ENIGMA MINING LTD

STIRLING DEEPS PROJECT

EL 23074

Drilling Report

Diamond Drilling to confirm a layered mafic complex in the Western Arunta Province and to assess potential for Ni-Cu

sulphides and PGE mineralisation.

Tenement/s EL 23074 1:250 000 Sheet

Name

Mount Peake

(SE5305)

Holder Enigma Mining Ltd 1:100 000 Sheet

Name

Anningie (5554)

Manager Tennant Creek Gold (NT) Pty

Ltd

Datum GDA94-52

Operator Tennant Creek Gold (NT) Pty

Ltd

GDA_E 317050-327590

Commodity GDA_N 7599400-7617851

Elements

Analysed

N/A

Keywords

Author S. Moyle (Geologist), C.Wetherley (Office Geologist)

Approved P. Burton (Director and CEO)

Report Date February 2010

Distribution TNG Limited (1)

NT Geological Survey. (1)

2

Executive Summary

Enigma Mining Ltd is a wholly owned subsidiary of TNG Ltd and holds all exploration

licences in the prospect area. TNG Ltd, as operator, has established the presence of a

large magnetite rich gabbro. This is defined by a zone of higher magnetic susceptibility

surrounding a circular feature of lower susceptibility. This was thought to represent the

top portion of a layered mafic intrusion. The circular feature may represent the magma

chamber or feeder channel.

The aim of this programme was to confirm the presence and nature of a layered intrusion

and assess whether there was any potential for magmatic base metal and PGE

mineralisation at depth. S saturated mafic-ultramafic intrusions of the Western Arunta

province have been noted to have potential for orthomagmatic Ni-Cu-Co sulphide

associations (Hoatson 2001).

TNG proposed two deep diamond drillholes to test this concept, provide confirmation of a

layered intrusive and using geochemical analysis, petrology and geophysics to ascertain

the potential for magmatic sulphides. Confirmation of this would establish an exciting

new exploration area. The project was called the Stirling Deeps Project.

TNG completed a small diamond drilling programme between 28th October - 21st

November 2009 to provide information on the nature and extent of a potential layered

mafic intrusion in the prospective Western Arunta province.

Two diamond drillholes were completed for 691.7 metres.

SDDD001 and SDDD002 both intersected olivine gabbro but did not confirm the presence

of a layered mafic intrusion in the area. Follow up drilling programmes are required to

further test this theory.

All work was completed to a high standard in time and on budget.

3

TABLE OF CONTENTS

1.0 INTRODUCTION ............................................................................................... 5

2.0 LOCATION AND ACCESS .................................................................................... 5

3.0 REGIONAL GEOLOGICAL CONTEXT ..................................................................... 6

3.1 Known Mineralisation ........................................................................................ 7

4.0 EXPLORATION CONCEPT.................................................................................... 8

4.1 Theory and Background ..................................................................................... 8

4.2 Magnetic Model .............................................................................................. 10

4.3 Gravity Model................................................................................................. 12

5.0 STIRLING DEEPS DIAMOND DRILLING PROGRAMME ........................................... 13

5.1 Site Preparation ............................................................................................. 13

5.2 Drilling .......................................................................................................... 14

5.3 Core Processing .............................................................................................. 15

5.4 Core Sampling ............................................................................................... 17

5.5 Analysis ........................................................................................................ 18

6.0 RESULTS ....................................................................................................... 18

7.0 CONCLUSIONS ............................................................................................... 19

8.0 RECOMMENDATIONS ...................................................................................... 19

9.0 REFERENCES ................................................................................................. 19

4

LIST OF FIGURES Figure 1: Location plan of Mount Peake project area ....................................................... 6

Figure 2: Mount Peake regional geology ........................................................................ 7

Figure 3: Stratigraphy of the Bushveld Complex (Cawthorn, 1999) ................................... 9

Figure 4: Section of layered mafic intrusion model with planned drillholes ......................... 9

Figure 5: Plan View of 3D model highlighting dense body coincident with

magnetic trend ............................................................................................. 10

Figure 6: West looking view of 3D model with magnetic and gravity trends...................... 10

