Level 2, 45 Richardson Street PO Box 568
West Perth WA 6005 West Perth WA 6872
Telephone: 61 8 9481 2433 Facsimile: 61 8 9322 5907
QUARTERLY ACTIVITIES
For the Quarter Ending
31 December 2006
HIGHLIGHTS
�� Uranium - The Lake Marmion Uranium Project has increased with the application for
nearby tenure containing drillholes with heavy mineral concentrates assaying up to
4,856ppm U3O8 within Tertiary channel material. These values strongly suggest that the
base of the palaeochannel at Lake Marmion is also mineralised with Uranium as are the
near surface lake sediments with adjacent trench samples of up to 5,430ppm U3O8.
�� Nickel - The Bardoc Nickel Joint Venture with Minara Resources Ltd has recommenced
exploration with drilling in the Number One Target Area to test in and around the
embayment feature on the basal contact, drill testing a New Nickel Target and after
inconclusive Testwork on the Western Zone drill intersection (45 metres @ 0.5% Nickel,
0.05% Cobalt and 0.1% Copper from 21 metres) conducting an Induced Polarization
(“IP”) Survey to better locate a nickel sulphide source for immediate drill testing.
�� Copper - Results from the previous drill program at the Mount Pleasant Copper Project
may have delineated new Copper Zones with one prospect returning Copper values of
up to 3.61% Copper (“Cu”) from drilling at the Old Mount Pleasant Copper Mine with
supporting surface stockpile samples assaying up to 5.32% Cu.
HALCYON GROUP LIMITED
Quarterly Report: 31 December 2006 Page 1 of 4
Introduction
Activity during the quarter continued to focus on the three high valued commodities of Uranium
(+A$200,000/t), Nickel (+A$53,000/t) and Copper (+A$7,200/t) within the company’s portfolio of mineral
assets; firstly further highly prospective Uranium tenure was applied for at the Lake Marmion Uranium
Project 130 kilometres north of Kalgoorlie in Western Australia, secondly Halcyon as part of the Joint
Venture with Minara Resources Ltd were it is earning up to 70% of the nickel rights on the Bardoc Project,
located 50 kilometres north of Kalgoorlie recommenced Nickel Sulphide exploration, and thirdly the
Company received drill results indicating potential new Copper zones at the Mount Pleasant Copper Project
located 15 kilometres south of Bardoc.
Summary
The Lake Marmion Uranium Project has increased with the application for nearby tenure containing drillholes
from the 1980s with heavy mineral concentrates assaying up to 4,856ppm U3O8 within Tertiary channel
material. These values strongly suggest that the base of the palaeochannel at Lake Marmion is also
mineralised with Uranium as are the near surface lake sediments with adjacent trench samples of up to
5,430ppm U3O8 and auger drilling results of up to 800ppm U3O8 taken in the 1970s.
The Bardoc Nickel Joint Venture with Minara Resources Ltd has recommenced exploration with drilling in the
Number One Target Area to test the interpreted embayment (subsided position containing heavy minerals
e.g. sulphides) feature on the basal contact and two off-hole conductors located along strike, and to test a
New Nickel Target further to the north with a coincidental electromagnetic (“EM”) anomaly and MMI (Mobile
Metal Ions)-M soil anomaly. In addition, after inconclusive Testwork on the Western Zone drill intersection
(45 metres @ 0.5% Nickel, 0.05% Cobalt and 0.1% Copper from 21 metres) the Joint Venture is
conducting an IP Survey to better locate a nickel sulphide source for immediate drill testing.
Results from the previous drill program at the Mount Pleasant Copper Project may have delineated two new
Copper Zones with one prospect returning Copper values of up to 3.61% Cu from drilling at the Old Mount
Pleasant Copper Mine with supporting surface stockpile samples assaying up to 5.32% Cu. The other
zone is a new fourth drill target area located a further 500m to the north-west with up to 0.38% Cu
intersected near surface.
