Sherwin Iron : Early Drilling Success at Mt Scott

Drillhole

N

E

40%

c/o

40%

40%

50%

c/o

50%

50%

58%

c/o

58%

58%

From m

Thick m

Fe %

From m

Thick m

Fe%

From m

Thick m

Fe %

RR00592D

8358001

433900

1

5.5

50.0

2

2.5

55.3

2.5

0.5

63.8

RR00593D

8358000

433700

2.75

2.5

50.5

4

1

63.0

4.25

0.75

65.3

5.5

1.75

49.3

6.25

0.75

57.7

6.5

0.5

59.5

RR00594D

8357600

434203

2.5

4.5

50.1

3.25

1.25

58.7

3.5

0.5

64.4

RR00596D

8357204

434401

2.75

4

51.7

2.75

2.75

55.7

3.75

0.75

65.9

RR00598D

8356804

434501

14.3

5.45

51.2

14.75

2

56.4

15

0.75

65.5

RR00599D

8356802

434299

27.75

4.25

51.4

28

2.75

54.6

28.5

1.25

58.1

RR00600D

8356003

434698

12.75

0.75

59.9

12.75

0,75

59.9

12.75

0.75

59.9

14

3.5

48.6

14

0.5

59

14

0.5

59.0

RR00601D

8355970

434525

20

3.5

51

20

2

53.0

RR00602D

8355197

434703

11.75

2.5

53

12

1.5

57.1

12.25

1.0

60.0

Criteria

Explanation

Sampling

techniques

• Nature and quality of sampling (eg cut channels, random chips, or specific

specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

HQ triple tube drilling provided whole core samples that were subsequently cut to half core for assaying over measured intervals using a standard diamond core saw. The hematite rich zones were competent so that representative cut samples were quite easy to obtain.

• Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

Cut Lines were marked on core for cutting over set quarter metre intervals (except at to key geological boundaries, where sample interval may vary slightly less or greater). Only laboratory XRF assays have been reported as no field calibration tools were considered necessary.

• Aspects of the determination of mineralisation that are Material to the Public Report. In cases where 'industry standard' work has been done this would be relatively simple (eg 'reverse circulation drilling was used to obtain

1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay'). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

HQ diamond core drilling was used to obtain nominal 0.25m length samples, each typically 2 to 3 kg weight. These samples were crushed and pulverized to obtain a 100gram from split pulps for pressed pellet XRF assay. This was reported for the basic iron ore suite elements at an approved assay laboratory.

Drilling techniques

• Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

HQ triple tube diamond core drilling in vertical holes from surface testing near flat lying ironstone stratigraphy ie no oriented core ---to a maximum depth of around 40m.

Criteria

Explanation

Drill sample

recovery

• Method of recording and assessing core and chip sample recoveries and

results assessed.

Drill core recovery was measured and logged from consecutive core blocks (reflecting depth interval of each run). Recovery was recorded with standard tape measure : being percentage of depth of core recovered / depth drilled for each core run.

• Measures taken to maximise sample recovery and ensure representative nature of the samples.

Sample recovery maximized by using an experienced drilling company/drillers familiar with ground conditions in the area and applying HQ triple tube technique.

Diamond core was carefully placed in properly marked trays with depth core blocks and downhole direction clearly marked. Half core cut sampling ensured representivity.

• Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

Diamond core showed excellent recovery in the target mineralized zone . This zone was geotechnically competent material dominantly thick bedded hematite ( occasional goethite) and associated silica.. Some core loss and reduced RQD ( Rock Quality Determination) was evident in waste zones( shales). Such zones were visually obvious and not assayed.

Logging

• Whether core and chip samples have been geologically and

geotechnically logged to a level of detail to support appropriate Mineral

Resource estimation, mining studies and metallurgical studies.

Sherwin understands the geology and stratigraphy of this target zone, which is interpreted to be the same horizon as that being mined by Sherwin elsewhere at Deposit C. All logging conforms to Sherwins existing coding and geotechnical log sheet data includes RQD, total fracture frequency per core run, and other factors.The level of data collected should support future resource estimation.

• Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

Logging is both qualitative in description and quantitative in assaying/ geotech and recovery measurement. Core photography of each core tray is conducted as standard procedure.

• The total length and percentage of the relevant intersections logged.

Logging is conducted throughout the total drillhole to recognizable geological boundaries whether on texture/ colour / lithology or structure / geotechnical basis. Generally logged boundaries may be typically half metre to 1 metre apart but variable through the stratigraphy.

Criteria

Explanation

Sub-sampling

techniques and sample preparation

• If core, whether cut or sawn and whether quarter, half or all core taken.

Samples cut to half core for assay. Remaining half core preserved in tray for potential quarter cutting for other purposes. Eg metallurgical/ density/

• If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry .N/A

• For all sample types, the nature, quality and appropriateness of the sample preparation technique.

Samples crushed and pulverized to fine powder size for pressed pellets for XR.

Recognized appropriate for this material.

• Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

Standards submitted every 50 samples and one duplicate per 50m sample.

Sample splits representatively taken from crushed and pulverized material for assay.

• Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second- half sampling.

Both standard reference samples and duplicates were collected. Results compare favourably with parent samples lying within two standard deviations.

• Whether sample sizes are appropriate to the grain size of the material being sampled.

Hematite samples are very fine grained almost powdery depositional silts and clays and hence sample sizes are very favourable, with no concern about coarse grained / nugget -style issues that may apply in --say gold deposits..

Quality of assay

data and laboratory tests

• The nature, quality and appropriateness of the assaying and laboratory

procedures used and whether the technique is considered partial or total.

