Bass Metals Base Metals

1. OPERATIONS

Que River Mine
The Que River Mine provides a low cost entry to production; initially at a small scale but with attractive margins to generate sufficient cash to maintain the Company’s larger base metals development activities and regional exploration activities.

Introduction
The Que River Zinc-Lead operation is located in North-Western Tasmania 75kms South of Burnie, and is 100% owned by BSM. Lying just 3kms south of the world class Hellyer volcanic hosted massive sulphide (VHMS) deposit and in a similar geological setting, the Que River VHMS deposit consists of a cluster of seven steeply dipping polymetallic massive sulphide lenses referred to as QR32, Nico, P North, PQ, S, PQ South, and P3 (refer Figure 1). These lenses strike approximately north-northeast over a length of 800 metres and extend to a depth of some 300 metres below surface.

Figure 1: Que River Mine – simplified geology plan

After an extensive trial mining and processing programme through early to mid 2007 the Company concluded an Ore Sales Agreement with Zinfiex’s Rosebery operations for the delivery of 4,200-8,000 tonnes of ore per month. Site establishment works and ore deliveries to the Rosebery Plant began on 28 September 2007. The site is now well established and Mancala Mining Pty Ltd is the Project Manager through a mining alliance agreement. The key Mancala personnel have significant local mining experience including involvement at the Hellyer and Que River mines in the 1980’s. Approximately 24 people are employed at the Que River mine site.

This is the first stage of a possible four stage mining plan spanning 3-5 years with Stage 1planned to generate 120,000tt grading 8% Zn, 4% Pb, 0.7% Cu, 99g/t Ag & 2g/t Au (refer Figure 2). After four month mining positive reconciliation trends are apparent for the PQ lens and high grade drill intercepts which characterise the southern PQ area suggest that this trend will continue (refer Figure 3).

The Que River Mine project is able to capitalise on infrastructure remaining from the previous mining operation (1978 to 1991) which includes power reticulation, sealed road access and a large water settlement dam. As well the project is within reasonable trucking distance to two flotation concentrator plants able to treat this ore type. These attributes have enabled BSM to get into production early with an initial modest scale project and plans to develop it to a larger scale. BSM is the first new explorer to the ground since the mine closed in 1991, and the Company considers that there is excellent potential for further discoveries to add to the resource inventory currently delineated as shown in Table 1.

Table 1: Que River Mineral Resource Summary

Figure 2: Schematic looking SW on completion of Stage 1 Mine Plan.

Figure 3: Long Section of PQ South showing high grade intercepts and remnant mineralisation

2. ADVANCED PROJECTS-

Hellyer Mine Project (HMP)
The HMP is the prime focus of the Company to determine the potential of establishing a large scale, high grade base metal mine utilising one of 2 existing local processing plants within trucking distance. Currently the HMP comprises the Hellyer remnant resources and the adjacent Fossey Zone prospect. The objective is to establish an updated Mineral Resource incorporating the Fossey Zone and to complete a mining study as quickly as possible.

Hellyer Remnants
The Hellyer deposit is a single high grade polymetallic VHMS ore body with the pre-mining mineral resource originally reported as – 17 million tonnes at 14% Zn, 7% Pb, 0.4% Cu, 5oz./t Ag & 2.5g/t Au. Mine development commenced in 1987 and the concentrator was commissioned in 1989 and operated for approximately 11 years, operating at 1.5 million tonnes per annum until closure in June 2000.

BSM has assessed the mineralisation occurring around the decommissioned mine and recently completed an initial combined Mineral Resource estimate (Indicated and Inferred) of 748,000 tonnes grading 7% Zn, 4% Pb, 0.3% Cu, 87 g/t Ag and 1.3 g/t Au for the HMP.

This initial Mineral Resource estimate for the HMP represents a significant milestone for the Company towards expanding its base metal resources and potentially its production profile. A summary of the estimate, prepared by Coffey Mining and reported in accordance with the JORC Code, is presented in Table 2 and the location of key components illustrated schematically in Figure 4. This does not include the unmined Southern Barite Lens (now known as the Fossey Zone) where the Company has recently reported significant wide high grade base metal intercepts described in the following section.

Table 2: Hellyer Mine Project Mineral Resource

Coffey Mining was commissioned by BSM to undertake a Mineral Resource estimate for the mineralisation occurring adjacent to the mined areas of the Hellyer deposit, referred to as the HMP. This mineralisation comprises both massive base metal sulphide zones and distinct areas of strong base metal veins referred to as stringer zones, generally occurring in the footwall position to the main mined portion of the Hellyer deposit. As well, Coffey Mining was requested to assess and classify areas of potentially recoverable remnant mineralisation associated with the former mine workings. Full details on the Mineral Resource estimate are available in the Company’s report to ASX on the 26 October 2007.

