Peel Exploration Limited (ASX:PEX) Quarterly Report For The Period Ending 30 June 2010

Perth, Aug 2, 2010 AEST (ABN Newswire) - Peel Exploration Limited (ASX:PEX) is pleased to provide a Quarterly Report for the period ending 30 June 2010. Highlights for the quarter include;

- Option over Apollo Hill gold project acquired.

- Encouraging gold-base metals mineralisation intercepted in drilling at May Day including: 16m @ 1.78 g/t Au, 42 g/t Ag, 0.25% Cu, 0.95% Pb, 1.33% Zn; and 27m @ 2.12 g/t Au, 27 g/t Ag, 0.07% Cu, 0.43% Pb, 0.75% Zn.

- Encouraging molybdenum-gold-copper mineralisation intercepted in drilling at Attunga including: 5.6m at 0.44% Mo, 0.70 g/t Au, 12 g/t Ag, 0.45% Cu, 1.9 g/t Re; and 1.4m at 22.70 g/t Au, 13 g/t Ag, 0.72% Cu.

- Modelling of May Day/Gilgunnia gravity, IP and regional magnetic data completed.

- Desktop study of historical May Day drilling and geological data including 3D modelling completed.

- Desktop study of historical Apollo Hill drilling and geological data including 3D modelling commenced.

Exploration

Apollo Hill Project: Gold; NE Goldfields WA (HHM 100%, PEX option to acquire).

During the quarter, Peel announced that it has 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 project, located about 50 kilometres southeast of Leonora, comprises 16 mineral leases covering about 140 square kilometres and is focused on the advanced Apollo Hill gold deposit, an extensively mineralised gold system (see Figure 1).

The key terms of the option agreement will see:

- Peel granted an exclusive call option over the assets comprising the Apollo Hill gold project (expiring 30 November 2010);

- Peel complete an aboriginal heritage and work programme clearance survey during the option period.

If Peel elects to exercise the option and proceed with the acquisition of Apollo Mining Pty Ltd then the sale agreement will see:

- Peel issue 11 million fully paid ordinary shares to Hampton Hill Mining NL in consideration for the entire issued capital of Apollo Mining Pty Ltd (subject to Peel shareholder approval);

- Hampton Hill Mining NL transfer E31/0685 to Peel (being part of the Apollo Hill gold project - not held by Apollo Mining Pty Ltd);

- Hampton Hill Mining NL granted a 5% gross overriding royalty on Apollo Hill gold production exceeding 1 million ounces.

The Apollo Hill gold project exhibits the hallmarks of a major mineralised system, showing extensive and intense hydrothermal alteration and deformation. Two significant gold deposits, Apollo Hill and the Black (or Camp) deposit, have been identified to date and remain open in several directions. Peel believes that excellent potential exists for the delineation of additional mineralisation.

Background and Geology

Fimiston Mining 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 (see Figure 2).

Multiple gold mineralisation events are interpreted to have occurred at Apollo Hill during a complex deformational history. Gold mineralisation is accompanied by quartz veins and carbonate-pyrite alteration associated with a mafic-felsic contact.

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. Deeper 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 termed the Western trend (Black deposit).

Resources and Targets

The main Apollo Hill deposit has been drilled by traverse sections spaced 20m to 100m apart. Gold mineralisation is open along strike and down dip on most sections. Preliminary mineral resource studies were undertaken by Fimiston in 1996 using a manual cross sectional polygonal method, however, no detailed report was prepared and hence the resource estimate calculated does not meet ASX JORC code reporting requirements.

Peel has completed an in-depth systematic review of the Apollo Hill database and believes that a significant gold resource target is achievable with minimal additional exploration. Furthermore, it is also apparent that previous exploration has identified multiple gold geochemical anomalies away from the known gold deposits that require priority follow-up.

May Day Project: Gold, Lead, Zinc, Silver, Copper; W NSW (PEX 100%).

