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EPM 15543

Cat Creek

Surrender Report

Author: Shane Hibbird

Gryphon Minerals Limited

Submitted by: Gryphon Minerals Ltd

26.05.2010

Gryphon Minerals Technical Report No. TR649

i

ContentsPage

1. Summary 1

2. Introduction 1

3. Geology 3

4. Previous Exploration by Gryphon Minerals

4.1 Literature Search and Airborne Geophysical Imaging 5

4.2 Heritage Survey 5

4.3 Vegetation Sampling 5

4.4 Soil Sampling 6

4.5 Air Core Drilling 6

5. Work Completed by Gryphon Minerals 7

6. Conclusions and Recommendations 8

7. References 9

List of Figures

Figure 1: Location Plan

Figure 2: Pastoral Lease and Access Plan

Figure 3: Airborne Radiometric Image - Uranium

Figure 4: Airborne Magnetic Image – Total Magnetic Intensity

Figure 5: Regional Geology

Figure 6: 2008 Air Core Drilling Cross Sections

ii

List of Tables

Table 1: Blocks and Sub-Blocks comprising EPM15543

Page

2

Table 2: Contact details of Pastoral Lease Holders 2

List of Appendices

(Refer Digital Data Files)

Appendix 1: Air Core Drill Hole Collar Details

Appendix 2: Spectral Radiation Log

Appendix 3: Air Core Drill Logs

Appendix 4: Air Core Assay Results

1I/Exploration/08Cat_Creek/Memo_Reports/Surrender_Report/EPM15683_2010S.doc

1: Summary

The Cat Creek surface radiometric anomaly corresponds with a Holocene aged fluvial fan deposit that consists of an accumulation of clay atop a basal lag of sands and gravels. These sediments rest upon weathered Lower Cretaceous mudstones of the Eromanga Basin

Geological, geochemical and radiometric analysis of air core drilling, soil and vegetation samples within the radiometric anomaly located within the Cat Creek Tenement EPM15543, northwest Queensland was undertaken from 24 th May 2007 to 23rd May 2008 by Gryphon Minerals Ltd. A surface radiometric anomaly suggested potential for pedogenic related, or a subsurface roll front type uranium deposit. Soil sampling and field inspection discounted the potential for a surfical deposit but air core drilling was undertaken to assess the potential of the area to host a subsurface deposit.

Assay results from the air core drilling were not available until the start of the second tenement year, but when they were received, they were disappointing. Most of the near surface samples can be considered anomalous in uranium relative to the underlying Cretaceous sediments but the maximum uranium assay returned from the near surface was only 5.9ppm. It is considered that results an order of magnitude larger would be significant enough to warrant further follow up drilling.

The maximum uranium assay (22 ppm) returned from the program was from within a Cretaceous siltstone at the bottom of drill hole CTAC023 (128 – 130m). Elevated copper molybdenum, selenium, and vanadium are also present.

It is recommended that Gryphon surrender EPM15543 “Cat Creek”.

2: Introduction

Tenement EPM15543 “Cat Creek” was granted to Gryphon Minerals Ltd, on the 24 th May 2007. The tenure expires on 23rd May 2012.

The project is located in northwest Queensland, on the 1:250,000 scale Millungera map sheet SE/54-15. The Cat Creek EPM is located 120 km to the north east of Cloncurry on pastoral leases. The township of Cloncurry is 117km east of Mt Isa, the regional centre for the north west of Queensland. Travel by road to Cloncurry from Mt Isa is via the Flinders Highway, a good quality sealed road. A regional location plan is provided as Figure 1.

To access Cat Creek from Cloncurry, the sealed road north to the Ernest Henry Mine is taken. Several kilometers short of the mine, a left turn is required to cross the Cloncurry River onto Sedan Dip road. The road from this point is mostly dirt but of good quality. Approximately 100 km further on the road joins with the Wills Development Road just south of the Cat Creek tenement boundary. From here, numerous station tracks and fence lines afford good to fair access around the tenement. Vehicle access off track is easy through the relatively open woodland. Figure 2 shows the access within the Cat Creek tenement area.


