Ann: Exploration Update, page-4

Rikardo is spot on by saying it is a waiting game.

What we know are the facts that ERM have made 2 discoveries, but we don't know how good they will be until much more work is done. One is at Edna Beryl being a potentially high grade IOCG deposit and the other being at Kadungle, which seems to be a large mineralised field containing a deep porphyry Au/Cu target and also a shallower epithermal Au/Ag target (or targets to be more precise).

Now here is the waiting game:

The Edna Beryl IOCG deposit is awaiting the next stage of works, which will be 'resource drilling'. That stage is at the mercy of the JV partner. Precisely it will depend upon the EVN planning and concurrence because that company is providing the funds budget. The next stage of work requires a new drilling drive to be mined underground from the current small mining operation. Remember that this area of operations is the subject of the tribute agreement for the high grade small mine being worked right now, so that brings a third party into planning considerations. We won't know how large or how good this IOCG discovery will be until this 'resource drilling' is undertaken. That is the waiting game for Tennant Creek.

The Kadungle discovery in NSW of a large mineralised field is very early stage. It is between scout drilling and first pass target drilling right now. That means there is much more drilling and assay work yet to come before a clear picture can be formed about the economic prospectivity of this discovery. Mr Market is apt to ignore the potential of such discoveries at this early stage. This is where a speculative investor can get in early and if luck/good management plays out then make a killing.

It is a high risk investment decision right now because all we can do is take a best guess about the prospects based on some big picture geology comparisons regarding the genesis of these types of ore bodies in the Macquarie Arc lithologies relative to other such discoveries like Cadia Ridgeway and Northparkes. Here is a link to an interesting article about the Cadia Ridgeway discovery that might be relevant to the potential ERM have at Kadungle......... http://www.smedg.org.au/Sym99cadia.htm

With Kadungle, we now await the first pass assays from the epithermal targets at Trig that are due sometime in late Feb 18. We already know that the first pass assays from the porphyry target at Mt Leadley (2kms away from Trig) are indicating that the petrology indicates good prospects for a significant Au/Cu porphyry mineralising body. The small number of results so far indicate that the main ore body is either just off to the side of the diamond drill hole no. 17 or just a little bit deeper. More target drilling is required before we investors/speculators can be sure, so at this stage it is still highly speculative with regard to scale and grades. This all means a waiting game for Kadungle.

The epithermal deposit assays from Trig should be higher grades than the porphyry grades at Mt Leadley. Porphyry deposits are always low grade and it will be the scale and depth of the ore body that determines the economic feasibility. Epithermal deposits are shallow and can be either low sulfidation or high sulfidation ore bodies. That will determine the grades of Au/Ag that might be contained in the ore body, which will mostly be vein type geometry. Maybe the mineralised field discovered will contain both types of sulfidation and that will depend on variables related to historical geological and weathering events over the passage of time.... huge amount of time obviously.

Thus......... it is a waiting game with the typical high risk v high reward scenario to consider. Some of the risk is mitigated by ERM having funds in the bank, a JV partner funding Tennant Creek work, and a 'no risk' income stream being generated from the small mining tribute agreements established by ERM.

GLTAH and DYOR etc etc blah blah blah.

Cheers