South Pacific Minerals My Sleeper for 2005 and Beyond Peter Grandich Grandich Publications Jun 15, 2005 Every once in a while, a junior comes along that you just feel in your bones could have a nice run. There's not any one reason for the feeling but rather a sum total of all the factors. Such is the case for me when it comes to SPZ. The company was brought to my attention by a financial advisor I used in Canada and had suggested others use after I left the brokerage business in 1995. Graham Harris, who is now a Director and head of corporate development for SPZ, is that person. Graham was very astute, so I was more than willing to hear about a company he decided to become so involved with. I was glad I did. South Pacific Minerals Corp. (formerly Fraserfund Financial) is a TSX Venture Exchange listed (SPZ) junior exploration company that is focused on exploration and development of World Class copper, gold and base metal deposits in one of the richest and most prolific copper and gold producing regions in the world. The company has acquired an 85% effective interest in a major portfolio of properties in mineral rich Papua New Guinea, with three granted Exploration Licenses and seven Exploration License Applications covering 11,000 sq. km (>2,700,000 acres). This has created one of the largest exploration companies in PNG by land area / properties. Their flagship porphyry copper / gold project contains a NI- 43101 Inferred Resource of 750 million pounds of copper and 1.64 million ounces of gold in 85 million tonnes of rock grading 0.4% copper and 0.6g/t gold. There are excellent immediate drill targets and >570 km2 of gold anomalous drainages, with numerous epithermal gold and porphyry copper/gold targets to follow-up. Every once in a while, a junior comes along that you just feel in your bones could have a nice run... Such is the case for me when it comes to SPZ. The Company's Directors include some of the industry's best, with proven track records for maximizing project potential and returning shareholder wealth. They have extensive experience in mineral exploration, project development and financing to that ensure the Company has the best possible opportunity to achieve success. South Pacific's corporate objective is to maximize returns to its shareholders through the discovery and development of World Class mineral deposits on its carefully chosen properties, while maintaining its responsibilities to local communities and the environment. HIGHLIGHTS Papua New Guinea hosts very large porphyry copper/gold mines and deposits and has a long history of profitable resource developments. Geological and geochemical information has confirmed that all South Pacific Minerals properties in PNG have good potential for various combinations of very large epithermal gold, porphyry copper / gold, various intrusive related, skarn, quartz-sulphide vein, lateritic nickel and/or platinum group metal deposits and also excellent potential for smaller to medium tonnage, medium to high grade gold deposits. The flagship property of the South Pacific group is the Mt. Bini Project (Ofi Creek Deposit) which has an Inferred Resource totaling ~85Mt of 0.6 g/t Au + 0.4 % Cu for 750 million pounds of copper and 1.64 million ounces of gold, based on 11 diamond drill holes. Other South Pacific ELs and ELAs (applications) have trenches with 205m of 1.9g/t Au (incl. 55m of 5.8g/t) and 10.9m of 26.9g/t Au (incl. 1.0m of 147.8g/t) in separate prospects and neither have been evaluated by drilling. This is an excellent property portfolio and South Pacific has estimated that more than US$15 million was spent between the mid-1960s and late-1990s locating and defining the properties and their projects. South Pacific's Independent Geologist and others have initiated extensive data compilation/ evaluation on all projects and/or visited the Mt. Bini Project site, undertaken ground truthing, evaluated possible drill targets and completed public relations/landowner liaison with the enthusiastic local people. Exploration and drilling commenced in May 2005 at the Mt. Bini EL on well-defined epithermal gold and porphyry copper/gold targets. Highlights of the three granted Island Arc Mining Ltd ELs and seven ELAs (applications) are listed below. Note that the assays quoted are historic assays that have not been confirmed by the company and they are normally the best results and are not necessarily representative of all the work completed on each area. CORE PROJECTS Mt. Bini Property (EL 1348) Ofi Creek Porphyry Copper/Gold Deposit + Epithermal Gold Prospects Current Inferred Resource of ~85Mt of 0.6 g/t Au + 0.4 % Cu was calculated by BHP (750 million pounds of copper & 1.64 million ounces