Apollo Hill - E39/1198; P31/1797; P39/4586; P39/4587; P39/4588; P39/4589; P39/4590; P39/4591; P39/4592; P39/4677; P39/4678; P39/4679; P39/4789; E31/0685; E31/0800; and E39/1236 - located about 50 km southeast of Leonora, Western Australia, contains two significant gold deposits; Apollo Hill and the Black Zone. These deposits exhibit the hallmarks of a major mineralised Archean gold system, showing extensive and intense hydrothermal alteration and deformation.

In June 2010, Peel announced that it had entered into an option agreement with Hampton Hill Mining NL (ASX:HHM) to acquire the entire issued capital of Apollo Mining Pty Ltd, the 100%-owner of the Apollo Hill gold project in the North Eastern Goldfields of Western Australia. The Apollo Hill gold comprises 16 mineral leases covering about 140 km². In November 2010, Peel exercised its option over Apollo Hill gaining 100% ownership.

History

Fimiston Mining Limited discovered Apollo Hill in December 1986 during a drill program aimed at finding the source of abundant eluvial gold at the base of a prominent hill in the area. Active drilling since then has outlined extensive gold mineralisation and alteration over a one kilometre strike length, which is up to 250m wide and dips 45-60 degrees to the east.

Geology

The Apollo Hill gold project straddles a major shear zone, known as the Apollo shear zone, which is a component of the Keith-Kilkenny Fault system. This shear zone is largely concealed beneath transported overburden, often associated with the Lake Raeside drainage system, and previous surface geochemical sampling and shallow RAB drilling has consequently been of limited effectiveness. Drilling by previous explorers has largely focussed on the only locality where this shear zone is exposed at surface, Apollo Hill itself, and also on a nearby parallel trend where the Ra deposit is located.

Aboriginal Heritage and work program clearance survey

As required under the terms of the Option and Sale agreement with Hampton Hill, in September 2010 Peel undertook an Aboriginal Heritage and work program clearance survey utilising the services of consulting anthropologist Daniel de Gand and Wongatha Aboriginal Heritage Consultants. The outcome was positive with large areas of the project area effectively cleared for future exploration access.

Metallurgy

Also in late 2010, Peel undertook preliminary metallurgical testwork on two representative samples of Apollo Hill mineralisation to determine potential extraction characteristics. Key findings of this testwork were:

• Overall gold extraction was excellent for both samples, with 98.68% and 98.76% total gold extracted for Sample 1 (15-16m - AD002) and Sample 2 (154-155m - AD002), respectively.
• Leach kinetics were rapid for both samples, with a significant proportion of gold solubilised within the first two hours of cyanide contact.
• Both samples contained a significant amount of gravity recoverable gold, greater than 80%.
• Relatively low base metal levels limit the possibility of excess reagent consumption caused by base metal - cyanide complexation.
• Organic carbon levels below detectable limit, indicating very little chance of preg-robbing occurring during cyanidation.

Resource Estimation

In November 2010, Peel reported a maiden resource estimate for the Apollo Hill and Ra deposits. The highlights of this work were:

• Maiden resource at Apollo Hill and Ra deposits estimated at 11.1 Mt at 1.0 g/t Au for 341,000 ounces of gold (using 0.5 g/t gold cut off).
• Maximum depth of the resource estimate is 150m below surface.
• At a 0.2 g/t gold cut off for scenario planning the estimated resource is 26.6 Mt at 0.6 g/t Au for 534,000 ounces of gold.
• The Apollo Hill deposit extends to surface and remains unexploited.
• Mineralisation at Apollo Hill and Ra deposits remains open at depth and along strike to the south of both deposits.
• Potential increase in resources with minimal further drilling.
• Exploration planning now underway, infill and extensional drilling planned for March 2011.

The Apollo Hill resource consists of two deposits: the main Apollo Hill deposit and the Ra deposit to the south-east. A breakdown of the inferred resources present at 0.5 g/t gold cut off for each deposit is shown in Table 1.

	Mt	Au g/t	Ounces
Apollo Hill (total)	9.9	1.0	318,000
fresh	7.5	1.0	241,000
oxide	2.4	0.8	62,000
Ra (total)	1.2	1.0	39,000
fresh	0.8	1.0	26,000
oxide	0.4	1.0	13,000
Combined Total	11.1	1.0	341,000

Table 1. Summary of Apollo Hill inferred resource estimate at 0.5 g/t cut-off.

Resource Estimate Details

The resource estimate, completed by independent consultants Hellman & Schofield Pty Ltd, is based on 22,887 metres of historic drilling made up of 35 diamond, 214 reverse circulation and 136 aircore drill holes completed by a number of explorers since 1986. The resource estimate has been classified as Inferred under the JORC code (2004 edition). Work completed by Peel Exploration has included re-sampling and examination of diamond core, field visits, and compilation and validation of data. The current estimates assume densities of 2.3 and 1.8 t/bcm for oxidised Apollo Hill and Ra (previously known as Camp) mineralisation respectively, with a density of 2.6 t/bcm for fresh rock at both deposits.

Documentation of historic sampling details is variable, however approximately 35% of the sample data (metres drilled) used in the resource estimation has documentation covering details of the methodologies used.

Assaying was carried out at a number of laboratories in Perth and Kalgoorlie. About 75% of the samples used in the estimation were analysed by fire assay with AAS finish method with the remainder analysed using either aqua regia or LeachWell digests with AAS finish or unknown finish methodology. More than 15% of assay results have had repeat analysis carried out and further check analysis has also been carried out on a number of batches.