The Cat Creek radiometric anomaly was brought to Gryphon’s attention by geologist Dave Hamdorf. The relatively low order anomaly is evident on publicly available data from which images were produced showing the anomalous radiometric responses from many of the river systems draining the Mt Isa Block, Queensland. The Cat Creek radiometric anomaly is located in a large alluvial fan formed by a tributary of the Cloncurry River accumulating sediments on the Cloncurry River flood plain. This system appears to have deposited radiometric material on the surface in recent times and it was thought that this may be of sufficient concentration to be of economic interest. In addition, it was postulated that during low sea level stands during the Tertiary, the Cloncurry River and its tributaries may have incised their river beds and, on re- sedimentation with subsequence base level rises, deposited carbon rich sediments such as peat which would later form a suitable chemical trap to uranium moving in the groundwater. Evidence of a recent Holocene event of about a 10m incision by the Cloncurry River is described by Twidale 1966b. Much larger sea level falls occurred in the late Tertiary/Pleistocene associated with major ice ages which would have produced significant reactivation of erosion along the river systems.

An application permit was applied for and the area given the project name of Cat Creek, after one of the larger tributaries of the Cloncurry River feeding into this alluvial fan. The following table identifies the Blocks and Sub-Blocks that comprise the Cat Creek EPM 15543.

Table 1: Block and Sub-Blocks comprising EPM15543BIM Block Sub-BlocksNORM 3205 YZNORM 3206 QRS VWXYZNORM 3277 CDE HJK NOP STU XYZNORM 3278 ABCDEFGHJKLMNOPQRSTUVWXYZNORM 3349 CDE HJK NOP STU XYZNORM 3350 ABCDEFGHJKLMNOPQRSTUVWXYZNORM 3422 DE JK OP TU YZ

Total: 100 Sub-Blocks

The tenement is on pastoral leases and the relationship of the tenement to the pastoral leases and the contact details of the lease holders are given in Table 1 and the locations of the lease boundaries are shown on Figure 2.

Table 2: Contact Details of Pastoral Lease HoldersLot Plan Lot 1 Plan 1 Lot 2 Plan 2 Owner Address Phone1 CE3 3 MF22 McClymont,

Alistair & Joanne

Burleigh Station, Richmond,QLD 4822

(07)47418599

4991 PH1705 Spreadborough, James & Elaine

Spoonbill Station, JuliaCreek, QLD4823

(07)47468724

4415 PH629 5 CE15 2 CE3 Australian Cattle Company

Kalmeta StationGPO Box 587,Brisbane, QLD, 4001

(07)47484917(fax)


3: Geology

The Cat Creek tenement is situated on the Wondoola depositional plain. This depositional plain is a segment of the larger Carpentaria Plains and is flanked by Donors Plateau to the west and Mt Fort Bowden ridge (upfaulted Precambrian rocks) protruding through the Millungera Plain to the east (Twidale 1956, 1966a). The Wondoola depositional plain is associated with the Flinders and Cloncurry Rivers and is a black soil plain, with a vegetation cover consisting of mainly open grassland with a few scattered trees. The topography is generally 60 to 80m ASL. It is an alluvial plain developed on the silt and clay Wondoola Beds of Quaternary age. A small fraction of the sediment is derived from the Cretaceous beds in the Julia Creek area to the south and older siliceous rocks in the east. These alluvial beds developed as successive flood plains associated with the ancestral river systems. Changes in sea level during the Holocene combined with uplift of the Selwyn Upwarp may have caused the incising of the present day alluvial system with the Cloncurry, Flinders, and Saxby Rivers all entrenched up to 10m in depth (Twidale 1966b).

The Cat Creek tenement is bisected by Forty Mile Creek. This runs north - south along the intersection between Holocene red brown flood deposits consisting of quartzose sand, silt, clay and gravels that are generally superficial in depth located to the east and up to 40m thick early Quaternary Woodoola Beds (yellow clay, silt, and sand alluvial plain deposits) to the west (Grimes, 1973). The distribution of the Holocene flood deposits corresponds very well with the airborne radiometric anomaly.

