Peel Exploration Limited (ASX:PEX) Acquisition Of May Day Gold-Base Metal Deposit Near Cobar

Perth, Sep 25, 2009 AEST (ABN Newswire) - Peel Exploration Limited (ASX:PEX) is pleased to announce it has expanded its NSW exploration portfolio, reaching conditional agreement to acquire a 100% interest in the May Day gold-base metal deposit, from Imperial Corporation Ltd (ASX:IMP).

The May Day gold-base metal deposit (comprising a 100 hectare mining lease - ML1361), is located approximately 100km south of the mining town of Cobar in central NSW. Peel recently lodged an exploration licence application (ELA3776) covering approximately 84 km2, encompassing the May Day deposit.

Peel Exploration Managing Director Rob Tyson said the acquisition of the project and surrounding tenure was an exciting development for Peel.

"It offers a potentially rapid path to production and cashflow, benefiting from its situation on a granted mining lease located in one of Australia's major mining districts," he said.

"Available data suggests the presence of open, high grade gold-base metal mineralisation with minimal recent exploration, offering excellent exploration potential. The combination of precious and base metals exposure is a good fit for Peel, adding diversification to the Company's existing high-grade JORC-compliant tungsten resource at Attunga," Mr Tyson said.

May Day was discovered in 1898 and was initially developed as an underground copper-lead-silver mine. Exploration in the 1970s identified high grade gold-base metal mineralisation to a depth of about 250m below surface. Exploration in the late 1980s defined a shallow gold resource, which eventually lead to the development in 1996 of a small-scale mining operation comprising an open pit with a heap leach gold circuit. Minimal recent exploration has been completed.

Peel believes that the May Day deposit offers excellent potential to be rapidly advanced to development. Desktop studies indicate substantial gold-base metal mineralisation immediately below the historic open pit, with deeper drillhole intersections demonstrating depth continuance of high-grade gold-base metal mineralisation. Peel plans to complete a full dataset compilation, followed by an extensional drilling programme, in order to commence resource definition.

The May Day deposit exhibits similarities to the nearby Hera gold-base metal deposit (1.8 Mt at 6.7 g/t Au, 0.2% Cu, 2.5% Pb, 2.8% Zn, 14 g/t Ag) which YTC Resources Ltd (ASX:YTC) recently acquired for A$12 million. Peel considers the May Day deposit to potentially represent the upper levels of large-scale Cobar-style mineralisation such as CSA, Peak and Endeavor.

The terms of the sale agreement will see consideration of 2.75 million fully paid ordinary Peel shares and replacement of the environmental bond relating to ML1361 (A$43,000) in exchange for the full transfer of ML1361 to Peel. Conditions of the agreement include the completion of due diligence investigations and the renewal of ML1361.

May Day Deposit - ML1361

Available data suggests that the May Day deposit, a structurally controlled-volcanogenic massive sulphide (VMS) system, is a classic analogue for Cobar-style precious and base metal mineralisation. Drilling has shown that high-grade mineralisation is present to depths of at least 250m below surface and remains open.

Previous Exploration

Diamond core drilling in the 1970s identified high-grade volcanogenic massive sulphides (VMS). It should be noted that assaying for gold was not completed on large sections of disseminated and stringer mineralisation (only on massive sulphides intercepts). Better results included:

- MD-DDH1 - 5.2m at 3.1% Zn, 2.4% Pb, 0.5% Cu, 68 g/t Ag, 2.5 g/t Au from 109.79m.
- MD-DDH2 - 1.8m at 9.1% Zn, 3.1% Pb, 0.5% Cu, 49 g/t Ag, 3.4 g/t Au from 147.07m.
- MD-DDH3 - 4.8m at 11.5% Zn, 9.4% Pb, 0.8% Cu, 179 g/t Ag, 1.9 g/t Au from 138m.
- MD-DDH4 - 3m at 8.9% Zn, 4.9% Pb, 1.4% Cu, 235 g/t Ag, 6.2 g/t Au from 282m.
- MD-DDH6 - 0.5m at 14.5% Zn, 8.4% Pb, 0.6% Cu, 156 g/t Ag, 4 g/t Au from 160m.

RC Drilling in the late 1980s and early 1990s focussed on the near-surface, oxidised portion of the May Day mineralised system, however deeper drillholes (maximum depth of 99m) yielded multiple noteworthy gold-base metal intercepts. Drillhole intercepts occurring between 50m (base of pit) and 100m below surface across 150m of strike length (below the open pit) included:

- MDH18 - 30m at 1.7 g/t Au from 54m
- MDH27 - 40m at 0.7 g/t Au from 56m*
- MDH29 - 33m at 1.3 g/t Au from 66m*
- MDH30 - 36m at 1.9 g/t Au from 52m
- MDH31 - 29m at 2.1 g/t Au from 70m*
- MDH32 - 22m at 1.5 g/t Au from 74m*
- MDH33 - 24m at 1.3 g/t Au from 40m
- MDH37 - 16m at 1.6 g/t Au from 70m
- MDC54 - 25.9m at 1.7 g/t Au, 1.2% Zn, 0.5% Pb, 0.2% Cu, 33 g/t Ag from 61.4m*

Mining

In the mid-1990s, Imperial Mining NL (precursor to Imperial Corporation Ltd) acquired the May Day project and commenced small-scale mining operations with the aim of completing Research and Development on a new resin recovery system known as "Virtokele-in-pulp". Records indicate that 81,000t at 3.35 g/t Au and a the intervening covered zone has been completed and the area represents a high-further 102,000t at 1.3 g/t Au were mined from the May Day open pit. Technical problems were encountered with the Vitrokele recovery system.

Mineralisation potential

Cobar style mineralisation typically has much longer dimensions in the vertical plane rather than along strike. May Day appears to fit well with this analogue, with a relatively short strike length (approximately 140m) and known depth extent to 250m below surface. Limited deeper drilling has been completed to date. Peel believes that current drill data supports potential for the definition of substantial gold-base metal mineralisation within 300-400m of surface.

Mining infrastructure in the region is well established and the opportunity may also exist for limited capital expenditure if an economic resource is recognised, with the possibility of trucking ore for toll treatment at nearby underutilised processing plants.

ELA3776

In early September 2009, Peel lodged ELA3776 covering 84 km2 surrounding the May Day deposit. ELA3776 encompasses potential extensions to the May Day mineralised system, and also covers the historic Gilgunnia and Four-Mile goldfields.

The Gilgunnia goldfield has recorded production of about 5,000 ounces gold from narrow, high-grade gold in quartz veining. The Gilgunnia goldfield lies approximately 2.5 kms northeast of May Day, along strike. Limited exploration of priority exploration area.

Elsewhere within ELA3776 are several surface base metal geochemical anomalies (not previously tested for gold) that warrant further investigation, along with several surface gold geochemical anomalies. These areas represent follow-up targets.

For the complete Peel Exploration ASX Announcement, please click the link below:

http://www.abnnewswire.net/media/en/docs/61493-ASX-PEX-461345.pdf

Contact

Peel Mining Limited T: +61-8-9382-3955 F: +61-8-9388-1025 E: info@peelex.com.au WWW: www.peelex.com.au