STRATEGIC MINERALS CORPORATION NL ACN ANNUAL REPORT 2008 FOR THE YEAR ENDED 31 DECEMBER 2008

STRATEGIC MINERALS CORPORATION NL ACN 008 901 380 ANNUAL REPORT 2008 FOR THE YEAR ENDED 31 DECEMBER 2008 Strategic Minerals Corporation NL Annual ...
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STRATEGIC MINERALS CORPORATION NL ACN 008 901 380

ANNUAL REPORT 2008 FOR THE YEAR ENDED 31 DECEMBER 2008

Strategic Minerals Corporation NL

Annual Report 2008

CORPORATE DIRECTORY DIRECTORS Claude F Guerre (Chairman) Wally A C Martin (Managing Director) Roland D Bartsch (Managing Director) Claude Bigeard

COMPANY SECRETARY Jay Stephenson

REGISTERED OFFICE Suite 4, Level 1 460 Roberts Road Subiaco, Western Australia 6008 (P.O. Box 66, Floreat Forum WA 6014)

AUDITORS BDO Kendalls Audit & Assurance (WA) Pty Ltd 182 Hay Street Subiaco, Western Australia 6008

HOME EXCHANGE Australian Stock Exchange Limited Exchange Plaza 2 The Esplanade Perth, Western Australia 6000 ASX Code: SMC

Telephone (08) 9388 8399 Facsimile (08) 9388 8511

SHARE REGISTRY Security Transfer Registrars 770 Canning Highway Applecross, Western Australia 6953

Email: [email protected] Website: www.stratmin.com.au

Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233

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Strategic Minerals Corporation NL

Annual Report 2008

CONTENTS OF STATUTORY ANNUAL REPORT

Page Company Particulars & Contents

1

Chairman’s Address

3

Review of Operations

4

Directors’ Statutory Report

25

Corporate Governance Statement

35

Auditors’ Independence Declaration

42

Financial Report

43

Directors’ Declaration

77

Auditors’ Report

78

Additional Shareholder Information

80

This is the financial report of Strategic Minerals Corporation NL as an economic entity and its controlled entities for the year ended 31 December 2008. The economic entity comprises:

• • • • • • •

Signature Resources Pty Ltd Telluride Mining Pty Ltd Spencer Mining Pty Ltd Strategic Metals Corporation Pty Ltd Strategic Mineral Investments Pty Ltd and its subsidiary Bayfield Mineral Sands Pty Ltd Alpha Uranium Pty Ltd

Strategic Minerals Corporation NL is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. The address of the registered office and principal place of business is: Suite 4, Level 1 460 Roberts Road SUBIACO WA 6008

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Annual Report 2008

CHAIRMAN’S ADDRESS Dear Shareholder It is with pleasure that I present the following report of the Company’s activities for the year 2008. In the past year the company focussed its exploration activities in both fieldwork and drilling on its Woolgar gold project in northern Queensland. A total number of 42 holes were drilled during the year for a total of 2902 metres, with the majority of drilling focussing on the Sandy Creek area. The programs conducted were highly successful, with a new high gold discovery being identified in an extensive area of gold in soil anomalism and veining at Mowbray, and additional gold resources being added to gold inventory at the Sandy Creek area. Outstanding results from the limited drilling conducted at Mowbray demonstrates the potential which exists for the numerous untested targets in regional areas, within the main tenement holding, principally along the Woolgar fault zone. This potential can only be realised through ongoing drilling campaigns, however the results from Mowbray has expanded the confidence in discovering additional high grade near surface deposits in the project area. As reported in my address to shareholders in 2008, up-dated resource modelling was being undertaken along with scoping and pre-feasibility studies, with a view to assessing the economic development alternatives for the gold resources within the Woolgar project. Those studies are continuing and at the time of writing this report the Company is discussing avenues for raising the capital required for completing the feasibility assessment and securing the capital for acquiring and commissioning of the most appropriate treatment plant. The current global economic crisis has strengthened the confidence of international investors in the future of gold as a commodity, which is expected to continue to increase in value. The increasing gold price of course will have a significant effect on the economics for producing gold from Woolgar, which has been the ultimate objective of the board for some time. From its inception, Strategic has focussed on its gold project at Woolgar, having established a global near surface gold resource in the order of 774,000 ounces at an average grade of .96 g/t, with several high grade deposits included in the inventory. The overall results of the Sandy Creek drilling are being collated for further updating of the resource base. Because of the current economic climate, Strategic, along with many other Australian junior exploration companies, has reviewed both it’s portfolio of tenements and its administrative and technical budgets and have taken steps to reduce costs appropriate to the economic circumstances. Several tenements that were acquired largely as a strategic buffer zone around the principal Woolgar tenement holdings have been relinquished and management remuneration reduced. The board will vigorously pursue the objective of elevating the Company from explorer to gold producer, and in light of the current gold market, I am confident that this objective will be achieved. Sincerely