During the December Quarter the Company continued to review its 100% owned gold assets at the Bardoc
Project for economic potential of the known gold prospects at the recent higher gold price of over A$830/oz.
There were no dedicated base metal exploration activities at Bardoc during the quarter.
The Company was successful in raising an additional $1,817,210 (net of placement fees) through the
placement of 123.8 million ordinary shares.
Detailed information on all aspects of the Company’s corporate and exploration activities can be found on
Halcyon’s newly updated website www.halcyongroup.com.au, including all attached maps in high resolution
colour.
Lake Marmion Project
The Lake Marmion Project is located ~130kms north of Kalgoorlie in Western Australia. The project consists
of 2 applications for exploration licenses (ELA29/634 & 637-area of 250 km2) covering the Lake Marmion
Tertiary drainage channel. The tenure contains drillholes from the 1980s with heavy mineral concentrates
assaying up to 4,856ppm U3O8 within Tertiary channel material. The tenure is also adjacent to trench
samples of the lake sediments taken in the 1970s which assayed up to 5,430ppm U3O8 and was supported
by auger drill results of up to 800ppm U3O8. The project area is highly prospective for both uranium in
surficial (near surface) deposits such as lake sediments and for the deeper palaeochannel/sedimentary type
uranium mineralisation (see attached map).
HALCYON GROUP LIMITED
Quarterly Report: 31 December 2006 Page 2 of 4
This quarter the Company applied for tenure which contained drilling by BHP Minerals Ltd for gold in the
1980s where heavy mineral concentrates assayed up to 4,856ppm (or 0.4856%) U3O8. This result came
from a 2 metre sample of Tertiary channel material within a 4 metre zone where the heavy mineral
concentrates averaged 3,024ppm (0.3024%) U3O8 from 70 metres down drillhole GD7.
This application has now given Halcyon exposure to the discovery of palaeochannel/sedimentary type
uranium deposits with good examples being those deposits in the Frome Embayment in South Australia with
the currently operating in-situ leach mine of Beverley (12 Million Tonnes @ 1,800ppm U3O8) and the recently
discovered and Four Mile prospect (Alliance Resources Limited). Locally the nearest example is the Mulga
Rocks Deposit (220kms to the east) which is associated with lignite (form of organic matter) at the base of a
palaeochannel and contains a resource of 10.8 Million Tonnes @ 1,400ppm U3O8.
Although the results are of concentrates from drill samples, the above mentioned values are very strong
indicators that the base of the palaeochannel is mineralised with uranium, therefore giving a high probability
of discovering economic deposits (greater than 300ppm) of uranium in this palaeochannel/sedimentary type
environment in and around Lake Marmion.
The new tenement application also contains the western extension of the drainage channel that returned
trench sampling results of up to 5,430ppm U3O8 and auger drilling results of up to 800ppm U3O8 in the
1970s.
The Lake Marmion Uranium Project remains highly prospective for uranium in surficial (near surface)
deposits such as lake sediments and the company is initially focussed on testing the potential of the project
to host this near surface material though any drilling will be extended to also test the palaeochannel
potential.
Bardoc Project
Nickel Exploration
Nickel exploration at Bardoc has focused on the highly prospective basal contact of a komatiite unit which
extends over 15km of strike within the Project area. This basal contact is the host for the Scotia nickel
sulphide deposit (1,130,000 tonnes @ 3.1% Ni & 0.3%Cu) located just 10 kilometres to the north of
Halcyon’s tenement boundary. This work is part of a joint venture, where by Minara Resources Limited (ASX:
MRE) are earning up to 70% of the nickel rights to the Bardoc Project (located 50 kilometres north of
Kalgoorlie, in Western Australia) through the expenditure of A$3.1 million.
