(Dr) R. Russell and Associates Pty Ltd M.Aus.I.M.M

ABN 14 649 250 177 ACN 009 347 577

Consulting Geologist Unit 2, 27 Seventh Ave.

Maylands WA 6051

Tel (08) 9272 9058 Mob 0427 723 635 E-mail: rrussell@iinet.net.au

Prospectivity Overview

PNG Holdings

Gryphon Mining &Energy Melanesia Pty Ltd

INTERIM DRAFT UPDATE

September 2016

INTRODUCTION

1. The Project Area, Brief & Summary of Conclusions

Richard Russell and Associates Pty Ltd have been commissioned by Gryphon Mining

and Energy Melanesia Pty Ltd (GMEM) to independently assess both the alluvial and

hardrock mining potential of their tenement package in Papua New Guinea held via

their Joint Venture with El Dorado Mining & Energy Limited. The report presented

here is an interim report and will be followed by a series of much more comprehensive

reports once the results of sampling analysis and remote sensing analysis has been

completed. Richard Russell and Associates holds no stock in GMEM and carries out

this work on the basis of cash payments only.

Fig.1 GMEM’s Exploration Licence Applications (Provided by the client)

The prospectivity of Papua New Guinea in general and the New Guinea Thrust Belt

specifically is well established by many independent authors. The Client’s tenement

applications total some 2,257 sub-graticular blocks (c.8,000 km2) making it probably

the biggest single landholding in mineral leases in PNG (subject to the grant of all

applications).

Richard Russell and Associates commenced the commission by examining various

remote sensing imagery including high resolution SPOT data in some areas as well as

lower resolution imagery and various reports supplied by the client inclusive of ASX

reports of Pilbara Minerals in respect of promising alluvial and hardrock areas south of

Tamo Village within the area of ELs 2419, 2444 and ELA 2431.

A compilation of stream sediment and rock chip sampling provided by the MRA of

PNG to the client has also been summarised in various images by the client and

provided to the author in respect to ELs 2401, 2419 and ELA 2431.

Previous to the present work programme, the author has carried out field sampling,

mapping and analysis for another client in the area to the north of Kompian in Enga

Province. The area lies to the south of the client’s EL 2419. The author is therefore

familiar with the geology, modes of mineralisation and prospectivity in general in the

New Guinea Thrust Belt.

In addition, the author has examined desktop data reviews provided by the client and

carried out remote sensing-based structural mapping and target analysis work (see Fig.

7). Recently, he visited and examined the geology and geomorphology of parts of the

ELA's 2431 & 2444. Most recently, the author has visited the southern portion of EL

2401 and conducted reconnaissance prospectivity sampling and mapping.

Exploration Philosophy

The client has provided the author with a report on the potential to apply Geotech’s

ZTEM airborne geophysical survey method in the rugged terrain enclosed in the client’s

tenement areas. This report cites numerous case studies where successful discoveries

and/or definition of a range of significant mineral deposits have resulted from

application of the ZTEM technology. One in particular, the Balboa porphyry copper-

gold discovery in jungled tropical terrain in Panama appears to be in a similar setting

to the PNG environment. The Balboa deposit showed no or very little surface

geochemical signature nor magnetic signature and was progressed from initial survey

to a drilled discovery in under 6 months.

The Geotech report also cites case studies where the ZTEM method has been used

successfully in exploration for Porphyry Copper-Gold-Molybdenite, SEDEX base

metals, unconformity uranium, VMS Nickel-Copper, Magmatic Nickel-PGE Massive

Sulphide and Epigenetic Gold of Low, Medium and High Sulphidation character.

The client has advised the author of its intention to utilise the ZTEM method in its

tenement package to define large target structures and arrive at drilled results in 12

months or less which it believes will be of great appeal to investors. The author believes

that such an approach, coupled with remote sensing and limited ground field work on

defined targets, represents a sound exploration philosophy.

