West Musgrave

West Musgrave Project (BHPB Nickel West Alliance) - Western Australia

West Musgrave - Handpump & Skimish Hill Projects Location Map and Interpreted Geology

Handpump Prospect

First pass Reverse Circulation ( RC) drilling at the Handpump prospect in the West Musgrave Complex, Western Australia, has intersected significant gold mineralisation in rhyolitic breccia. Five-metre composite analyses from hole number HPC001 reported 65 m @ 0.83 g/t gold from 10 m, including a central high grade interval of 5 m @ 5.1 g/t gold from 35 m depth within a zone of 15 m @ 2.3 g/t gold from 30 m (Figures 1, 2 & 3).

The significance of this discovery cannot be understated as it represents the first economic gold intersection in the Mesoproterozoic Musgrave block and may herald the beginning of a completely new and sparsely explored gold province in Australia.

Gold mineralisation at the Handpump prospect is associated with a north-dipping hydrothermal rhyolitic breccia which is completely open in all directions (Figure 1 & 2).

Previous surface costean rock chip sampling by Beadell indicates that the breccia and the mineralisation is northwest-striking and dipping to the north over a known strike length in excess of 300 m. The northwest and southeast strike extensions of the mineralised breccia are completely open.

Figure 1. Handpump prospect interpreted geology and drill holes location plan

Figure 2. Handpump prospect RC drill section 332200E

The hydrothermal breccia-hosted gold mineralisation intersected in HPC001 is interpreted as a distal magmatic setting with potassic alteration of wallrock adjacent to the silica dominant breccia matrix. There is a fine-grained biotite and sericite overprint and minor disseminated and vein-selvage pyrite with traces of chalcopyrite. No metallurgical testwork has been completed on the mineralisation, however comparison of aqua regia and fire assay repeat analysis suggests a non-refractory style of mineralisation.

The Handpump rhyolite breccia is located on a contact between rhyolite to the northeast and agglomerate to the southwest. Mapping suggests continuity with the Primer prospect over 2 km to the south, separated by an area of transported cover (Figure 3). The extensive area of rhyolite breccia immediately southeast of the RC drilling at Handpump has similar alteration and brecciation. A costean rock chip sampling program has just been completed in this area to delineate the strike extension of the mineralisation and analytical results are pending. The northwest extension of the mineralisation remains effectively untested as cover masks any surface expression.

Figure 3. Aerial photograph of Handpump and Primer prospects showing location of drill holes and regional surface geology.

Handpump Prospect Background

The Handpump prospect is located 75 km east of Warburton in the remote central eastern part of Western Australia, close to the border with South Australia and Northern Territory (Figure 4). The Musgrave Complex forms a large belt of Mesoproterozoic rocks stretching in an east-west direction from the northern part of South Australia across into Western Australia.

The area was originally targeted by WMC Resources as a conceptual geophysical / geological target focussed on the southern tip of the Palgrave Cauldron which was thought to be a large circular collapse volcanic feature. Widespread de-magnetisation of the rocks at the southern margin of the Palgrave Cauldron was interpreted as due to extensive magmatic hydrothermal alteration, considered to be an excellent geological target for gold mineralisation.

WMC Resources completed regional soil sampling across the project area and identified the Handpump gold anomaly as a 1200 m by 400 m soil anomaly with a peak value of 0.250 g/t gold.

Complex land access issues resulted in little or no follow up of the anomaly until Beadell successfully negotiated a Land Access Agreement with the Yarnangu Ngaanyatjarraku Parna in 2008. The Handpump gold anomaly remained untested for over 10 years, representing one of the largest un-drilled soil anomalies in Western Australia. The recently discovered Tropicana gold deposit was also an historical WMC Resources gold soil anomaly of much lower tenor.

In September 2008 Beadell completed rock chip sampling on two separate lines across an outcropping hydrothermal breccia. The sampling delineated a greater than 0.1 g/t gold mineralised zone up to 58 m in width with highest values of 11 m @ 0.52 g/t gold and 13 m @ 0.64 g/t gold. The anomaly occurs within a greater than 0.05 g/t, open-ended and northwest-trending mineralised corridor over 300 m in width.

At the same time a limited first pass attempt to drill the original soil anomaly with aircore drilling proved ineffective due to the coarse colluvium cover and hard impenetrable bedrock. The aircore drilling predominantly targeted the southwest trending soil anomaly, however it has been determined that the soil anomaly was hosted in transported cover that had shed off the outcropping hill to the northeast of the anomaly.

Primer Prospect

A large circular molybdenum soil anomaly several kilometres in diameter is located 3 km southeast of the Handpump prospect. Infill soil sampling, rock chip sampling and mapping has outlined sporadic outcrop of the same style of hydrothermally-altered and brecciated rhyolite as hosts the Handpump mineralisation. Up to 0.14 g/t gold occurs in soil samples from a 500 m x 100 m spaced survey.

Skirmish Hill Project

An Option and Joint Venture Agreement has been entered into with Anglo American Exploration (Australia) Pty Ltd ("Anglo American") on Beadell's 100% owned Skirmish Hill Project in the West Musgrave region of Western Australia. Anglo American can elect to exercise the Option and earn an initial 51% equity in the project by the expenditure of $1 million within 3 years and earn an additional 24% by the additional expenditure of $2 million in an additional 4 year period.

The Skirmish Hill project covers an area of 560 km ² in three contiguous granted tenements 80 km south-east of BHPB's Nebo-Babel nickel deposit. The project is considered highly prospective for nickel sulphide, platinum group elements, and copper-gold mineralisation.

Anglo American is planning an extensive geophysical survey in the form of a regional airborne electromagnetic (EM) survey using the highly successful proprietary "Spectrem" EM system. This will be the first time the Spectrem EM system has been flown in Australia. The survey is planned to cover most of the Skirmish Hill tenure in search of geophysical anomalies that may represent metal sulphide bodies.