Stonehenge Nickel Project -- EL 17/2003

The Stonehenge lease contains the potential to host significant nickel deposits. The lease contains similar rocks and magnetic signatures to the adjacent Avebury Nickel Mine and the recently discovered Saxon Nickel Deposit. Both deposits are located on magnetic highs (Stonehenge Nickel Map). In addition the Comstock lead-zinc- silver mine is also located on a magnetic high.

Historical geological survey reports identified outcropping nickel sulphide mineralisation in a narrow pyroxenite dyke just south of the Swansea prospect (located south of SDD001, see Stonehenge Nickel Map). The dyke trends in a north-westerly direction parallel to the long axis of the magnetic high on the Stonehenge lease. The dominant sulphide noted was in the form of the nickel sulphides, millerite and pentlandite.

Mineral Resources Tasmania carried out stratigraphic drilling during 1989 in the north western corner of the lease. The drilling identified folded Cambrian volcanic basaltic lava flows and dolerite intrusive dykes and sills fault bounded against an intrusive ultramafic unit. The rock types identified also host Allegiance's Avebury deposit confirming that the rocks underlying the lease are prospective for nickel deposits. The gabbro was intersected at 153m metres vertical depth and the volcanic sequence started at surface indicating that any nickel mineralisation will be shallower than previously suggested.

Airborne geophysical surveys have identified two magnetic anomalies, a large 1,000m by 600m by 400m thick target (Stonehenge) and a smaller 300m by 200m by 100m thick target (Southwest). Geophysical modelling indicated that the Stonehenge target was between 100 and 200 metres below surface and the Southwest target was only 10-20 metres below surface.

Two diamond drill holes (SDD001 and SDD002) details shown in the table below have were completed by Stonehenge Metals in 2007 to depths of 603.6m and 420m respectively, targeting nickel sulphides at depths between 50 and 400 metres (Stonehenge Nickel Map). While the holes did not intersect significant nickel mineralisation both holes encountered lithologies similar to the Avebury geological sequence and down hole geophysical surveys were completed. Drilling results from these holes contain small intervals of anomalous lead and copper but only background levels of nickel. Geophysical modelling of the drill holes indicates a moderate anomaly approximately 200 metres below the base of the second diamond hole in the area of Target 1 (Stonehenge Nickel Map). The Southwest Anomaly (Target 3) remains to be tested.