Summary & Conclusions

From this combination of data sources, it is clear that the tenement package is highly

prospective for alluvial gold over wide areas as well as hardrock gold, (epigenetic

and/or assocated with copper mineralisation in porphyry copper-gold type deposits,

base metals and other precious metals inclusive of PGE (platinoids). It is readily

apparent that most recorded gold values in stream sediment sampling and rock chip

sampling as well as the numerous artisinal workings are predicated about ready access

and not the fundamentals of the relevant geology.

The reconnaissance work done to date by the Company and other previous explorers

should be augmented by a thorough review and analysis of all relevant remote sensing

data available, such as Landsat, aerial photography, Spot Imagery & aeromagnetics

where available. This work as well as airborne geophysical methods such as ZTEM &

VTEM to prioritise both major hardrock targets for drilling and prospective areas for

exploitation of what may promise to be very large scale exploitation of palaeoalluvials.

Fig. 2 The client’s tenements and the geological terranes of PNG (provided by the

client)

Els 2401, 2419, 2444 and ELAs 2431 & 2468

During the recent field programmes, a recently worked alluvial gold claim, ML

503 (now the subject of various applications since ML 503 was cancelled)

enclosed within the greater ELA 2431, has been inspected. In this area, it is clear

that coarse gold of high grade was recovered. The author estimates from field

sampling and panning that the gravels in the alluvial gold claim contain gold

grades of between 2.5 to at least 5 g/m3. Such grades are normally considered

to be commercial subject to sufficient volumes being determined.

Based on known gold values recorded by the MRA and by the author, as well

as anectdotal evidence of artisinal mining, within the areas enclosed by ELs

2419 & 2444 and ELA 2431, braided river channels on the low-angle plains

along the entire northeastern side of the Schrader Mountains have significant

potential for alluvial gold in both modern and palaeo-alluvials. This is a similar

environment of deposition which is thought to have produced some of the

Archaean gold-bearing conglomerates such as the Beaton's Creek conglomerate

in the Pilbara and the Witwatersrand goldfields in South Africa.

Within EL 2401 there are many areas showing similar potential for gold bearing

alluvial outwash gravels as well as hardrock gold deposits that are sourced from

areas known to contain gold in both alluvial and hardrock sources with grades

up to, and sometimes exceeding, 6 g/t. Field sample panning by the author

revealed that of 74 panned alluvial samples, 49 contained visible gold in the

concentrate. Laboratory analysis of concentrates ranged from 0.004 to 2,879

ppm of Au and zero to 34 ppm of Pt.

The total area with the potential to host gold bearing outwash palaeo-gravels

probably exceeds 1,000 km2 within the client’s tenement package.

Within EL 2419 and partially within ELA 2431, a combination of SPOT data

and other less detailed imagery has been analysed by the author for base and

precious metal mineral alteration signatures coupled with geological structural

analysis. This work programme has resulted in 21 significant targets being

defined variously for gold, base & precious metals (including platinoids), with

8 such targets being considered as “A” grade priority. This preliminary analysis

will be extended to cover the remainder of ELA 2431, EL 2401 and portions of

EL 2444.

Within ELs 2401, 2419, 2444 & ELAs 2431 & 2468, the writer considers the

potential for hardrock gold to be very good.

Within ELs 2401, 2419, 2444 & ELAs 2431 & 2468, Landsat and Shuttle Radar

derived contour studies still in progress have shown the potential for over 1.5

Bn. m3 of broadacre palaeo-alluvials. Where tested by field sampling, such

palaeo-alluvials have exhibited widespread if not entirely uniform visible gold

in panned concentrates and so must be considered highly prospective candidates

for very large scale alluvial exploitation

Within ELA 2431, it appears that later stage epigenetic fluids associated with

late stage diorites are the probably source of the coarse 'shotty' gold in modern

alluvials being worked by local communities. The diorites appear to have

intruded into fracture zones on the margins of ultramafic ophiolites. This coarse

alluvial gold appears to be common in the alluvial deposits downsteam of the

ultramafic/diorite outcrops. It is thought that late stage fluids associated with

these fracture controlled diorites have resulted in the formation of gold ore in

this provenance.