The Quaternary deposits rest unconformably on the Lower Cretaceous Rolling Downs Group which consists of the Allaru Mudstone, the Toolebuc Limestone and the Wallumbilla Formation. The Rolling Downs Group and older Mesozoic sediments in the Cat Creek tenement are probably in the order of 200 to 300m thick. They lie within the Canobie Depression, separated from the main Eromanga basin by the Fort Bowen Ridge, immediately to the east of EPM15543. The Precambrian basement on which they sit is at considerable depth, probably in excess of 250m below the surface.

The surface geology of the tenement area, scanned from the published 1:250,000 scale Millungera map sheet is shown on Figure 5.

Despite the fact that it was surfical uranium mineralisation that drew Gryphon’s attention, the tenement areas are considered most prospective for the Sandstone or Roll Front style of uranium mineralisation in the subsurface. The surfical anomalism is evidence supporting the general exploration concept, but of critical importance is the postulated presence of Wyaaba Bed equivalents in the Cloncurry and Flinders River deposits. The Wyaaba Beds are Pliocene to Pleistocene in age and exist on the surface on the Claraville Plain to the east. They are known from bore holes to be up to 60m thick. The exploration model relies on a porous unit, usually a sandstone, in this case, a fluvial channel sand deposit of the Wyaaba Beds, that allows uranium transport in solution via oxic ground waters. The uranium is sourced from the weathering of uraniferous rocks in the hinterland, in the case of these projects, the Mt Isa Block and its various granitoids and metasediments. Should these waters, as they move slowly in the subsurface aquifers of the channel deposits encounter a reducing environment within the aquifer the uranium will precipitate out of solution and form a deposit. It is considered that the critical


requirements for this model are – or at least have been in the past, present in the deposits of the Cloncurry River and its tributaries. The biggest risk to the prospectivity of the projects will be the preservation of prospective stratigraphy for long periods of time that has enabled a significant accumulation of uranium to form an economic deposit. Australian examples of these types of deposits are found in the Frome Embayment in South Australia, the Beverley and Honeymoon Well deposits

Incision of the river channels into the surrounding Mesozoic and older bedrock could have been an ongoing and repeated process. As can be seen in the Late Pleistocene and Holocene Sea-Level Curve below, the majority of the time over the last 450,000 years, the sea level was over 50 to 120 or more metres below the current sea level. It is during these times, and no doubt the trend could be safely extrapolated back into the Tertiary much further, that the rivers eroded the channel systems. During the sea level highs, stream base levels would rise to approximately their present positions and the channels would have in-filled with sediments.

There is the risk that the Cloncurry River, draining into the Gulf of Carpentaria may have been affected with the rise and fall in sea levels, with repeated cycles of incision and erosion followed by periods of deposition. The sediments within the Cloncurry River within the Cat Creek tenement, located only 280km from the present coast may have been eroded away during subsequent low stands and the river valleys again filled during high-stands such as the present day conditions. The risk that the river sediments are all young and have had little time to accumulate economically significant mineralisation is present. Fluctuating climates, erosion and deposition rates that would have accompanied these sea level changes would probably have been important in the formation of uranium deposits.

It can be concluded from this that if the Cloncurry River and its tributaries were able to incise there drainage valleys below that of today, the depositional history of the channel sands in the Cloncurry River is likely to be complicated. The sediments would have been deposited under a broad range of climatic conditions with variations in water chemistry and flow, and sediment flux over time. The provenance of this sediment is the Mt Isa Bock with its uranium rich granitoids and metasediments. With such a history, there is a


chance that a geological/geochemical environment existed in these sediments at some time that would have been conducive to the deposition of uranium. A risk for the project is whether any older river sediments have been preserved in the river channels long enough to have accumulated significant uranium mineralisation. With each successive fall in river base levels, the river sediments would have undergone erosion to varying degrees, and with each return to a high stand, subsequent deposition would have in- filled the river valleys again. It is possible that sediments from all but recent times have long since eroded away, and with the time required to form uranium deposits of economic size measured in the millions of years rather than thousands, presents a second risk to the exploration concept.

4: Previous Exploration by Gryphon Minerals

4.1 : Literature Search and Airborne Geophysical Imaging

Literature searching failed to find any reported mineral exploration data in the immediate vicinity of the Cat Creek tenement.

