Quarterly Report for the period ended 30 June 2010

Highlights

• Binding Heads of Agreement signed with Ivernia Inc (TSX:IVW) (“Ivernia”), an international base metal mining and exploration company, to invest a minimum of $2 million in exploration within 12 months to advance the Prairie Downs Base Metal Project (“Project”).

• New geological interpretation demonstrates significant potential for resource additions and highlights the exciting exploration potential of the project.

• Updated total JORC compliant Mineral Resources of 3.0 million tonnes at a grade of 4.9% zinc, 1.6% lead and 15 grams per tonne silver.

• New highly efficient management structure implemented including the appointment of Mr Dennis Wilkins as Company Secretary and Mr Gordon Barratt as Non-Executive Director.

• Prairie continues to actively seek and review new project opportunities designed to complement existing assets and deliver long-term growth to shareholders. The Company has developed an efficient project identification and due diligence capability and is confident that its disciplined approach will continue to deliver positive outcomes for shareholders.

Joint Venture Agreement

In June 2010 Prairie concluded an agreement with Toronto based Ivernia Inc. (“Ivernia”) (TSX:IVW) which will result in Ivernia funding a significant exploration program at the Company’s flagship project. By investing a minimum of $3 million in exploration over 18 months Ivernia will earn an option to acquire a 60% interest in the Project for a payment to Prairie of $10 million. As a result of this agreement an aggressive exploration program is underway to pursue high priority targets near the existing known mineralisation and a number of other high priority targets along strike of the regional structure.The Joint Venture contemplated by the binding Heads of Agreement will result in a fully funded and expertly managed exploration program designed to expand existing resources and discover new world class zinc-lead deposits. This will support and enhance the project feasibility work already conducted by the Company. A successful Joint Venture will result in the development of the Project and in Prairie, in addition to receiving $10 million, retaining a significant interest in a new base metal mine.

This agreement provides the opportunity to rapidly accelerate exploration and development of the Project. Ivernia’s commitment recognises the potential of the Project and endorses the Company’s recent initiatives.

Updated Resource Statement

During the quarter the Company reported a revised JORC Mineral Resource for its 100% owned Project at Prairie Downs to include results from all drill programs conducted to date. The updated resource was completed by Independent specialist mining resource and geological consultants, Optiro Pty Ltd (“Optiro”).  The updated resource is based on a complete review and reconstruction of the geological database, a new geological interpretation and a revised geostatistical interpolation.The Mineral Resource estimate, reported above a cut-off grade of 1% zinc, is tabulated overleaf. Results include:

• Indicated Resources tonnage updated to 2.28 million tonnes from 2.26 million tonnes;

• Inferred Resources tonnage updated to 0.7 million tonnes from 2.40 million tonnes; and

• Overall Total Resource grade updated to 6.5% Zn + Pb from 8.1% Zn + Pb.

Table 1 - June 2010 Prairie Downs Mineral Resource

Prairie Downs Mineral Resource - June 2010
Domain	Resource Classification	tonnes	Zinc (%)	Lead (%)	Silver (ppm)
Central	Indicated	310,000	5.55	1.69	15.8
East	Indicated	930,000	6.68	1.73	22.2
Main Splay	Indicated	670,000	3.75	1.01	6.3
West	Indicated	360,000	3.88	2.24	11.8
Total Indicated		2,280,000	5.22	1.59	15.0
Central	Inferred	220,000	3.62	1.88	18.4
East	Inferred	140,000	5.81	1.73	21.1
Intermediate Splay	Inferred	90,000	4.62	1.69	22.4
Main Splay	Inferred	190,000	3.13	1.24	5.9
West	Inferred	70,000	3.51	1.17	6.8
Total Inferred		700,000	4.03	1.58	14.9
Total		2,980,000	4.94	1.59	15.0

  

Exploration Potential

The Mineral Resource estimate was reinterpreted based on an updated geological model which incorporated additional data, including a number of holes drilled since the last Mineral Resource calculation in February 2008.

Optiro updated the Company’s geological and structural model to incorporate the main Prairie Downs breccia zone which controls localisation of the ore zones.  A number of late-stage faults which dissect the main ore zone were also interpreted.  Between these fault zones mineralisation was estimated using a 1% zinc cut-off.  Figure 1 below shows a three-dimensional view of the interpreted ore zones looking south together with the drilling and the late cross-cutting faults.  The field of view is approximately 1,800 m from east (left) to west (right).

  Figure 1 – Prairie Downs ore body viewed from the north 
showing ore zones and drill holes

  

Ore zones were subdivided by the faults into the Central, Eastern and Western blocks.  The other ore zone is the Main Splay (formerly called the Gabbro Lode), which sits in the footwall of the main ore zone and strikes northwest-southeast, in contrast to the main ore zones which strike grid east-west (Figure 2).

  

Figure 2 – Plan view with north to the top of the page
showing ore zones and drill holes (faults removed)

  

Drillholes were composited to one metre intervals within the wireframed solids and grade was estimated into 10 mE by 5 mN by 5 m RL blocks, with sub cells for volume fill purposes.  Variography was carried out on the Central, Eastern, Western, Intermediate Splay and Main Splay domains, and revealed a double plunging system.  Estimation was carried out using Ordinary Kriging employing a multiple pass approach.  Estimation parameters were determined by systematic kriging neighbourhood analysis.

A default density of 3t/m3, based upon a suite of specific gravity measurements, was used throughout.  The model was validated against input de-clustered composites on a whole domain and on a slice basis.

Classification was carried out according to the JORC Code (2004) and was based upon the criteria of drilling density and estimation quality.

 

New Management Structure

Prairie has undergone a management restructure to most efficiently manage the ongoing activities of the Company’s existing assets and to assist in seeking new opportunities. 

Mr Alec Pismiris retired as Company Secretary during the quarter and remains a non-executive Director of the Company. The Board take this opportunity to extend a sincere thank you to Mr Pismiris for his years of diligent service as Company Secretary, since relisting the Company in 2005.

Following Mr Pismiris’ retirement, Mr Dennis Wilkins has been appointed Company Secretary. Mr Wilkins is an accountant who has been a director, company secretary or acted in a corporate advisory capacity to listed resource companies for over 20 years in Australia and internationally.

Mr Gordon Barratt has been appointed as a non-executive director. Mr Barratt is an experienced corporate advisor to the resources industry. Mr Barratt is currently a director of Daddo Barratt Broking Pty Ltd and is currently a partner with the RBS Morgans Ltd Caloundra office.

As a consequence of Ivernia managing the Company’s exploration program the services of a full time Managing Director are no longer required and as such Mr John Welborn’s contract as Managing Director will be amended as from 6th August 2010. Mr Welborn will remain as Non-Executive Director of the Company and will assist in overseeing the agreement with Ivernia as well as working with the Board in seeking new opportunities for the Company. 

 

Corporate 

The Company’s cash balance as at 30 June 2010 was $2.7 million.

As at 28 July 2010 the Company had 2,333 shareholders and 72,890,598 ordinary fully paid shares on issue with the top 20 shareholders holding 27.66% of the total issued capital.

Prairie Downs Metals limited continues to explore new investment opportunities designed to deliver long-term growth to shareholders.

 

John Welborn    
Managing Director

For further information contact:

John Welborn    
Managing Director
Prairie Downs Metals Limited

Tel: (+6 18) 9225 5755
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Information in this report that relates to Exploration Results or Mineral Resources is based on information compiled by Mr David Kelly who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Kelly has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Kelly consents to the inclusion in this report of the statements based on their information in the form and context in which it appears.