2. EL 2401 & ELA 2431 (Western Tenements)

The author has recently visited this area and his field and office analyses are the subject

of a separate report September 2016 available on request, “Independent Assessment of

the Prospectivity of the Southern Parts of EL 2401 & ELA 2468, West Sepik Province,

Papua New Guinea”. The laboratory analyses of hand panned concentrates collected by

the author in the field are presented in Enclosure 2 herein. EL 2401 clearly has

significant hard rock, alluvial & palaeo-alluvial (sensu stricto) potential. The area has

seen a long history of artisanal alluvial gold mining and several western companies

including Harmony Gold have done basic preliminary exploration over relatively small

areas of the terrain that are reasonably accessible but there has been no widespread

regional geophysical or geological reconnaissance.

Harmony Gold reported on 30th November 2011:

ridge and soil spur sampling first pass results of up to 13.8 g/ton and individual rock

chip samples of up to 39 g/t as well as

a “high tenor gold anomaly with a footprint of over 5 km of strike” around Amanab

within 2401.

It is believed however that Harmony moved on to focus on the more recent Frieda

porphyry copper-gold project.

The client has provided maps derived from PNG MRA data bases showing the

distribution of a mix of alluvial stream sediment sampling with minor hardrock rock

chip sampling results. Some of these are illustrated below. A purported undated

government report quoted “The Minerals Planner (Geologist) spent 3 weeks surveying

the area and found the presence of alluvial gold in the streams/creeks and terraces of

Biaka. Almost every creek surveyed have (sic) presence of gold with good number of

colours as many as up to fifty on the average for every panning dish washed.”

Further work before the planned ZTEM survey will focus on remote sensing mapping,

structural target & mineral alteration signature definition as well as field inspection and

sampling to better define alluvial and hard rock potential. This area (compared to the

Schrader Range terrain within the Client’s Central Tenements, ie ELs 2419, 2444 &

ELA 2431) is more accessible via an established system of logging roads. However,

the general access to the whole area is quite limited and imposes restraints if exploration

was limited to conventional ground sampling in most of the tenement area.

Fig.3 ELA 2401 Au, Pt 3-6 g/t Fig. 4 ELA 2401 Au > 6 g/t

(MRA Source provided by client) (MRA Source provided by client)

An extract from the September 2016 report follows with mapping completed by the

author.

“1.1 Alluvial Potential

Alluvial gold appears to be widespread in the creeks in the southern parts of EL 2401

and EL 2468. At least 740 million cubic metres of gravels are estimated to occur in the

area presently under review. The exploration area represents about 35% of the total

area of the two licences and this estimate of volume is expected to increase significantly

when the whole of the licence areas to the north are explored.

Laboratory results providing Au & Pt in parts per billion (ppb) from the independently

collected pan concentrates are included in this report in Appendix 1. Laboratory

analysis of these panned concentrates returned gold grades ranging from 4 to

2,878,762 ppb (ie 0.004 ppm to 2,878.762 ppm) with platinum grades from 0 to 34,490

ppb (ie 0 to 34.49 ppm).

Out of 74 samples collected, 49 (66%) contained visible gold in field panned

concentrates. At least 17 of the samples were thought by the writer to contain gold

grades of over 1 g/t. The samples were small spot samples rather than bulk samples

and were collected only from sites reasonably accessible by road. The samples

represent a spread over a linear distance of over 40km and represent both modern

alluvial deposits and palaeo-gravels.

1.2 Hard Rock Potential

There is good potential for economic hard rock mineralisation in the exploration area.

The alluvial gold appears to be sourcing in quartz veins in the greenstone/bluestone

schist that outcrops along the mountain front in the exploration area.

Where examined in the field to date, which is mainly along access tracks, the Dauri to

Kanobasi area on the mountain front along the edge of the Sepik Swamps appears to

host the highest concentration of mineralised quartz veins. The area is accessible by

vehicle track and represents a suitable target area for first-pass exploration. From

limited field observations, the veins appear to be 40m to 100m long and about 0.3m to

1m in width. Total strike length of the observed quartz veins in the Dauri to Kanobasi

area is estimated to be at least 2.7 kilometres. Gold grades are not possible to estimate

at this stage. From the high gold grades obtained in the local alluvial gravels, it is

thought that the grades are likely to be high but erratic.