Figure 4: Hellyer Long section showing remnant resource blocks

Table 3: Hellyer-Que Combined Mineral Resource Inventory

Figure 5: Fossey Zone drill hole location plan and simplified geology

Figure 6: Drill section 10,150mN

Figure 7: Drill Section 10,200mN

Fossey Zone
The Fossey Zone (refer Figure 5) formerly known as the Southern Barite Lens (SBL) (refer Note below for derivation of the name) is a large, un-mined, barite-rich zone developed at the Hellyer ore position to the south of the Hellyer ore body. Historic exploration over this prospect comprised wide spaced drill traverses targeting which did intersect several zones of high grade polymetallic mineralisation, such as:

1.5m at 12.0% Zn, 9.3% Pb, 0.5% Cu, 184g/t Ag, 2.5g/t Au (HL661)
7.2m at 21.6% Zn, 9.7% Pb, 1.0% Cu, 142g/t Ag, 2.5g/t Au (HL666)
5.3m at 9.4% Zn, 5.4% Pb, 0.6% Cu, 166g/t Ag, 2.3 g/t Au (HL683)
14.3m at 4.7% Zn, 3.1% Pb, 0.2% Cu, 190g/t Ag, 4.4g/t Au (HL789)
13.5m at 6.7% Zn, 3.8% Pb, 0.2% Cu, 170g/t Ag, 3.6g/t Au (HL866)

However, the geological interpretation at that time was for a horizontal zone of mineralisation, which limited the tonnage potential for the intercepts and was therefore likely not considered “relevant” to a large scale mining operation extracting approximately 1.5 million tonnes of ore per year.

BSM’s intercept of 57.5 metres at 9.2% Zn, 4.7% Pb, 94 g/t Ag and 2.89 g/t Au comprising massive sulphide mineralisation in September 2007 led to a new geological interpretation incorporating a steeply dipping zone of barite alteration enclosing several zones of high grade massive sulphide base metal mineralisation. Since that time drilling has tested and confirmed the new interpretation as shown in Figure 5 and the schematic drill sections (figures 6 & 7).

The Fossey Zone mineralisation defined to this point occurs within 175 metres of the surface, “up plunge” from the Hellyer resource. It is emerging as a key component of any potential mining scenario at the HMP.

Growth of Combined Base Metal Mineral Resources
BSM has rapidly delineated a significant JORC compliant Mineral Resource inventory comprising the Hellyer and Que areas which are located only 4km apart. As well there s excellent exploration to further grow these resources through advanced prospects such as Fossey Zone. A summary Mineral Resource Inventory is presented in Table 3.

Origin of the Fossey Zone Name
The Hellyer deposit is named after Henry Hellyer who was the Chief Surveyor for the Van Dieman’s Land Company. In November 1828, on one of the earliest exploration expeditions of the rugged Tasmanian west coast, Hellyer crossed the Southwell River and walked almost over the top of the Hellyer ore body on his way south to near Mt Farrell, where he turned east and headed for Cradle Mountain. The Assistant Surveyor for the Van Dieman’s Land Company, and Hellyer's offsider on this expedition’, was Joseph Fossey. Fossey was also an important explorer in his own right and was the person who named Cradle Mountain. Given the close relationship of these prominent Tasmanian explorers, Fossey and Hellyer analogous to the close association between the SBL and the Hellyer deposit, the Company’s geologists have decided to rename the SBL the Fossey Zone, hopefully to become the Fossey ore body.

Farrell & Magnet Projects

These are advanced base metals projects centred on significant historic mining centres with potential to add to the base metal resource inventory in the near term and possibly become satellite mining operations to Que River.

Farrell (100% BSM)
This project area overlies a 4km extent of the Henty fault which hosts the historic Farrell mining centre and numerous other base metal and gold occurrences (refer Figure 8). BSM holds a 100% in this project. The Mt Farrell-Murchison Mines had significant historic Pb-Ag production of approximately 700,000t grading 13% Pb, and 14oz. /t Ag. Prior to the 1930’s, zinc was a contaminant in the lead and was avoided. BSM is focussing on the entire 4km strike which has been poorly drilled to date. A mineral resource has previously been reported for North Farrell comprising 180,000t @ 11% Pb, 11oz. /t Ag and 4% Zn, of which 28% is in the Measured, 12% in the Indicated and 60% in the Inferred JORC classifications. BSM is in the process of developing this prospect into an advanced stage drilling project.

