G2

Regional Setting

Location of the G2 Project, astride the G2 Gravity Corridor, is shown on Figure 1 and Figure 8. The Peake and Denison Ranges area has been subjected to significant diamond exploration in the last 30 years following reports of a one carat diamond from the area in 1894. There is abundant geological evidence in the area for the presence of pre-Mesozoic diamondiferous kimberlites, which have been eroded to produce secondary sources in paleo-gravel horizons at the base of the Mesozoic succession. The aim of the program is to locate commercial diamondiferous kimberlites hosted by Permian Basement under the shallowest Mesozoic cover on the G2 Gravity Corridor.

A veiw from the southern G2 tenement area across the barren gibber plain towards Mount Allalone.

Tenements

Flinders made application for two full size EL's just south of the Peake and Denison Ranges on 3 March, 2000. The tenements were granted on 13 October 2000. Details are tabulated below:

Land Tenure

This project lies entirely within pastoral leases in the north of South Australia. In accordance with Part 9B of the Mining Act and the regulations under the Native Title (South Australia) Act, the statutory notices for the ELs have been served and the Public Notices advertised. Negotiations with the Kujani and Arabunna claimants have commenced.

Previous Exploration

There has previously been significant reconnaissance diamond exploration in this area with a one-carat diamond reported from gold workings on the western margin of the Denison Range by HYL Brown in 1894, and six diamonds located by Stockdale near Edward Creek. Also, there are numerous kimberlitic indicator minerals known in the region. Many of these are from third-order sources, that is, from creeks having eroded through basal Mesozoic sediments which are themselves secondary sources thought to have been derived from kimberlites emplaced during the period 270 to 170 Ma.

Previous work in the region was dominated by two main exploration strategies. Firstly, detailed follow up of diamond indicator drainage anomalies led to numerous secondary sources in basal Mesozoic sediments. Secondly, testing of airborne magnetic targets in the vicinity of secondary or third-order sources generally proved magnetic hematite concentrations to be the source of anomalies. This drilling has also located some dense concentrations of kimberlitic indicator minerals in basal Mesozoic sediments with relatively fresh wear characteristics suggesting local primary sources as described by David Jones in 1990.

Flinders believes that the former exploration strategies demonstrated a lack of willingness to follow up drainage trails of secondary indicators to find primary sources as would be expected, for instance, with gold panning. Consequently, Flinders' exploration strategy involves tracking down primary sources via drilling to follow the paleodrainage trail of secondary indicators. This involves utilisation of the undercover drilling technique which was developed by Tiger International at Springfield. This work, and analysis of other drainage anomalies in the Springfield area, showed that anomalous drainage or colluvial cover results can be present over areas of from 10 to 50 square kilometres. They can be detected by routine kimberlitic heavy mineral analysis on composite drill samples from the base of overlying unconsolidated cover. It is proposed to use these strategies on the Francis and Margaret ELAs.

Proposed Program

Flinders plans to carry out a sampling program utilising undercover drilling to avoid surface contamination of sample material. Sampling density for this drilling program will be one sample per 25 square kilometres which will be achieved using a staggered grid on 4.8 km centres. This is a spacing of 23.04 square kilometres per drill hole. The staggered drill hole pattern will allow for followup of positive samples by using a 1.6 km square grid pattern involving an additional 8 holes per original hole drilled.

It is proposed to drill approximately 10 holes on EL 2758 and approximately 72 holes on EL 2759, subject to access. These are shown on Figure 1. The drill hole locations were planned using the following criteria:

• Shallow Mesozoic cover - less than 40m

• Avoiding areas of artesian water

Drilling will be carried out by a light weight RAB rig and a 20 - 40 kg composite sample will be collected from the basal Mesozoic cover from each drill hole.

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