1.3 Recommendations

Further mapping and a programme of bulk sampling is required to fully assess the

alluvial deposits. If the results of the bulk sampling are positive and reflect the grades

obtained in the reconnaissance sampling, it is likely that a successful alluvial mining

operation might be commenced.

Detailed field and photo-mapping followed by rock chip sampling of the hard rock

targets is recommended. The results of this work should form the basis for a drilling

programme.”And :

“A conservative exploration estimate of the volumes of gravel in the southern parts of

EL's 2401 and 2468 is 740 million m3. This represents a probable minimum value. The

present exploration area is about 35% of the total area of the two EL's. When

exploration is completed in the northern parts of the tenements, it is expected that this

value will be significantly increased.” And :

“From the writers observations, the alluvial gold is likely to be derived from small

quartz veins intruding into the ubiquitous blueschist/greenschist meta-sediments

('schist') which outcrops along the mountain front (Photograph 3). No other rock types

were seen in outcrop. However, the Dio River, in addition to schist clasts, is also

carrying clasts of granite, diorite and some magnetite and epidote (?). Furthermore,

the Google imagery shows considerable outcrop areas of carbonates straddling the

PNG/Irian Jaya border in the headwaters of the Dio and Green Rivers (The 'Border

Mountains; Figure 1). The Aitape-Vanimo 1:250,000 map published by the PNG MRA

shows large areas of Pre-Oligocene 'Amanab Metadiorite' throughout the area of EL

2401 consisting of sheared, weakly foliated metadiorite, some metagabbro and

metagranodiorite intruded by dolerite dykes. All of the boundaries of these mapped

lithologies are interpreted, evidenced by the dashed line geological boundaries on the

map. This information suggests that the geology in the hinterland of the Amanab Massif

is much more complex than what is observed along the mountain front. The auriferous

quartz veins may be only part of mineralised epithermal, porphyry or skarn-type

deposits in the mountains further to the northwest.” And :

“Total strike length of the quartz veins (within the Dauri, Kondabasi, Biaka areas

alone) is likely to be in excess of 2.7 kilometres.”

Fig. 5 Reconnaissance Mapping & Gold Occurrences EL 2401 & ELA 2468 Western Sepik

Fig. 6 Detailed view EL 2401 Area of Interest

Following this report, Gryphon has reported to the author its interest in starting a mining

operation in the Biaka, Dauri & Konabasi area within EL 2401. Pending the completion

of the proposed airborne ZTEM & VTEM surveying and the proposed continuation of

the remote sensing studies, this is a logical location to prioritise for initial mining

operations for both hardrock and alluvial gold.

3. ELs 2419, 2444 & ELA 2431 (Central Tenements)

3.1 Overview

o “Witswatersrand” concept for palaeo-alluvial gold deposits interpreted from

Shuttle Radar, field observations and remote Landsat over at least 1,000 km2,

probably in excess of 500 m3 (work in progress)

o Visible gold in palaeo-alluvial concentrates where tested to date

o Grades are estimated by the writer in modern alluvials within parts of ELA 2431 to

be relatively high at between 2.5 grammes per cubic metre (g/M3) to at least 5 g/M3.

o 21 major structural hardrock targets, many with probable mineral alteration haloes

o Within ELA 2431, May 17th 2013 Pilbara Minerals reported to the ASX :

Placer Gold Deposit with 2M oz potential over 20 km strike

Plan to produce 65,000 oz pa

Investment of $4.45 million to deliver 15,000 oz pa

Hardrock gold geochem anomalies

This area of these tenements located between Mt Hagen & the north coast of PNG is

remote, sparsely inhabited and has had very little serious exploration.

