Marriott’s Nickel Sulphide Project  (AUZ 100%)

Location

Marriott’s is a shallow nickel sulphide deposit located 70 kilometres south of BHP Billiton’s world class Leinster Nickel Operations. The deposit was drilled by WMC in the 1970’s and subsequently Australian Mines limited purchased the deposit from BHP Billiton in 2007  with an agreement to treat the ore at the Leinster Mill.

Figure 1: Marriott’s - Location plan over regional geology.

Geology

The geology at Marriott’s is well understood with the ore being located at the base of a series of minor komatiite flows, which are themselves situated above a thick serpentenised periodotite unit of the Mt Clifford Formation.

There is excellent preservation of primary igneous textures at Marriott’s, and this has made it possible to define individual flow units, which has proved to be an invaluable aid when it came to interpreting and modelling of the orebody.

Figure 2: Marriott’s - Interpreted geology plan and drillhole collars.

Drilling and metallurgy

WMC drilled a 40m by 40m pattern of surface diamond holes into the Marriott’s deposit and to date

Australian Mines Limited has drilled an additional 38 surface diamond holes into the deposit, so as to check the integrity of the earlier WMC data and also to provide samples for metallurgical testwork.

All drilling at marriott’s has accurate down hole survey control.

A comprehensive programme of mineralogical studies and flotation tests have been conducted by both BHPB and Australian Mines Limited, and these tests confirm that the flotation process at the Leinster mill will recover 87 to 93 percent of the nickel sulphide minerals.

Marriott’s Ore Resource

The total Marriott’s Indicated and Inferred Resource to a depth of 130 metres below surface is stated as 830,000 tonnes @ 1.13% nickel for 9,400 nickel tonnes as modelled by AUZ staff geologists.

Table 1: Marriott’s resource, Nov 2009.

Notes:

1.     Cut-off grade is 0.5% Ni

2.     Specific Gravity was estimated for each resource block by ordinary krieging  of the composited sg values, which were calculated from core by using the ‘immersion method’.

Potential

A consulting mining engineer has completed a scoping study which indicates that at a higher nickel price the project has economic potential, and the project will therefore be retained for the future.

The orebody is drilled to 130 metres below surface and there is potential to increase the resource at depth as illustrated by the image below:

Figure 3: Long section showing interpreted geology, diamond drill intercepts and down plunge potential.     

The information in this report that relates to Exploration Results and Mineral Resources is based on

information compiled by Mr M Elias who is a Fellow of The Australasian Institute of Mining and Metallurgy.

Mr Elias is employed by CSA Australia Pty Ltd and is a Non-Executive Director of AUZ. Mr Elias has

sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration

and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Elias

consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.