Figure 7: First vertical derivative magnetic image with planned diamond holes

and previous TNG drillholes ............................................................................ 11

Figure 8: 3D-image Magnetic (red) and gravity (green) models displaying ring

structure and sulphide target with planned drillholes ......................................... 12

Figure 9: Site Clearing .............................................................................................. 13

Figure 10: Final Diamond Drillhole locations ................................................................. 14

Figure 11: SDDD001 Core Photograph ........................................................................ 16

Figure 12: SDDD002 Core Photograph ........................................................................ 17

LIST OF TABLES

Table 1: Final diamond drillhole details ........................................................................ 15

Table 2: Best results from drillholes SDDD001 and SDDD002......................................... 18

APPENDICES

Appendix 1: Digital Data

Appendix 2: Sample Submission Form

5

1.0 Introduction

Enigma Mining Ltd is a wholly owned subsidiary of TNG Ltd and holds all exploration

licences in the prospect area. TNG Ltd, as operator, has established the presence of a

large magnetite rich gabbro. This is defined by a zone of higher magnetic susceptibility

surrounding a circular feature of lower susceptibility. This was thought to represent the

top portion of a layered mafic intrusion. The circular feature may represent the magma

chamber or feeder channel.

This report summarises a diamond drilling programme completed at the Stirling Deeps

Prospect within the Mount Peake Project from 28th October – 21st November 2009.

Previous exploration activities at Mount Peake have identified the presence of a large

magnetite-bearing differentiated gabbro. It was proposed that this gabbro may represent

the top part of a much larger layered mafic system which is host to Ni-Cu sulphide and

PGM mineralisation.

This drilling programme was partly funded by the Northern Territory Government

sponsored Geophysics and Drilling Collaborations Programme designed to encourage

exploration activities in greenfields areas. A grant of $80,000 was awarded to TNG by the

NT Government for this programme.

2.0 Location and Access

The Mount Peake project is located approximately 280km NE of Alice Springs, and 60km

west of the sealed Stuart Highway to Darwin. Access in the licence areas is good with

station and previous exploration tracks (Figure 1).

The new LNG gas pipeline runs 20km east of the project area and the Darwin to Adelaide

railway 80km to the east.

Exploration Access to the area has been granted by the CLC and Traditional Owners.

6

Figure 1: Location plan of Mount Peake project area

3.0 Regional Geological Context

The project area lies within the north-western portion of the Palaeoproterozoic Arunta

Province. The stratigraphy of the Arunta Province comprises relics of 2500 Ma Archaean

basement overlain by >1800 Ma Palaeoproterozoic, turbiditic sequences of greywacke,

quartz, sandstone, siltstone and shale along with mafic rocks and their high-grade

metamorphic equivalents. The Arunta also has minor calc-silicates and meta-felsic

volcanic units. During the Barramundi Orogeny, the sedimentary units were intruded by

mafic rocks which have been deformed and in places metamorphosed to amphibolite

facies. During the closing stages of the Barramundi Orogeny (~1830 Ma) granite plutons

intruded rocks of the Arunta Province.

The project area includes rocks of the Palaeoproterozoic Lower Hatches Group/ Reynolds

Range Group, comprising undifferentiated granite/granite gneiss and gabbro-dolerite

(Figure 2). Neoproterozoic to Palaeozoic rocks of the Georgina Basin cover the

Palaeoproterozoic rocks in the south to southeast. Cainozoic sediments also cover parts

of the tenements. Quaternary and Tertiary cover sequences of variable depth (ranging

from a few metres to in excess of 100m) conceal the basement rocks. Mafic/ultramafic

units have been recorded from previous drilling within and adjacent to the EL23074

(Figure 3), enhancing the prospectivity for Ni-sulphide mineralisation.

Geological assessment of the region and recent research identified the central Arunta as

an area prospective for Proterozoic, intrusive related, magmatic Ni-Cu-PGE sulphide

mineralisation (Hoatson, 2001).

The discovery of the gabbro demonstrating magmatic layering provides an impetus to

test the mineralisation potential of these sulphides at depth.

