ACTIVITY REPORT FOR THE QUARTER ENDING 31 MARCH 2006

Transcription

1 28 April 2006 Australian Stock Exchange Company Announcements Office Exchange Centre Level 4, 20 Bridge Street Sydney NSW 2000 Dear Sir ACTIVITY REPORT FOR THE QUARTER ENDING 31 MARCH 2006 Highlights Cooper Basin Oil and Gas Emily-1 oil and gas exploration well was spudded at 23:00 on 7 th January The hole reached a depth of 2,324m and was cased and suspended on the 24 th January. Results are considered encouraging with small quantities of oil recovered from the Primary Objective (Base Birkhead/Top Hutton). The upper sand unit to be selectively perforated at a later date with a smaller work over rig to establish oil production. White Sands Petroleum (WSP) EDM drill rig has undergone the required modifications and is currently setting up at Reid s Dome. WSP will drill the Reids Dome prospect as the shake down well to prove the rig is fully operational and fit for purpose. Gold & Base Metal Rock chip sampling at the Ken s Bore Prospect (Bronzewing South) returned interesting results including: 7.85g/t, 37.0g/t, 497.0g/t and 399.0g/t Au. James Bore, Hartwell Bore and Piawanning tenements granted by Department of Industry & Resources. Agreement reached with Falcon Minerals Ltd on a split commodity arrangement in relation to the Marymia Project. 1

2 OIL AND GAS EXPLORATION PEL 182 Onshore Petroleum Explorations Cooper Basin S.A. (AuDAX Resources Ltd 39.9%, Eagle Bay Resources NL 37.6%, White Sands Petroleum Ltd 10%, Australian Oil Company Limited 12.5% ) PEL182 permit was awarded to Eagle Bay Resources NL on the 10 th August 2005 after strong competitive bidding, with a 5 well drilling commitment scheduled for year 1. Eagle Bay contracted independent consultants to conduct an overall new interpretation of all existing geological and seismic data in the permit. The review has confirmed the prospectivity of this area, with a number (11) of targets being identified. This work highlighted at least 3 major areas for the proposed drilling of up to 5 new exploration wells in year 1 of the permit. These areas are detailed below together with the consultant s size estimates, which would only apply if hydrocarbons were present. Prospect locations are shown on the accompanying diagram. Eastern 3 Well Program 1. Emily-1 (drilled) and Sarahlyn-1 Jurassic Oil plays in the NE of the permit 2. Vanessa-1 Permian Gas plays in the SE of the permit low risk Western 2 Well Program 3. Jasmine-1 and Michelle-1 Permian and Triassic stratigraphic oil plays in the western half of the permit. The 5 proposed well locations have been site inspected, cleared and accepted by representatives of the local owners Native Title Claimant Group, and the requisite Work Area Clearance Report filed. Proposed well locations and access roads have also been site inspected and an Environmental Assessment Report (ERA) prepared and filed for the Eastern 3 well locations. Progress is being made with respect to environmental clearances for the 2 Western Wells. As previously reported AuDAX and joint venture partners contracted driller White Sands Petroleum Ltd (WSP) to drill 5 wells on PEL182, in doing so WSP will earn a 10% interest in the permit by meeting 20% of the costs. AuDAX and Eagle Bay have also purchased A$1.5m of casing which is currently on location at Innamincka in central Australia. The WSP EDM Rig-1 is currently being mobilized from Roma to Reid s Dome where it will drill the first of the planned shake down holes. Drilling is expected to commence early May. This is considerably later than expected, delays have been attributed to longer than expected time to complete modifications, delays in accessing key components and more recently delays in mobilisation to site due to heavy rains and site access problems. Once the hole at Reid s Dome has been completed the rig will possibly complete a further two work over holes in the area before moving to the Cooper to start drilling on PEL182. While meaning possible further delays the drilling at Reid s Dome and the work overs are considered necessary and is being done in order to prove that the rig is fully operational and fit for purpose and to ensure that teething problems are ironed out prior to drilling on PEL182. 2

