The Conrad silver mine is situated about 25 km south of the town of Inverell, in northern NSW, where Malachite's tenements cover approximately 375 km² and are held 100% by the Company (Figure 1).

Key features of the Conrad project are:

• Mined from 1898 to 1912 and again from 1948 to 1957
• Mining extends over a 1.5 km strike length and to a maximum depth of 267m (Figure 3)
• Produced over 3.5 million ounces of silver
• Average historic grade of about 600 g/t (20 oz/t) silver
• Co-product lead (8%), zinc (4%), copper (1.5%) and tin (1.5%)
• Located on mining leases and extending on to EL
• Malachite's interest 100%
• Drilling has intersected mineralisation in the Conrad Lode along a 2km strike length and to a maximum depth of 500m below surface
• The lode structure extends along strike for a further 5km and is open at depth
• Interim global mineral resources comprise 3.5 million tonnes at 5 oz/t silver equivalent
• This represents 8.8 Moz of contained silver, or 17.7 Moz of silver equivalent

Historical workings were developed mainly on the Conrad lode, which was accessed through the Conrad, King Conrad, Moore and Davis shafts. Some ore also came from the King Conrad and Alwell’s lodes. The first production period extended from 1898 to 1912, when the mine closed due to industrial relations problems. It was then largely inactive until 1948, when Broken Hill South Ltd. commenced underground development. The mine resumed production from 1955 to 1957, but then closed due to falling lead prices; it has been idle ever since.

Since early 2007 exploration at Conrad has been very largely focussed on drilling to delineate mineral resources within, beneath and along strike from the old workings that make up the historic Conrad Mine. To the end of September, 2008, approximately 16,000 metres of reverse circulation percussion and diamond drilling has been completed at Conrad. Based on drilling to June, 2008, an interim global Conrad resource comprising 3.5 million tonnes containing 8.8 million ounces of silver, or 17.7 million ounces on a silver equivalent basis, was reported in August, 2008. For details of this interim mineral resource, please see Table 1. A new, upgraded mineral resource estimate will be reported towards the end of 2008.

The mineral resource at Conrad is contained in three lodes, namely the Conrad Lode, the King Conrad Lode and a low grade, bulk tonnage style known as the Greisen Zone. Figure 4 shows the relationships between these lodes at Conrad and Figure 5 is a block model showing the resource disposition within the Conrad Lode, as currently known. The rare and highly valuable metal, indium, is present in significant amounts at Conrad, with values up to 136g/t In. Given that indium is currently worth significantly more than silver (i.e. around $US750/kg In), this metal has the potential to add important extra value to the project. A strong correlation between zinc and indium at Conrad (correlation coefficient of 0.9) indicates that indium is likely to report to a zinc concentrate.

Conrad Lode – The greater part of the delineated mineral resource at Conrad is contained within the Conrad Lode, which is the dominant feature of the Conrad system. This main lode has now been drilled over a strike length of 2km and to a maximum depth of 500m. Importantly, the mineralisation in the Conrad Lode is open in both directions along strike (but especially to the southeast) and at depth. Most of the metal value in the lode is contained within a narrow, high grade core zone, generally between 0.5 and 1m wide, that ranges from dominantly massive sulphide, with minor quartz, to dominantly quartz, with subordinate sulphides. At the northwestern end of the Conrad Mine area the ore minerals in the lode are principally sphalerite and galena, with some chalcopyrite, cassiterite and stannite. Silver is present mainly as tetrahedrite, pyrargyrite and acanthite. Gangue minerals are mainly pyrite, pyrrhotite, arsenopyrite and quartz. At the southeastern end of the Conrad Mine area the lode tends to be somewhat different, with subordinate galena and minor sphalerite and more abundant chalcopyrite, stannite and cassiterite, in a mainly quartz-pyrite gangue.

