ELSMORE

The Elsmore project is based on ELs 6196 (“Elsmore”), 7177 (“Macintyre”) and the northern part of EL 7349 (“Kings Gap”), all of which are held 100% by Malachite (Figure 1). These tenements are located in northern New South Wales, about 20km east and southeast of Inverell and about 25 km northeast of the Company’s Conrad silver project. The two ELs cover approximately 450km² but exclude the Elsmore Tin Mine, which occupies about 2.5 km² of land, with attaching mineral rights, in the northern part of EL 6196. The Company explored this land under an option agreement with the current owner in 2004 but allowed the option to lapse when results obtained at the Elsmore mine were found to be inferior to those obtained on the Company’s own ground.

The Elsmore mine was the first commercial tin mine in Australia and has produced tin from various alluvial deposits intermittently since 1871. Newstead, located 5km southeast of the Elsmore mine, has a similarly long history of mining but appears to have been less extensively worked over the years. Newstead is currently the focus of the Company’s exploration at Elsmore, with particular emphasis on a tin-bearing paleo-alluvial deposit, known as the Karaula Lead.

GEOLOGY

Tin mineralisation occurs widely in the Elsmore district, where it is hosted by the late Permian to early Triassic aged Elsmore and Tingha Granites. Large quantities of tin were produced in the district in the late 19th and early 20th century, mostly from alluvial or eluvial deposits derived from the granites, but several hard rock mines were also developed. Primary tin mineralisation, occurring as the mineral cassiterite, is generally strongest in granite that has been altered to greisen (i.e. rock rich in quartz and mica). The most intense greisenisation occurs in discrete veins that form stockwork and sheeted zones, although masses of pervasive, strong greisenisation are also common. The tungsten mineral, wolframite, is commonly associated with cassiterite in the Elsmore district. Specimen quality cassiterite crystals, intergrown with euhedral aggregates and mega-crystals of smoky quartz, are quite abundant within the Elsmore greisen deposit. Much of the historic tin production came from mining of buried paleo-channels, or simply from sluicing of weathered tin-bearing granite.

NEWSTEAD PROSPECT

Field work at Newstead has identified a large greisen system, comparable with that at the Elsmore mine, although less intensively worked. Good grade tin mineralisation has been found in outcrop (up to 1.55% Sn) and silver is also significantly anomalous at surface (up to 66 g/t Ag). Tin occurs in areas of massive greisen as well as in prominent quartz veins. Further sampling, leading to drilling, is planned for the Newstead greisen deposits.

The recent focus of exploration activity at Newstead has been the Karaula Lead, which occurs at surface as semi-consolidated, sandy and pebbly alluvium that seems to be a blanket or sheet deposit, perhaps originally a lake bed, partly surrounding Bruce’s Hill. The alluvium is underlain by granite and greisen. Its extent has not been completely defined but it does appear to cover at least 1 sq km in area. Old workings, in the form of shallow pits and shafts, up to 8m deep, are developed in the Karaula Lead in several places and free grains of the tin mineral cassiterite are visible on surface in some areas.

Malachite has sampled the Karaula Lead in outcrop for assessment of the tin content, both quantitatively (by tin assay) and qualitatively (by treatment with a cone concentrator). The results have been highly variable but encouraging, as there are many good tin values, commonly in the 0.5 to 1kg/cu m range, but up to 3.5kg/cu m. The Company is now evaluating various treatment methods that may be applicable to the Karaula Lead material. This includes a dry processing technology, being developed in Germany, which if applicable, could offer a very low cost, low risk start up option for development of the Karaula Lead.

SHEEP STATION HILL PROSPECT

Sheep Station Hill is situated within the eastern part of the Elsmore greisen system but is not part of the Elsmore mine property. At Sheep Station Hill the greisen veins are typically 0.5 to 2.5m wide, with near vertical dips, and individual greisen veins can be traced for several hundred metres along strike. Numerous such veins traverse the hill, striking generally NNE, and the cumulative strike length of mineralised greisen veins is over 3km. A number of cross-cutting veins and areas of massive greisen also occur. Some of the greisen veins contain spectacular, high grade aggregates, as illustrated adjacent, that have been the target of mineral specimen collectors for years.

Sampling across greisen vein outcrops by Malachite has produced some very encouraging results, with tin values commonly around 0.1 to 0.6% Sn, but up to 2.3% Sn. Tungsten, copper, molybdenum and silver values are also highly anomalous, with up to 0.69% WO3, 0.33% Cu, 0.086% Mo and 32.5 g/t Ag in samples across vein widths in outcrop. Coarse grained wolframite and molybdenite are also locally very prominent in outcrop.

Drilling at Sheep Station Hill has produced several high grade tin intercepts that compare favourably with the highest tin and tungsten grades at surface. Copper is also present in the greisen veins at depth, with assays up to 0.57% Cu, while molybdenum values are generally below 100ppm Mo, but are occasionally much higher, up to 0.14% Mo. A short programme of core drilling followed earlier RC drilling at Sheep Station Hill for comparative purposes. Generally there was reasonable consistency between RC and core results but the nuggety nature of the tin and tungsten was even more apparent in core, with very coarse grained cassiterite and wolframite observed in places. One off the core holes intersected a spectacular 0.9m @ 7.2% Sn and 4.0% WO3, represented by very coarse grained cassiterite and wolframite crystals and aggregates of crystals up to 5cm across. These results emphasise the “nuggety” nature of tin and tungsten mineralisation at this prospect.

MACINTYRE

Exploration on the Macintyre licence (EL7177) is still at an early stage, involving stream sediment sampling, geological mapping and prospecting.

KING’S GAP

The northern portion of the King’s Gap EL covers an area with abundant old tin workings (Figure 2), including hard rock, surface alluvial and deep lead workings. The Company’s exploration of this area is at an early stage.