The geological structure of the area has been defined by analysis of drilling, geological mapping and geophysical data. The magnetite bearing zone has been identified to occur across 39km of strike; 19km in Kalia I and 20km in Kalia II. Within this magnetite bearing zone, multiple ore bodies have been identified. The greenschist which hosts the magnetite occurs as two distinctive bands identified as Kalia I and Kalia II, separated by a large intrusive body of monzogranite of Early Proterozoic age.

The primary iron mineralisation in the Kalia I deposit, consisting of a number of bodies of banded iron (magnetite quartzites), amphibole-magnetite schists and talc/ultramafic magnetite schists which extend from northwest to southeast for a distance of 19 km. The width of exposures in the surface of rocks of the greenstone association, including iron mineralisation bodies of magnetite and amphibole-magnetite quartzite, varies from 2 to 4.5 km. These rocks of the Kambui Supergroup, enclosing the iron mineralisation, are represented by a wide spectrum of schists. These include chlorite-amphibole, biotite-amphibole, pyroxene-amphibole, garnet-biotite-amphibole, chlorite and chlorite-talc varieties. On the southern flank of the deposit, bands of talc rich assemblages which include, actinolite-talc and chlorite-talc schists occur. These talc schists contain disseminations of magnetite. The thickness of packets of talc schists ranges from 10-50+ m.
 
The ore bodies are steeply dipping monoclines or pseudo-monoclines with angles of up to 80° to the south-south-west with up to 14 ore zones identified in each section and individual ore zone widths of up to 350m. Results of the ground magnetic surveys indicate the magnetite zones may extend to depths of more than 2000m.

The results obtained from exploration drilling indicate that there are three principle types of magnetite mineralisation at Kalia identified to date, these are;

Type 1: Magnetite Quartzites (primary BIF)
Type 2: Banded Amphibolites rich in magnetite
Type 3: Ultramafic and Talc schists rich in Magnetite

A maiden Mineral Resource Estimate (MRE) has been completed in August 2009 for the Kalia Magnetite (See Figure 1). The MRE has been classified based on the guidelines documented by the Joint Ore Reserves Committee (JORC, 2004). CSA Global (UK) Ltd (CSA) was commissioned by Bellzone to complete the MRE for the Kalia Magnetite zone. Data used in the preparation of the MRE was sourced from recent diamond drilling and mapping completed over the project. In the MRE Type 1 and Type 2 ores were reported as BIF and Type 3 ore reported as Schist.

The Schist Ore is significantly softer than BIF and can be processed and upgraded economically, even with the lower Fe grade.

The Kalia Resource has been classified as an Inferred Resource based on the guidelines defined in the JORC code. In addition to this resource, depth extensions and lateral extensions of the drill defined resource have been described as Exploration Potential (JORC guidelines) and represent drilling targets for future resource development (See Figure 2). The estimation of exploration potential is conceptual in nature and it is unknown at this time whether developing these targets will result in additional resources. The JORC Resource has been calculated on 4.4km of the known 39km strike length.

Whittle Optimisation Results

Upon completion of the grade model, and prior to resource classification and reporting, Whittle optimisations were completed to ensure a reasonable economic basis for reporting the resource. The Whittle optimisation provided conceptual pit dimensions including maximum potential pit depth. The Whittle optimisations indicated that the Kalia I deposit could be economically mined to the 100mRL based on the current data. It should be noted that the 100mRL is the current base of the Resource Block Model, effectively the Whittle Optimisation “mined” to the base of the current Model (See Figure 3).

The ongoing drilling programme has identified extensions of the magnetite ore bodies. Infill drilling is underway to convert the inferred resource to indicated and measured and to test the areas identified as Exploration Potential.

Based on the results of the JORC Resource definition and optimisation work, it is recognised that significant potential exists to increase the resource tonnage at Kalia. The following image illustrates the footprint of the final Whittle shell based on the current JORC Resource, superimposed on the limits of the known BIF mineralisation. This image confirms the potential to significantly increase the resource tonnage with additional drilling along strike.