In most places where it has been intersected in drilling the high grade core of the Conrad Lode is contained within a lower grade envelope that is expressed as a zone of disseminated sulphides and narrow sulphide veinlets, from 1 to 20mm wide, within altered granite. The mineralised envelope can be developed over widths ranging from 1m to as much as 5m and its presence means that any dilution of the high grade core zone at the mining stage would be by mineralised rather than barren material.

Most of the drilling completed to date within the Conrad Lode is widely spaced (commonly holes are 100m apart along strike and down dip), so much of the resource delineated within this lode is currently in the Inferred category under the JORC Code (Table 1). Infill drilling is aimed at upgrading this resource by targeting areas of higher grade, such as those shown in Figure 3 and the newly recognised silver-copper-tin dominated mineralisation, which is not yet included in resource estimates, at the southeastern end of the Conrad system.

King Conrad Lode – This lode occurs only at the northwestern end of the Conrad Mine area and seems to represent a split off the main lode (Figure 4). Mineralogically it is fairly similar to the nearby Conrad Lode, although it tends to be narrower and can be of high grade. For example, drill hole CMDD50 intersected the King Conrad Lode from 84 to 85.17m for a 0.5m true width intercept that assayed 1,715g/t Ag, 3.9% Cu, 16.1% Pb, 5.0% Zn, 3.4% Sn and 79g/t In. A mineralised envelope is present at the King Conrad Lode but it also tends to be narrower than in the Conrad Lode case, except where the King Conrad Lode splits off from the Conrad Lode.

Only about 15% of the mineral resource so far delineated at Conrad is contained within the King Conrad Lode but this is quite an important component as it is near surface and should be readily accessible through a refurbished King Conrad shaft.

The King Conrad Lode is still open to the northwest, although it seems to have narrowed down to probable sub-economic widths. Down dip it appears to merge with the Conrad Lode at about 300m depth.

Greisen Zone – This body of mineralisation occurs between the Conrad and King Conrad Lodes at the northwestern end of the Conrad Mine area (Figure 4) over true widths ranging from about 20m to 40m. The mineralisation within the body is generally of low grade (around 100g/t silver equivalent; Table 1) and is similar in style to that in the envelope zones that surround the two main lodes. Sulphides occur as disseminations and small veinlets, ranging from weakly to strongly developed and locally within the Greisen Zone there are wider high grade veins whose affinities are uncertain.

Mineralogically the Greisen Zone differs significantly from the high grade lodes. The ore minerals are galena, sphalerite and cassiterite, with the silver occurring at least in large part as native silver, while the gangue minerals are pyrite and pyrrhotite, all contained in a siliceous and micaceous (i.e. greisenous) host rock. There is virtually no copper and arsenopyrite is very subordinate.

Only about 7% of the interim resource estimate is contained within the Greisen Zone but that may well grow as new drilling infills the near surface part of the body, which crops out a little to the northwest of the King Conrad shaft. The significance of the Greisen Zone is based on its width and near surface location that potentially make it amenable to low cost open pit mining. Moreover, a pit to extract the upper part of the Greisen Zone would also allow some of the high grade parts of the nearby Conrad and King Conrad Lodes to be extracted in this way.

In April, 2008, the company purchased a property, known as “Jadree”, which adjoins the Conrad mining leases at their southeastern end. Jadree includes a renovated residence and approximately 340ha of freehold land. The residence is currently being used as a field camp and office for Conrad, while adjoining land is being utilised as a drill core logging, handling and storage area. In the longer term it is envisaged that some of the Jadree land would be used for Conrad mine infrastructure, including a mine office, plant site, tailings dam and related facilities.

The results of drilling to date at Conrad are very encouraging and support the Company’s view that the Conrad mine will see a third incarnation as a modern, underground mining operation (possibly together with a small open pit based on the Greisen resource) producing a mix of metals. For further details of recent drilling results and updates on continuing exploration and evaluation of the Conrad project please go to ASX Announcements.

More photos from the Conrad Project can be found in the Photo Gallery.