The stream sediment data from the MRA (provided by the client), shows a somewhat

subdued signature in comparison to the prolific values encountered in ELA 2401. The

topography in these tenements is much more remote and rugged with relief ranging

from a little over sea-level to over 3,000m. In the writer's opinion, the lack of

exploration in this area is logical. Nevertheless, there is likely to be significant

mineralisation in these areas based on known alluvial gold mining operations and the

author’s independent field inspection and sampling of the areas of the Clay (Kokum)

and Tupuka Rivers within ELA 2431 and EL 2444.

Fig. 7 Alluvial Gold Distribution ELs 1419, 2444 & ELA 2431.

Anecdotal evidence quoted by local people is that every stream running to the north off

the Schrader Mountains hosts gold bearing gravels. Two small alluvial mining leases,

ML 503 (now to be replaced by one of several subsequent applications) located north

of Tamo Village on the Tupuka River, AML 603 located high up in the Schrader Range

area to the southeast of Tamo Village at the headwaters of the Waimera River within

EL 2419 and AML 805 upstream at the headwaters of the Clay or Kokum River have

been or are currently being worked for alluvial gold.

Gravels of the Tupuka River within ML 503 have been mined for gold by a Korean-led

consortium from 2009 to 2015. The much larger Clay (or 'Kokum') River, into which

the Tupuka River drains, is also known to contain gold-bearing gravels. The gold

grades, the extent of the auriferous gravels and amount of gold recovered are relatively

unknown.

3.2 Field Inspection Tupuka and Clay Rivers ELA 2431 & 2444.

In March 2016, an exploration team comprising Mr. John Heugh, GMEM managing

director, Mr. Paul Lewis, a mining engineer, and the writer, along with 10 local

labourers spent 10 days in the area with three main objectives:

assessing the mining equipment left behind by the previous miners,

working out a possible mining strategy and

evaluating the gravels in the area.

The present report deals with the third of these tasks; the evaluation of the gold-bearing

gravels in the area.

3.3 Data and Technique

The evaluation is based on:

Photo interpretation of SPOT imagery to orientate the sampling programme and

map, as far as possible, the geology and geomorphology of the area.

Field sampling of the gravels along the main and tributary creeks, panning off

of concentrate and recording of the results.

The structural geology and outcrop mapping of the Kokum and Tupuka Rivers is

presented in this report as Enclosure 3. The imagery is from the SPOT-6 satellite. It is

a natural colour image with a nominal ground resolution of 1.5m.

The map is a neat pencil-drawn document and has not been fair-drawn as yet. The

1:250,000 geological map sheets of Ramu River and Wewak cover the area of interest

and were used as a guide to the remote sensing mapping.

The field sampling was carried out by collecting samples of river gravels comprised

mostly of modern alluvial gravels. In some areas, older palaeogravels were sampled.

The samples were collected mainly from outcrops in natural exposures but also in old

test pits and from mullock heaps from the previous mining.

The samples each comprised a c.30-litre volume of the target gravels.

The gravels were then dished-off in a gold pan and the concentrate collected for

laboratory analysis. A total of 77 samples were collected in this way from the Tupuka

and Kokum Rivers (Enclosure 1). A total river length of 7.2 kilometres was covered on

the Tupuka River and 16.8 kilometres on the Kokum River and two right-bank

tributaries of the Kokum. 66 of these samples (86%) contained visible gold in the

concentrate. This result is, in the writer's opinion, highly significant given the random

sparse spot sampling carried out and the very small sample size.

3.4 Summary and Results Tupuka and Kokum Rivers ELA 2431 & EL 2444:

3.4.1 Alluvial

The gravels carried by the Tupuka and Kokum (Clay) Rivers are generally gold-

bearing. Typical of many alluvial gold systems, the gravels in the fast-flowing upstream

parts of the river systems are low-volume, high-grade while the larger-volume lower-

grade outwash deposits lie downstream of the mountain front on the lower-gradient

ground.

A JORC 'Exploration Target' volume calculation is under preparation for the gravel

resource. Whilst this is a work in progress, it can be noted that the order of magnitude

estimates of the known high-grade low-volume deposits currently being mined on or

about ML 503 probably number in the thousands of Bench Cubic Metres (BCM) while

the low-angle outwash slopes upstream (and perhaps downstream) of Tamo Village

may host many millions if not hundreds of millions of BCM.

