Exploration Drilling ...................................................................................................................1 4.4 COMEX Test Work .....................................................................................................................1 4.5 Plant Spillage Samples ...............................................................................................................1
5.0 GEOPHYSICAL SURVEYS.....................................................................................................................1
5.1 Ground Electromagnetic Surveys .......................................................................................................1
6.0 EXPLORATION EXPENDITURE..................................................................................................5
7.0 PROPOSED PROGRAMME AND BUDGET FOR 2010-2011 ....................................................5
8.0 REFERENCES...................................................................................................................................5
North Australian Diamonds Ltd Annual Exploration Report MLN1154
ii
LIST OF TABLES
Table 1
Tenement Details
Table 2 Bedevere RC Down hole Spoil Geochemical Sample (10-005) Results Table 3 Plant Spillage Sample Results
LIST OF FIGURES
Figure 1 ML1154 Location Map Figure 2
ML1154 Current/ Historical Sample Map
Figure 3 Bedevere EM 34-3 Survey Map Figure 4
Excalibur South Ground EM Survey Map
Figure 5 Perceval Ground EM Survey Map
LIST OF APPENDICES
Appendix A Drill Logs Appendix B Bedevere EM 34-3 Survey Data Appendix C
Excalibur South Ground EM Survey Data
Appendic D Perceval Ground EM Survey Data
North Australian Diamonds Ltd Annual Exploration Report MLN1154
SUMMARY
This report details exploration and evaluation activities carried out by North Australian Diamonds
Limited (NADL) over Mineral Lease ML 1154 for the period 14th June 2009 to 13th June 2010..
NADL acquired 100% of ML1154 in November 2004 from Rio Tinto. The tenement is held under
Merlin Diamonds Pty Ltd, which is a 100% wholly owned subsidiary company of NADL.
Activities completed during the reporting period included a geotechnical drilling program at Palsac,
Bedevere and Launfal as well as an exploration drilling program at Tailing’s Dam and Bedevere.
Down-hole spoil geochemical samples were collected from Bedevere and indicator minerals from
Tailing’s Dam. Plant Spillage samples were collected at Merlin. A ground EM survey was conducted
over Excalibur South and Perceval. COMEX test work was also conducted over the Merlin Mine and
samples were sent to COMEX in Norway for pyrite/diamond testwork.
Total expenditure amounted to $7,712,390.79
North Australian Diamonds Ltd Annual Exploration Report MLN1154
1.0 INTRODUCTION
This report details exploration and evaluation activities carried out by North Australian Diamonds
Limited (NADL) over Mineral Lease ML1154 for the period 45th June 2009 to 13th June 2010.
NADL acquired 100% of mineral lease 1154 in November 2004 from Rio Tinto. The tenement is
held under Merlin Diamonds Pty Ltd (MDPL), which is a 100% wholly owned subsidiary company
of NADL.
The target for exploration within this lease is diamond bearing kimberlite intrusives. In addition,
NADL is undertaking evaluation to reestablish commercial scale mining operations within the lease.
2.0 LICENCE DETAILS
Mineral Lease 1154 was granted to Ashton Mining Limited on the 15th June 1998 replacing
Exploration Retention Licenses (ERL’s) 141 and 142. The area covered by the ERL’s was
previously held under Substitution Exploration License 8630, which replaced the original licenses
6424, 7267, 7581, 7859, 7860 and 7861 in July 1995. ERL 141 comprised 736 hectares, and ERL
142, located to the south of ERL 141, comprised 888 hectares. On the 17th December 1996,
application for a mineral lease was made over the ERL’s, covering an area of 2,350 hectares. On
granting of the mineral lease, the ERLs were automatically surrendered.
The licence is located on the Bauhinia Downs (SE53-03) 1:250,000 map sheet and the Glyde (6164)
1:100,000 sheets. Access to the lease is via a 64 kilometre formed gravel access track from the
Carpentaria Highway, the turn-off is approximately 6 kilometres south-west of the McArthur River
Mine turn-off. A tenement location map is shown as Figure 1.
Table 1: Licence Details
Project Name Tenement No Application Date Grant Date Sub-Blocks Area (ha) Merlin MLN 1154 17/12/1996 15/06/1998 Na 2350
North Australian Diamonds Ltd Annual Exploration Report MLN1154
North Australian Diamonds Ltd Annual Exploration Report MLN1154
3.0 GEOLOGY
The mineral lease is located on a plateau referred to as the Merlin Plateau that is part of the Bukalara
Ranges. The Merlin Plateau occurs at an elevation of approximately 200m above mean sea level and
is approximately 10km north-south by 5km east-west. The plateau itself is host to twelve kimberlite
pipes, a small breccia pipe and a further two kimberlite pipes dissected by Matheson Creek that
bounds the plateau to the north (Emu 1 and Emu 2 kimberlite pipes). The kimberlite pipes have been
age dated as Devonian and intrude the Neoproteozoic Bukalara Sandstone that attains a maximum
thickness over the plateau of approximately 100m. Kimberlite material is described as olivine rich
kimberlite and kimberlite breccia and is likely to represent the upper diatreme facies. The kimberlite
is highly weathered to approximately 100m below surface. Proterozoic sediments of the McArthur
Group form the basement to the area. The youngest rocks in the area are sediments of Cretaceous
age that outcrop in isolated areas. Various alluvial deposits occur and a lateritic profile is developed
over the plateau.