Claude Guerre CHAIRMAN

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Annual Report 2008

REVIEW OF OPERATIONS GOLD Woolgar Gold Project, Queensland Strategic Minerals Corporation N.L. (100%) Background The Woolgar gold field is located 120 kilometres north of Richmond in north Queensland (Figure 1). Strategic’s Woolgar project tenements cover an area of 700 square kilometres and all mining titles and exploration permits are 100% owned and managed by Strategic. The regional area is one with a high gold endowment. Multi-million ounce gold deposits have been developed at Kidston (4.1m oz Au), Charters Towers (7.1m oz Au), Mt Leyshon (3.2m oz Au) and Pajingo - Vera Nancy (3.2m oz Au). High grade epithermal gold veins were first recognised by Strategic at Woolgar in 2002, in the Sandy Creek area, expanding the potential of the field to host a major gold deposit. The epithermal veins at Woolgar are believed to have many geological similarities to those at Pajingo, one of Australia's largest and most profitable gold mines. The majority of the high grade material at Pajingo occurs at deeper levels and was discovered by intensive deep drilling of geological targets. The geological similarities with Pajingo, and other epithermal deposits, demonstrate a great opportunity for gold discoveries through continued drilling of the extensive Sandy Creek vein system, both near surface and at depth. Some 18km of veined structures are exposed at surface, and the gold mineralised veins have been demonstrated to extend beneath surrounding younger cover rock sequences.

Gold nugget from the historical Woolgar Goldfield in the Mowbray and Perseverance areas.

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Past and current work programs have been directed toward continued expansion of the near surface gold resource base, and development of open pit mining operations to take advantage of the high gold prices. A portion of the cash flow from surface operations will be assigned to deep resource drilling for large high grade Pajingo type targets. Figure 1 – Woolgar Project Location

Geology and Resources The total global resource for the Woolgar project including Measured, Indicated and Inferred categories at mostly a 0.8 or 1.0 g/t cut off is 10.43 million tonnes at 1.39 g/t gold, approximately 446,800 ounces gold, Table 1. The majority of these resources occur near surface (0 - 100m depth) within open pittable mining depths. At lower resource estimation gold cut-off grades, a larger unpublished gold resource exists in the Sandy Creek epithermal vein system at open cut mining depths. At a 0.4 -0.5 g/t cut-off grade the current global resource, in Measured, Indicate and Inferred categories) is estimated at 25.16 million tonnes at 0.96 g/t, approximately 774,100 ounces of gold (excluding unpublished new discoveries requiring additional drilling). The gold deposits within the Woolgar project tenements occur in two distinct areas, the Sandy Creek area and the historical Wooglar goldfield (Figure 2). Mineralised veins or fault zones in both areas are hosted within Proterozoic basement rocks exposed as 'windows' through younger relatively flat lying sedimentary cover rocks.

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Annual Report 2008

The majority of the resources, approx. 350,000 ounces gold (Table 1) are hosted by the Sandy Creek low sulphidation epithermal vein system, in several mineralised shoots (Figure 3). This vein system has a very large footprint, with approximately 18km of veining exposed at surface, and clear evidence of the veins extending further beneath surrounding younger Jurassic sandstone cover rocks. Additional gold deposits are located to the north and northwest of the Sandy Creek area within the historical Woolgar Goldfield, which has seen periods of mining from the late 1800’s through to the 1970’s. The numerous small historical gold workings are distributed over 20km's on or adjacent to the major Woolgar Fault zone, a major fault splay off the Gilberton fault zone, which is spatially associated with numerous gold occurrences including the major Kidston gold deposit. The largest drilled resource position within the Woolgar goldfield of approx. 95,000 ounces gold (Table 1) is the Soapspar deposit. Figure 2 - Woolgar project, geology & deposit locations

