Miscellaneous Report ISAMISREP. 390

Exploration Permit for Minerals No. 12561 ‘Fountain Range’,

QueenslandPartial Relinquishment Report for the

Period Ended 9 August 2008

XSTRATA COPPER EXPLORATION PTY LTD

MISCELLANEOUS REPORT ISAMISREP. 390

TITLE: EXPLORATION PERMIT FOR MINERALS No. 12561 ‘FOUNTAIN RANGE’, QUEENSLANDPARTIAL RELINQUISHMENT REPORT FOR THE PERIOD ENDED 9 AUGUST 2008

HOLDERS: MOUNT ISA MINES LIMITED SOVEREIGN METALS LIMITED

OPERATORS: XSTRATA COPPER EXPLORATION PTY LTDSOVEREIGN METALS LIMITED

1:250,000 SHEET: SF54-2 CLONCURRY

1:100,000 SHEETS: 6956 MARRABA

INVESTIGATIONSCONDUCTED BY: XSTRATA COPPER EXPLORATION PTY LTD

AUTHORS: DG JUNGMANN, TV HARVEY, LW VON HOLT

SUBMITTED BY: TG SHAW

DATE: AUGUST 2008

COPY: 2

DISTRIBUTION

1. Xstrata Copper Exploration Pty Ltd, Mount Isa Library

2. Department of Mines and Energy, Brisbane

3. Xstrata Copper Exploration Pty Ltd, Exploration Library

4. Sovereign Metals Limited, Townsville

5. Sovereign Metals Limited, Perth (Digital)

LIST OF CONTENTS

1. INTRODUCTION......................................................................................12. LOCATION AND ACCESS.........................................................................13. TENURE............................................................................................14. REGIONAL GEOLOGY..............................................................................25. PREVIOUS EXPLORATION ACTIVITY.........................................................36. EXPLORATION COMPLETED DURING THE TERM OF TENURE...................3

6.1 GEOPHYSICS.....................................................................................................37. CONCLUSIONS AND RECOMMENDATIONS..............................................48. REFERENCES....................................................................................5

i

LIST OF TABLES

Table No TitleTable 1 Main Phases of Previous

Exploration in the Current EPM Area

LIST OF DRAWINGSDrawing No Title Scale58494 EPM 12561 Fountain Range

Location and Sub-block Details 1:250,00058676 Fountain Range EPM 12561 2008

RelinquishmentSub-Blocks Northern Section Geophysical SurveyCoverage 1:25,000

LIST OF APPENDICESAppendix No TitleAppendix 1 UTS Airborne Magnetic and Radiometric Survey-Digital Data

ii

SUMMARYAim of ProjectThe exploration program undertaken on Exploration Permit for Minerals (EPM) 12561 ‘Fountain Range’ was aimed at the discovery of economic copper-gold mineralisation.

Object of ReportThis report provides details of exploration carried out by Xstrata Copper Exploration over 21 relinquished sub-blocks of EPM 12561 ‘Fountain Range’ during the period of tenure ending 9 August 2008.

LocationEPM 12561 ‘Fountain Range’ covers approximately 216 km² in four separate blocks. The tenement is approximately 32 km west of Cloncurry, between latitudes 20 30’ south and 20 50’ south, and longitudes 140 06’ east and 140 17’ east.

TenureEPM 12561 ‘Fountain Range’, was granted over 67 sub-blocks for a period of five years on 10 August 2005.

The ‘Fountain Range’ EPM was operated by Xstrata Copper Exploration Pty Ltd on behalf of Mount Isa Mines Limited (51%), as part of the Carpentaria Joint Venture with Sovereign Metals Limited (49%), previously Echelon Resources Limited. On 18 March 2008, Sovereign Metals elected to sole fund and manage exploration on the tenement as part of the Excluded Tenements Joint Venture.

The exploration permit is subject to the Mineral Resources Act 1989 and the Mineral Resources Regulation 2003. Following the relinquishment of 21 sub-blocks reported here, the current tenement now totals 46 sub-blocks.

Summary of WorkExploration conducted by Xstrata Copper Exploration over the 21 relinquished sub-blocks to 18 March 2008 comprised compilation of open file data as part of regional target generation activities and partial coverage of the relinquished area by a sub-regional detailed aeromagnetic and radiometric survey in May 2007.

