Drummond Basin - Drummond East, Drummond West and Clermont Projects (100% Impact)

Impact owns 100% of eight exploration licences in the Drummond Basin, called Drummond East (EPMs 14927-929), Drummond West (EPMs 14932-934) and Clermont (EPMs 14116-117).

The Drummond Basin is one of Australia's most prospective areas for large epithermal vein and stockwork style gold-silver deposits and for bulk-tonnage disseminated gold-copper-molybdenum deposits. It contains the active 4 million ounce Vera-Nancy-Pajingo gold mine and gold deposits at Twin Hills, Yandan, Mt. Coolon and Wirralie. Significant results have been reported from the Anthony porphyry-hosted molybdenum deposit located about 50 km south of the Drummond West Project.

More than 70 targets have been identified, of which 15 are ranked as high priority, as a result of target generation exercises that have been completed over Impact's three main project areas. All previous exploration results were considered, together with conceptual models for epithermal gold and porphyry-style copper-gold-molybdenum mineralisation.

A significant rationalization of Impact's original ground holding in the Drummond Basin was completed in line with statutory requirements and with a focus on retaining its priority targets. Discussions with a number of parties with a view to a Joint Venture on Impacts' gold-copper projects are in progress.

Gold in the Drummond Basin, Queensland

The Company owns 100% of two very large groups of tenements over the southern part of the Drummond Basin, called Drummond West (2,236 square kilometres) and Drummond East (2,135 square kilometres), as well as the 590 square kilometre Clermont Project located about 100 kilometres south of the Twin Hills Mine.

The Drummond Basin is one of Australia's most prospective areas for large and World Class (see Glossary) epithermal vein and stockwork style gold deposits and for bulk-tonnage disseminated gold deposits. It contains: (i) the Vera-Nancy-Pajingo mining centre that has produced 2.3 million ounces of gold at head grades greater than 7 g/t and at mid-2005 had reserves of 646,000 ounces; (ii) the recently opened Twin Hills Mine (underground resource of 434,000 t at 16.2 g/t); (iii) the dormant Yandan Mine (produced 359,600 ounces from small pits); (iv) the dormant Mt Coolan Mine (produced 265,000 ounces); and (v) the dormant Wirralie Mine (produced 430,000 ounces and has a remaining resource of 548,000 ounces for nearly one million ounces of contained gold). These deposits all occur within the lower, mainly felsic volcanic sequence within the Basin, called the Cycle 1 Volcanics, and which are related to volcanic centres that are largely unexposed at surface. The positions of such deposits, and their relationship to each other, are depicted in the conceptual exploration model devised by Impact (See Below). They illustrate the prospectivity of the Drummond Basin, which has been subject to only modest deep exploration beneath the regolith and other cover rocks.

This conceptual model also shows the position at depth of the recent Yandan Deeps discovery by Straits Resources Limited below and immediately along strike from the open pit deposits at the dormant Yandan Gold Mine. Here, two drill holes about 40 m apart have returned 176 m at 2.4 g/t gold from 211 m (including 27.5 m at 8.1 g/t gold from 301 m), and 194 m at 2.1 g/t gold from 192 m (including 30.5 m at 8.6 g/t gold from 311 m).

These holes were targeted at induced polarisation (IP) chargeability anomalies, and intersected the mineralisation near the base of the Cycle 1 Volcanics, at the contact with the underlying basement Anakie metamorphic rocks.

Drummond West Project

The Drummond West Project is along strike from and to the north and south of the dormant Yandan Gold Mine, and contiguous with the Twin Hills Mine. It includes outcropping and buried units of the prospective Cycle 1 Volcanics. Exploration by previous companies has focussed on the northern part of the area where stream sediment, soil and rock chip sampling was directed at a ten kilometre long north west trending structure, the Alliance Fault. Here, rock chip samples returned values of up to 37 g/t gold with 0.95% copper, and 16 g/t gold with 1% copper at the Alliance Prospect, and up to 18 g/t gold and 13.4 g/t gold at the Homeward Bound and Sleeping King Prospects. There has been no systematic exploration or drilling of this structure.

Thirty five stream sediment samples returned anomalous values, greater than 25 ppb gold, at various sites. In addition there are ten areas, each up to several square kilometres in extent, which contain numerous gold-in-soil values greater than 25 ppb. These anomalous results have not been followed up. Thirteen RC holes (for a total of only 770 m) and 15 RAB holes (for a total of 754 m) are reported in the records on fi le at the Queensland Department of Natural Resources, Mines and Water. These holes intersected minor and very low grade gold mineralisation in a few places. The project area is considerably underexplored.