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Table 1 - Woolgar Project Global Resource Summary Resources Estimated At Higher Cut-off Grades Classification

Cutoff Grade

Tonnage

Gold Grade

Gold Metal

T x 1000

g/t

oz's

Resources Estimated At Lower Cutoff Grades Cutoff Grade

Tonnage

Gold Grade

Gold Metal

T x 1000

g/t

oz's

SOAPSPAR DEPOSIT Measured

0.4

1,667

0.91

48,800

0.4

1667

0.91

48,800

Indicated

0.4

1,175

0.90

34,000

0.4

1175

0.9

34,000

Inferred

0.4

472

0.82

12,400

0.4

472

0.82

12,400

3,314

0.89

95,200

3314

0.89

95,200

SUBTOTAL

SANDY CREEK EPITHERMAL VEIN DEPOSITS Measured

0.8 - 1.0*

4,752

1.62

247,100

0.4 - 0.8**

12066

0.98

381,700

Indicated

0.8 - 1.0*

953

1.38

42,370

0.4 - 0.8**

5113

1.04

171,100

Inferred

0.8 - 1.0*

989

1.95

62,130

0.4 - 0.8**

4672

0.84

126,100

SUBTOTAL

7,117

1.63

351,600

21,850

0.97

678,900

TOTAL

10,431

1.39

446,800

25,164

0.96

774,100

* The majority of resources estimated at a 0.8 g/t gold cut-off grade; Explorer estimated at a 1.0 g/t cut-off grade. ** The majority of resources estimated at a 0.4 or 0.5 g/t gold cut-off grade; Shanghai & Finn estimated at a 0.8 g/t cut-off grade. Note: Initial results from modelling in progress for Lost World, integrating new drilling and more detailed data is indicating a small reduction in the global resource estimate above, the model is expected to be concluded in the first quarter of 2009.

Figure 3 - Sandy Creek schematic geology & gold resource locations

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2008 Exploration Overview Exploration and mine development work programs continued to be the Company’s focus at the Woolgar gold project. Exploration programs are being undertaken with the objective to expand the near surface open pitable resource base to 1 + million ounces of gold. (The project is believed to have the potential to deliver 1 - 3M oz’s gold at a potential grade between 0.9 – 4g/t gold. The described project resource potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a Mineral Resource larger than the published 774,000 oz’s gold and it is uncertain if further exploration will result in the determination of a larger Mineral Resource; the conceptual potential is based on analogy with the similar epithermal deposits such as the Pajingo Deposit, located to the east of Woolgar). Exploration programs were conducted within the main Sandy Creek epithermal vein system and on regional targets. Exploration in 2008 was delayed and restricted by a shortage of drilling equipment and qualified staff in northern Queensland, and high associated costs. In the early part of the Woolgar 2008 field season, an extensive detailed program of soil sampling (standard soils and MMI), rock chip sampling and mapping was conducted over identified targets in the historical Woolgar gold field. Some 2196 standard soil samples and 305 MMI samples were collected and assayed during the year. Significant new exploration targets were established in the Mowbray (Big Vein) area, including gold in soil anomalies, and major untested mineralised veins. Drilling at Woolgar commenced in September, with a series of holes designed to test a number of shallow targets within the Sandy Creek epithermal vein system, and the newly identified targets in the Mowbray area. The drilling phase consisted of 42 RC drill holes totalling 2902 metres of drilling. The drilling was conducted by Well Drill Pty Ltd. The exploration highlight for the year was the confirmation of a major new gold target in the Mowbray area at Woolgar; with the initial reconnaissance drilling returning the following high grade drill intersections: ƒ

5m @ 39.3g/t gold, Intersection from first and only hole at the new Big Vein target.

ƒ

12m @ 2.76 g/t gold, Intersection at Big Vein No. 2 target.