This quarter the Company recommenced nickel sulphide exploration activities as approved recently by the
Nickel Joint Venture. The approved program has a budgeted expenditure of over $350,000 with the drilling
component to start immediately. The activities are as follows:
Western Zone
After several stages of Metallurgical and Mineralogical Testwork on the sulphide portion of the mineralised
drill intersection reportedly previously from HNIC042 (45 metres @ 0.5% Nickel, 0.05% Cobalt and 0.1%
Copper from 21 metres) the results proved in-conclusive. Therefore it could not be determined whether
similar material in the Western Zone prospect would be amenable to concentrating economically. The
sample proved to be of in-adequate quality to provide representative results.
The Western Zone is still categorised as a massive sulphide Nickel target area with drill hole HNIC042
identifying a priority area within the prospect (see attached map of the Western Zone) due to the intersection
of 60 metres of sulphides from 55 metres which was partly coincidental and adjacent to a Komatiite
(“preferred”) host rock containing high levels of nickel, copper and cobalt further up the same drill hole.
Consequently the Joint Venture has committed to trialling a Dipole-Dipole IP geophysical survey to better
locate a nickel sulphide source within this priority area. An immediate program of follow-up drilling would be
committed if strong anomalies resulted from the early February survey. The aim would be to specifically
target the most sulphide-rich zone for more representative samples.
HALCYON GROUP LIMITED
Quarterly Report: 31 December 2006 Page 3 of 4
Number One Target Area
The conclusion from the one hole (HNIC043) drilled in the previous program was that the basal contact of
the komatiite unit that hosts the Scotia Nickel Deposit to the north in this highly prospective area still remains
untested. The Joint Venture has committed a further 3 drill holes, one hole to test the interpreted embayment
(subsided position containing heavy minerals e.g. sulphides) feature on the basal contact and 2 other holes
to each test off-hole conductors located along strike.
New Nickel Sulphide Target Area
The latest EM survey provided another 3 strong conductors from the Pride Gossan area through to an area
just north east of the Excelsior Pit, one of these anomalies coincided with better MMI-M soil values of nickel,
chromium, cobalt and palladium indicating a new Nickel Target (see attached map). The Joint Venture has
committed to drill testing this target.
Drill results from the drilling component of this program will be released at the earliest opportunity.
Gold Exploration
Gold exploration at the Bardoc Project is centred on the historical Gold mining centre of Bardoc. The project
covers 25 kilometres of strike of the Bardoc Tectonic Zone (BTZ) which has a geological and structural
setting that is very prospective for large scale gold mineralisation as is evident by the very successful
Paddington deposit (4Moz) located 12 kilometres along strike to the south of Bardoc. The BTZ extends over
a strike length of 75 kilometres and hosts in excess of 6Moz of gold.
During the December Quarter the Company continued to review its 100% owned gold assets at the Bardoc
Project for economic potential of the known gold prospects at the recent higher gold price of over A$830/oz.
Base Metals Exploration
There were no dedicated base metal exploration activities during the quarter.
Halcyon believes that the Bardoc project has good potential to host a high valued multi-commodity VHMS
(Volcanic hosted Massive Sulphide) style deposit similar to the Jaguar Deposit some 200kms to the north.
The Company continues to actively seek a Joint Venture Partner to fund further exploration on the two main
base metal target areas.
Mount Pleasant Project
The Mount Pleasant Project is located 32 kilometres north west of Kalgoorlie. Previous mining yielded 84.3
tonnes @ 7.6% Copper in 1960-62 from the Old Mount Pleasant Copper Mine and then a bulk sample was
collected in 1973/74 from an underground shaft called the New Mount Pleasant Copper Mine with over 250
tonnes stockpiled and assaying up to 8.6% Copper & 100g/t Silver. The Copper-Silver mineralisation is
associated with silica rich pods within black shales and metasediments at the contact between major gabbro
and basalt rock units. The gabbro unit to the west contains historic gold workings (Golden Buckle) that
produced 78.6 tonnes @ 85.4g/t Gold prior to the Second World War.