Conclusions and RecommendationsTarget generation work failed to identify targets of significant size or interest to Xstrata Copper Exploration over the relinquished sub-blocks. The systematic geophysical surveys only provide minimal coverage over EPM 12561 and failed to identify any magnetic or radiometric anomalies of significance.

iii

1. INTRODUCTIONExploration Permit for Minerals (EPM) 12561 ‘Fountain Range’, was granted on 10 August 2005 comprising 67 sub-blocks in four groups, approximately 32km to the west of the township of Cloncurry in northwestern Queensland.

The tenement is one of several included in the Carpentaria Joint Venture between Mount Isa Mines Limited (51%) and Sovereign Metals Limited (49%), previously Echelon Resources Limited. The Joint Venture is operated by Xstrata Copper Exploration Pty Ltd on behalf of Mount Isa Mines. In 2008, Xstrata Copper Exploration ceased exploration activities on EPM 12561. Sovereign Metals elected to sole fund and manage exploration over the tenement on 18 March 2008 as part of the Excluded Tenements Joint Venture.

The primary conceptual exploration target is economic iron-associated copper-gold mineralisation, recognised in a number of mineral deposits in the Eastern Succession of the Mount Isa Inlier. In the Cloncurry district the prominent example is the Ernest Henry copper- gold deposit (Ryan, 1998) where the ore is hosted in a magnetite-rich breccia body. Mineralisation is considered to have occurred post-peak metamorphism in an actively dilating breccia body within a north east-striking shear zone. Other significant deposits in the Cloncurry district are less magnetic and include Osborne (Adshead et al., 1998), where copper- gold ore is hosted in silica - magnetite pyrrhotite bodies, and Eloise where copper-gold ore is pyrrhotite-hosted (Baker, 1998). The common theme to all these styles of mineralisation is a strong structural control, an association with iron-rich alteration assemblages (sulphide or oxide), usually magnetic to some degree, and a probable granitoid genetic association.

This report documents work conducted by Xstrata Copper Exploration on EPM 12561 when Sovereign elected to sole fund on the 21 sub-blocks relinquished during the tenure period ending on 18 March 2008.

2. LOCATION AND ACCESS‘Fountain Range’ EPM covers approximately 216 km² in four separate blocks. The tenement is approximately 32 km west of Cloncurry, between latitudes 20 30’ south and 20 50’ south, and longitudes 140 06’ east and 140 17’ east.

The Exploration Permit is accessed using the Corella Park Road and subsequent station tracks. This tenement is located within the northern portion of the Marraba (6956) 1:100,000 sheet, within the Cloncurry (SF54-2) 1:250,000 sheet.

The tenement area is variably rugged, with areas of good exposure interspersed with flat valleys containing alluvial to colluvial material.

3. TENUREEPM 12561 ‘Fountain Range’ comprising 67 sub-blocks, was granted to Echelon Resources on 10 August 2005 for an initial five year term as part of the Carpentaria Heads of Agreement. The Carpentaria Heads of Agreement was a Joint Venture between Mount Isa Mines Limited as the manager, and Echelon Resources.

During 2006, Mount Isa Mines earned 51% equity in the Joint Venture with Echelon Resources electing to contribute to their share of Joint Venture (JV) expenditure in order to maintain their 49% equity in the Carpentaria Joint Venture.

August 2008 1 EPM: 12561 ‘Fountain Range’

On 24 October 2006, Echelon Resources de-merged some of its Australian exploration assets into Sovereign Metals Limited (Sovereign). As a consequence, Echelon Resources assigned its interest in the Carpentaria Joint Venture to its wholly owned subsidiary, Sovereign.

Xstrata Copper Exploration Pty Ltd was appointed project manager of the Carpentaria Joint Venture on behalf of Mount Isa Mines Limited. On 18 March 2008, EPM 12561 ‘Fountain Range’ was transferred to an Excluded Tenements JV with Sovereign Metals electing to sole fund and manage exploration over the tenement.

Twenty-one sub-blocks of EPM 12561 were relinquished on 9 August 2008 and are listed below together with the retained sub-blocks. The location of the residual tenement and relinquished sub-blocks are presented in Drawing No. 58494.