7

3.1 Known Mineralisation

The only mineralisation in the project area is recorded as magnetite in gabbro with

historical drillholes (ARD02 and DD82MC1) containing significant magnetite. The ‘Murray

Creek Fe Prospect’ (Figure 2) was named as a result of this drilling.

Drilling conducted in February 2009 by TNG confirmed the presence of extensive

magnetite mineralisation in the gabbro for over 1300m. This magnetite contains

economic quantities of vanadium and titanium and is under current exploration by TNG.

Figure 2: Mount Peake regional geology

EELL 2233007744

8

4.0 Exploration Concept

TNG exploration has established the presence of a large magnetite rich gabbro. This is

defined by a zone of higher magnetic susceptibility surrounding a circular feature of lower

susceptibility (Figure 5). This was thought to represent the top portion of a layered mafic

intrusion. The circular feature may represent the magma chamber or feeder channel.

The aim of this programme was to confirm the presence and nature of a layered intrusion

and assess whether there was any potential for magmatic base metal and PGE

mineralisation at depth. S saturated mafic-ultramafic intrusions of the Western Arunta

province have been noted to have potential for orthomagmatic Ni-Cu-Co sulphide

associations (Hoatson 2001).

TNG proposed two deep diamond drillholes to test this concept, provide confirmation of a

layered intrusive and using geochemical analysis, petrology and geophysics to ascertain

the potential for magmatic sulphides. Confirmation of this would establish an exciting

new exploration area. The project was called the Stirling Deeps Project.

4.1 Theory and Background

Layered igneous intrusions are known to host four different types of mineralisation:

1. Magnetite (V-Ti rich)

2. Chromite ± PGE

3. Sulphide Ni – Cu ± Co

4. PGE

Magnetite mineralisation is generally found in the middle to upper portion of layered

igneous intrusions due to fractional crystallisation of the magma, resulting in a dense Fe-

Ti-V rich layer which subsequently crystallises e.g. Bushveld Complex, South Africa

(Cawthorn, 1999; Figure 3).

At Mount Peake magnetite mineralisation has been intersected at 35m and TNG’s theory

is that this may be equal to the top levels of a layered intrusion (Figure 4).

9

Figure 3: Stratigraphy of the Bushveld Complex (Cawthorn, 1999)

Figure 4: Section of layered mafic intrusion model with planned drillholes

Magnetite Mineralisation Eg Mount Peake, ,

Chromite Accumulation

PGE Mineralisation

Comparative to Mt Peake magnetite olivine gabbronorite

Disseminated sulphides ± Chromite± PGE

Massive Sulphides ± Chromite ± PGE

Hole 1 Hole 2

10

4.2 Magnetic Model

Reinterpretation of the aerial magnetic data showed a prominent NE trending ridge with possible ring structure (Figure 5). 3D modelling of this zone has shown this structure is defined with an outer zone of higher magnetic susceptibly around a circular feature of lower magnetic response (Figure 5, 6, 7). Testing of the magnetic model to date has indicated that a magnetite olivine gabbro is the source of the anomaly with the lateral extents of the model appearing to be consistent with drilling. Coincident with the western rim of the circular magnetic anomaly is a gravity anomaly which is thought to represent sulphide accumulation at the base of the magma chamber.

Figure 5: Plan View of 3D model highlighting dense body coincident with magnetic trend

Figure 6: West looking view of 3D model with magnetic and gravity trends

Eastern Margin

of Magnetic Ring

Structure

Low Magnetic

Respone Core To

Ring Structure

Gravity Model

Coincident with

Magnetic Model

Ring Structure

Area of

Interest

Gravity Model

Coincident with

Magnetic Model

Ring Structure

ARD 2

N

N

W

W

E

ARD 2

S

11

Figure 7: First vertical derivative magnetic image with planned diamond holes and

previous TNG drillholes

12

4.3 Gravity Model

The gravity data was combined with the magnetic data and modelled using 3D imaging

software (Figure 8). The resulting gravity model appears coincident with the magnetic

ridge and is thought to represent magmatic sulphide mineralisation on the margins or

base of a magma chamber (Figure 4), based on the following key points:

1. Crystallisation on the contact or chilled margin of the magmas with surrounding

bedrock.

