Cathedral Rocks encompasses an area of historic base-metals production. Elementos considers that the district is highly prospective for Intrusive Related Gold systems. There has been no previous exploration for gold or molybdenum.

Location and access

Cathedral Rocks, comprising a 128 km² lease, is located 50 kilometres east of Armidale, northern NSW. The Hillgrove gold and antinomy mine, which contains 6.25 million tonnes at 4.3g/t gold and 1.6% antinomy, is located 25 kilometres east of Cathedral Rocks.

Access is by paved roads and a network of farm tracks. Excellent support infrastructure and local services are available in Armidale.

a) Reimburse Mr Roach’s prior exploration costs up to $5,000;
b) Meet the minimum expenditure and reporting requirements;
c) Pay $2,500 within 7 days of execution of the agreement;
d) Pay $5,000 within 12 months of execution of the agreement;
e) Pay $15,000 within 24 months of the execution of the agreement;
f) Rehabilitate any environmental disturbances caused during exploration activities; and
g) Upon exercise of the option, purchase the tenement for $150,000 cash.

Historical exploration

Cathedral Rocks is centred on the historic reef and alluvial tin fields of Yaroona, Lauder and School Gully which produced tin in the early 1900's. Whilst a number of gold and base metal anomalies were identified in exploration during the early 1950's, it wasn't until the 1970's that CRA Exploration drilling intercepted a number of significant base metal mineralised zones. Crucially, CRA Exploration did not analyse for gold and molybdenum, now considered the most prospective targets based on a new interpretation of the possibility of intrusion related gold systems (IRGS) within the regional geology.

Mapping and sampling programs, targeting regions known for gold, molybdenum, and tin mineralisation are well advanced. Two anomalies have been identified from historical records and are the focus of the current field campaign. Mapping has identified lead, zinc and tin mineralisation in an alteration related to dykes cutting the boundary of granites and their host rocks.

A molybdenum anomaly has been identified from a review of historical exploration data, which is considered significant due to the strong association of gold with molybdenum in IRGS systems. This prospect, located in the east of the Cathedral Rocks tenement, has been reported to have a number of soil samples with highly anomalous molybdenum values, but was historically never analysed for gold. It is considered likely that the area is prospective for gold, molybdenum, silver and tin.

Recent exploration activities

Mapping and sampling of this prospect is scheduled to begin early in July 2010. Preliminary results have returned geochemical signatures which appear to confirm Intrusive Related Gold (IRG) style mineralisation in some parts of the property.

School Gully Creek

Mapping and sampling in the vicinity of the historic School Gully tin workings have indicated the presence of IRG type mineralisation with selective rock sample results returning strongly anomalous gold, arsenic, bismuth and tin, with low base-metals and low silver-gold ratios, which is common in IRG gold system in northern New South Wales. Auriferous mineralisation occurs in the contact zone of the Round Mountain granite and its’ baked sedimentary wallrock. Selective rock-chip sample results include 1.03g/t Au, 5.96g/t Ag and 1.82% As, 0.08g/t Au, 8.03g/t Ag and 0.21% As, 2.61g/t Ag, 0.3% Mo and 0.11% Cu; and 87g/t Ag, 0.12% Bi and >500g/t Sn .

From the 30 samples taken around the historic tin workings, 11 samples returned grades exceeding 0.8g/t Au, 5g/t Ag, 0.15% As or 500g/t Sn.

Yaroonah

Base-metal mineralisation has been identified in dykes from rock chip sampling at Yaroonah. Select rock chips returned grades including:

• 4.87%Pb, 5.41%Zn and 188g/t Ag; and
• 3.15%Pb, 6.88%Zn and 51.1g/t Ag.

Yaroonah samples also contained up to 0.3% molybdenum and 189g/t silver from in selective samples. Even thought there is very limited outcrop, from a total of 22 samples around the old workings, 10 returned grades of over 0.5% lead, 0.5% zinc or 10g/t silver.

(Au – gold, Ag – silver, Bi – Bismuth, As – Arsenic, Sn – Tin, and Cu - Copper)

Prospectivity and exploration target

Intrusive Related Gold Systems are a style of mineralisation where the minerals are deposited in halos in and around large granitic intrusions characterised by suites of pale felsic granites (Leucogranties). Gold, molybdenum, and tin deposits are known to be related to intrusives. The Round Mountain Adamellite is at the southern end of a chain of I-type leucogranites, which hosts the Timbarra Gold Mine 200 kilometres north, as well as the Kingsgate and Seven Hills deposits in between. The Company is focusing on an area of hornfels (baked country rock) that is suspended in the roof of the Round Mountain Adamellite. Hornfels are a brittle rock that forms fractures and open spaces easily when faulted, which can then be mineralised by the fluids generated from the intrusion.

Drilling that has occurred has been in a localised area using outdated exploration models. No exploration has been undertaken for gold, or an intrusive related gold systems style deposit.

New understanding of intrusive related gold systems shows that Cathedral Rocks has the required structure and lithologies, indicative of excellent potential for large bulk tonnage mineralization, which could be exploited by open cut mining methods. Intrusive related gold systems are potentially economically significant deposits.

Exploration strategy

On-going exploration will involve mapping and rock chip sampling to extend and delineate the known zones of mineralisation and identify new targets.

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