3 Emily-1 was selected as the first well as it is a simple 4 way closure, oil prone, with 3 separate oil objectives in the Hutton, Poolowanna and Tinchoo sandstones. Emily-1 is located 6.5km up dip from the 1997 Santos oil discovery at Tarragon-1 which flowed 1,500 BOPD from the Hutton and 500 BOPD from the Tinchoo sandstone reservoirs. Emily-1 is located in the NE part of PEL-182, within the Innamincka regional reserve, approximately 85 km by road north of Innamincka. It is located on the northern flank of the Cooper/Eromanga basin, just updip of the Permian pinchout edge (Blue) and down dip of the Triassic pinchout edge (Green), in an ideal position to capture hydrocarbons migrating up and out of the deeper Patchawarra Trough and Cooper Basin source kitchen, into the overlying Triassic and Jurassic sandstone reservoirs. The Emily-1 oil and gas exploration well was spudded at 23:00 hours on the 7 th January 2006 using the high capacity Century 18 drill rig. The hole was drilled to total depth of 2,324m which it reached on the 18 th January. As reported on the 16 th January a fair oil show was noted in the Primary Objective at the Base Birkhead/Top Hutton at m. No significant shows were recorded from the secondary and tertiary objectives of the Poolowanna Formation or top of the Tinchoo Formation. Due to rain in the area and road closures the contractors and drill stem test equipment did not arrive in time and a post logging straddle drill stem test was undertaken. Wire line logs were completed and results correlated well with the best oil and gas shows on the Basal Birkhead/Top Hutton. The straddle drill stem test was completed over the Base Birkhead/Top Hutton interval from 1,901-1,907.5 metres over 3

4 two sand bodies that exhibited hydrocarbon shows when drilling and recorded higher resistivities on the electrical logs. The test recovered a total of 33.6 barrels of fluid, of which 1.3 barrels were light black oil. The hole was cased and suspended on the 24 th January. The upper sand will be selectively perforated at a later date with a smaller work over rig to establish oil production with less water. AuDAX and the joint venture partners are encouraged by the presence of oil in this first well and looking forward to drilling the other targets on PEL 182. HARD ROCK EXPLORATION Millrose Project Discussions are being held with various parties regarding the best way to extract value from this asset. Metallurgical and geotechnical holes have been planned. Bronzewing South Project During the quarter IGO elected to withdraw from the Yandal split commodity JV. Work completed by IGO on the Bronzewing South tenement included soil sampling and ground TEM surveys. Both soil and TEM surveys returned a number of anomalies that appear not to have been adequately followed up. The ground TEM survey completed over the Eastern Ultramafic mapped a bedrock conductor, which appears to have a steep northerly dip and strike length of approximately 800m. Field checks have been carried out and a portion of the conductor appears to be spatially related to a prominent eastsouth-east striking ironstone ridge. The ironstone ridge is interpreted to represent the surface expression of remobilised sulphides into a major fault zone. The ground TEM survey completed over the Western Ultramafic returned a more complex pattern, which appeared to be strongly influenced by IP and SPM effects. The area is geologically complex and characterized folded and faulted sediments, basalts and ultramafic sequences. Some but not all of the conductors appear to be spatially related to a black shale - ultramafic contact. Previous reconnaissance RAB drilling by AuDAX in the area returned anomalous Ni (up to 0.58% Ni often with associated elevated Cu up to 738ppm, Co and Pt). Petrological analysis of samples from RAB holes in the area has indicated the presence of spinifex and olivine ad-cumulate textures. A number of TEM anomalies appear to be unrelated to this contact. Data is currently being assessed by an independent consultant with a view to defining drill targets. Prospecting activities continue to yield significant quantities of coarse gold and specimens, this time from the Ken s Bore Prospect area. Follow up rock chip sampling of a number of thin quartz veins and Fe/Mn filled fractures returned some interesting results including: 1.90g/t Au, 1.24g/t Au, 7.85g/t Au, 37.0g/t Au, 497.0g/t Au and 399.0g/t Au. A sample taken some 800m to the north of this main area returned a value of 0.5g/t Au. These results go some way to explaining the source of a portion of the Ken s Bore gold-in-soil anomaly. Yandal West Project As indicated above IGO elected to withdraw from the Yandal split commodity JV during the quarter. Results of work completed by IGO were reported in the December quarter, no further work has been 4