2. Separation of a sulphur rich liquid phase from the parent magma via liquid

immiscibility and subsequent crystallisation.

Figure 8: 3D-image Magnetic (red) and gravity (green) models displaying ring structure and sulphide target with planned drillholes

13

5.0 Stirling Deeps Diamond Drilling Programme

The aim of the diamond drilling programme was two fold:

1) To test the magnetic ridge and coincident gravity anomaly (SDDD002) and to,

2) Test the low magnetic core of the circular feature to a depth of 500m

(SDDD001).

5.1 Site Preparation

Access tracks and drillhole sites were cleared by TNG personnel using a grader (Figure

9). Drill sites were cleared using the raised blade of the grader in an effort to keep

surface disturbance to a minimum. Tracks and drill pads were located to avoid impacting

established trees. Additional access to the drilling area was confined to previously

disturbed ground. Two drill sumps were dug using a mini-excavator and were located

approximately 6m from the collar. Sumps were lined with plastic for increased stability.

Two larger sumps were dug on the access track to act as a reserve water supply. These

sumps were left to dry and filled in at the conclusion of the project.

A camp site 500m east of Murray Creek was selected, with a single caravan used for

accommodation and messing purposes. Power was provided via generators. All waste

was removed from site and taken to the Ti Tree waste disposal facility. Drinking water

was sourced from Mistake Bore and transported to the camp site by TNG personnel.

Figure 9: Site Clearing

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5.2 Drilling

Two diamond drillholes (SDDD001-002; Figure 10) were completed for 691.7m (Table 1).

Both holes were pre collared by RC. The holes were drilled HQ, as exploration holes.

Figure 10: Final Diamond Drillhole locations

15

SDDD001 was drilled at 90˚ as planned and on its exact proposed location.

SDDD002 was initially planned to be an angled hole with a dip of -60˚ however, it was

decided that a vertical hole would suffice.

Prospect Hole No. Easting Northing Dip Azimuth Depth

Stirling

Deeps SDDD001 323000 7606200 -88.7 0 405.8

Stirling

Deeps SDDD002 322482 7606310 -89.9 0 285.9

Table 1: Final diamond drillhole details

The drilling was completed by Associated Exploration Drillers Pty Ltd utilising a UDR 100

drilling rig, mounted on an 8x4 Mercedes Actros from 28th October - 21st November 2009.

Two crews worked a 12 hour continuous shift, producing an average of 34.5m HQ core

per shift.

The drilling was completed using a 3m barrel; however the length of the drilling run was

reduced in broken ground.

The core was placed in steel core trays and annotated with the hole and tray number by

the drilling crew. The drilling crew then would wash down the core to remove any drilling

fluids and dirt.

The core was then loaded onto a pallet on the back of a Land cruiser ute and driven to Ti

Tree Caravan Park. Here the core was offloaded and repackaged to be taken into Alice

Springs. Seven separate pallets were loaded with core and secured. Fast Ass Couriers

transported all pallets to the Alice Springs core library:

Alice Springs Core Facility

16 Power Street

Alice Springs NT 0870

5.3 Core Processing

The diamond core was processed systematically conforming to the following routine:

Core recoveries and metre marks;

Magnetic susceptibility;

Core photographs (wet);

Core tray marking;

Geological and structural logging; and

Core cutting.

Core Recoveries & Metre Marks

Following core orientation, core recoveries were completed for each core run. This

involved recording the depth on each core block, determining the theoretical length of

the run and then measuring the actual length of the core recovered. This process

identified several core block annotation errors which were rectified.

Individual metre marks were annotated on the core in red paint marker based on the

core recoveries and location of potential loss zones.

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Magnetic Susceptibility

A model KT-6 portable magnetic susceptibility meter was then used to assess the

magnetic properties of the entire length of the core. Three individual measurements were

taken per metre and the average was recorded (Appendix 1). On some occasions the

magnetic properties were too low to obtain a reading and were therefore assigned a

magnetic value of zero.