The new discovery is located approx. 7.5 km west of the Company’s Sandy Creek gold deposits, on the Woolgar fault zone. The holes, which returned the significant intersections at Mowbray, were part of a widely dispersed reconnaissance first pass drill program directed at structural and geochemical targets defined over a 2.5 km strike length. At the Sandy Creek area additional mineralisation was also established by the drilling. Zones of mineralised veining and alteration were intersected in the majority of the drill holes completed. Regional Targets – Exploration Results The new Big Vein / Mowbray targets are located within the historical Woolgar goldfield, approx 7.5 kms to the west of the Sandy Creek epithermal vein system which hosts the majority of the projects published 774,000 oz gold resource at an overall grade of 0.96g/t gold (total for all categories measured, indicated and inferred; as per Table 1). The new target areas were highlighted by aeromagnetic and soil sampling surveys, and are located to the SE and E of historical gold mines at Mowbray (Figure 2). The soil sampling programs identified significant gold anomalies over a 2.5km strike length. Soil samples are -80 mesh sieved samples collected at a 20m spacing on 100m spaced lines. Reconnaissance MMI soil sampling was conducted across the southern extensions of the mineralised Woolgar fault zone which is blanketed by extensive alluvium and Jurassic sandstone. 8

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Annual Report 2008

In 2008 a total of 11 shallow RC drill holes were drilled in the Mowbray area. The holes were widely dispersed designed as a first pass reconnaissance test of targets defined by surface sampling programs conducted during the year. Summary drilling results and drilling location statistics are provided in Tables 1 & 2 below. The most prominent targets identified by the sampling and drilling are as follows. Mowbray NE Mowbray NE, is a major >0.05ppm gold in soils anomaly, situated along strike on the same mineralised fault zone, to the NNE of the Big Vein target. The >0.05ppm anomaly is approximately 600m x 125 m and has a peak value of 0.52ppm gold. Initial rock sampling from the area returned values of up to 91.4 g/t gold and 12.9g/t gold to below detection limits from vein outcrops (refer to Table 3 for a full list of outcrop sampling results). Initial mapping has identified several intersecting gold mineralised structures within the anomaly. Two of the four holes drilled at the Mowbray NE area (the northern most exposure of the main structure) located approximately 1.75 km to the north of the Big Vein target, recorded significant intersections as follows: Hole MBRC0004,

2m @ 4.55 g/t Gold, from 24 to 25m down hole;

Hole MBRC0005,

2m @ 1.71 g/t Gold, from 67 to 69m down hole

Hole MBRC0003, intersected an old open mining stope at the target position. Big Vein The Big Vein targets were expressed in the soil sampling surveys by two extensive, >0.05ppm gold in soils anomalies, with peaks of 0.45ppm and 0.47ppm gold respectively, which occur on either side of a ridge covered by a blanket of Jurassic sandstone. The sandstone masks the underlying rocks which are prospective hosts to gold mineralisation. The gold anomalies and mapped gold mineralised veins project under the Jurassic cover, and are likely to be a single larger gold anomalous zone >450m x 200m. A small 200m diameter “bullseye” magnetic anomaly is situated immediately adjacent to the gold anomalies. The source of the magnetic anomaly is masked by the Jurassic sandstone cover rocks. A weak magnetic anomaly is associated with the Kidston gold deposit located to the north of the Woolgar Project area. Mapping in 2008 indentified two major sub-parallel veined structures coincident with the anomalies, to date these have been mapped and sampled over a strike length of approximately 1km. The soil anomaly on the eastern side of the Jurassic sandstone ridge coincides in part with the historical ‘Big Vein’ gold workings. The historical workings at Mowbray were shallow. Initial rock sampling returned a maximum value of up to 29.4 g/t gold from Big Vein and 7.48g/t gold from Big Vein 2, and several lower grade gold mineralised samples (Table 1).