Cut off	Weath.	Ra			Apollo Hill			Combined
Au g/t		Mt	Au g/t	koz	Mt	Au g/t	koz	Mt	Au g/t	koz
	Oxide	1.6	0.5	26	7.3	0.5	117	8.9	0.5	143
0.2	Fresh	2.3	0.6	44	15.4	0.7	347	17.7	0.7	391
	Total	3.9	0.5	63	22.7	0.6	438	26.6	0.6	534
	Oxide	0.6	0.8	15	3.4	0.7	77	4.0	0.7	92
0.4	Fresh	1.2	0.8	31	9.5	0.9	275	10.7	0.9	306
	Total	1.7	0.8	44	12.9	0.9	373	14.7	0.8	398
	Oxide	0.4	1.0	13	2.4	0.8	62	2.8	0.8	75
0.5	Fresh	0.8	1.0	26	7.5	1.0	241	8.3	1.0	267
	Total	1.2	1.0	39	9.9	1.0	318	11.1	1.0	341
	Oxide	0.3	1.1	11	1.7	0.9	49	2.0	0.9	60
0.6	Fresh	0.6	1.2	23	6.0	1.2	231	6.6	1.2	255
	Total	0.9	1.1	32	7.7	1.1	272	8.6	1.1	314
	Oxide	0.2	1.3	8	0.9	1.2	35	1.1	1.2	43
0.8	Fresh	0.4	1.5	19	3.9	1.4	176	4.3	1.4	195
	Total	0.5	1.4	23	4.8	1.4	216	5.4	1.4	238
	Oxide	0.1	1.6	5	0.5	1.4	23	0.6	1.4	28
1.0	Fresh	0.2	1.7	11	2.6	1.7	142	2.8	1.7	153
	Total	0.4	1.7	22	3.1	1.7	169	3.4	1.7	181

Table 2: Apollo Hill resource estimates to 150 metres depth.

In addition, Peel Exploration submitted 100 quarter core samples from three drill holes to ALS Laboratory Group in Perth, WA for triple analysis by fire assay (50g) and AAS finish. Standard reference material was also submitted by Peel Exploration. ALS conducted duplicate sample checks, lab standard checks and blank sample checks. Pulps of these samples were the submitted to Standard Reference Laboratories in Perth, WA for analysis by fire assay as a further check. The results largely confirmed previous sampling and assaying results.

Location of drill hole collars was sourced from historic reports with variable survey methodologies completed. Down hole surveys were predominately conducted with a down hole camera. Structural studies in 2004 indicate that the predominant drilling direction previously used has the highest probability of intersecting the greatest number of mineralised features.

The topographic surface used was generated from all drill hole collar coordinate data, and 200 by 200 metre spaced spot heights from a ground gravity survey completed by Fugro Ground Geophysics in March 2004.

Hellman & Schofield estimated resources for the Apollo Hill gold project by using Multiple Indicator Kriging with block support correction methodology, to reflect open pit mining selectivity. The model estimates recoverable resources into panels sized 10 metres across strike by 30 metres along strike by 5 metres vertical. Although the model estimates extend to around 290 metres depth, the reported resources only include estimates to approximately 150 metres below surface to reflect realistic extraction depths.

Peel Exploration believes that the shallow and extensive nature of mineralisation at the Apollo Hill gold project suggests that the project has reasonable prospects for eventual economic extraction.

Apollo Hill Deposit Details

At Apollo Hill, two zones of mineralisation have been identified: West (or Main) Zone and the East Zone (see Figure 2). The current resource extends for 600m in strike length and Peel Exploration expects to increase this to the south-east with further drilling. The gold mineralisation dips to the north-east at 45-60 degrees and is accompanied by quartz veins and carbonate-pyrite alteration associated with a structurally deformed mafic-felsic lithological contact. Mineralisation is present at surface.

The Apollo Hill mineralisation has been tested by generally 30 metre spaced, 45 degrees trending traverses of drill holes generally inclined towards the south-west. Across strike spacing is variable. For most traverses, the upper approximately 50 metres has been tested by holes spaced at around 20 metres. Below this depth the coverage is highly variable, ranging from around 20 metre spacing on some sections to commonly greater than 60 metres.

The western mineralised domain strikes 315 degrees and has an average width of approximately 95 metres. The eastern domain strikes 330 degrees and has an average width of approximately 115 metres.

Recent metallurgical testwork by Peel Exploration has been favourable showing gold extraction levels of over 80% by gravity separation alone and greater than 98% of gold extractable via gravity and cyanidation.

Ra Deposit Details

The Ra gold deposit is covered by a layer of transported material, with mineralisation hosted by dolerite rock and dipping 30-60 degrees to the east. The current resource at Ra has a strike length of approximately 300m with mineralisation open along strike and at depth.

Ra deposit mineralisation has been tested by generally 20 metre spaced, 45 degrees trending traverses of drill holes inclined towards the south-west. Across strike spacing is generally around 15 metres to a depth of approximately 60 metres below surface. Below this depth, sampling is limited to rare, broadly and irregularly spaced drill holes.

Further Work

Planning of additional exploration at Apollo Hill is well advanced, with infill and extensional drilling designed to increase resources and provide sufficient material for comprehensive metallurgical testwork is planned for later in the March quarter subject to regulatory approvals. A preliminary scoping study is planned for mid year. An IP geophysical survey commenced in January 2011, however high salinity levels in nearby covered terrain interfered with data quality and the survey was subsequently cancelled.