Predictore™ – fluid flow mapping for rapid ore discovery

INTRODUCTION

PD is targeting gold and uranium ore deposits which were formed by the deposition of ore minerals from hot fluids at high rock pressures, typically 150° to 400°C and 1,500 to 5,000 times atmospheric pressure.  Predictore^TM is a technology-based system that maps where these fluids are most likely to have been focused over a long period of time during the structural deformation of the host rocks.  These are locations where chemical reactions between fluids or with the surrounding rocks are most likely to have caused the accumulation of economic minerals in sufficient concentration to form ore deposits.

Other computer-based targeting systems are generally based on various automated methods for recognising empirical geological patterns thought to be associated with ore deposits. These are inherently unreliable because of the variability of the geological characteristics of ore bodies and their settings.  PD believes that the Predictore^TM system will be more effective because it uses the actual mechanical, physical and chemical properties of rocks and ore forming processes to simulate the actual mechanisms of ore formation.

The intellectual property which is applied in the Predictore^TM system consists of two types of software and associated knowhow: one for numerical modelling and a second for a specific type of geophysical data processing. Details of these two applications are provided below.

The numerical modelling software and knowhow was developed by the Predictive Mineral Discovery Cooperative Research Centre (pmd*CRC) during the course of a seven year research program between July 2001 and June 2008. The pmd*CRC was supported by the Australian Government, a number of research institutions and universities, six of the State and Territory geological surveys and 18 mining and exploration companies. A total of $111million was spent of which approximately $17million was on the development and adaptation of the fluid flow simulation software for the purpose of targeting ore deposits.

The Predictore^TM system also utilises wavelet analysis (sometimes referred to as “worm” analysis), to analyse regional geophysical data sets.  Software and knowhow to further process the outputs of this analysis were developed by Dr Barry Murphy, PD’s Chief Geologist. This facilitates the identification of large and deep structures which are thought to channel large quantities of metal-bearing fluid from deeper in the earth’s crust, generating well mineralised belts at the surface.  These are thought to be favourable pointers to the location of large ore deposits.

Details of PD’s contractual rights to the components of the Predictore^TM technology are explained below. Application for Australian trade mark registration of the Predictore name was made in September 2010.

PREDICTORE - APPLICATION TO ORE DISCOVERY

The use of the Predictore^TM technology relies on obtaining access to high quality geological mapping, geophysical and geochemical data.

At the mineral province scale, PD utilizes geological and geophysical data, commonly available through government organizations. Wavelet analysis is applied to regional aeromagnetic and/or gravity data, which is then further processed to highlight what are interpreted to be very deep and long structures.  These are then compared with the location of known ore deposits so that they may be prioritised and areas selected for more detailed follow-up on the ground.

At the project scale, geological maps and geophysical data are used to construct three dimensional models of the geology. The most likely stress field at the time when ore deposits were formed is derived from a detailed analysis of the known geology.

Fluid flow modelling then follows and involves two steps:

• In the validation step, the program inputs of rock and fluid properties and stress regimes are varied to provide a range of alternative output models.  These models are then compared with the known geology and the observed locations of mineralisation and anomalous geochemistry for the best match. The  most appropriate inputs for the next, “predictive” step are then chosen;
• In the predictive step the models generated are used to predict new locations where focused fluid flow is indicated.

Drilling may then be used to follow up untested targets predicted by the models. As understanding about the prospect develops, the fluid flow modelling may be further used to refine targeting and support resource definition.

A number of case histories have been published where the technology has been applied effectively to mineral exploration. These include the Stawell-Kewell belt in Victoria, the Kundana area in the Eastern Goldfields of Western Australia and the Century project in Queensland.  In all cases, modelling upgraded the understanding of the ore systems and highlighted new targets.

At the Stawell deposit, computer modelling of the pattern of gold mineralisation adjacent to the Magdala basalt was carried out in the validation phase. This led to the prediction of focused fluid flow over the Kewell prospect beneath 100 metres of younger cover and located 100 kilometres to the north of Stawell.  The first drill hole to test the prediction resulted in an intersection of 4.1m at 12.6 g/t Au. Whilst Kewell was an uneconomic discovery, PD believes this and subsequent drill results validated the Predictore^TM technology.  The modelling and drill results are shown in Figures 1 and 2 respectively.

Figure 1: Computer model results from Stawell Mine (above) and Kewell prospect (below), Western Victoria. At Stawell, fluid flow vectors from modelling (arrows) compare well to the location of the known Dukes Nose mineralisation (at top left). At Kewell, 100km to the north, modelling predicted the location of gold mineralisation (circled arrows) which led to a series of ore grade drill results (source: Roberts, P. A., Schaubs, P.M. and Potma, W. 2007. Practical application of numerical modelling to predictive targeting. Extended Abstracts, SGA Conference Dublin, 2007)

PD aims to increase the probability of success in drilling programs by using Predictore^TM to identify high quality drill targets.  PD understands that academic studies of historical mineral exploration programs suggest that first phase drilling of an exploration prospect, on average, has around a 1% chance of achieving an ore grade intersection.  PD believes that the Predictore^TM technology can improve this chance of success.

Figure 2: Cross section of diamond drilling through Section 5967600N at the Kewell Prospect showing intersections on targets generated by the predictive modelling.

ACCESS TO INTELLECTUAL PROPERTY

 PD’s rights to the pmd*CRC technology are governed by a number of agreements with various participants in the pmd*CRC and with Ausmodel Pty Ltd (Ausmodel), the owner of the relevant intellectual property.  PD’s rights and obligations under the agreements can be briefly summarised as below:

• Under the Venture IP Agreement (as varied), PD has the right to purchase certain intellectual property (Venture IP) being 3D modelling and simulation software and processes for use in mineral exploration and the shares in Ausmodel provided:
  • PD has raised at least $2 million dollars in capital by 30 December 2010 which has been met; and
  • PD has raised an additional amount of $20 million in capital by 30 December 2014 (Second Threshold Date). Assuming that PD raises $6 million under this Prospectus, a further $13.1 million will need to be raised to satisfy this requirement.
• If PD fails to achieve either of the above raisings then PD’s rights to acquire the shares in Ausmodel and ownership of the Venture IP will be forfeited, unless agreed otherwise by the parties.
• The price for acquisition by PD of Venture IP and purchase of Ausmodel will be at least $1 million (IP Sale Price).  At any time (but not less than 6 months prior to 30 December 2014), if the Venture IP Owners agree, they may obtain an up-to-date valuation of the Venture IP and improvements subject to certain terms set out in the Venture IP Agreement and that valuation will then determine the IP Sale Price.
  • PD has a licence to apply the pmd*CRC technology to mineral exploration outside of Australia on an exclusive basis and within Australia on a non-exclusive basis during the interim period until it obtains ownership of the Venture IP under the Venture IP Agreement. PD is to use diligent efforts to actively use the Venture IP outside Australia and is also required to pay Ausmodel at least $300,000 per annum (consisting of a licence fee and a fee for consultancy services with at least half of such services relating to the use of the Venture IP outside Australia). The license runs until 30 December 2014, unless terminated earlier such as on the earlier payment of the IP Sale Price.

Dr Murphy, PD’s Chief Geologist, provides access to his expertise embodied in the Fractore system (both knowhow and software, and including any future developments) for interpreting potential field “worm” and other data and converting it into secondary products that can be used for project generation.  This access is exclusive to PD in terranes with potential for orogenic gold or uranium ore deposits in the continent of Africa and non-exclusive elsewhere, except that Dr Murphy may contract his services using this intellectual property for other target ore types (without reference to PD).