Springfield Project

Regional Setting

The regional geological setting of the Springfield Project is illustrated in Figure 1. It is located along the continent-wide G2 gravity lineament as described by O'Driscoll in 1990. This lineament probably represents a deep zone of weakness in the earth's crust along which primary diamond source rocks have been intermittently emplaced during periods of local crustal tension.

Of the three diamond prospects in South Australia containing over 100 diamonds, two lie within the Springfield Project area. These are the Eurelia kimberlite dykes and the Springfield Basin Diamond Ridge conglomerates.

Tenements

Through agreements (see below), and applications in its own right, Flinders has management control of eight exploration licences covering a total of 5,874 square kilometres. Details are listed in the table below. Locations are shown in Figure 2.

Agreements

Flinders purchased the mining rights held by Tiger for the Springfield Project tenements. This has enabled Flinders to continue Tiger's obligations in joint ventures with the Springfield Initial Licence Holders (ILH) and Amity International.

The Initial Licence Holders are Messrs Jim Allender and Tony Le Brun and Inca Resources Pty Ltd. They originally applied for title to the Springfield area in 1991. The agreement consisted of an initial option phase whereby Flinders has earned, in stages, a total equity of 75% for the exploration expenditure of $1.25 million. Flinders announced on 30 May 2002 that it had expended a total of $1.25 million and earned a 75% equity in the Project, at which time the Springfield Joint Venture became operational.

During the Joint Venture period equity is determined on a contribute or dilute basis. An Area of Mutual Interest of 30 minutes of longitude and latitude from the outer boundary of any tenement applies to this agreement.

Land Tenure

The type of land tenure over the majority of the project area is Perpetual Crown Lease. There is also a gradually increasing proportion of freehold land to the south as illustrated on Figure 2. There are some small areas of Pastoral Lease in the north-west part of the project and also small areas of Crown Land under roadside and nature reserves.

As far as Flinders has been able to ascertain, Perpetual Crown Lease is likely to have extinguished Native Title. Flinders intends to initially limit activities to Freehold and Perpetual Lease land. It is however necessary to carry out site inspections in accordance with the Aboriginal Heritage Act 1988, prior to carrying out any activities which would disturb the surface of the land.

Previous Exploration

There have been several previous diamond exploration programs in the Springfield Project area over the last forty years. Work by Stockdale in the 1960's established the Southern Flinders Ranges as the first known kimberlite province in Australia. The main results of these programs are illustrated by the 90 clusters of indicator mineral anomalies shown on Figure 3. This also shows that the project area currently contains eight diamondiferous prospects. It is thought that when the Kalumburu Joint Venture (the forerunner to the Ashton JV which discovered the Argyle deposit) partners were assessing which area to focus on, they considered that the South Flinders Ranges and the north east of Western Australia had the best diamond potential in Australia.

There has only been one phase of serious previous diamond exploration on the Springfield Project area and that was by Swan, Freeport and Poseidon between 1979 and 1991. Previous exploration for base metals is not considered relevant. Swan Minerals and its successors held a similar area to the current project area, and proceeded from first-pass drainage indicator sampling to location of diamond-bearing conglomerates on Diamond Ridge between 1979 and 1982. In 1983 they carried out bulk sampling of the diamondiferous conglomerates and recovered 120 diamonds totalling 1.06 carats from 1000 tonnes of conglomerate.

As these results were clearly uneconomic, Freeport turned to the area they thought contained the source of the diamonds to the west and south west of Diamond Ridge. Exploration of this area, mainly via loam sampling and geochemistry, proved negative for kimberlites. Freeport also drilled five diamond drill holes to Adelaidean basement under Diamond Ridge. These also failed to intersect any kimberlite. A large area around the Springfield Basin was drainage sampled with generally negative results. The few positive results were thought to have been derived from the Diamond Ridge area. In late 1990, Poseidon took over Freeport and relinquished the Springfield Project area in order to concentrate its diamond activities on the Bow River alluvial diamond mine.