Information regarding two deep water bores was found. The Spoonbill bore, R2324 located at 516426E 7793448N was drilled to 265m. Beneath several metres of Quaternary alluvial deposits 11m of Lower Cretaceous Wallumbilla Formation mudstones was drilled, beneath which 243.8m of Jurassic Gilbert River Formation was intersected. This Formation is part of the Lower Cretaceous Rolling Downs Group that also contains Allaru mudstone, minor limestone and labile sandstone (Grimes, 1973).

Bore R30402 at 506702E 7800236N (adjacent to hole CTAC049) was drilled to a depth of 321m. The hole intersected 7m of Quaternary alluvial material above 149m of Toolebuc limestone and 165m of Wallumbilla Formation (Grimes, 1973).

Publicly available aeromagnetic and radiometric data was acquired and imaged. Figure 3 shows the uranium channel of the radiometric data and the essentially featureless aeromagnetic data is shown on Figure 4.

4.2 : Heritage Survey

A heritage survey was carried out with three representatives of the Mitakoodi people on the 22.11.07 accompanied by two geologists from Gryphon. Individual drill sites adjacent to access tracks and fence lines were inspected. No significant sites were identified.

4.3 : Vegetation Sampling

Vegetation samples were taken from a number of different species of trees that grow in the area. Trees were selected based on maturity and general healthy appearance. The strategy being that late in the dry season, all larger trees, particularly eucalypts will be tapping water from deep below the surface. Uranium will concentrate in the leaves of these trees if the water they are drawing is


enriched. The samples were between 1 and 2 kilograms in weight and were picked from several different sites from around the tree. Eucalypts (Coolibahs and Bloodwoods) were favored, but in places other species were found at the exclusion of these eucalypts. Several samples were taken from acacias (Gidgee). Regardless, all trees were of similar size and no doubt were tapping the water from similar depths. It would be envisaged that a detailed survey would be more rigorous on the selection of trees for sampling.

Samples were dispatched to Genalysis Laboratories in Perth and were submitted for a range of elemental analysis, the details of which are provided in the 2008 annual report.

To summarize, the results from the vegetation sampling did provide assay results from U and a number of Rare Earth elements that corresponded well with the radiometric anomaly. Many of the responses were subtle, but others were quite marked. The sampling has succeeded in verifying the radiometric data which can be concluded to represent the surfical accumulation of U and related rare earth elements.

Throughout the traverse of the tenement a scintillometer was utilized to detect the level of gamma radiation from the surface. In areas to the west of the Cat Creek anomaly, background readings were in the order of 20 to 30 cps (counts per second). Readings over the anomaly were consistently within the 50 to 70 cps range (twice background) and occasionally readings of over 100 were noted.

4.4 : Soil Sampling

Two bulk soil samples were collected. The loose topsoil was scraped from the surface and a shovel was used to take the sample from a depth of 10 to 30 centimetres. Each sample was 3 to 4 kilograms in weight. Samples were dispatched to Genalysis Laboratories in Perth and were submitted for a range of elemental analysis, the details of which are provided in the 2008 annual report.

The soil samples, from Cat Creek reveal that a much higher percentage of the total uranium content in the samples is present as adsorbed ions on the sediment particles – a situation that would develop as the uranium has been mobilized, transported and then deposited from solution.

A much larger soil orientation survey will be required for geochemical orientation purposes to ascertain whether surface sampling will be effective at Cat Creek.

4.5 : Air Core Drilling

Over the period from the 27.04.08 to the 24.05.08 an air core drill program was undertaken to assess the extent of the subsurface expression of the anomaly. Drill Torque Queensland were contracted to drill 49 holes for a total meterage of 2653m using a TD375-1 8.26cm air-core rig mounted on a 4x4 MAN truck with an onboard 750x350 compressor capable of drilling holes to depths of 150m. The program was overseen by a geologist from Gryphon accompanied by a member of the local Mitakoodi people who was employed as a field assistant for the duration of the project.


