A partly defined magnesite resource thought to be of the order of 579 million tonnes in size, consisting of a series of semi-continuously outcropping magnesite beds ranging in thickness from 0.5 m to 9.0 m, is situated within the northern Flinders Ranges of South Australia. Here, ten distinct deposits occur within the early Neoproterozoic Skillogalee Dolomite formation, a sequence of interbedded layers of magnesite, dolomite and siltstones, which extends north-west from Leigh Creek over a strike length of some 130 km. The Pug Hill and Termination Hill magnesite deposits are included within the subject EL 2765 that was held until November 2002 by BHP Minerals Pty Ltd. EL 2765 was a replacement for EL 2100, which was granted to BHP Minerals Pty Ltd in June 1998. Since that time, SAMAG Ltd, operating under a joint venture agreement, has earned a 100% interest in the magnesite deposits located within the tenement area through spending $200,000 on targeted exploration at the Termination Hill, Pug Hill and Mount Playfair deposits, including execution of a 2000 m fully-cored diamond drilling programme. During late 1998, 13 holes for a total penetration of 984.9 m were completed at Pug Hill, and another 10 holes for 921.5 m were completed at Termination Hill. At Pug Hill, six high-grade (> 42% MgO) magnesite beds outcrop over a 2.5 km strike length, dip at 55-60 degrees to the south-west, and range in thickness up to 2 m. The most economic parts of these beds are located on the northern limb of the west-plunging Pug Hill Syncline. At Termination Hill, as many as forty high-grade magnesite beds extend over a strike length of 7 km, and range in thickness up to 1 m. The beds dip westwards at 70 degrees, and at the southern end of the outcrop are folded to trend southwestwards, probably as a result of tectonic movements associated with the Termination Hill diapir. On the basis of surface and downhole sample measurements and analyses reported herein, the total magnesite resource (Measured + Indicated + Inferred) defined within these two deposits currently stands at 49 million tonnes grading 42.7% MgO. The Pug Hill and Termination Hill deposits are now held within mineral Retention Leases 97 and 99 respectively, but the location of the deposits, and need for significant upgrading of access for transportation to the railhead at Leigh Creek, is seen as restricting the viability of mining them. No further work is therefore currently recommended for the Pug Hill and Termination Hill magnesite deposits. The Termination Hill diapir is still regarded as prospective for copper/gold deposits, and remains untested. EL 2565, comprising two strike-elongated portions of ground which abut the south-western and north-western boundaries of EL 2765, is 100% owned by Magnesium Developments Limited, the operating subsidiary of SAMAG Ltd. SAMAG is owned by Magnesium International Ltd (formerly Pima Mining NL). The southern part of EL 2565, covering an area of 242 square km, was relinquished on 18/11/2002. Included within the relinquished area are the Camel Flat, Mount Hutton South, Mount Hutton, Myrtle Springs and Mount Playfair magnesite deposits, over which a number of Retention Leases and Mining Leases have now been granted to SAMAG. These leases were taken up after the completion of separately described (see Env 9869) geological investigations including aerial photography, geological mapping, surface rock chip sampling, diamond drilling and bulk sampling had outlined a total resource at the above listed deposits of 210.3 million tonnes, grading an average 42.5% MgO, of which 18.3 Mt is included in the Measured resource category at the Mount Hutton deposit (ML 6092). This deposit has latterly been subjected to trial mining, and has been selected for future mining operations to supply a proposed SAMAG-built magnesium metal processing facility. The Camel Flat deposit is located approximately 2 kms north of the Leigh Creek township. The purchase of Mining Leases 5594 and 5595 at Camel Flat from Unimin Limited (formerly Normandy Industrial Minerals) added a significant resource to the project's total resource outline. As this deposit had not been drilled, the 13 Mt resource could only be assigned to the Indicated category based on data from trenching, surface sampling, bulk sampling and previous mining operations. The Mount Hutton deposit is located 20 km north-west of Leigh Creek township and 5 km south-east of the Myrtle Springs mine. It comprises a steeply dipping sequence of magnesite and dolomite interbeds which outcrop continuously throughout Mining Lease 6092. These beds strike north-west and dip between 60º and 70º to the north-east. A total of eighty-six individual beds have been identified within the package, which extends over a strike length of 24.5 km. Structural mapping within ML 6092 (formerly MCs 3098, 3099 and 3100) at Mount Hutton was completed in August 1999. SAMAG also commissioned Fugro to conduct a detailed (1:10,000 scale) aerial photography and photogrammetric survey of the Mount Hutton Mineral Claims and the ore haul road route, in August 1999. The accurately located digital photographs and contours were combined with geological DGPS mapping data to form a comprehensive Geographical Information