This quarter the Company received results from the previous drill program at the Mount Pleasant Copper
Project. These values may have delineated two new Copper Zones with one prospect returning Copper
assays of up to 3.61% Cu from drilling at the Old Mount Pleasant Copper Mine with supporting surface
stockpile samples assaying up to 5.32% Cu. The other zone is a new fourth drill target area located a further
500m to the north-west with up to 0.38% Cu intersected near surface.
These are strong indicators that a new copper zone adding scale to the project maybe close to discovery.
Success in this area combined with that already delineated deposit at the New Mount Pleasant Mineralised
Zone could provide sufficient tonnes of Cu metal available to develop a first stage mining and milling
operation at the Mount Pleasant Project.
HALCYON GROUP LIMITED
Quarterly Report: 31 December 2006 Page 4 of 4
The outcomes of the last round of exploration drilling are as follows:
�� Old Mount Pleasant Copper Mine (84.3 tonnes @ 7.6% Copper was mined in 1960-62)- 6 holes where
drilled in this campaign, surface stockpiles were sampled and 2 old gold targeted drill holes where resampled,
the highlights being:
�� 1m @ 3.61%Cu, 8.6g/t Silver (Ag), 1.46g/t Gold (Au) & 0.04% Cobalt (Co) within 2m @
2.56%Cu, 4.7g/t Ag, 0.79g/t Au & 0.03% Co from 23 metres in HMPC061.
�� Surface Stockpiles returned a best result of 5.32%Cu, 7.4g/t Ag & 0.23g/t Au, 0.08% Co &
0.21% Zinc (Zn).
�� 1m @ 0.84%Cu, 7.4g/t Ag & 0.14g/t Au from 35 metres (resample of previous gold
drillhole).
Further drilling is required to delineate the high grade trend associated with the previous mining.
�� North-west of the Old Mount Pleasant Copper Mine – a new drill target area based on a Cu soil
anomaly 500 metres away was tested by a total of 3 holes in this campaign, the highlight being:
�� 1m @ 0.38%Cu & 3.4g/t Ag within 8m @ 0.24%Cu & 1.0g/t Ag from 16 metres in HMPC058.
Further drilling is required to intersect higher grades at depth or along strike.
�� New Mount Pleasant Mineralised Zone – a total of 8 holes where drilled in this campaign to extend the
previously delineated mineralisation, the highlights being:
�� 2m @ 1.17%Cu within 8m @ 0.60%Cu & 0.5g/t Ag from 21 metres in HMPC038.
�� 3m @ 0.84%Cu & 29.1g/t Ag within 7m @ 0.69%Cu & 13.6g/t Ag from 40 metres in HMPC043.
No further work is expected on this area until the project is closer to the development stage.
�� North of the New Mount Pleasant Mineralised Zone – 7 drillholes were used in this campaign to test
Cu and Zn soil anomalies a further 400 metres to the north of the main mineralisation at New Mount
Pleasant. The results were only anomalous though the stratigraphy still needs to be verified to
determine that the target zone was fully tested.
�� North of the Old Mount Pleasant Copper Mine – 2 drillholes were used in this campaign to test a
coincidental Cu soil anomaly/magnetic anomaly along strike to the Old Mount Pleasant Copper Mine.
The results were not encouraging enough to warrant any further drilling at this stage.
The Company is encouraged by results from two of the four new Copper prospects tested and is likely to do
further follow drilling in the near future to determine if either zone may lead to a new discovery that would
prompt development of the Mount Pleasant project.
Andrew Radonjic
Managing Director
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Andrew
Radonjic, Managing Director of Halcyon Group, who is a member of The Australasian Institute of Mining and Metallurgy included in a list promulgated by
the ASX from time to time.
Mr Radonjic has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Radonjic consents to the inclusion in the report of the matters based on his information in the form and context in which
it appears.
HCY
halcyon group ltd