The basic iron ore XRF suite is acceptable and % of element components

Fe, Si, P, LOI , Al,Ca, K, Mn, Mg accounts for virtually total rock composition.

• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

N/A

• Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.

Criteria

Explanation

Appropriate high grade Fe and appropriate Si standards have been submitted.

Standards and duplicates submitted with acceptable accuracy demonstrated. No blanks submitted . External laboratory checks done in past but not yet on this program. Will be conducted in next exploration phase associated with the RC drilling.

Verification of sampling and assaying

• The verification of significant intersections by either independent or alternative company personnel. All Significant intersections verified by database geologist and project geologist

• The use of twinned holes. N/A in this case but done elsewhere on the project. RC drilling is planned with limited twinning likely to be conducted.

• Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

All documentation processes, protocols and entry procedures validated by

Sherwins database geologist. This uses Micromine and Excell as basic

• Discuss any adjustment to assay data. None required. Intersections at various cut offs have been reported in table

Location of data

points

• Accuracy and quality of surveys used to locate drill holes (collar and down-

hole surveys), trenches, mine workings and other locations used in Mineral

Resource estimation.

All holes surveyed by hand held GPS but not considered accurate yet.. Formal survey with RL to be done at a later stage

• Specification of the grid system used. GDA94

• Quality and adequacy of topographic control.

Accurate to 1 metre from existing aerial photography. ortho photogrammetric coverage planned. All collars within 3 to 5m of RL

Data spacing and

distribution

• Data spacing for reporting of Exploration Results.

Only Reconnaissance --- was nominally planned at 200m x400m

• Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

No--- it is considered reconnaissance drilling only

• Whether sample compositing has been applied.

No as Sherwin is keen to discriminate boundaries as clearly as possible for future mining purposes..

Criteria

Explanation

Orientation of data

in relation to geological structure

• Whether the orientation of sampling achieves unbiased sampling of possible

structures and the extent to which this is known, considering the deposit type

.Yes the vertical orientation is perfect for the stratigraphic dip of 5 degrees from horizontal.

• If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

Not applicable in this flat lying stratigraphy as vertical holes are optimal for horizontal controlled grade variance within flat dipping beds..

Sample security

• The measures taken to ensure sample security.

Samples checked and sent by Sherwin personnel to laboratory with relevant paperwork cross checked upon receipt. Samples do not show correlation with drill location or depth.

Audits or reviews

• The results of any audits or reviews of sampling techniques and data.

Procedures used for sampling and data collection for Sherwin were set in place by SRK Consulting and Coffey mining from 2010 to2012, as evidenced in previous Sherwin Annual and technical reports. Audits by those groups verified the practices used at that time and continue to be used in the current programme.

Criteria

Explanation

Mineral tenement

and land tenure status

• Type, reference name/number, location and ownership including

agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

EL 24101- Sherwin Iron Ltd 100% owned. Roper River Area -and on McMinn Station 140kms east of Mataranka NT. Agreement with traditional Owners - Ngukkur Community -through NLC ( Northern Land Council)

Registered Heritage Sites identified well outside area of drilling.

• The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

EL24101 secured by Special Project Status of Roper River Iron Ore Project.

Group Project Expenditure and Technical Reporting Approved. No impediments to obtaining a future mining licence seen.

Exploration done by other parties

• Acknowledgment and appraisal of exploration by other parties.

Criteria

Explanation

BHP in 1950sand 1960s only. Identified existence and potential for iron ore. No

drilling conducted ---small bulk sampling.

Geology

• Deposit type, geological setting and style of mineralisation.

Oolitic Iron Ore (shallows, near- marine basin) within the Sherwin Formation of the Roper Group Stratigraphy in the Macarthur Basin.

Drill hole

Information

• A summary of all information material to the understanding of the

exploration results including a tabulation of the following information for all

Material drill holes:

• easting and northing of the drill hole collar Already shown for material drillholes in Table1

• elevation or RL (Reduced Level - elevation above sea level in metres) of the drill hole collar.

Still to be recorded as these are reconnaissance holes all collared within a3 to 5 metre elevation range.

• dip and azimuth of the hole :

All drilled Vertical

• down hole length and interception depth

Shown in Table 1

• hole length.

Exploring for a single target iron ore zone. Hole depth varied from 12m to near 40m.

• If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

Data aggregation methods

• In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

These are stated- weighted averaging applied at geological boundary sampling. Most sampling was 0.25m

• Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

These are clearly stated on the table reported with intersections shown at varying cut off grades, based on the carrying factor of assays grade into an intersection being above cut off.

Criteria

Explanation

• The assumptions used for any reporting of metal equivalent values should

be clearly stated. N/A in this case

Relationship

between mineralisation widths and intercept lengths

• These relationships are particularly important in the reporting of Exploration

Results.

• If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

Downhole intersection width approximates true width in this case.

• If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg 'down hole length, true width not known').

Diagrams

• Appropriate maps and sections (with scales) and tabulations of intercepts

should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

Too early for sectional views at this point. Plan view is shown.

Balanced reporting

• Where comprehensive reporting of all Exploration Results is not practicable,

representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

Such intersections shown at various cut offs in the table 1

Other substantive

exploration data

• Other exploration data, if meaningful and material, should be reported

including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples - size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

No groundwater encountered. High grades associated with geotechnically competent rock.

Further work

• The nature and scale of planned further work (eg tests for lateral extensions

or depth extensions or large-scale step-out drilling).

RC infill Drilling of 150 holes testing extensions and further testing of shallow intersections. Details not yet available.

• Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

Already shown in Plan view release diagram