During licence Year 12, following encouraging results made by its continuing exploratory drilling, Gunson Resources was able to negotiate a joint venture over the Mount Gunson Project tenements with Falconbridge Limited through its subsidiary Noranda Pacific Pty Ltd. Falconbridge was taken over by Xstrata plc in August 2006, very shortly after the finalisation of the joint venture agreement. The drilling work undertaken during December 2005-January 2006 consisted of 2 near-vertical diamond holes for a total penetration of 1161.1 m that were put in at Chianti prospect. A PACE Initiative Year 1 collaborative drilling project subsidy of $36,750 was received to offset (in part) the cost of this drilling [see the PACE project DPY1-12 final report held separately in Env 11206]. Hole MGD34 was drilled to follow up persistent traces of copper mineralisation found in hole MGP31, namely microscopic sized particles of bornite seen by the consultant petrologist to be commonly present in altered granite cuttings that contain 0.2% magnetite and 3% haematite. The new hole was drilled on the western flank of the Chianti northern residual gravity high, at a location ~600 m closer to the interpreted Cattlegrid Fault position than MGP31, and was collared from a site on line 2 of the 2005 MIMDAS IP survey. The pre-Pandurra Formation basement was reached at 451 m downhole depth. It was later interpreted that here the top-of-basement surface dips fairly steeply in a WNW direction. The lithologies in the MGD34 basement core are directly comparable to those seen previously in nearby holes EC47 and MGP31, i.e. mainly medium-grained altered granite with some aplite, that show variable haematitic and chlorite-sericite alteration plus minor brecciation, where the haematite appears to overprint earlier chlorite-sericite. The granite is cut by inferred Lincoln Complex mafic dykes which are strongly altered and vary in grain size from aphanitic to medium-grained. Assay results obtained from MGD 34 included a mineralised intercept of 4.0 m @ 2.01% Cu + 0.1 g/t Au obtained from within the downhole interval 548-554 m. The mineralisation seen in the drill core consists of chalcopyrite plus minor bornite and associated pyrite formed within a quartz-rich host: visually, the sulphide content in places approaches 50% in bands up to 50 cm wide. Within the MGD34 core basement section overall the copper content is low (<50 ppm), apart from in this single horizon where Cu-Au-Ag(+Mn) are oddly enriched. Also, the basement section beneath this horizon has noticeably more trace uranium in it than does the section above, while conversely, the trace Pb-Zn-Co enrichment pattern has the reverse distribution. Gunson Resources interpreted this isolated vein style copper occurrence to represent an offshoot from or remobilisation of mineralisation coming from a larger body of Carrapateena type breccia-hosted IOCG mineralisation. Hole MGD35, which was drilled at a location ~3.6 km to the SSW of MGD34, reached the pre-Pandurra basement at 337 m downhole depth. The basement cored here comprises the same rocks as found in MGD34, but they contain no mineralisation despite having overall a perceived higher degree of alteration and brecciation. The maximum copper assay value returned from MGD35 was 30 ppm Cu; again some elevated uranium is present in the deeper part of the cored basement section; but the lack of a Cu-Au geochemical correlation indicated to Gunson Resources that these rocks hold no IOCG pathfinder signature. During licence Year 13, a further 2 exploratory NQ2 diamond cored holes for 1408.49 m were drilled into basement at the Chianti prospect, at sites chosen with the agreement of new JV partner Xstrata Copper Exploration Pty Ltd. As part of the same drilling campaign conducted during February-April 2007, a third hole, MGD46, was completed on the northern part of Chianti, but it lay within the JV's adjoining EL 3112 Yeltacowie. A PACE Initiative Year 4 collaborative drilling project subsidy of $75,000 was received to offset (in part) the cost of drilling these three holes [see the PACE project DPY4-65 final report held separately in Env 11557]. Hole MGD44 (TD 607.32 m, 178 m RC precollar) was drilled vertically approximately in the centre of the southern part of the Chianti residual gravity anomaly, between MGP30 and MGD35. These latter holes had entered a predominantly granitic basement, so in MGD44 at 291 m depth it was surprising to intersect a considerable sequence of Gawler Range Volcanics lying immediately beneath the Pandurra Formation. The volcanic sequence consists of fine dacitic variants, overlying a 57 m section of thinly laminated tuffaceous sediments, which in turn overlie a basement of presumed Hiltaba Suite granites and mafic dykes. It was thought that sections of granite which lie within the volcanic sequence may be due to an irregular shape of the sides of the pipe, or may represent blocks that were seismically stoped from the margins of