Core Photographs

Core photographs were taken following the completion of the core mark-up. Each tray

was photographed wet in the shade (Figure 11, 12).

Figure 11: SDDD001 Core Photograph

17

Figure 12: SDDD002 Core Photograph

Core Tray Marking

All steel core trays were cleaned and applied two coats of white paint to the exposed face

of the tray. The face was then marked with company name, hole number and metre

values ‘to’ and ‘from’.

Geological and Structural Logging

The core was logged onto paper A3 logging sheets. Particular attention was paid to the

mineralisation styles and orientations of veins and fractures in an effort to determine

structural controls. The digital logs are contained in Appendix 1.

Core Cutting

Core that was to be sampled was cut once down the centre. The Alice Springs core

facility provided a core saw and blades were purchased at TNG’s expense.

5.4 Core Sampling

Following the completion of all stages of the core processing and logging, mineralised

intervals were identified for sampling.

The mineralised zone was cut and sampled as half core. The remaining half core has

been catalogued within the Northern Territory core library for future public reference

(Appendix 2).

A total of 223 samples (1 sample per metre in mineralised intervals) were submitted for

sampling.

18

All one metre half HQ core samples were delivered to ALS Alice Springs by TNG

personnel.

ALS Alice Springs

13 Price Street

Alice Springs NT 0870

5.5 Analysis

All samples were sent to ALS, and received a ME-ICP61 Multi-element analysis for

determination of the following twelve elements Al, As, Cr, Cu, Fe, Ni, P, S, Th, Ti, U and

V.

These samples also received a PGM-ICP24 50g fire assay for Pt, Pd and Au.

A CRUSH-21 code was also added for sample preparation due to the nature of the

samples.

6.0 Results

SDDD001 reached 405.8m, ending in porphyritic granite. Hematite and sericite alteration

was present in varying degrees from 280m to the end of hole. A summary log of the

mineralised intervals is shown below and the best results are shown in Table 2.

SDDD001 24-58m (magnetite gabbro)

219-231m (fg base of gabbro/hematite altered siltstone contact)

280-298m (base of quartzite & hematite/sericite altered porphyritic granite

contact)

SDDD002 reached 285.9m ending in a quartzite unit. A summary log of the mineralised

intervals is shown below. Anomalous values of chromite were intersected from 100m and

the interval from 141-149m gave chromite values of 114-148ppm (Table 2). There was

no prominent PGE or sulphide mineralisation.

SDDD002 8-150m (magnetite gabbro)

250-262m (fg base of gabbro/siltstone contact)

Hole ID

Highest

Cu

(ppm)

Highest

Ni

(ppm)

Highest

Cr

(ppm)

SDDD001 153 121 50

SDDD002 105 282 148

Table 2: Best results from drillholes SDDD001 and SDDD002.

All results are included in Appendix 1.

19

7.0 Conclusions

The aim of the drilling programme was to confirm the presence of, and determine the

nature of the layered intrusion at Mount Peake and to test its potential to host magmatic

Ni-Cu sulphide and/or PGE mineralisation at depth.

Gabbro was intersected in both holes. These results reinforce the presence of an

extensive olivine gabbro intrusion, however the presence of a mafic layered intrusion was

not confirmed.

The programme was completed within time and budget constraints.

8.0 Recommendations

TNG’s exploration model remains strong with further follow up drilling programmes

proposed to adequately test the potential of a layered mafic complex.

Chromite mineralisation within SDDD002 reinforces the mafic intrusion model with more

work required to investigate any additional mineralisation.

9.0 References CAWTHORN, R.G. (1999). The platinum and palladium resources of the Bushveld

Complex. South African Journal of Science, 95, 481-489.

HOATSON, DM. (2001). Metallogenic potential of mafic-ultramafic intrusions in the

Arunta Province, central Australia – Some new insights. AGSO Research Newsletter, 34,

29-33.

APPENDIX 1

SD_DD_Collar_Data.txt

SD_DD_Survey_Data.txt

SD_DD_Lithology_Data.txt

SD_DD_MagSus_Data.txt

SD_DD_ICPAssay_Data.txt

APPENDIX 2

Sample Submission Form