The current licence holders took up the tenure and carried out gravity and airborne magnetic surveys which defined several new targets at Springfield and Boolcunda. In 1994, K Wills was commissioned to carry out an in depth review of previous exploration. This resulted in a series of recommendations for future work. The Springfield ILH made several attempts to find a joint venture partner between 1995 and 1997 and in early 1998, reached the agreement described above with Tiger International Resources Inc.

1998-99 Exploration

A program was set up in March and April of 1998 which consisted of:

• Bulk sampling to check Freeport's work, to locate larger diamonds and to provide additional information through paleocurrent studies and indicator mineral analysis on possible primary source locations

• Enhancement of airborne magnetic processing, to produce better quality images for interpretation of possible kimberlite targets

• Completion of an undercover drilling program to search for kimberlites

Each of these segments was carried out and the program modified as results became available.

Diamond Ridge is in the central foreground, where trench sites are visible as white patches.

Regional Regolith Mapping

In mid November 1999, consultant geologist Dr Richard Russell commenced regional reconnaissance regolith mapping with an emphasis on understanding landscape evolution over the project area. To aid this work, a recent Landsat Thematic Mapper image was purchased, and Jim Allender produced various images designed to enhance regolith features. This work has improved our understanding of stream and gravel transport directions over time, hence aiding location of indicator and diamond primary sources.

Terrain has been classified into erosional and depositional regolith units. This enables efforts to be focused on erosional regolith units where it is easier to track anomalous indicator mineral results to their primary sources. A number of structures have also been identified, a deeper understanding of which may also aid in kimberlite location.

Another benefit of the landscape evolution studies has been the implications of the new model. It was previously thought that the current landscape had been eroded from a high-level pre-Permian peneplain, which existed at the time of kimberlite emplacement. A consequence of this was that some part of any kimberlite's diatreme facies would have been eroded. Now that we see the landscape as the product of uplift of a low (near sea) level pre-Permian peneplain, it is likely that only a small proportion of kimberlite diatreme would have been eroded.

Regional Indicator Mineral Review

A review of previous drainage indicator sampling in the project area was carried out by John Howard. The results of this review are also illustrated on Figure 3. A total of 90 drainage indicator anomalies were recognised and eight prospects containing diamonds were also recognised. The distribution trend of these stones is close to the eastern edge of the G2 lineament, and they define a zone of major prospectivity in the project area. Most work to date has been focused on the follow up of only six of the 90 known indicator anomaly clusters. Follow up of these clusters will generate a significant amount of additional drainage indicator mineral sampling if their sources are to be located. Initial work will consist of resampling anomalous sites to check their validity and to obtain minerals for microprobe chemical analysis in order to assess each anomaly's diamond potential.

A sample site in Boolcunda Creek

Geophysics

A review of available airborne magnetics over the entire project area has been carried out. A detailed image at 1:25,000 scale of the project's core area was produced and interpreted. More than 65 magnetic anomalies, which could be caused by kimberlites, have been recognised. Only two of these have been drill tested to date.

Bulk Sampling

The first major activity in 1998 was bulk sampling of 1000 tonnes of diamond-bearing conglomerate from Diamond Ridge. A total of 56 diamonds totalling 1.63 carats was recovered from the bulk samples. Diamonds were only recovered to 1 mm minimum size. Despite the smaller sieve size range, larger stones with higher weights were recovered when compared to Freeport's work. A further seven small diamonds were recovered from the indicator mineral samples. The largest stone was a clear white macle-dodecahedron with a diameter of 3.5 mm and a weight of 0.34 carats. This is the largest known diamond to be recovered from the Southern Flinders Ranges to date.

Local Regolith Mapping

During April and May 1998, Dr Richard Russell carried out new regolith mapping based on photo interpretation of 1:40,000 scale colour air photographs and new fieldwork. The resulting map showed where concealed kimberlites could be located with an undercover drilling program.