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Annual Report 2008

Only one hole was drilled into the main Big Vein target which recorded the following outstanding results: Hole MBRC0009,

5m @ 39.3 g/t Gold, from 40 to 45m down hole; (including 2m @ 91.95 g/t Gold) and, 1m @ 5.85 g/t gold,

from 51 to 52m down hole

Two out three holes into the main section of Big Vein No. 2 recorded the following results: Hole MBRC0007,

12m @ 2.76 g/t Gold,

from 4 to 16m down hole

Hole MBRC00011,

5m @ 1.32 g/t Gold,

from 11 to 16m down hole

The two best intersections were recorded in holes targeting veins where they project beneath thin (1-4m thick) Jurassic sandstone cover rocks. The drill holes are widely separated and the mineralised intersections are open in all directions. The dips of the mineralised veins are not well understood at this stage, but are thought to be generally steep. Other Targets Additional smaller high level gold in soil anomalies have been highlighted by the current sampling, with peaks as high as 3.03 ppm gold. The majority of these anomalies coincide with outcropping lodes with historical shallow gold workings. Figure 4 - Schematic plan of Mowbray area, showing drilling, gold in soils and preliminary rock sampling results and schematic geology.

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Annual Report 2008

Sandy Creek Targets - Exploration Results In 2008, further exploration of the Sandy Creek epithermal vein system focused on targeted drilling to test for additional shallow open pitable resource positions. A total of 33 shallow RC drill holes were drilled. The holes were widely dispersed designed as a first pass reconnaissance test of targets defined by surface sampling programs conducted in 2008. Summary drilling results and drilling location statistics are provided in Tables 1 & 2 below. Significant results were also received from additional shallow RC drilling conducted in the established Sandy Creek epithermal vein system, which hosts the majority of the projects published 774,000 oz gold resource (total for all categories measured, indicated and inferred; as per Table 1). Drill results from the Sandy Creek area have highlighted incremental strike and/or plunge extensions to gold mineralised zones within the Grand Central, West End and Hillview South structures. At the Telecom vein, the drilling has highlighted a narrow mineralised structure with a defined strike length of approximately 700m; the grade and width of the structure is variable and more drilling will be required to properly assess the potential of the structure. Future Exploration Ongoing drilling will be conducted with the objective of delineating new shallow open pitable gold mineralised positions, with the objective of increasing the gold resource base to 1 million oz’s of gold. The current published estimated global gold resource totals approx. 774,000 oz’s at an average grade of 0.96 g/t gold (total for all categories measured, indicated and inferred; as per Table 1). Additional MMI soil sampling is also proposed to further test the ‘blind’ southern extensions of the Woolgar fault zone where it masked by younger cover of alluvium and Jurassic sandstone. The Company is designing a follow-up drill program to be implemented in 2009. Within the Sandy Creek Epithermal vein system, past and recent combined RC and diamond drilling has defined broad gold mineralised envelopes of >1g x m, at shallow and moderate depths, within several of the major veined structures. These zones are open and untested at depth and along strike [refer to illustrations from the Lost World, Shanghai and Hillview structures, Figures 47]. Particularly significant is the potential to extend the major Lost World resource to the NW, where recent initial step-out drilling has confirmed gold mineralisation beneath the Jurassic sandstone cover. Within the historical Woolgar goldfield, extensive soil geochemical surveys, mapping and reconnaissance drilling conducted along the major Woolgar fault zone, has established numerous targets for drilling, in addition to established targets on the historical Woolgar goldfield mine workings. Strategic's immediate drilling strategy is to carry out further systematic step-out drilling on these and other similar targets, with the objective of expanding the near surface resource position.

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2008 Mining Assessment & Resource Model Updates Prefeasibility assessment of a stand alone heap leach style mine development of the Soapspar gold deposit, which is located 8km to the north of the main epithermal gold resources at Sandy Creek, was initiated in 2006. The initial assessment of the Soapspar deposit conducted in 2006/7, demonstrated that the ore at Soapspar would require fine crushing and agglomeration to achieve the desired gold recoveries from heap leach processing, As a consequence it was evident that the development economics would be greatly improved by integration of Soapspar with the Woolgar global resource base. The prefeasibilty work program was expanded in 2008 to include all the established gold resources at Woolgar, upon the withdrawal of Oxiana Ltd from the Woolgar Joint Venture in late 2007, which released the resources from any development restrictions inherent in the Joint Venture terms. Updating and refining of the resource block models was conducted as the first stage of the expanded prefeasibility assessment, which is ongoing. Resource modeling was undertaken by