Similar potential is thought to exist in the low-angle outwash slopes on a 100 km front

sloping northeast from the Schrader Ranges within the client’s acreage. The downslope

extent potential of such outwash gravels has not been tested but could be as much as 10

to 30 km within the client’s tenements thus giving a range of surface area from 1,000

to 3,000 km2. It is not known as yet how much of this large area hosts auriferous alluvial

channels.

An examination of detailed aeromagnetics, planned to be flown simultaneously with

the proposed ZTEM & VTEM surveys, may enable rapid estimations to be made. This

would be based on the anticipated characteristic signature of alluvial magnetite, which

commonly accompanies the heavy mineral suite including the gold, in this part of PNG.

VTEM is also proposed to be trialed as a potential mapping tool to establish the

dimensions of the better, wider and deeper palaeo-alluvial channels.

Initial estimates based on remote sensing and detailed high resolution contouring show

potential of over 250 million m3 of palaeochannel sediments in one area alone to the

east of the current Clay/Kokum Rivers. This needs to be drilled and sampled as a

priority as a precursor to the development of alluvial mining via heavy earthmoving

equipment or possibly bucket dredging on a grand scale.

The overall grade of the gold in the gravels as a whole is difficult to estimate on the

basis of the field sampling for the following reasons:

The samples could only be taken where natural gravel exposures occurred.

The samples are generally 30 litre volume samples and are therefore very small.

They are generally not 'bulk' or 'channel' samples but point samples.

Attempts were usually made to sample the lower part of the gravel horizon but this

was not always possible. This procedure would produce a bias in the grade

estimates:

o An over-estimate of the gold grade of the profile as a whole would be

obtained by sampling only on bedrock while

o samples where bedrock could not be reached would provide an under-

estimate of grade.

Nevertheless, the amount of gold in the dish does provide an indication of the nature of

the gold in the natural system:

Coarse, 'shotty' gold characterises the upstream areas in the Schrader Mountains

around Jonimo Camp on the Tupuka River and the upstream parts of the two right-

bank tributaries of the Kokum River (Nowapet Creek and Kruaing Creek). Grades

are estimated by the writer to be relatively high at between 2.5 grammes per cubic

metre (g/M3) to at least 5 g/M3.

Fine gold characterises the gravels that were sampled in the Kokum River and on

the broad low-angle slopes downstream beyond the mountain front around Tamo.

However, most of the gravel accessible here for sampling is loose material in gravel

banks partly incised by the main creek. Few of the sample sites were in the lower

part of the gravel profile or on bedrock. Most of this material is below the level of

the present river and therefore inaccessible. A few fine gold colours were

consistently obtained in the upper loose material. In the writer's opinion, this is a

surprisingly good result. Higher gold grades would almost certainly be obtained

lower down in the gravel profile.

Very large volumes of gold-bearing gravels are likely on the outwash plains in the

present Kokum River and it's palaeochannels around the village of Tamo. Indeed,

braided river channels on the low-angle plains along the entire northeastern side of

the Schrader Mountains have the same potential. This is a similar environment of

deposition which is thought to have produced some of the Archaean gold-bearing

conglomerates such as the Beaton's Creek conglomerate in the Pilbara and the

Witwatersrand goldfields in South Africa.

Pilbara Minerals Limited reported to the ASX in an announcement on May 17th, 2013

that the Tupuka & Clay Rivers combined had potential of hosting a 2 M oz. resource

and that they had plans to develop a 65,000 oz. pa alluvial gold mining operation

beginning with a 15,000 oz. pa operation on the Tupuka River.

In another ASX announcement dated 29th April 2013, Pilbara announced that

“Intermittent past production has yielded 10,000 ounces of alluvial gold, much of which

was very coarse. Pilot test work over palaeo-channels and placers discovered nuggets

(0.1g to >30 g) over a 7km stretch of the Tupuka River.”