the structure and became rafts within the volcanic sequence. A petrographic study of cored rock samples from MGD44 showed that below the laminated sediment, a unit logged in the field as andesitic GRV is actually altered dolerite, presumably a component of the basement granite complex. This changed lithology attribution meant that the laminated sediment (likened in the petrographic description to Tarcoola Formation) could thus be interpreted as the base of the volcanic sequence. A sample of granite (604 m) from the near the bottom of the hole was described as a possible potassium-deficient variant of the Hiltaba Suite. Angled diamond cored hole MGD45 (TD measured downhole 801.17 m, precollar length 300 m) was drilled about half-way along the northern arm of the Chianti residual gravity feature, about 600 m north of MGD34 which had made the copper intercept of potentially economic grade. However, by contrast it encountered an unmineralised basement sequence consisting of altered granite and chloritic dolerite that is similar to what exists in MGD35, and gave little indication of being close to a significant mineralised position. The information obtained by drilling MGD44 and MGD45 was said by Gunson Resources to have significantly extended the understanding of basement geology in the Chianti prospect area. The additional data points had helped to refine knowledge of the top-of-basement palaeosurface depth and topography, and the thick intersection of GRV and associated sediments made in MGD44 had revealed an aspect of Chianti geology that was not previously known, because there was no indication of these units in nearby holes MGP30 and MGD 35, and they did not appear to have topographic expression on the palaeosurface. This suggested that they are restricted to a part of the prospect where volcanic rocks had been extruded into (or from?) a local, steep-sided depression (half-graben or pipe?) that had developed within a largely granitoid terrain: the ‘pipe’ interpretation accorded with recent findings from Carrapateena, where the best copper values were believed to occur in a sub-vertical pipe-like body within a larger halo of ferruginous breccias and alteration. Clearly the Chianti area had once been subject to highly active geological crust-forming processes, and such extrusive and intrusive igneous activity in the vicinity of major fault structures was known to provide a setting amenable to the formation of IOCG mineralisation. During licence Year 14, activities on EL 3264 included: - acquisition of surface IP and TEM surveys at Chianti prospect, plus down-hole TEM logging of two holes; - petrophysical studies to assist interpretation of the IP data; - performing a petrographic study of one basement granitoid sample; - making geochronological age determinations on samples of basement granitoids from Chianti prospect; - drilling two deep NQ2 diamond cored holes into basement at Chianti prospect; - commencing a mining feasibility study in April 2008 for the undeveloped MG 14 deposit at Mount Gunson. This wholly buried Cu-Co-Ag deposit,which lies approximately 1 km north-east from the eastern lobe of the Cattlegrid open-pit, was defined by Pacminex (SA) Pty Ltd in the early to mid 1970s with more than 150 drillholes, about half of which were cored and the remainder RC drilled; and - drilling five large-diameter (100 mm) core holes at MG 14 during July 2008 to provide bulk samples of fresh orebody material to use for doing further metallurgical testwork. After completing the 2007 drilling campaign at Chianti, it was recognised that a different targeting technique was needed to identify specific zones of interest within the residual gravity anomaly. A preliminary moving-loop TEM survey was initiated to test whether this technique could identify zones of higher conductivity which might represent sulphide targets. A further advantage of having the EM crew at Chianti was to conduct down-hole TEM in drillhole MGD34 in order to test for a significant off-hole target related to the copper intersection in that hole. The TEM programme was started in November 2007, but was abandoned after completion of less than four of the planned ten lines, due to oppressive heat. An attempt to read MGD34 at this time was unsuccessful due to a blockage in the hole. A single-component downhole log for drillhole MGD44 was read at this time, but returned no indication of an off-hole conductor. The crew returned in March 2007, and completed two additional TEM lines. Hole MGD34 proved to be firmly blocked above the level of the copper intersection, in spite of two attempts made with the drill rig to clear out the hole and flush it with fresh water. However, the recently completed hole MGD48 was logged to its full depth. In conjunction with the TEM work, a dipole-dipole IP survey totalling 19.6 line km was conducted, along 6 lines 400 m apart using 200 m dipole separations plus multiples thereof (n=1 to 8), with a single traverse read in December 