SUPERSORB’S MINERAL EXPLORATION ASSETS – MOLYBDENUM AND TIN

In this section we provide a brief summary review of the new exploration projects that your Company has negotiated rights to acquire interests in and a background to the strategies we are implementing leading to a new exploration focus on two strategic metals- molybdenum and tin.

OVERVIEW - OUR STRATEGIES

Metal Price Cycles and the Chinese Economy

Most metal prices in the ferrous and non-ferrous sector have risen strongly since 2003.  These dramatic price increases, in the light of relatively subdued economic growth in Europe and the US economies, can be largely attributed to the growth in the Chinese economy and the resultant flow-on effect to other Asian economies.  China has strongly increased its presence in the global market for commodities, as a net importer, to feed large scale of building of industrial plants, buildings and infrastructure projects in that country.

This strong upward movement in commodity prices and the likelihood, in the view of your Directors, of sustained longer term commodity prices well above long term averages, provides a very positive environment for potential resource development opportunities in these commodities.  The Directors of Supersorb have acted to take advantage of strategic opportunities in two commodities – molybdenum and tin – which we believe present attractive opportunities flowing from strong price cycles.  Further background on these two strategic metals is summarised below.

Molybdenum Markets

The usage of molybdenum is strongly linked to the consumption of stainless steel, constructional steel and specialised high strength/high temperature steel alloys.   Approximately 75% of all molybdenum produced goes into these applications as an important alloying element in such specialised steel production.

The balance of 25% is consumed as specialised chemicals, and as pure molybdenum metal.

The Molybdenum price (in the form of molybdenum oxide used as a feedstock in most applications) has risen strongly from a 20 year average below US$5 per pound (1992-2002), to recent prices in excess of US$25 per pound.

The chart below shows the molybdenum price over the last three years:

Apart from the clearly evident demand in current mainstream metallurgical applications, there are a number of global trends that suggest that molybdenum demand will continue to increase as the metal is utilised in facing new technological challenges, including:

• Control of greenhouse emissions
• Vehicle weight reduction and trend towards higher strength materials
• Diesel engines for improved fuel efficiency
• Fuel cell powered vehicles
• High pressure corrosion resistant pipelines for long distance gas and oil transmission
• Higher operating temperatures of fossil power plants for better efficiency and reduced emissions.

We believe that the state of current markets and trends in molybdenum utilisation in specialised steels provide a strong indicator of sustainable prices well above long term averages.

Supersorb’s Molybdenum Strategy

Although we consider that prices of US$25 per pound may not be sustainable in the longer term, we believe that there is a strong probability that long term molybdenum prices will average well above the US$5 per pound seen over the last two decades.  These anticipated higher prices will significantly enhance the project economics for the development of molybdenum resources.

We have targeted, initially, potential high grade resources of molybdenum mineralisation (The Khartoum and Everton projects – described further below), that have the scope to be proved up and brought into production with a relatively short lead time and low capital expenditure for production plants.  The potential for additional commercial molybdenum resources will be investigated at Valla, which is a more ‘grass roots’ project.

Tin Markets

The main demand for tin comes from the electronics industry, with approximately 45% of world consumption going into the production of solders (a sector that has been exhibiting strong growth in recent years).  The second biggest consumer is for tinplate (20%) with the chemicals industry (15%) being the other significant consumer.  The electronic solder sector is seen as a ‘green’ industry development, with tin replacing lead in lead-free solders.

Tin has been anything but a ‘glamour metal’ in the last 20-30 years.  During the 1980’s and 1990’s the market suffered from falling demand and excess production.  However, extended periods of low prices resulted in low levels of investment in production assets, which has in turn resulted in structural changes. 

According to International Tin Research Institute reports, the growth in the Asian electronic solder sector, and in particular the Chinese market, has been driving demand for refined tin.   Current evidence suggests that the tin market is now in overall deficit with contracted supply from producing countries such as Indonesia and Bolivia being outstripped by increasing demand.

These market developments have resulted in a trend of increasing tin prices, as indicated by the three year graph below:

Supersorb’s Tin Exploration Strategy

There are currently few tin producing operations in Australia, and the evidence suggests that there are only a few exploration companies targeting potential tin resources.  We believe the positive outlook for the tin price as evidenced by the recent breakthrough of the tin price above US$10,000 per tonne (US$4.54/lb), and the limited opportunities for supply increases both in Australia and globally, provide a strategic opportunity for tin exploration and resource development for your Company.

We have focused on a potential tin resource in North Queensland (Jeannie River) which has been the subject of extensive drilling in the 1980’s.  The conclusion from that drilling that the project has the potential for a significant tin resource, presents Supersorb with an opportunity for a project with a relatively low resource risk. and the opportunity to assess potential development of the already identified resource and potential further commercial tin resources in this region.  The Jeannie river Project is further reviewed below.

AQUISITION OF EXPLORATION PROPERTIES

The Purchase of Friends Exploration Pty Ltd.

During 2005/2006 we entered into an agreement to purchase a private exploration company Friends Exploration Pty Ltd (“Friends”) with interests in two mineral exploration projects in North Queensland.  The purchase was subject to Supersorb completing its due diligence, which was duly completed, and the finalisation of the acquisition of 100% of the shares in Friends was announced on 28 August 2006.

This purchase gave Supersorb interests in the two KEY exploration projects targeting molybdenum and tin.  The Khartoum Project in North Queensland was a significant high grade molybdenum mine at the time of the First World War.  It has not been in production since that date and has been subject to very little further exploration.

The Jeannie River prospect, also in North Queensland, was identified by Carpentaria Exploration Company Ltd (“CEC”) (a subsidiary of MIM Holdings) in the 1980’s as a potential significant tin resource.  In the literature, it was written by MIM personnel that “ a possible resource of 6.7 Mt of mineralisation at a grade of approximately 0.8% tin has been indicated by exploration to date.  However, CEC did not continue with this project probably due to low tin prices at the time. 

Molybdenum Exploration Joint Venture Agreements

As announced in the September 2006 Quarterly Report, we have subsequently reached ‘in principle’ agreement with prospectors and private companies to farm-in (through Joint Ventures) to two other molybdenum exploration projects in NSW and Victoria.   These projects are known as “Valla” in Northern NSW and “Everton” in NE Victoria.  Formal farm-in agreements have been executed and are subject to future shareholder approval.

EXPLORATION PORTFOLIO SUMMARY

The Location map below shows the location of the four key exploration projects described above.

Supersorb has a focussed molybdenum-tin exploration portfolio as briefly summarised below:

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