Tenements: ML1361 (May Day), EL7461 (Gilgunnia)

Targets: Volcanogenic Massive Sulphide mineralisation.

Drilling

In early May, Peel completed a programme of 10 RC drillholes for 1,877m at the May Day gold-base metal deposit, located about 100km south of Cobar in central-western New South Wales. This drilling programme was primarily designed to test for down-dip extensions to known mineralisation.

Better drill results from May Day include the following intercepts:

- 16m at 1.78 g/t Au, 42 g/t Ag, 0.25% Cu, 0.95% Pb, 1.33% Zn from 159m in MDRC002;

- 24m at 0.96 g/t Au, 20 g/t Ag, 0.07% Cu, 0.70% Pb, 0.85% Zn from 120m in MDRC004;

- 27m at 2.12 g/t Au, 27 g/t Ag, 0.11% Cu, 0.43% Pb, 0.75% Zn from 120m in MDRC005;

- 3m at 1.33 g/t Au, 98 g/t Ag, 0.92% Cu, 7.29% Pb, 8.19% Zn from 140m in MDRC006, and;

- 10m at 2.15 g/t Au, 28 g/t Ag, 0.06% Cu, 0.34% Pb, 0.39% Zn from 213m in MDRC010.

Peel is encouraged by the results returned, which confirm down dip extensions containing several higher grade zones including a massive sulphide intercept. A full list of significant assay data is contained in Table 1.

The drilling at May Day confirms that mineralisation is shear-related and occurs as a sub-vertical lense/shoot. Mineralisation occurs at or near the interbedded contact of a fine-grained sedimentary hangingwall and a porphyritic volcanic footwall. Mineralisation at May Day is associated with silica/talc alteration and includes disseminated through to massive sphalerite-galena-pyrite-pyrrhotite-chalcopyrite sulphide mineralisation. The true width is estimated to be approximately 65% of the reported intercepted widths.

Peel believes that the May Day deposit, a structurally controlled-volcanogenic massive sulphide (VMS) system, is an analogue for Cobar-style precious and base metal mineralisation. Peel was attracted to the May Day prospect by its encouraging historic drilling results, geophysical signatures, and lack of modern exploration. Peel believes that the drilling results returned confirm the prospectivity of May Day.

Geophysics

Since acquiring May Day in late 2009, Peel has completed several geophysical surveys comprising a gravity survey, an Induced Polarisation (IP) survey and remodelling of regional airborne magnetic data. Interpretation shows that a moderate-to-strong chargeable IP anomaly and a deep magnetic anomaly are associated with the May Day deposit.

Peel believes that drill results support the Company's belief that the May Day deposit possibly represents "leakage" from a deeper mineralised system. Interpretation of the magnetic data indicates the source of the anomaly to be located at greater than 400m below surface (see Figure 1). Drillhole MDRC010 intercepted mineralisation at about 185m below surface, with mineralisation remaining open at depth.

Future work

Peel believes that good potential exists for the discovery of additional near-surface gold-base metal mineralisation along strike from the May Day deposit. Shallow historic RAB drilling completed to the west of May Day in the 1970s delineated near-surface geochemical lead-zinc anomalism in close proximity to several historic workings. No gold assays were undertaken at the time of drilling, and no follow-up drilling has ever been completed. Peel is looking to complete a review of all recently acquired and historic data, along with a shallow aircore/RAB drilling programme testing for near surface mineralisation.

In addition, a regional airborne VTEM survey is planned by several neighbouring tenement holders. VTEM has been shown to be an effective exploration tool in the Cobar district and has the ability to penetrate to up to 500m depth. Peel is examining the merits of completing a survey over the May Day area.

Attunga Project: Gold, Tungsten, Molybdenum, Copper; NE NSW (PEX 100%).

Tenements: EL6883 (Mt Patterson), EL6884 (Attunga).