2007 and the remaining 5 lines read early in March 2008. An anomaly revealed on the first line was supported from the TEM data, and drillhole MGD47 was sited to test this feature. The subsequent IP surveying suggested that the data from the original IP line was misaligned, and careful investigation by the contractor eventually traced the problem and allowed this line to be aligned correctly with data from the later lines. This re-plotting showed that there was no IP anomaly where MGD47 had been drilled, although other features of interest were present in the IP data. Drillhole MGD48 was proposed to be drilled nearby to test the shallowest IP response. Vertical hole MGD47 (TD 561.87 m, 255 m RC precollared) reached the pre-Pandurra basement at 399.75 m depth. It consisted of coarse Donington Suite granitoids with thin mafic dykes. The peak copper assay value obtained was 84 ppm Cu. There were no significant assay results. Vertical hole MGD48 (TD 771.61 m, 207.4 m RC precollared), which was drilled from a collar sited ~300 m east of MGD47, reached the pre-Pandurra basement at 356.06 m depth. It was intended to directly test the aforesaid N-S trending zone of IP response, but no conductive source for this was identified. The basement sequence encountered in MGD48 was unusual, in that a sequence of haematitic sediments (from 529.6 to 631.2 m), tentatively correlated with the Wandearah Metasiltstone, are packaged within a sequence of Donington Suite granitoids and metadolerite. A peak copper assay value of 603 ppm Cu was obtained from the depth interval 810-812 m. No visible sulphide mineralisation was recorded, and there were no significant assay results. During April-May 2008, LA-ICPMS method U-Pb isotopic radiometric dating was performed on the zircon crystals contained within 1 m long half-drill core samples of a number of granites and gneisses that were encountered by the 2007 drillholes, and one granite sample from mineralised hole MGD 34 that had been drilled in 2006. The results showed that all of the samples belonged to the Palaeoproterozoic Donington Suite; no evidence of younger Hiltaba Suite intrusions was found. Gunson Resources had for several years listed in its corporate Annual Report a portfolio of Indicated and Inferred Resources of copper mineralisation known to be present within the Adelaidean cover of the Mount Gunson district, including Windabout, MG 14, Cattlegrid South and Sweet Nell. In April 2008, Gunson announced that it was to conduct a study of the feasibility of mining and processing the MG 14 deposit at Mount Gunson. This work was to be carried out in conjunction with Mines Trust, the operator of a small but profitable plant producing copper metal by leaching the low-grade dumps at the old Kanmantoo mine, east of Adelaide. A pre-mining resource estimate was calculated manually by Gunson Resources for the MG 14 deposit using available drillhole information. The mineralisation is generally flat-lying, and starts about 25 m below the surface. The in situ resource for the Main Zone, using all assayed intersections above the 0.5% Cu cutoff grade, is 1.65 Mt @ 1.4% Cu, 16 ppm Ag, 610 ppm Co, zone average thickness = 1.9 m. When a grade x thickness constraint of 2m% Cu was applied, the in situ resource became 1.05 Mt @ 1.7% Cu, 18 ppm Ag, 374 ppm Co, zone average thickness = 2.9 m. Structure contour maps were prepared to show the geometry of the three mineralised horizons known at MG 14, and to guide future ore delineation drilling by identifying places where the limits to ore distribution are still poorly constrained. Three additional figures were provided to inform the resource estimate revisit documentation: one showing the Cu grade in each drillhole, superimposed on the resource outline; another showing the mineralised intercept widths; and the last showing the grade x thickness product distribution. Having these factors plotted helped Gunson Resources to define where the highest grade and thickest ore is likely to be found, and formed the basis for selecting sites for the planned drilling for metallurgical samples. The 5 large diameter cored holes totalling 98.5 m were drilled during July 2008. All holes were drilled vertically, using rotary mud drilling to go down to a depth just above the mineralised layer, then switching to drilling triple-tube core at 100 mm diameter. Hole locations were selected to provide a sampling of the range of grades and thicknesses, particularly within the eastern (shallower) part of the deposit. The drilling programme was supervised by consultant geologist David Tonkin, assisted by Stephen Batty from Challenger Geological Services. The mineralisation intersected was within the expected ranges of grade and thickness. 65 selected samples of crushed drill core were analysed for a basic suite of eleven elements. The individual assays based on geological intervals were used to define a single composite sample for each hole to submit for metallurgical testing.