Undercover Drilling

Programs of undercover drilling were undertaken in June 1998 and December 1999, to test the idea that undiscovered kimberlites could be present under shallow regolith cover in the Springfield area. A total of 836 metres were drilled in 114 holes. The results downslope of Diamond Ridge showed that a sizeable area of anomalous undercover minerals was present and that the technique could work effectively.

Trenching

In his second mapping project carried out in August 1998, Richard Russell worked on a project to determine the likely source directions for the conglomerate units that are widely present at the base of the Springfield Basin. To this end additional trenches were cut across basal conglomerates at approximately one-kilometre intervals around the Springfield Basin. Most of the basal conglomerate units sampled contained kimberlitic indicator minerals as shown on Figure 4. Most of the paleocurrent directions suggested sources outside the margins of the basin.

The results from Trench 26 were most encouraging. Sample T26-1 contained over 100 very fresh chromites and 169 very fresh pyropes, including about 10% green knorringitic (high chromium and magnesium) pyrope. Knorringitic pyropes are a strong indicator of high diamond contents in their primary source rock. Probe results on indicator grains suggested that the main sources indicated on Figure 4 are all likely to be diamondiferous.

Interpretation of Springfield Basin Results

Knowledge of kimberlite emplacement models and a review of previous work led to the realisation that one of the most-likely locations for the source of the Diamond Ridge diamonds is under the Springfield Basin. This has been previously suggested by Freeport, the Springfield ILH and many visitors to the project area (eg Warren Atkinson in 1999). In his 1995 review of previous work Kevin Wills mentioned that an under-basin location was possible.

A model of kimberlite emplacement was suggested to Flinders and this model has provided much stronger support for the concept of kimberlites under the Basin. The idea is basically that the Springfield Basin represents a sediment-filled volcanic crater or subsidence depression that was formed by the initial phase of a kimberlitic volcanic eruption.

In this hypothesis, kimberlite volcanic ash is thrown out around the vent and is later incorporated into Permian glacial sediments to explain the diamonds and indicators in basal Springfield Basin conglomerates. This process explains why paleocurrent directions all point towards the centre of the Springfield Basin, yet the sediments include a kimberlitic signature (diamonds and abundant indicators) derived from a primary source located under the basin.

This model is illustrated on Figure 4. It is thought most likely that any volcanic eruption creating a crater would be focused on the deepest part of the crater. From previous work by Johnson in 1960, basin sediments are thought to be up to 400 metres deep.

Drainage Sampling

Recent work shows that there are many more positive indicator mineral results around the Springfield Basin than were discovered by previous workers. This is thought to be due to three factors connected with previous sampling.
1. Generally smaller samples
2. Samples were concentrated in the field
3. Samples were only observed to 0.4 mm
Recent samples were larger (20-40 kg), concentrated in the laboratory (IDL) and observed to 0.3 or 0.2 mm.

In August 1998, Barbara Anderson carried out an 80-sample detailed drainage survey at a nominal spacing of two kilometres along creeks, over an area within about six kilometres of the margin of the Springfield Basin.

Results are shown on Figure 5. A total of about one third of the initial samples collected gave positive results, including many in locations where Freeport had previously returned negative results. Some of the positive results with low numbers of worn indicator grains are probably from secondary sources, such as the Springfield Basin. However, it was most encouraging that several of the new anomalies were draining areas not connected to the Springfield Basin and contained numerous fresh or very fresh indicator grains suggestive of local primary sources.

Six sites were chosen as the most prospective and were followed up with further infill sampling in early November 1999. These prospects are KA - 12A, 12B, 101, 113, 117 and Hut Hill from the Kanyaka Project (see below).

On Source Prospecting

In May 1999, at the five KA sites a systematic program of mapping, ground magnetics and soil sampling was carried out. At Hut Hill, only a new ground magnetic survey was completed.