Magnet (75% BSM, 25% Clancy Exploration Ltd)
BSM’s initial focus is on the early mining potential of the historic Magnet Mine, which according to MRT records produced 630,000t grading 5.7% Pb, 7.3% Zn and 394g/t Ag between 1895 and 1940. The zinc grade is an estimate from zinc rich tailing which were reprocessed in the 1970’s .A zone of distinctive zinc rich mineralisation in the hanging wall of the main lode from the historical records and examination of the old workings has been uncovered and is an exciting development for BSM (refer Figure 9)
A drilling program is planned to test for extensions to the Magnet system as well as several possible new Magnet style targets along strike.

Figure 9: Magnet Project - Summary Long Section

Figure 8: Farrell Project – Summary Long section.

3. EARLY STAGE EXPLORATION

The Company has an active and ongoing early stage exploration programme targeted at the discovery o new and large scale mineral deposits – such as those which currently characterise the geological neighbourhood BSM operates in.

Through exploration joint ventures with Zinifex Australia, Clancy Exploration, Adamus Resources and Pioneer Nickel as well as its own 100% owned tenements, BSM has the largest tenement holding over the prospective Mt Read Volcanics.

Hellyer Exploration Alliance (HEA)
BSM entered into an exploration alliance with Zinifex over the Hellyer Project tenements in July 2005, to date the parties have co-funded a $2.0 million exploration programme with the aim of discovering large scale, high grade Hellyer-style massive sulphide mineralisation.

Under the terms of the HEA, Zinifex has the right to elect up to 4 special project joint venture (SPJV) areas each with an area of up to 2 km² (refer Figure 10). It can acquire a 51% interest by spending at least $4.5 million in aggregate within 3 years of having made its first election. During this period Zinifex will act as joint venture manager and undertake all exploration activities.

This early stage exploration was successful in identifying several target zones and in February 208 Zinifex completed the selection of its 4 SPJV’s areas. These included the Switchback target where a new alteration zone was discovered and visible galena and sphalerite (though not of economic concentrations) was observed in drill-core.

Figure 10: Hellyer area simplified geology and SPJV areas.

Other Regional Base Metals Projects
Oonah (75% BSM, 25% Clancy Exploration Ltd)
BSM has 2 exploration objectives at Oonah:

Discovery of a large-scale new high grade Pb-Zn-Ag or Cu-Sn-(Au) deposits;
Delineation of high grade mineralised zones which may be amendable to small scale mining and trucking.

The Oonah exploration licence covers the northern Zeehan Pb-Zn-Ag mineral field which was developed in the 1880’s and then abandoned in the late 1900’s. Some 44 recorded mineral occurrences and historic mines are within its boundary. Of most significance, are the mines of Oonah, Montana and Zeehan Western, which according the MRT’s database contained production of:

Oonah – 863,000t @ 1.05% Cu, 1.23% Pb, 0.98% Sn and 153g/t Ag;
Montana – 40,000t @ 5.3% Pb, 143g/t Ag and 0.5g/t Au and
Zeehan Western – 300,000t @ 8.7% Pb, 480g/t Ag and 0.5g/t Au

A field reconnaissance trip to the Montana Silver Lead mine identified the location of the historic box-cut pit and partially filled inclined shaft accessed via the pit. The ore horizon was observed and bulk rock chip samples were taken from the pit floor and walls returning encouraging results as listed in Table 4 below.

Table 4: Rock-chip assay results – Montana Silver Lead mine

North Rosebery (75% BSM, 25% Clancy Exploration Ltd)
This exploration licence lies immediately north of the Rosebery Mine Lease and has more than ten VHMS base metal occurrences reported within the boundary. Exploration drilling by Zinifex has come within 300m of the tenement boundary and Bass Metals Ltd geologists are evaluating testing the extensions to the world-class Rosebery Zn-Pb-Ag orebody onto the North Rosebery licence.

Also, further north in this tenement, the prospective stratigraphy is significantly altered and considered prospective for Rosebery-style base-metal mineralisation at depth. Soil sampling programmes are in progress to better define drill targets.

Leven River (75% BSM, 25% Clancy Exploration Ltd)
The Leven River exploration licence overlies the northern continuation of the Que River-Hellyer stratigraphy. Several Pb, Au and As mineral occurrences are reported within the tenement boundary. Two high ranking VHMS targets were generated by using airborne geophysical data. These targets are interpreted to lie in the hanging wall to the Hellyer deposit stratigraphic position and are untested.

Through exploration joint ventures with Zinifex Australia, Clancy Exploration, Adamus Resources and Pioneer Nickel as well as its own 100% owned tenements, BSM has the largest tenement holding over the prospective Mt Read Volcanics.