Drummond East Project

The Drummond East Project is along strike from and south of the Mt Coolon Mine, and includes the prospective Cycle 1 Volcanics. Exploration by previous companies in this area has, for such a large area, been modest. It has included 281 stream sediment samples, 1,900 soil and auger samples and 126 drill holes for a total of 5,600 m of drilling, mainly to depths of about 50 metres. Soil sampling has been restricted to very wide-spaced reconnaissance (taken on a 2 kilometre grid spacing) with some infill sampling in a few places. About 30 of these samples returned signifi cant gold values, greater than 100 ppb, and four samples have values greater than 0.5 g/tonne. Thirty three RC holes were drilled at intervals of between 300 m and 1 kilometre, directed at some of the elevated soil values, and to depths in the range 25 m to 80 m, with one hole to 150 m depth. Most of the anomalous soil samples have not been followed up.

Clermont Project: Gold

The Clermont Project is about 100 kilometres south of the Twin Hills Gold Mine. At least half of the tenement area is interpreted to be underlain by the prospective Cycle 1 Volcanics, mainly beneath a cover of younger rocks and regolith. This cover has hindered previous regional soil geochemistry surveys, which have identifi ed a few areas, kilometres in dimension, that contain erratically distributed elevated gold-in soil values that have not been drilled, and are targets for follow up work.

There are three prospects, all of which are centred on poor rubbly outcrops of vein quartz within extensive black soil plains, at which some drilling has been done by previous explorers. These are Retro, Retro Extended and Ayers Rock. At the Retro Prospect 11 RC holes totalling 616 m have been drilled along a strike length of 1,100 m on lines spaced at between 160 m and 500 m, with intersects of interest that range from 2 m at 1.1 g/t gold to 2 m at 13.7 g/t gold in the top 50 metres. Geological continuity between these widespaced sections is uncertain.

At the Retro Extended Prospect five RC holes totalling 257 m have been drilled along a strike length of 150 m, with intersects of interest that range from 12 m at 1.2 g/t gold to 16 m at 8.5 g/t gold from surface. The latter includes an interval of 8 m at 16 g/t gold, 143 g/t silver, 5.6% copper and 7.6% lead from 8 m depth. This is interpreted to be an oblique intersect representing a true lode width of 3 to 4 metres.

At the Ayers Rock Prospect previous exploration has been targeted at IP resistivity anomalies (regarded as indicators of buried resistive vein quartz), that are partly coincident with poorly outcropping vein quartz. One such linear resistivity anomaly has been drilled on sections ranging from 50 m to 200 m apart, along 2,000 m of strike, for a total of 66 RC holes and 6,487 m. Many of these holes intersected widespread silica-sericite-pyrite alteration and low grade gold (from 0.1 g/t to 0.5 g/t). Within these broad zones there were some narrow high grade intersects associated with quartz veins. Several holes had intersects of interest, including:

• ARC008: 22 m at 1.1 g/t from 60 m depth;
• ARC009: 32 m at 3.8 g/t from 22 m, including 2 m at 32.8 g/t from 22 m and 2 m at 18.9 g/t from 50 m;
• CAR003: 22 m at 1.7 g/t from 20 m, including 1m at 8.5 g/t from 38 m; and
• CAR005: 6 m at 5.1 g/t from 40 m depth.

Resistivity

Chargeability

However the IP geophysical survey at the Ayers Rock Prospect also defined several linear chargeability anomalies (as opposed to the resistivity anomalies referred to above). These are between 1 and 2 kilometres long. Only a small strike length of these has been drill tested by previous explorers and there are many strike-kilometres that have not been tested. This is signifi cant because at the Yandan Mine these chargeability anomalies are commonly associated with the buried sulphidic disseminated style gold deposits that have been intersected at depth by Straits. At Ayers Rock there is potential for gold deposits that are analogues of Yandan and Twin Hills.

Future exploration at Drummond East, Drummond West and Clermont
Large parts of Impact's tenements in the Drummond Basin are covered by younger sedimentary rocks and regolith which has rendered ineffective most of the previous conventional surface geochemistry exploration. They are not well explored. It is intended to explore for new gold and gold-copper deposits under this cover using new concepts and technologies. Therefore the exploration will focus on establishing those parts of the project areas that are underlain by the prospective Silver Hill Volcanics by using geophysical methods and by synthesising and analysing all of the previous exploration data. This will be followed up by soil geochemistry programs and more detailed ground geophysical programs at those areas ranked to be most prospective, to defi ne drill targets. At Clermont in particular, the existing IP geophysical data will permit immediate planning of soil geochemistry programs to defi ne drill targets, and further IP surveys will be completed at other priority areas. It is expected that deep drilling by RC and diamond methods will be a significant part of the work at Clermont, in the search for bulk tonnage gold deposits.