Mithril Resources have used a grant of PACE Initiative Year 2 funds to perform additional drilling on their EL 3105 located just north of Fowlers Bay. This area is regarded as being very prospective for Mid-Proterozoic mafic/ultramafic - hosted magmatic sulphide nickel, copper and cobalt deposits, formed in inferred Voisey's Bay - style settings such as within feeder conduits that lead both between and outwards from buried magma chambers to sites near the present land surface. Recent aircore drilling done by the company in 2004 had already identified a number of Ni/Cu/Pt/Pd anomalous shallowly buried ?small mafic intrusive bodies that are closely associated with aeromagnetic anomalies. These intrusions show a preferred shape orientation that suggests strong structural control by regional fracture systems. In an attempt to more directly target possible undetected deeper sulphidic intrusions in the district, Mithril flew a GEOTEM aerial survey of 770 line km over the western part of the licence in early 2005. Eight resulting AEM anomalies were deemed worthy of ground EM follow-up using moving loop and some fixed-loop traverses. This work revealed that the AEM anomalies were mostly spurious and generated by conductive overburden materials: the moving loop data clearly showed that the principal ground EM responses were due to early time, poorly conductive sources. However, some few low amplitude, late time responses from likely bedrock conductors were also detected with the ground EM techniques, particularly the 500 m x 300 m fixed loops laid out on lines 200 m apart. The subject PACE-subsidised drilling programme commenced in October 2005 with 3 RC holes for 505 m completed to test just one bedrock EM target (Anomaly 18), owing to major drilling difficulties which created the need to twice redrill the first hole to reach the objective depth. The modelled conductor may possibly have been reached in two of the holes, but no confirmatory downhole geophysics could be done because bad caving prevented all of the holes from being cased to allow probes access. The likelihood remains that no substantial conductive body was found, and that the EM anomaly has its cause in a non-rock source such as saline groundwater held in sub-vertical fractures. PACE drilling continued in March 2006 with 22 aircore drillholes for 995 m (of which 20 penetrated the basement) that were intended to follow up two sets of geochemical anomalies approximately 1000 m apart that had been found by the 2004 drilling. The new holes were able to delineate much larger zones of elevated metal values within the regolith interval, with maximum values of 0.4% Ni and 287 ppb Pt+Pd encountered at the bottom of hole CHAC028 drilled over geochemical Anomaly 1. The AC drilling results obtained here imply that the western side of the underlying intrusive body is probably of a more primitive composition than the eastern side, meaning that the body is spatially differentiated or that it is really made up of a number of smaller, separate intrusions. Moreover, the location of the most elevated Ni/Cu/PGE anomalism in the most northern AC drillholes on Anomaly 1 suggests that the source body extent remains open to the north, leaving good scope for finding additional massive sulphide primary mineralisation. It was recommended, therefore, that further RC drilling be carried out to try to intersect such mineralisation in the northern part of the Anomaly 1 prospect, and that complementary efforts be made to successfully obtain downhole or surface EM data to guide the exploration.