Banded iron formation (BIF) rock outcrops and an associated 15 km long aeromagnetic anomaly located about 20 km west of Iron Baron were chosen by Centrex Metals as high quality targets deserving of exploration for economic iron mineralisation embracing both haematite and magnetite, by virtue of their close proximity to known favourable host strata and structures. It was surmised that if an imbricate thrust-fold system (i.e. multiple thrusts and multiple wedges of basement and overlying iron-rich formations at various elevations) is invoked as a major influence on the present architecture of the Middleback Range and the area to the west, then the BIF occurrence within Centrex' EL 3287 can be interpreted as a structurally repeated slab of ore-hosting Middleback Range strata. Therefore, although the BIF at Stony Hill is only slightly exposed relative to the ore-bearing beds forming ranges to the east, this area should be considered as highly prospective for the discovery of further iron orebodies in the region. Four potential priority drilling targets were identified, of which the first, mapped under cover with no outcrop, forms the focus of this PACE Initiative Year 5 drilling project report. The other target zones, one of which had previously been drilled by BHP to record up to 38 m thickness of jaspilitic iron formation, required additional gravity profiling to refine drillsite selection. The subject PACE-subsidised drilling completed in the Target 1 area during the period March-May 2008 (24 RC holes for a total penetration of 2769 m, on widely spaced lines over 2 magnetic anomalies) was based on the reasoning that a major north-west trending dyke intersects two fold hinge zones of an iron formation unit, and changes its magnetic signature as it crosses the fold structures. The depletion of the magnetic signature here was taken to suggest that haematite could be present. A similar structural / mineralogical relationship is also evident at Iron Princess (an orebody located north of Iron Knob) and in the Iron Baron area. This model was disproved by the drilling, as no hematite mineralisation of any significance was encountered. Petrographic studies of recovered drill cuttings from holes SHR001 (depth intervals 41-42 m, 73-74 m) and SHR002 (depth intervals 51-52 m, 71-72 m) showed that they include quartz-plagioclase - rich diorite to (gneissic) tonalite, plus also lesser amphibolite or hornblende-rich chips, with biotite partly altered to chlorite. Veins variously contain calcite, adularia, epidote and prehnite, with very minor secondary K-feldspar in some quartzofeldspathic chips. Abundant albite in the partly gneissic tonalite in SHR001 (73-74 m) and in SHR002 (51-22 m), and lesser albite in the quartz diorite to tonalite in SHR002 (71-72 m) commonly have a diffuse mottled reddish 'staining' by haematite dust. This may represent incipient (hydrothermal) oxidation. Sparse actual crystalline haematite is interstitial in SHR002 (51-52 m). The drill cuttings sample from SHR001, 73-74 m, shows amphibolite cutting tonalite. Quartzofeldspathic samples SHR001 (41-42 m) and SHR002 (51-52 m) include an alteration assemblage of albite-sericite and clays or chlorite. The best magnetite - bearing BIF intercept came from vertical hole SHR019 between the depths of 118 to 146 m, which yielded an average head grade of 21.7% Fe. Drilling conditions in the area were very difficult, and plagued by collapsing of the angled holes SHR001 and SHR002, together with abrasive bit and hammer wear. Due to the very limited and extremely slow initial drilling progress, and in an attempt to avoid budget blowouts, it was decided to drill only vertical holes after the completion of SHR001 and SHR002. Although a number of promising aeromagnetic anomalies remain undrilled on EL 3287, Centrex now anticipates that this licence area will be included as part of an airborne Full Tensor Gravity survey coverage planned for several of its tenements in 2009. This will lead to improved target definition, and importantly, such new geophysical data can be used to delineate both magnetite and haematite orebodies. At this stage, future drilling target priorities will be re-assessed.