Anectdotal evidence indicates that problems with the Korean partners in the Tamo

project coupled with their move into a lithium deposit in WA had a significant bearing

on their decision to pull out of the project.

3.4.2 Hard rock

The writer considers the potential for hard rock gold to be very good. Ultramafic rocks

appear to have been fault-emplaced as ophiolites into the sedimentary section of the

Schrader Mountains in a discontinuous zone about 2.5km wide extending from about

1km upstream of Jonimo Camp toward the southeast for at least 15km. The ultramafics

contain extensive carbonate and magnetite veining with serpentinised fault zones.

Tertiary diorite intrusions appear to have been emplaced along the main boundary faults

of the ophiolite.

The gold itself is not contained in the ultramafics or the diorite. Rather, it appears to be

associated with quartz veining in the main fault zones on the boundaries of the ophiolite

block. The mineralised fluids are likely to have been driven by hydrothermal activity

as the diorites were intruded. If zones of high frequency quartz veins could be located,

the resulting stockworks could yield economic orebodies. The potential for platinoids

should also not be overlooked. Copper and silver mineralisation are also likely in this

sort of environment.

Pilbara Minerals reported to the ASX on the 20th September, 2013 that a sampling

programme south of the alluvial operations (within the current ELA 2431) recorded 13

“anomalous” samples including several anomalous in gold copper and molybdenum

and concluded from petrology analysis that some of the rock samples showed evidence

of a primary epithermal signature.

The author has commenced a remote sensing analysis of all of the client’s tenements in

an effort to define hard rock structural and intrusive related mineral targets focused on

gold and other precious metals such as silver and platinoids as well as base metals.

This work comprising detailed assessment of structures, intrusive features, general

geology and where evident, possible mineral alteration signatures has commenced with

EL 2419 and most of ELA 2431 as shown in Figure 7.

The analysis within ELAs 2419 and 2431 revealed a high level of prospectivity with 8

“A” level high priority targets, 6 intermediate priority targets and 7 lower priority

targets. Several targets are associated with interpreted intrusive “plug” like bodies.

Some of the targets defined are quite large up to several km in diameter.

The structural shear and faulting system evident in the remote sensing analysis coupled

with MRA mapping shows a generally NNE/SSW orientiation of maximum

compression and a WNW/ESE orientation of maximum extension. The compression

faults are thrust and reverse trend faults trending EW to WNW. Extension faults trend

NNE to NS and there are many left lateral NE and right lateral NNW shears .The major

influence on structure is right lateral wrenching oriented about 1500 to 3300 that is, SE

to NW.

The primary mechanisms for most major ore bodies in the world is folding, faulting and

shear zones providing a locus for intrusive and fluid mineralising activity. The area

examined by the author clearly has enormous structural and intrusively-related

mineralisation potential. That there have been no major mineral deposits discovered in

this area is probably due to the general paucity of mapping and consequent exploration.

This is further due to the harsh jungle-covered terrain, remoteness, lack of infrastructure

and generally inaccessible nature of the area.

Fig. 8 Remote Sensing Target Generation and Prioritisation EL 2419 & ELA 2431

In the author's opinion, remote sensing mapping and evaluation, followed by airborne

geophysical techniques such as the client’s preferred ZTEM exploration philosophy,

followed by field sampling, mapping and drilling, is a sound exploration rationale. Such

a general methodology is likely to lead to the discovery of mineralised zones. In this

terrain, some of these have the potential to be both economic and very large.

This work will be extended into ELs 2401, 2444 and ELA 2468 after which high-graded

areas will be selected for higher resolution imagery analysis.

Dr Richard Russell

Richard Russell & Associates

Perth, Western Australia

September 2016.

Enclosure 1-Laboratory Analyses of Field Reconnaissance Pan Concentrate

Sampling of the Kokum/Clay & Tupuka Rivers ELA 2431 & EL 2444

Enclosure 2- Laboratory Analyses of Field Reconnaissance Pan Concentrate

Sampling of the southern part of EL 2401 and ELA 2468

Enclosure 3- – Detailed SPOT data ELA 2431 (To be inserted)