Retained sub-blocks

BIM Block Sub-BlocksCLON 459 f, l, q, s, t, x, yCLON 460 wCLON 531 c, d, g, h, j, m, n, o, p, r, s, t,

x, yCLON 603 a, b, c, d, f, g, h, j, l, m, n,

o, q, r, s, tCLON 674 j, o, p, wCLON 675 k, o, tCLON 676 f

Total 46 Sub-blocks

Relinquished

sub-blocks

BIM Block Sub-Blocks

CLON 459 b, c, g, h, m, r, u, zCLON 460 q, r, vCLON 531 e, kCLON 674 d, e, k, xCLON 675 n, s, xCLON 676 g

Total 21 Sub-blocks

4. REGIONAL GEOLOGYThe geology of the tenement can be divided into two broad areas, separated by a major northeast trending fault that is broadly coincident with the Barkly Highway. The northern area is dominated by Corella Formation calc-silicates, sandstones, and siltstones intruded by the Tommy Creek Microgranite and various dolerites. A thin sequence of Quamby Conglomerate is found in the northern sub-blocks. Structurally, the block is dominated by the Fountain Range Fault and the Corella River Fault Zone. The Fountain Range Fault runs along the western boundary of the tenement before crossing the northern sub-blocks; the Corella River Fault Zone is a broad northeast trending zone of brecciation that hosts a significant number of small copper-gold shows.

The southern area is dominated by the Bulonga and Duck Creek Anticlines, and the Wakeful Syncline, all of which plunge to the northeast. Three main lithological packages are present as follows:

August 2008 2 EPM: 12561 ‘Fountain Range’

The Overhang Jasperlite consisting of jaspilite, limestone, shale and marl.

The Mitakoodi Quartzite comprising roughly 1750Ma deformed sedimentary and intrusive rocks.

The Marraba Volcanics consisting mainly of metabasalts.

5. PREVIOUS EXPLORATION ACTIVITYThe ‘Fountain Range’ area was the subject of significant exploration during the 1970’s to 1990’s. Surface geochemical sampling was the common exploration method, although airborne electro magnetics (EM) was also employed. The main phases of work completed over the current EPM area are documented in Table 1 below.

Year

Company Activities

EPM DNRMReport

1975

Jododex Soil sampling, streamsediment sampling, drilling

EPM1323 CR 5350,5608, 5939

1976

CarpentariaExploration Co Pty Ltd

Soil sampling EPM1269 CR 5572

1984

CRA Stream sediment sampling,RAB drilling

EPM3368,3967

CR 14123,15558

1989

WMC Stream sediment sampling

EPM5544,6896

CR 21661,22166

1992

Dominion & NorthLimited

Stream sediment and soilsampling, drilling, airborne EM

EPM5754,7438, 7934

CR 24316

1997

Eagle Mining Stream sediment sampling

EPM9601 CR 30183

2002

Selwyn Mines Soil sampling EPM10553 CR 33672

Table 1: Main Phases of Previous Exploration in the Current EPM Area

6. EXPLORATION COMPLETED DURING THE TERM OF TENURE

Exploration work conducted by Xstrata Copper Exploration over the sub-blocks relinquished during the period of tenure ending 9 August 2008 comprised a review of open file data as part of regional target generation activities, and partial coverage of the relinquished area by a detailed aeromagnetic and radiometric survey flown in May 2007.

6.1 Geophysics

Geophysical exploration work completed on the relinquished 21 sub-blocks of EPM 12561 ‘Fountain Range’ comprised portions of the sub-regional 2007 Naraku aeromagnetic and radiometric survey.

The systematic detailed Naraku airborne magnetic and radiometric survey was undertaken in May 2007 by UTS Geophysics Pty Ltd over an area

northwest of Cloncurry. Magnetic and spectral radiometric readings were taken along 50 metre spaced east-west flight lines at a nominal terrain clearance of 25 metres; north-south tie lines were flown at a 500 metre line spacing. Sampling interval along lines was approximately 5 metres for magnetics and 50 metres for radiometrics. The rationale behind the airborne surveys was to provide systematic magnetic and radiometric information in far more detail than that previously available to assist geological mapping and target identification. A small section of this survey lies within the relinquished 21 sub-blocks of EPM 12561 ‘Fountain Range’.