4.0 EXPLORATION COMPLETED DURING CURRENT REPORTING PERIOD
4.1 Resource Drilling
Three programs of Diamond and RC resource definition drilling were completed during the previous
reporting period. The first program comprised an ore reserve and geotechnical drill program
targeting the Palsac pipe and included a total of 6 diamond drill holes for a total of 2,523.1 metres
and total RC drilled metres are 473m. The second program targeted the Bedevere pipe and included a
total of 1 diamond drill holes for a total of 179.4 metres. The third program comprised of a drilling
program at Launfal consisting of 1 diamond drill hole for a total of 535.8 metres. Each of the Drill
holes from all three programs is discussed in Appendix A.
4.2 Drill Core Sampling
Down-Hole Sampling
Three programs involving the collection of various downhole samples were completed at Bedevere
during May, 2010. The first comprised the collection of a downhole grade sample from a vertical
diamond drill hole through centre of Bedevere pipe. A selection of core from the resource drill holes
was sent to the Perth laboratory for diamond recovery. This was undertaken to provide some
certainty to the predicted diamond content at depth by investigating the relationship between
North Australian Diamonds Ltd Annual Exploration Report MLN1154
microdiamonds and macrodiamonds at depth from drill core and microdiamonds and macrodiamonds
at surface from production data and from mini-bulk samples. The second program involved the
Collection of samples from RC Chip piles for geochem analysis. The chips were from holes drilled
into and around the Bedevere kimberlite pipe. Analysis was to determine if samples were kimberlitic
or associated with kimberlite. Results from the samples are discussed in table 2. A third and separate
program surrounding Bedevere involved the collection of exploration downhole indicator samples. A
total of 491 samples were collected (10-008-001 to 10-008-491). Samples were sent to the company’s
Lab and results are awaited. All three programs and the samples collected in each are shown in figure
2.
North Australian Diamonds Ltd Annual Exploration Report MLN1154
North Australian Diamonds Ltd Annual Exploration Report MLN1154
Table 2: Bedevere RC Down hole Spoil Geochemical Sample (10-005) Results
SAMPLE TYPE TENEMENT EASTING_AMG NORTHING_AMG
DATU
M ZONE
Ba
(ppm)
Ce
(ppm)
Cr
(ppm)
La
(ppm)
Nb
(ppm)
Ni
(ppm)
10-005-
001
RC
Geochem MLN 1154 642427 8142491 AGD66 53 315 23 x 10.6 10 x
10-005-
002
RC
Geochem MLN1154 642427 8142491 AGD66 53 372 38.9 65 17.1 10 x
10-005-
003
RC
Geochem MLN 1154 642452 8142491 AGD66 53 184 132.4 x 58.7 27 x
10-005-
004
RC
Geochem MLN 1154 642452 8142491 AGD66 53 232 101.7 x 46.4 18 27
10-005-
005
RC
Geochem MLN 1154 642478 8142491 AGD66 53 178 116.8 x 54.8 18 58
10-005-
006
RC
Geochem MLN 1154 642478 8142491 AGD66 53 316 55.8 81 28.1 17 63
10-005-
007
RC
Geochem MLN 1154 642478 8142491 AGD66 53 330 46 x 22.4 21 86
North Australian Diamonds Ltd Annual Exploration Report MLN1154
10-005-
008
RC
Geochem MLN 1154 642478 8142491 AGD66 53 235 40.2 x 17.8 15 203
10-005-
009
RC
Geochem MLN 1154 642554 8142490 AGD66 53 711 55.8 100 26.7 15 116
10-005-
010
RC
Geochem MLN 1154 642554 8142490 AGD66 53 217 41.5 x 20.7 12 x
10-005-
011
RC
Geochem MLN 1154 642554 8142490 AGD66 53 311 63.3 69 32.5 34 x
10-005-
012
RC
Geochem MLN 1154 642554 8142490 AGD66 53 223 36.9 410 18.7 14 x
North Australian Diamonds Ltd Annual Exploration Report MLN1154
4.3 Exploration Drilling
Two Exploration programs targeting follow up chromite and diamond positive as well as indicator
minerals were completed at Bedevere and Tailing’s Dam. The first program was an RC exploration
drilling program around Bedevere to follow up on positive chromite and microdiamond indicators.