Systems (GIS) dataset. In April 2001, Minarco was commissioned by SAMAG Limited to undertake a geological, mining and resource study of the Mount Hutton and Mount Hutton South (MLs 5617 and 5618) magnesite deposits. Borehole data compilation, geological modelling and resource estimation was subcontracted to ECS International. Minarco carried out validation of the geological model and all mining related work. The JORC Code - compliant 143.3 Mt estimated magnesite resource present at Mount Hutton / Mount Hutton South, besides the 18.3 Mt of Measured resources, includes 72 Mt in the Indicated category and 53 Mt in the Inferred category. The Myrtle Springs magnesite deposit is located 25 km north-west of Leigh Creek South township. The Mount Playfair deposit is located 5 km north-west of the Myrtle Springs deposit and is the northerly extension of the same magnesite beds. The purchase of Mining Leases 5000-5001 at Myrtle Springs and 4998-4999 at Mount Playfair has permitted the definition of a combined 31 Mt of Indicated and 23 Mt of Inferred magnesite resources at these prospects. To delineate the subsurface mineral resource potential of magnesite beds mapped within EL 2565, an initial six drilling traverses spaced 2500 m apart were drilled in February 1999 to encompass targets at the Mount Hutton deposit and at the Mount Playfair, Myrtle Springs and Mount Hutton South prospects. The magnesite beds there dip at 60 degrees to the north-east and outcrop over a strike length of 13 km, with beds ranging in thickness up to 2.5 m. 14 inclined, fully cored diamond drillholes totalling 1040 m intercepted 52 magnesite beds averaging 0.87 m thick. Thereafter, due to tenure, transport, calcium content and overburden stripping ratio considerations, only the central Mount Hutton occurrence was chosen for infill drilling at a traverse spacing of 250 m (50 diamond holes for 2911.6 m in May 1999). A total of 86 magnesite beds were thereby intercepted, only ten of which appeared to be discontinuous, with the rest interpreted as extending over the entire length of the deposit. The Witchelina magnesite deposit,located 60 km north-northwest of Leigh Creek and 25 km east of Farina, and held by SAMAG under Retention Lease 96, occupies a shallow dipping syncline. This syncline has been affected by large-scale compressional Delamerian tectonics, resulting in minor parasitic folds and occasional small-scale reverse faulting with displacements up to 5 m on the limbs of the syncline. The southern end of the Witchelina syncline plunges shallowly to the north at less than 5°. This shallow plunge results in the four principal magnesite beds being sub-horizontal along the fold access of the syncline. Magnesite Bed 4, which has an average thickness of 8 m, is therefore less than 10 m below the surface. Due to the shallow plunge of and sub-horizontal structure of the beds along the fold axes of the syncline, the waste-to-ore stripping ratio will be very much lower than at Mount Hutton. SAMAG's drillhole arrangement at Witchelina reflected the geological structure of the open folded syncline. The syncline is elongated in a NNW-SSE direction. Therefore, a majority of the drilling was carried out at 90º to this direction. The low dip of the magnesite sequence required only shallow drilling to intersect the targeted beds. A total of 46 fully cored diamond holes were drilled for 2,157.5 m during 1998 and 1999. Drillhole intercepts made from between 60 and 100 m depth showed that 25 beds averaging 2.2 m thick and dipping at 15-45 degrees make up the mineable package of magnesite, which occurs within a 500 m wide dolomite/magnesite sequence. A Measured ore resource of 23.7 Mt @ 41.0% MgO was calculated using wire frames and digital terrain model volumes. Simple volumetric calculations on non-JORC Code qualifying drillhole data also gave Indicated and Inferred magnesite resources of 93 Mt and 98 Mt respectively, @ 40% MgO, for this deposit. During the final licence year, to 18 November 2003, SAMAG's activities consisted of making environmental baseline studies and desktop mining studies on the Mount Hutton (ML 6092) area. An abandoned well at Mount Hutton was rehabilitated for future groundwater monitoring, and was sampled. A groundwater monitoring report was prepared by PPK Environmental. The northern portion of the licence area, extending from the Witchelina deposit to the Screech Owl Creek deposit, was retained whilst obtaining a Retention Lease (RL 96) over the Witchelina deposit. No field work or exploration activities were undertaken in this period, and EL 2565 was allowed to lapse at the anniversary date. As part of its pioneering attempt to establish a magnesium metal processing industry in South Australia, SAMAG has outlined significant local deposits of magnesite ore which have been tested at AMDEL Ltd's laboratories and were found to provide a suitable feedstock for the proposed magnesium metal plant (see summarised testing results given in EL 2565 final report). SAMAG has elected to develop the Mount Hutton mine first, and the company envisages that the deposits delineated at Camel Flat, Mount Hutton South, Myrtle Springs, Mount Playfair and Witchelina will not be required for mining, at least within the next ten years.