Targets: Intrusive-Related Gold System style gold-tungsten mineralisation; skarn style tungsten-molybdenum mineralisation and skarn-style precious/base metals mineralisation.

Attunga Copper Mine Prospect drilling

Between March and May, Peel completed a programme of six diamond drillholes for 944m of drilling at the Attunga Copper Mine prospect. This drilling was designed to test for up- and down-dip and along strike continuation of significant polymetallic mineralisation discovered in May 2009 (drillhole ACM004 intercepted 75m at 1.02 g/t Au, 0.87% Cu, 0.09% Mo, 0.06% Bi, and 22 g/t Ag from).

Peel is buoyed by the results with several drillholes returning high grade molybdenum and gold values (see Table 2). In April, Peel reported that ACMD008 had intercepted encouraging visible molybdenum-copper mineralisation over an approximate 8m zone. Final analysis confirmed a high grade molybdenum interval of 5.6m at 0.44% Mo, 0.70 g/t Au, 12 g/t Ag, 0.45% Cu, 1.9 g/t Re from 48m. ACMD008 also contained several other zones of encouraging mineralisation including a high-grade gold intercept of 1.4m at 22.70 g/t Au, 13 g/t Ag, 0.72% Cu from 55m.

Mineralisation at the Attunga Copper Mine is interpreted to be sub-vertical and occurs in garnet-rich calc-silicate skarn with sulphide minerals including chalcopyrite, bornite and molybdenite. The true width of the intervals reported is unknown due to the uneven geometry of the skarn alteration system, however the overall width of the system is assumed to be less than 8m.

The results from Attunga confirm the presence of significant molybdenum-gold-copper skarn mineralisation that remains open in several directions. Peel will review all drill results and is planning to complete an IP survey as part of future exploration work.

Attunga Tungsten Deposit

No further work was undertaken during the quarter.

Kensington/Kensington NW

Peel is currently completing a shallow RAB drilling programme at Kensington targeting tungsten and gold mineralisation. Historic data indicates the presence of a large, shallow, low/mid grade tungsten occurrence. RAB drilling currently underway is designed to test for this occurrence, along with associated gold mineralisation. Kensington is located just 5km north of Peel's 100%-owned Attunga Tungsten Deposit.

A limited RAB programme is also planned for the Kensington NW gold prospect. Rock chip sampling by Peel has returned anomalous gold values associated with an outcropping breccia whilst a previous explorer has reported a significant gold-in-bedrock anomaly over 1.5 km strike.

Yerranderie: Silver, Lead, Gold; Central NSW (PEX 100%).

Tenement: EL7356.

Targets: Silver-lead-gold mineralisation in surface waste and tailings dumps.

No fieldwork was undertaken during the quarter.

Mt Tennyson East: Molybdenum, Tungsten; Central NSW (PEX 100%).

Tenement: EL7272.

Targets: Skarn-hosted molybdenum and tungsten mineralisation.

No fieldwork was undertaken during the quarter.

Dungowan Project: Copper, Zinc, Gold, Silver; NE NSW (PEX 100%).

Tenement: EL6613.

Targets: Polymetallic VHMS mineralisation; syngenetic exhalative gold mineralisation; and epigenetic structurally-controlled gold mineralisation.

No fieldwork was undertaken during the quarter.

Armidale Project: Silver, Gold, Antimony, Tungsten; NE NSW (PEX 100%).

Tenement: EL6722.

Targets: Intrusive-related precious metals mineralisation.

No fieldwork was completed during the quarter.

Corporate

During the quarter, Peel announced that it has 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. Apollo Hill represents an advanced gold project.

For the complete Peel Exploration Quarterly Report including tables and figures, please refer to the following link:
http://www.abnnewswire.net/media/en/docs/63449-ASX-PEX-499646.pdf

Contact

Peel Mining Limited T: +61-8-9382-3955 F: +61-8-9388-1025 E: info@peelex.com.au WWW: www.peelex.com.au