The most promising results from this work were at the KA - 12A, 12B, 113 and Hut Hill Prospects. Results at KA 101 and 117 were suggestive of smaller sources. A set of representative results from the KA - 12A prospect are shown in Figure 6. In this figure a digital elevation model (6a) shows the main target to be associated with a topographic depression. The ground magnetic (6c) and soil sample results (6f) also show anomalies located near the same topographic depression. The regolith map (6b) shows that the depression contains sedimentary cover of various types, which could be masking a kimberlite. The location of a possible kimberlite source at KA - 12A is shown in Figure 6(e).

Calabrinda Prospect

A possible primary source for diamonds was found at the Calabrinda Prospect. Drainage indicator mineral sampling results included abundant very fresh picroilmenites, chromite, pyrope, phlogopite and one microdiamond. In late 1998, John Howard mapped the prospect prior to digging a trench and drilling four RAB holes. The trench and drillholes suggested that the diamond and indicator minerals are located in a shallow Tertiary sedimentary basin and that the primary source cannot be far away, probably within one kilometre.

In 1999, John Howard carried out infill drainage indicator sampling at the CC 50, 53 and Hut Hill Prospects and part of the Wilson Valley anomalies. Further anomalies were returned and follow up exploration is planned.

Hut Hill Prospect

The most promising prospect on the Kanyaka EL so far is at Hut Hill. Here a train of drainage indicator anomalies was followed to an area where sample KA - 311R gave over 1000 "on-source" kimberlitic picroilmenites. This area was mapped and ground magnetics carried out. An anomalous magnetic high located about 500m up-slope from the on-source picroilmenites is possibly caused by an undiscovered kimberlite.

2002 Exploration

Work recommenced on the Springfield Project following the successful ASX listing of Flinders Diamonds Ltd on 20 February 2002. Since February exploration has focused on testing the global emplacement model (GEM) outlined in our Strategy statement.

Three geophysical survey techniques - gravity, seismic reflection and moving loop TDEM - have been used with the aim of locating the deepest part of the Springfield and Boolcunda Basins and identifying the potential depth to target prior to drill testing. A second aim has been to identify the most effective and efficient method of defining deep targets under the prevailing basin conditions, which could be employed to explore other similar basins in the future. A brief summary of each method is outlined below.

Gravity Surveying

Gravity surveys at 200m x 200m station spacing across the Springfield and Boolcunda Basins were completed in stages during March-April 2002. Additional stations, infilling to 100m x 100m spacing, were read within a central low-density zone identified at Springfield. In total 387 stations were read at Springfield and 123 stations at Boolcunda.

Well-defined low-density zones identified in both were interpreted to represent the thickest sequence of basin sediments resting on higher density Proterozoic basement rocks. These zones were then used as a guide for locating seismic reflection lines as outlined below.

Seismic Reflection Surveying

2D seismic reflection surveys in the Springfield and Boolcunda basins were undertaken in May 2002. Seismic acquisition was based on a 20-fold survey recording at 10m stations. The non-explosive MiniSosie survey method was also trialled on one line (SpB-3) at Springfield. Both methods appear to have been effective in identifying basement and clearly defining the lowest point of the basin within the confines of the surveys.

The Springfield survey comprised three lines which were surveyed across the central gravity low. Two NW trending parallel lines (BL-1 and BL-2), for a total 3.48 line km, were surveyed at Boolcunda.

Interpretation of the data has identified a likely depth to basement at the lowest defined point. At Springfield this depth is estimated at approximately 485m and at Boolcunda the depth is estimated as approximately 360m.

Moving Loop TDEM

Moving loop Time Domain Electromagnetics (TDEM) surveying was trialled along seismic lines SpB-1 and SpB-3 at Springfield to compare with seismic results. The result showed a strong correlation with interpreted seismic reflection defining the basement unconformity both in terms of basin basement topography and estimated depths.

Further TDEM surveying may be carried out at Springfield and Boolcunda prior to drill testing.

Drill testing of the deepest points defined within each basin is planned for the near future.

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