SRK Consulting Engineers & Bartsch Geoscience Pty Ltd. Camp Vein A new resource model for the Camp Vein deposit and an update of the Grand Central resource model was completed in April 2008. The Camp Vein and Grand Central gold resource positions are shallow, within open-pitable depths, situated in two intersecting structures. The total resource estimate for the Camp Vein and Grand Central deposits including Indicated and Inferred categories at a 0 g/t Au cut off within a nominal 0.4 g/t Au shell is 2,764 000 tonnes at 1.14 g/t Au. Included within this is a high-grade pod of 13,500 tonnes at 21.97 g/t Au. The resource estimate is summarised in Table 5. The resource estimate is consistent with JORC guidelines. The resource is classified on a global basis due to the poor continuity of higher grades; the current drill spacing is insufficient to accurately define local block grades above a zero cut off. Lost World A new resource model is also being completed for the main Lost World gold deposit, and is currently being finalised. The new model integrates recent shallow and deep drilling and detailed mapping constraints. Initial results from the modelling in progress for Lost World, is indicating a small reduction in the global resource estimate. The model is expected to be concluded in the first quarter of 2009. Midgee Creek Project, Queensland Strategic Minerals Corporation N.L. (85%) Background EPM16815 was granted in March 2008 (Figure 4). The tenement is held 85% by Strategic Minerals Corporation NL and 15% (free carried) by Bartsch Geoscience Pty Ltd. The EPM has been targeted primarily for high grade gold vein and shear zone hosted gold deposits, in addition to porphyry and intrusive related replacement gold deposits. The EPM16815 is situated within a corridor of historical mine workings, which includes the giant Mount Morgan mine and the smaller Mount Chalmers Au, Cu, Ag mine. The EPM is approximately 11km NE of Mount Morgan and 28km SE of Mount Chalmers. The Mount Morgan mine produced 7 648 533 oz of gold and 360 616t of copper. The tenement is located approximately 14km south of Rockhampton which provides excellent infrastructure to support both exploration and any potential mining; with major coastal highways, railways and grid electricity for power in close proximity.

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Annual Report 2008

Historical Mining & Previous Exploration 26 small historical gold ± copper mine workings are located within EPM16815, which were mined predominantly in the late 1800’s and early 1900’s through to 1946 (QDME, 2007a). Mine workings were for narrower high grade vein and shear zone hosted mineralization and broader zones of disseminated intrusive related gold ± copper mineralization, and alluvial gold. The most significant recorded hard rock mine production, of 279.43kg gold from a mine working within EPM16815, was from the Hector mine, which was mined to a depth of 143m. Alluvial workings were also extensive; around 2000 alluvial miners are reported to have been camped at Glenn Dee, also within the EPM area. A review of historical exploration is currently being conducted. Based on the Qld Department of Mines & Energy (QDME) databases, very little modern detailed exploration has been conducted over the target area. Some 38 rockchip samples are recorded in the QDME database within the EPM boundaries. Four of these samples are highly anomalous in gold, including one sample which assayed 111g/t gold (31 out of the 38 samples recorded were less than detection limits for gold (QDME, 2007b). All the rock samples have been collected outside the main target area of interest. Targets The primary target of interest is the intersection of two structural domains. A major NNE trending structural corridor extending through the major Mount Chalmers Au-Cu-Ag and Mount Morgan Au-Cu mines, and a NW trending fault zone along which are clustered numerous abandoned historical gold workings centred on the old Midgee Creek gold workings. The projected intersection of these two structural domains sits on the margin of the Bundaleer Tonalite (part of the Bouldercombe Intrusive Complex) in areas mapped with extensive alluvium cover. It is thought that the identified covered structural setting may represent a relatively unexplored ‘blind’ target position. Figure 5 - Midgee Creek project location map

