The Millenium Mining Leases cover a north trending line of historic shallow mines with cobalt and copper mineralisation occurring in a broad structure, indicated in historic drilling. Elementos has also applied for further exploration tenements along the strike of the main structure and nearby.

Location and access

Millenium is located in Queensland, 35 kilometres northwest of Cloncurry, accessible via a well maintained gravel road. Millenium is situated in the world class Mt Isa Inlier, a significant gold and base metal producing region, host to world class copper/gold and lead/silver/zinc deposits.

The project area is situated within a highly mineralised district, 10 kilometres from Cudeco's Rocklands copper/cobalt project, which is an emerging major discovery. The district has established mining, processing and transportation infrastructure in close proximity to the major regional centres of Mt Isa and Cloncurry.

Tenement acquisition agreement

In August 2009, Elementos signed an option to purchase agreement with Forte Energy NL to acquire the Millenium Mining Leases (ML’s 2512, 2761, 2762, 7506, and 7507). As consideration under the option agreement, Elementos paid $20,000 on signing and extended the option agreement another six months by the payment of a further $20,000. Upon exercise of the option, Elementos will acquire the Mining Leases for a purchase price of $160,000, payable in cash or shares, at the election of the Company. A Deed of Variation was agreed in the September quarter 2010 to allow additional time for the renewal of the Mining Leases.

Elementos has also applied for a further 154 square kilometres of new exploration permits covering a major north-easterly trending structural corridor.

Historical exploration

Milenium has a number of historical copper mine workings and prospects that were operated around the turn of the century. The Federal mine exploited copper in bornite and chalcopyrite down to 135 metres and produced some 10,000 tonnes of ore at exceptionally high grade (25% copper). Other workings along a shear “lode” structure were less successful for copper mining, but the lodes were noted to be rich in cobalt.

Between 1964 and 1991 a number of companies explored the region targeting both copper and cobalt mineralisation. Carpentaria Exploration Company Pty Ltd initially completion field work and percussion drilling in 1964 and outlined a number of positive copper results. Tasman Minerals N.L completed a five hole diamond drilling program in 1970. Holes FD01, FD03 and FD04 were drilled to test for extension of the Federal Lode whist FD02 (183.1 metres) and FD05 (121 metres) were drilled to test the thick lower grade cobalt-copper mineralistion. Encouraging results were reported, confirming the thickness of the cobalt mineralisation including a best intersection in FD02 (95.4-106.1 metres) 10.7 metres @ 2,333ppm cobalt and 2.02% copper.

Another three diamond holes were subsequently drilled in the northern parts of the mining leases and the table below outlines some of the results demonstrating the large thickness of mineralisation encountered.

A number of holes in the southern end of the lease also encountered mineralisation but generally the thickness was lower than the northern zones but the cobalt grades were high.

There does appear to be some continuity of a higher grade cobalt zone between the holes and this will need to be tested with further drilling.

Most of the historical exploration (pre-1991) was aimed at delineating high grade copper mineralisation, with little emphasis on the cobalt, which was then in the range of US$5/lb to US$/10lb. With prices now above US$15/lb the cobalt is the principal target.

Recent exploration activities

The Company’s first geological mapping and sampling program at Millenium, was completed in June 2010. Significant results included:

• Two rock chip samples in the north returned grades of 1.58% Cu and 11% Cu including a gold intercept of 1.94 g/t;
• Two samples from mine spoil in the north returned 10.3% Cu and 5.1% Cu;
• Rock chip sampling along strike from previous workings in the south returned 20% Cu and 14.1% Cu over 2 metres and 8% Cu, 0.41g/t Au in the main shear;
• Samples of mine spoil in the south returned up to 31.2% Cu and 106g/t Ag;

Rock chip channel sampling of historic trenching returned values of:

• Trench T6 - 6 metres @ 1.75% Cu and 0.22% Co; and
• Trench T10 - 8 metres @ 2.53% Cu and 0.15% Co, including 4 metres @ 3.85% Cu and 0.24% Co.

The aim of the program was to extend the mapping and analytical data over the northern half of the leases, looking for evidence that the known copper-cobalt mineralised structure continues northwards, checking for potential parallel structures and resampling the existing trenches to confirm the historic results.
Mapping and sampling have confirmed that:

• The copper-cobalt mineralisation extends one kilometre to the north on surface before disappearing under cover;
• These copper values are comparable to the high-grade copper channel samples from historic costeaning;
• There are parallel structures, close-spaced, within the southern mineralisation; and,
• The presence of high-grade copper-gold mineralisation in a carbonate host rock suggests potential for bulk tonnage open pit style of mineralisation.

Prospectivity and exploration target

Historical exploration reports and drill sections have outlined a large mineralised envelope of cobalt between 40 and 88 metres thick over a strike length of approximately 450 metres, open to the north, south and down dip. The envelope is formed around a number of significant high grade shear zones with lower grade intermediate zones.

Previous metallurgical test work undertaken by Hydrometallurgical Research Laboratories demonstrated an ability to produce potentially saleable high grade cobalt concentrate with high recoveries. This is because, unusually, the cobalt mineralisation is in the form of cobaltite and not as cobaltiferous pyrite. It was also possible to produce a separate copper concentrate.

The exploration objective is to delineate thick cobalt mineralisation suitable for open cut mining and processing, to produce saleable high value concentrates of cobalt and copper.

Exploration strategy

The Company has been focused on building its tenement position in the Cloncurry area and lodged applications for new tenements north and north-east of the Millenium Mining Leases (“ML’s”) totaling 154 square kilometres.

When the new exploration tenements are granted exploration work will focus:

Reconnaissance mapping and sampling along the line of the structural trend;

• A broad-scale soil sampling program to delineate anomalies and help focus in on areas of potential mineralisation;
• Follow-up geophysical surveying to identify targets for drilling; and
• Exploratory drilling of the targets generated along with confirmation drilling of the known mineralisation in the Federal mining leases.

The Company is planning follow-up exploration programs on the Mining Leases to expand on encouraging preliminary results reported in June 2010 including:

• Follow-up sampling across the project concentrating on representative sampling of all exposed mineralisation;
• Ground geophysical techniques to determine orientation and extent of the mineralisation in preparation for drilling; and
• Reverse circulation drilling program aimed at identifying the form of the mineralisation at depth.

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