August 2008 3 EPM: 12561 ‘Fountain Range’

The locations of the flight lines are plotted on the 1:25,000 scale Geophysical Coverage Map (Drawing No. 58676). Digital data are presented in Appendix 1.

7. CONCLUSIONS AND RECOMMENDATIONSTarget generation work failed to identify targets of significant size or interest to Xstrata Copper Exploration over the relinquished sub-blocks. The systematic geophysical surveys only provide minimal coverage over EPM 12561 and failed to identify any magnetic or radiometric anomalies of significance.

August 2008 4 EPM: 12561 ‘Fountain Range’

8. REFERENCESAdshead ND, Voulgaris P and Muscio VN, 1998; Osborne copper-gold deposit, in Geology of Australian and Papua New Guinean Mineral Deposits (Eds. Berkman DA and MacKenzie DH), pp 793-800, AUSIMM Monograph 22.

Baker T, 1998; Alteration, mineralisation, and fluid evolution at the Eloise copper-gold deposit, Cloncurry District, Northwest Queensland, Australia, Economic Geology, v 93, pp 1213-1236.

Ryan AJ, 1998; Ernest Henry copper-gold deposit, in Geology of Australian and Papua New Guinean Mineral Deposits (Eds. Berkman DA and MacKenzie DH), pp 759-768, AUSIMM Monograph 22.

August 2008 5 EPM: 12561 ‘Fountain Range’

DRAWINGS

APPENDIX ONEGeophysical Data

(Digital)

4100

00 m

E

140º05'140º10' 140º15' 140º20' 140º25'

7730000 mN

b c

f g h

l m 459460

q r s t u q r

531

x y z v w

c d e

7720000 mNg h j k

m n o p

r s t

x y

a b c d

7710000 mN

f g h j

l m n o

q r s t

603

7700000 mN

d e

j k

674 o p

k675

n o

s t

f g

676

w x x

140º05'140º10' 140º15' 140º20' 140º25'

1:1 Million Block ID Sheet : Cloncurry SF54 Relinquished area - 2008

QQ0 5 10 15

Kilometers

XSTRATA COPPER EXPLORATION

FOUNTAIN RANGE EPM 12561

Location and Subblock DetailsRegion: NW QLD Projection: AGD 84 Author: P. Gow Scale: 1:250,000

1:100,000 : Marraba 6956 Drawn: G. O'C, S. J Date: 14/10/2004

1:250,000 : SF54-02 Revision Date: 26/08/2008 Drawing No: 58494 Fig. No:

500 Km

Fountain Range EPM Mount Isa

7700000 mN

7710000 mN

7720000 mN

7730000 mN

-20º30'-20º35'

-20º40'-20º45'

-20º50'-20º50'

-20º45'

-20º40'

-20º35'

-20º30'

4000

00 m

E

4100

00 m

E

4200

00 m

E42

0000

mE

4300

00 m

E43

0000

mE

4400

00 m

E44

0000

mE

140°12' 140°14' 140°16'414000E 416000E 418000E 420000E 422000E 424000E 426000E

414000E 416000E 418000E 420000E 422000E 424000E 426000E140°12' 140°14' 140°16'

25000,6,6,2,2,1,P625x650,

Scale 1:25000500 0 500 1000 1500

metresAGD84 / Australian Map Grid zone 54

XSTRATA COPPER EXPLORATION PTY. LTD.FOUNTAIN RANGE EPM 12561

2008 RELINQUISHMENT SUB-BLOCKS - NORTHERN SECTION GEOPHYSICAL SURVEY COVERAGE

UTS Naraku Airborne Magnetic & Radiometric Survey - flight lines as shown 50 metre east-west flight lines ; 500 metre north-south tie lines

Nominal 25 metre terrain clearance ; flown May 2007

TVH - Mt Isa - 08-07-08 Drawing 58676

-20°30'-20°32'

-20°34'-20°36'

7722000N7732000N

7730000N7728000N

7726000N7724000N

7720000N

-20°

36'

7722

000N

-20°

34'

-20°

32'

-20°

30'

7720

000N

7724

000N

7726

000N

7728

000N

7730

000N

7732

000N