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Annual Report 2008

URANIUM & BASE METALS Alpha Uranium Limited (Strategic Subsidiary Company) Woolgar Uranium Project, Queensland Strategic Minerals Corporation N.L. (100%) Overview Outcropping uranium occurrences were identified in past exploration conducted within the Woolgar project area. Previous drilling in the 1970's defined zones of mineralisation with high grade drill intersections up to 6m @ 0.25% eU3O8, and mineralised rock chips samples from several prospects up to 0.67% U3O8. Numerous untested airborne radiometric (uranium channel) anomalies occur throughout the tenements associated with a regionally extensive unexplored unconformity. Unconformity-related uranium deposits constitute approximately 33% of the world’s uranium resources and include some of the largest and richest deposits. Three main prospect areas at Woolgar have been identified with outcropping uranium occurrences and significant airborne radiometric anomalies. They were: 1. Perseverance-Shamrock 2. Middle Park 3. Sandy Creek Potential for the discovery of uranium deposits is considered high and an extensive exploration program, including drilling of identified targets has been designed. The board’s assessment was that it should seek to establish a new and independently funded company dedicated to identifying and exploring significant the portfolio of uranium projects. A wholly owned subsidiary company of Strategic, Alpha Uranium Limited, was established for the purpose of independently raising capital dedicated to exploring the portfolio of uranium tenement interests of Strategic, including its South Australian interests, and a prospectus was lodged with the ASIC in November to raise $4,000,000 via an Initial Public Offering in August 2007. Unfortunately investor interest in Uranium IPO’s declined commensurate with the lack of liquidity on the market, and the Alpha offering was not fully subscribed. The IPO successfully raised over $3.4 million of the minimum subscription sought; however market sentiment toward uranium projects declined and the Directors elected to withdraw the IPO until market conditions were more favourable. Strategic retains 100% ownership of its uranium assets through its subsidiary Alpha, and intends to conduct further exploration programs over the tenements in the future.

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Figure 6 - Perseverance uranium prospect, showing drill holes & significant intersections

Frome Basin Project Projects , South Australia (Martins Well 100%, & Joint Venture Interests - Siccus 10%, Mt Frome 10% & Reaphook Hill 7.5%) Background The Frome Basin Project comprises four exploration licenses along the western margin of the Frome Basin in South Australia, prospective for the discovery of uranium and base metal deposits. The projects include Martins Well (Alpha Uranium Ltd 100%) and free carried interests to bankable feasibility in three joint venture projects:- the Siccus Uranium JV (10%), Mt Frome JV (10%) and Reaphook Hill JV (7.5%). The Exploration Licenses are located approximately 500 kilometres north of Adelaide, and to the southwest of the Lake Frome shoreline (Figure 6). The project areas are believed to be highly prospective for further deposits of the style analogous to Beverly and Honeymoon Well, where uranium occurs in Tertiary palaeochannels (Figure 6). Beverley and Honeymoon Well are located 100km north and 100km southeast of the Siccus JV tenement respectively. Compilation of available geological data and targeting has confirmed the potential for palaeochannels that host uranium mineralisation. The Frome Basin project portfolio includes properties that contain significant base metal and gold exploration potential within Proterozoic ‘basement' and Cambrian rocks localised at the Frome Basin margins. In addition, other priority target styles have been identified; including a strong magnetic anomaly, which may reflect magnetic alteration minerals associated with Cu-Au mineralisation (refer to Martins Well project below). Further work is planned.

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Annual Report 2008

Siccus Joint Venture EL 3288 Alpha Uranium Ltd (10% Free Carried To Bankable Feasibility) Exploration License 3288 is regarded to be highly prospective for new discoveries of uranium. Beverley uranium mine and Honeymoon Well are located 100km north and 100km southeast of the Siccus JV tenement respectively. Exploration on the tenement targeting roll-front uranium mineralisation is managed by Uranio Limited (UNO) on behalf of the Siccus Joint Venture. Under the terms of the Siccus Joint Venture Uranio Limited holds a 70% interest, Deep Yellow (DYL) holds a 20% interest, with the remaining 10% interest is held by Signature Resources (Alpha Uranium) a wholly owned subsidiary of Strategic Minerals Corporation NL. Joint venture partner Deep Yellow commissioned Fugro Airborne Surveys to fly an airborne radiometric and electromagnetic survey in 2007, totalling 730 line-km over EL 3288. Based on the results of this survey, paleochannel drill targets were established. In 2008, a 1600m (8 hole) rotary mud drill program was conducted by Uranio. While the prospective stratigraphy was intersected, no significant results were recorded. Drilling has partially tested the southern and western side of the paleo-drainage. Scope for further work exists along the untested parts of the main paleo-drainage and further west of existing drilling, where the redox interface in Eyre sands could be expected. This work is planned, subject to further assessment of all historic data. Figure 7 - Frome Basin project areas & schematic geology