5 done. While the work done by IGO has downgraded the potential of the area for Nickel sulphide mineralisation, soil sampling carried out as part of the assessment did return a number of interesting gold anomalies. These gold-in-soil anomalies will be investigated further. As previously reported an agreement was reached with View Resources Limited for the sale of certain gold resources at West Yandal. During the quarter an extension of the option period was granted to View in order to allow them to finalise and complete their assessment of the Bronzewing/Cockburn Resource. The parties are currently negotiating a further extension of the option. Marymia Project In April AuDAX announced that it had reached an agreement with Falcon Minerals Ltd on a split commodity arrangement in relation to the Marymia Exploration Project. Falcon shall have the right to earn 70% interest in the rights to nickel and associated metals and base metals by spending a total on $1,750,000 within 5 years. Falcon shall spend a minimum of $150,000 within 12 months of the commencement date. Upon Falcon earning 70% interest in the Nickel rights, both parties shall contribute pro rata to nickel exploration and development or dilute according to a standard industry formula. This arrangement enables Falcon to use its in-house expertise and capability to focus purely on the nickel sulphide exploration of the tenements. AuDAX will continue to explore for and retain all rights to gold within the tenements and receive the added bonus of being able to access the data (including gold assays) generated by Falcon. The Marymia Project is considered prospective for both gold and nickel sulphide mineralization. The tenements host a sequence of strongly folded komatiitic ultramafic rocks which have a combined strike length in excess of 20km. Previous work by BHP and International Nickel established the clear presence of komatiite stratigraphy with MgO level of 25-32%. The komatiitie lithology is considered to be of the correct composition to host Ni sulphide deposits. The area has seen little post nickelboom exploration. Limited work carried out by Growth Resources in the mid 1990 s on a portion of the Western Ultramafic returned some interesting drill intercepts which included: 0.65% Ni from 8m, 1.05% Ni from 28m, 0.62% Ni from 9m and 1.07% Ni from 28m. Interpretation of recently acquired high-resolution magnetic data has resulted in the definition of a number of high quality gold and nickel-copper-pge targets. James Bore Project During the quarter the James Bore Project was granted. The project area lies approximately 5km west of the Mt McClure Gold Mine and is underlain by greenstone remnants within the western granite gneiss terrain located immediately to the west of the Yandal greenstone belt. Reconnaissance soil sampling by Normandy over exposed greenstone remnants returned significant gold-in-soil anomalies over hundreds of meters (up to 40ppb Au). No follow up was undertaken. AuDAX has confirmed the presence of the anomaly and will conduct mapping, rock chip sampling and infill soil sampling in order to locate the source of gold anomalism and to define drill targets. 5

6 Miscellaneous During the quarter the Piawanning and Hartwell Bore Tenements were granted by DOIR. Reconnaissance field investigations have been carried out and further field work will be undertaken during the next quarter. AuDAX continues to build and review its tenement position. A review of the Midway tenement revealed limited potential of the area to host a significant gold or base metal resource and the tenement application was withdrawn. Two new applications were made for ground in the Gascoyne Province. Recent work by the GSWA has highlighted the prospectivity of the area to host significant precious, base metal and uranium mineralisation. Government initiatives including detailed mapping, acquisition of high-resolution airborne magnetic and radiometric data and structural interpretation will provide important new data that will aid exploration in the areas applied for. We appreciate that some of the diagrams contained within this report may be difficult to read to obtain higher resolution colour diagrams please visit our website at Yours faithfully GARY J. ROPER Managing Director The hard rock information in this report is based on information compiled by Mr Glen W Edwards. Mr Glen W Edwards, AusIMM, AIG, (Exploration Director of the Company) 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 Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. G W Edwards consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Oil and Gas information in this report is based on information compiled by Mr Ian R Barr who is a geophysicist and consultant to the company and a Competent Person as described in Appendix 5A to the ASX Listing Rules. Note*: Mr I R Barr and most other publicly listed oil exploration companies use the words P50 Reserves in regard to an undrilled exploration prospect. These words indicate the unrisked oil or gas potential of a prospect if oil or gas is present and do not comply with the definition of reserves as set out in the JORC code which is a reporting code for mineral and coal exploration not for oil and gas exploration. Oil industry practice for ASX listed companies is to qualify P50 reserve statements as follows: Chapter 19 definitions of the ASX listing rules indicate a pre hydrocarbon reserve stage however no hydrocarbons are claimed to be present. 6