Drill spoil was bulk sampled into 4m composites and sent to ALS Townsville for assay. Assay was performed using Aqua Regia digestion (code ME-MS41u). This covers the sample suite U, Cr, Mn, Sn, Ag, Cs, Mo, Sr, Al, Cu, Na, Ta, As, Fe, Nb, Te, Au, Ga, Ni, Th, B, Ge, P, Ti, Ba, Hf, Pb, Tl, Be, Hg, Rb, V, Bi, In, Re, W, Ca, K, S, Y, Cd, La, Sb, Zn, Ce, Li, Sc, Zr, Co, Mg, and Se with the main focus being Uranium and associated pathfinder minerals. Assay results were still pending at the end of the 2008 reporting period and are discussed in the next section.

The lithologies intersected in the air core drilling were much the same in each of the drill holes. From surface, typically the drill holes intersected 2 m of red-brown clayey soils, then 8 to 10m of transported clays, a 1 to 3m sandy, gravelly lag sitting on a weathered mudstone, becoming fresh at about 30m. A number of drill holes were drilled to 100m or more to test for shallow basement, however none was intersected.

A hand held Exploranium GR135 Scintillometer was used to measure radiation counts per second (Cps) for each sample and compared to background levels obtained at a set distance (25m) from the rig. The sample displaying the highest Cps was then assayed for K, U and Th (ppm) using the scintillometer. Assay results using the handheld Exploranium GR135 Scintillometer were generally poor with highs of Potassium 2.5ppm (CTAC048 @ 17m), Uranium 10.2ppm (CTAC032 @ 4m) and Thorium 32.3ppm (CTAC030 @ 9m). Refer Appendix 2 for summary of results. Holes CTAC002 to 015 and CTAC041 were not sampled at the time of drilling due to equipment failure. A brief survey of these holes at the completion of the drill program however indicated results on par with CTAC001, with no significant radiation counts observed.

5: Work Completed by Gryphon Minerals

Assay results from the air core drilling were received and reviewed. The results on the whole were disappointing but low level uranium anomalism is present in the surfical deposits and also locally in the underlying Cretaceous mudstones. The results are plotted in cross sections on Figure 6.

The bottom of hole chip samples retained from the air core holes were reviewed. Previously the logging of the Cretaceous sediments were simplified as either weathered or fresh mudstones. In detail the drill chips reveal a range of lithologies, from organic rich shales, siltstones and fine sandstones of the Allaru Mudstone and Wallumbilla Formation to marly limestones, probably of the Toolebuc Formation.

Assay results and updated collar and geology files for the air core drilling are presented in digital files on the accompanying compact disk.


6: Conclusions and Recommendations

The Cat Creek surface radiometric anomaly corresponds with a Holocene aged fluvial fan deposit that consists of an accumulation of clay atop a basal lag of sands and gravels. These sediments rest upon weathered Lower Cretaceous mudstones of the Eromanga Basin.

Assays failed to return results that suggest any significant enrichment of uranium has occurred in the surficial deposits within the tenement area. Most of the near surface samples can be considered anomalous in uranium relative to the underlying Cretaceous sediments but the maximum uranium assay returned from the near surface was only 5.9ppm. It is considered that results an order of magnitude larger would be significant enough to warrant further follow up drilling.

The maximum uranium assay (22 ppm) returned from the program was from within a Cretaceous siltstone at the bottom of drill hole CTAC023 (128 – 130m). Elevated copper (155 ppm), molybdenum (134.5 ppm), selenium (18.3ppm) and vanadium (1050 ppm) are also present in an interval that begins at 112m.

Additional work to ascertain the significance of this deep interval could have merit, although the depth of the anomalous zone and the low tenor of the assay results detract from the concept of significant mineralization within the Cretaceous. The organic rich intervals of these sediments are elevated in uranium and the results seen in Gryphon’s drilling could just reflect this background content of the mudstones.

It is recommended that Gryphon surrender EPM15543 “Cat Creek”.


7: References

Grimes, K.G., 1973 – Millungera Queensland – 1:250 000 Geological Series. Bureau of Mineral Resources, Geology and Geophysics Australia. Explanatory notes. SE/54-15.

Doutch, H. F., Smart, J., Ingram, J. A., & Grimes, K. G., 1970 – Progress report on the geology of the Southern Carpentaria Basin. Bureau of Mineral Resources. 1970/39 (unpublished).