Lake Frome and Reaphook Joint Ventures EL 3346 & EL 2991 Alpha Uranium Ltd (10% and 7.5% Free Carried To Bankable Feasibility) The Lake Frome (EL 3346) and Reaphook (EL 2991) joint ventures are managed by Perilya. This is a free carried 7.5% joint venture interest in EL 2991 (the Reaphook joint venture) and a free carried 10% joint venture interest in EL 3346 (the Lake Frome joint venture). 16

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The joint venture areas contain three advanced exploration projects for lead and zinc, with three partly explored deposits: •

Eric’s lead deposit,



Wiluroona lead-zinc deposit and



Reaphook zinc deposit.

The Reaphook joint venture is between Perilya Limited (85%), Alpha Uranium Ltd (7.5% through its wholly owned subsidiary Signature Resources) and Paladin Resources Ltd (7.5%). The Reaphook joint venture covers the rights to explore for, and develop, all commodities other than uranium on EL 2991. At Reaphook, previous rock chip sampling returned values to 27% zinc and past drilling returned intersections to 18m @ 2.1% Zinc. The mineralisation is a Mississippi Valley type (MVT) model or a possible higher grade temperature variant as indicated by the Beltana zinc deposit located to the west of the project. Activity in relation to base metal exploration and development on the Lake Frome and Reaphook joint venture ELs is being conducted and fully funded by Perilya. No field activity was conducted in 2008. A program of drilling by Perilya is planned for the area. Martins Well Project EL 3508 Alpha Uranium Ltd. (100% Strategic wholly owned subsidiary) The Martins Well project EL 3505 adjoins the Siccus and Reaphook hill JV tenements. The tenement is owned and managed by Strategic Minerals, through its wholly owned subsidiary Alpha Uranium Ltd. Parts of the Martins Well tenement EL3508 are covered by Pleistocene to Holocene sediments at the surface. The Quaternary sediments cover a large portion of the tenement and mask older Tertiary sediments of the Eyre and Namba formations which are host to the Beverly and Honeymoon uranium deposits elsewhere in the basin. Late Proterozoic and Cambrian sandstone, siltstone, dolomite and limestone subcrop, characterise the rest of the tenement. Structural features consist of two domal features, the Martins Well and Willippa Domes, which define the distribution of Proterozoic and Cambrian strata. From the Martins Well Dome a swarm of barite, and manganese enriched faults extend northeast to the Reaphook Zn deposit. Similar style faults with a more northerly orientation extend north of the Willippa Dome. The Mammoth Black Ridge prospect is located on one of these faults and was developed on discordant, siliceous, ironstone striking approximately north northeast for 1.3km. Copper, silver and gold are reported to have been mined here.

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Strategic Minerals Corporation NL

Annual Report 2008

Figure 8 - Local geology of Martins Wells tenement

Two high Cu (± Au, U) priority exploration targets have been identified within EL3508, these included: 1) Willipa Dome – a ‘blind’ magnetic target, Figure 7; and, 2) Mammoth Black Ridge Mine – a copper anomalous ‘ironstone’ ridge

In 2008, 3D modelling of the Willippa magnetic target was conducted, and field work commenced, with reconnaissance rockchip sampling and mapping conducted across all the identified outcropping targets. Drill holes have been designed to follow-up on positive sampling and modelling results. Willipa Dome Magnetic Prospect The highest priority target assessed was the unexplained strong magnetic anomaly approximately 1km in length, within and cutting across the core of the Willippa anticline. It is postulated that this anomaly may represent a large magnetite constructive alteration zone, which could have associated Cu (Au-U) mineralisation. Small Cu occurrences are mapped in proximity to the anomaly. Modelling of the magnetic target suggested that the magnetic body comprises a series of stacked flat dipping bodies; the shallowest occurring at 80m depth. Extensive breccias and gossanous quartz veins were indentified at the up-plunge position of the magnetic body and throughout the footwall position. Several samples from this outcrop were highly anomalous in arsenic (maximum value sample WD0007= 2940ppm As; range

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