Strategic Energy Resources Limited provided an update on exploration at the Canobie Project which forms part of SER's "Isa Undercover Initiative". The Canobie Project covers over 1,800km2 within the Mt Isa Eastern Succession, bounded to the east by the Quamby fault zone /Gidyea Suture Zone. The fault system hosts several significant deposits to the south including the giant Ernest Henry Cu-Au mine and the Mount Margaret, Rocklands and Roseby Cu-Au deposits.

INFILL GRAVITY SURVEY COMPLETE: Last month an 823-station ground gravity survey was collected which infilled the northern end of the Canobie Project and an area south of the Lucky Squid gold prospect1. The gravity survey was designed to map the geometry of the dense mafic intrusions in an attempt to identify suitable trap sites for massive sulphide mineralisation. Mafic intrusions with sub-horizontal tube geometries could be zones where magma and sulphides are concentrated, these are termed `chonoliths'.

Globally large nickel-copper deposits are known to be hosted within narrow zones (chonoliths) of mafic/ultramafic intrusions. World-class mineral deposits hosted in chonoliths include Noril'sk - Talnakh (Russia), and Nova-Bollinger (Western Australia). GRAVITY MODELLING SUGGESTS FAVOURABLE INTRUSION GEOMETRY: Unconstrained inversion modelling of the gravity data has identified a potential north-south striking intrusion, possibly coring a tight fold adjacent to the major Quamby fault.

Within this intrusion there appears to be zones which have sharp steep contacts and appear to be flat lying with potentially an identifiable base. MAGNETIC REMANENCE STUDY IDENTIFIES POTENTIAL MASSIVE SULPHIDES: SER applied magnetic attribute processing to the existing magnetic data to understand the potential sources of the remanent magnetic responses across the Canobie Project. The study involved reprocessing the high quality 100m flight line magnetic survey flown in 2009 at the northern end of the project area.

Using this input, different grids of the magnetic data were produced to display the effects of remanent responses, and cluster maps of magnetic and gravity responses were produced to identify distinct remanent vector anomaly targets which could be sourced from a body of massive sulphides. The aim of the magnetic attribute study is to extract the magnetic remanence information from magnetic survey data to map the changes in magnetic properties of rock formations which can naturally occur due to time of emplacement (palaeomagnetism), or alteration. Up to six magnetic attributes can be combined in different ways to produce a pseudo-lithology map that differentiates areas of remanent magnetisation as well as areas of similar magnetisation properties, areas of common magnetic characteristic (pseudo-palaeomagnetic) and areas of similar vector rotations of the Total Magnetic Intensity (TMI) vector.

The addition of gravity (density) data to the magnetic attributes can further improve the classification of a pseudo lithology map. Certain minerals have unique magnetic properties which can be potentially identified in the magnetic attribute study such as monoclinic pyrrhotite (Clark et al 20042). Monoclinic pyrrhotite can be common in sulphide mineral deposits.

This study has identified clusters of point targets representing potential magnetic remanence which could be sourced from monoclinic pyrrhotite. Magnetic vectors extracted from the TMI of magnetic surveys are capable of discriminating mineralised systems (containing monoclinic pyrrhotite) from barren magnetic features (i.e. magnetite) (Schwarz 19753). This technique has been successfully applied to open file data over existing deposits globally including the Platreef PGE-Ni-Cu resource in the Bushveld Complex of South Africa4.

Like all targeting processes, not all anomalies are expected to be directly related to mineralised bodies, only when the anomaly is consistent with other data sets are they deemed high priority targets. COMPELLING NICKEL-COPPER TARGETS IDENTIFIED: The magnetic study identified numerous clusters of vector magnetic anomalies across the northern end of the Canobie Project. Importantly a number of these clusters are coincident with interpreted chonoliths modelled in the gravity data.

The magnetic products and gravity response have been clustered into equivalent responses producing a pseudo petrophysical map of the area. The results confirm the complexity of the mafic intrusions at Tea Tree, which SER is continuing to interpret in both 2D and 3D to refine the intrusion geometry mapping. SER has identified targets that have a distinctive magnetic response which could be formed from monoclinic pyrrhotite and occupy interpreted chonoliths associated with an ultramafic/mafic intrusion.

Previous drilling within the broader intrusion has demonstrated numerous criteria required for the formation of a massive sulphide system including assimilation of graphitic metasediments (metal and sulphur source), reaching sulphur saturation (mobile sulphides) and formation of semi massive sulphide basal layers (sulphur settling).