Quartz Circle Project Location

The Quartz Circle project, located 25km north-northeast of Nullagine in the East Pilbara District of Western Australia, consists of 2 exploration licences and 11 prospecting licences. When it listed on the ASX in June 2005 Graynic had an earn-in agreement with Cazaly Resources Limited, the holder of these tenements, to earn 80% of the Quartz Circle Project for the expenditure of $1 million. This milestone was reached during 2006, and Graynic now has an 80% interest in the project. Cazaly remains a joint venture partner with a 20% interest, free carried to initiation of a feasibility study.

The project area has been historically prospected for gold and base metals. There are no records of historical production, but there is one small copper working of uncertain age located centrally within the tenement area.

Exploration since 1971 has included:

• geological mapping, soil sampling, rock chip sampling, geological interpretation
• RC and diamond drilling
• ground based magnetics, EM, IP, gravity, Sirotem, MIMDAS
• airborne EM, magnetics and radiometrics.

The Company believes the target has all the footprints of a large volcanic-hosted massive sulphide (VMS) deposit which could be of considerable size and the project is regarded as a valuable asset. Since listing Graynic has spent an estimated $2M in exploration at Quartz Circle and has drilled 85 holes for a total of 13,108m.

Substantial progress has been made during the past 2 years, one of the highlights being an intersection of zinc mineralisation in RC drill hole GMRC021 at the Emperor Prospect, which contained 43m grading 4.4% Zn. Recent drill hole GM 58 produced the first significant base metal intersection (8m@1.26% Zn, 0.97% Pb and 458g\t Ag) ever achieved at the Imperial Prospect, confirming this area as a valid base metal target. It adds support to the view that the pronounced gravity anomaly could represent a large base metal deposit. This is however a fairly deep target, at least deeper than reached to date using 250m inclined holes. In addition to base metals, the presence of quite high gold grades aligned over a distance about 500m raises the possibility of a small gold deposit that could be accessed by open pit.

A small but shallow deposit of high grade Cu-Au-Ag mineralisation at Igloo Prospect could also provide a source of income in the medium term through custom milling of high grade ore. The company also believes there is diamond potential in the area base on structures on the ground and historical evidence in the region.

Quartz Circle Prospect Location