Laurent, J. 2008, EPM 15543 Cat Creek Annual Report For the Period ended 23/05/2009. Gryphon Minerals Technical Report No. TR463

Smart J., Grimes, K.G., Doutch, H. F., 1972 – New and revised stratigraphic names, Carpentaria Basin. New stratigraphic names. Queensland Government Mineral Journal, 73 (847), 190-201.

Twidale C. R., 1956, - Chronology of denudation in north west Queensland. Bulletin of Geological Society of America, 67, 867-82.

Twidale C. R., 1966a – Geomorphology of the Leichhardt – Gilbert area of northern Queensland. CSIRO, Land Research Service. 16

Twidale C. R., 1966b – Late Cainozoic activity of the Selwyn Upwarp, northwest Queensland. Journal of Geological Society of Australia. 13 (2), 491-4.


Appendices: Refer Digital Data Files on CD

500,

000

550,

000

CARPENTARIALOWLANDS 7,850,000 mN

CAT CREEK EPM155437,800,000 mN

KAJBBI

MOUNT ISA BLOCKDIP

7,750,000 mN

CLONCURRY

MT ISA7,700,000 mN

MALBON

MC KINLAY 7,650,000 mN

DUCHESS

BOUKE RIVER EROMANGA

REGION BASIN

25 0 25 50 75

KilometresFIGURE 1

Map Datum MGA94Zone 54 ProjeProjecct CairnsLoLocationcation

EE Townsville Cloncurry

Gladstone Roma

Brisbane

GRYPHON MINERALS LIMITEDEPM 15543 "Cat Creek"

LOCATION PLANAuhor: S. A. Hibbird Scale: 1:1,250,000Drawn: S. A. Hibbird Report No.: TR463

Date: June 2008 File Name:

350,

000

400,

000

450,

000

7,820,000 mN

qq

q

Kalmeta Station

7,810,000 mN

qqq

qqq

Burleigh Station

7,800,000 mNq Spoonbill Station

qq qq

Spoonbill Homestead

7,790,000 mN

Map Datum MGA94Zone 54

3 0 3 6 9

Kilometres PrProo jejecct

LoLocationcation

EE

Cairns

Townsville

FIGURE 2


PASTORAL LEASE ANDACCESS PLAN

CloncurryGladstone

RomaBrisbane

Auhor: S. A. Hibbird

Drawn: S. A. Hibbird

Date: June 2008

Scale: 1:150,000

Report No.: TR463

File Name:

500,

000

510,

000

7,820,000 mN

7,810,000 mN

7,800,000 mN

7,790,000 mN


FIGURE 3

3 0 3

Kilometres

6 9

PrProo jejecct CairnsLoLocationcation


Gladstone Roma

Brisbane


AIRBORNE RADIOMETRICIMAGE - URANIUM

Auhor: S. A. Hibbird Scale: 1:150,000Drawn: S. A. Hibbird Report No.: TR463


500,

000

510,

000

7,820,000 mN

7,810,000 mN

7,800,000 mN

7,790,000 mN


FIGURE 4

3 0 3

Kilometres

6 9

PrProo jejecct CairnsLoLocationcation


Gladstone Roma

Brisbane


AIRBORNE MAGNETIC IMAGE -TOTAL MAGNETIC INTENSITY

Auhor: S. A. Hibbird Scale: 1:150,000Drawn: S. A. Hibbird Report No.: TR463


500,

000

510,

000

7,820,000 mN

Qra

7,810,000 mN

7,800,000 mN

7,790,000 mN


FIGURE 5

3 0 3 6 9

Kilometres ProjeProjecct Cairns

Geological Key LoLocationcation

Qro Holocene Floodout Deposits EE Townsville

Quartose sand, silt, clay and gravel CloncurryQra Present day channel deposits GladstoneQa Holocene flood plain alluvium Roma

Sandy and silty clay, sand Brisbane Qw Quaternary Wondoola Beds


REGIONAL GEOLOGYAuhor: S. A. Hibbird Scale: 1:150,000Drawn: S. A. Hibbird Report No.: TR463


500,

000

510,

000

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