Four E-W lines were originally planned. Another 5 lines were added due to access problems to other
areas. These lines were to target some EM-34 anomalies and to drill through an apparent corridor
trending 15° that had microdiamond positive results. The lines were extended to areas that were of
higher elevation to where the positive samples were found using the logic that the indicators may
have washed down slope. Another five holes were planned to target an EM-34 high reading and
another four holes were also planned to the south of the Bedevere pipe as follow up to previous
kimberlite drill intercepts from historic drill holes. A total of 146 holes were drilled with a total of
9966m. The second program comprised RC exploration drilling north of the tailings dam. Two east-
west lines were planned to target areas of positive indicator minerals. Only one of the lines were
drilled (the northern most line) as the other line was still too wet for a drill rig to enter. A total of 10
holes were drilled (10-MEXR- 147 to 10MEXR-156) for a total of 600m of drilling.
4.4 COMEX Test Work
Representative samples of the Sorthouse tailings were collected from the Merlin Mine and were sent
to COMEX AS in Norway for the air classifier test. Its main purpose is separation of the fine
diamonds from pyrite or other gangue grains. Results are awaited.
4.5 Plant Spillage Samples
Five plant spillage samples were collected from the Merlin Mine plant for analysis and diamond
recovery. The samples were sent to the company’s wholly owned Lab in Wangara. Results were
released and included four positive and one negative sample which are discussed in Table 3.
North Australian Diamonds Ltd Annual Exploration Report MLN1154
Table 3: Plant Spillage Sample 10-010 Results
SAMPLE TYPE TENEMENT PROJECT EASTING_AMG NORTHING_AMG
DATU
M ZONE Indicator Result
Total
Diamon
d Macro Micro
10-010-
001
Plant
Fine MLN 1154 Merlin Plant 643251 8136183 AGD66 53 Positive 10 10 0
10-010-
002
Plant
Fine MLN1154 Merlin Plant 643251 8136183 AGD66 53 Positive 2 2 0
10-010-
003
Plant
Fine MLN 1154 Merlin Plant 643251 8136183 AGD66 53 Negative 0 0 0
10-010-
004
Plant
Fine MLN 1154 Merlin Plant 643251 8136183 AGD66 53 Positive 2 2 0
10-010-
005
Plant
Fine MLN 1154 Merlin Plant 643251 8136183 AGD66 53 Positive 2 2 0
North Australian Diamonds Ltd Annual Exploration Report MLN1154
5.0 GEOPHYSICAL SURVEYS
5.1 Ground Electromagnetic Surveys
Three EM Surveys were conducted during 2009-2010 period and these included an EM-34-3 Survey
over Bedevere (21st-26th of April 2010), a Ground EM Survey over Excalibur South (May 2010) and
a Ground EM survey over Perceval (May 2010). The survey conducted over Bedevere was flown
over approximately 30.2km using 20m cable with 25m line spacing and 20m stations. The survey is
shown in figure 3 and the data is discussed in Appendix B. The Ground EM survey over Excalibur
South was flown over approximately 54.7 line kilometres 20m cable, 25m line spacing and mostly
20m station spacing. The survey is shown in figure 4 and the data is discussed in Appendix C. The
last Ground EM survey which was flown over Perceval was flown over approximately 5.65 line
kilometres with a 20m cable, 25m line spacing and mostly 20m station spacing. The survey is shown
in Figure 5 and Appendix D.
North Australian Diamonds Ltd Annual Exploration Report MLN1154
North Australian Diamonds Ltd Annual Exploration Report MLN1154
North Australian Diamonds Ltd Annual Exploration Report MLN1154
North Australian Diamonds Ltd Annual Exploration Report MLN1154
6.0 EXPLORATION EXPENDITURE
Expenditure for the reporting period amounted to $7,712,390.79 as per the breakdown in the attached
expenditure report.
7.0 PROPOSED PROGRAMME AND BUDGET FOR 2010-2011
Proposed exploration and evaluation program for 2010-2011 will focus on prefeasibility production
trials. This work will include an upgrade to the Merlin pilot processing plant to enable throughputs
of greater than 50tph. Large bulk samples are to be excavated from the pipes Palomides, Sacramore,
Gawain and Kaye. The information on grade and diamond value obtained from this work will be used
to complete prefeasibility studies. An estimation of proposed expenditure is included below.
Processing plant upgrade $800,000
Bulk sampling and processing $1,500,000
Pre-Feasibility Studies $300,000
Total $2,500,000
8.0 REFERENCES
Reddicliffe, T., 2009. Annual Report. Year 11. ML1154 ‘Merlin’. North Australian Diamonds
Limited Report 09-031.
Kammermann, M., 2007. Annual Report. Year 10. ML1154 ‘Merlin’. North Australian Diamonds
Limited Report 08-033.
Appendix A
Drill Logs
Appendix B
Bedevere EM 34-3 Survey Data
Appendix C
Excalibur South Ground EM Survey Data
Appendix D
Perceval Ground EM Survey Data