of gold). Deposit is open in several directions and at depth, with excellent potential for increasing it. Only 11 holes drilled for ~3,680m (8 terminated in mineralisation). Results such as BND003 - 184m of 1.00 g/t Au + 0.31% Cu (42 to 226m dh) and BND004 - 401m of 0.56 g/t Au + 0.51% Cu (entire hole). Trenches include 110m of 1.25 g/t Au + 0.1% Cu (leached cap). The associated gold in soil anomaly is open ended to the SW and NE (>2,500m x 700m). Gold in soil anomaly includes three cohesive known higher grade zones, two of which are undrilled and one is ~700 x 500m in size, located ~1,000m WSW of the existing holes and probably represents an epithermal target (outcrop quartz veining to 20.3 g/t Au in trench). · ~1,084km2 EL with ~570km2 of drainage gold anomalies in 13 zones that have only had limited follow-up completed. Excellent logistics for exploration / development. Located ~50km from the National capital of Port Moresby and ~ 14 linear km from road access has been cut. Mt. Andewa Property (EL 1345) Five high stratigraphic level, undrilled epithermal gold prospects. Prospects contained within a 7,000m x 2,500m NW trending fracture / structural zone in an ~9km wide, eroded, breached to the NW, calc-alkaline, multi-phase, extinct stratovolcano /caldera with substantial hydrothermal alteration. Very near the coast in West New Britain Province. Gold/arsenic anomalous soil geochemistry reported over an embayed triangular shaped area of ~18km2. >1,000m long vein system at the Komsen Prospect. Assays include many anomalous stream sediments (silts to 0.629 g/t Au and pan-concentrates to 525ug contained gold/12.1 g/t Au). Soils to 4.06 g/t Au and outcrop rock to 58.4 g/t Au [often with high silver +/-Pb/Zn]. Trenches to 15.6m of 5.12 g/t Au + 5.9m of 3.86 g/t Au + 5.1m of 3.27 g/t Au, 9m of 6.80 g/t Au and 9m of 6.06 g/t Au. Large 1,067 km2 EL has 'barely' been examined and also covers the Mt. Schrader volcano (to the west). Similar tectonic setting to the Lihir deposit and perhaps with similar potential. Mt. Likuruanga Property (EL 1351) Significant untested exploration potential exists in the 811km2 EL.Bukuam Prospect Limited trenching returned 205m of 1.9 g/t Au (incl. 55m of 5.8 g/t Au, incl. 5m of 13.1 g/ t Au), 10m of 5.1 g/t Au and 70m of 1.7 g/t Au in different zones. Only three holes drilled with results such as 6m of 2.2 g/t Au + 9.5 g/t Ag + 1.2% Zn, 2m of 3.5 g/t Au + 9.5 g/t Ag and 10m of 1.7 g/t Au + 2.7 g/t Ag + 4.8% Zn. The 205m trenched interval remains untested by drilling. Gold grade in the skarn could increase towards the shear zone with a possible bonanza at the contact according to previous CRA workers. Ulete and Esis Porphyry copper occurrences No significant work for about 30 years and no emphasis on gold. Cu anomalies are developed on the western margin of an ~100km2 Oligocene calc-alkaline intrusive complex. Complete data compilation required to ascertain importance of porphyry copper targets. Gold was not routinely analysed for, but the limited soil lines show a significant gold anomalous zone requiring follow up. Mt Likuruanga Prospect A conceptual play, with strongly clay-pyrite altered exposures on the lower north-western slopes of the volcano, near where it is breached towards the sea. Some intensely pyritic (~20%) rocks occur as a prominent knob that is weakly copper, molybdenum, gold, mercury and arsenic anomalous. Hydrothermal alteration, pyritisation and the presence of a weak geochemical anomaly is encouraging. The geochemical association, alteration assemblages and structural setting suggests a Lihir type target. PROSPECTS Exploration License Applications Basilaki Islands Property (ELA 1347)345km2 ELA with five undrilled prospect areas. Tunawada Prospect Results to 0.12 g/t Au in silt, 1.1 g/t Au in pan-concentrates and 180 ppb in BLEG. Detailed follow-up investigation included geological mapping and soil sampling (to 1.25 g/t Au). Whacker bedrock sampling to 21.0 g/t Au (25m spacings on 100m lines). Rock chip sampling to 28.1 g/t Au in outcrop and channel sampling to 1.75 m of 17.8 g/t Au. 1 km2 soil anomaly with gold values >0.05 g/t Au and >200 ppm Cu. Soil anomalies defined cover up to 500 x 300 metres averaging >0.2 g/t gold and up to 500 x 100 metres averaging >1.0 g/t gold. Sudest Island Property (ELA 1346) 469km2 ELA contains the first known gold occurrence in PNG. Proximal to the highly successful +5M oz Misima Deposit/ Mine. Never been drilled and very limited follow-up ever undertaken. Contains a 25km long zone of highly anomalous gold geochemistry in drainages. Less than 10% of the strike has even been cursorily evaluated by soil geochemistry or trenching. Results to 151.2 g/t Au in outcrop, 2m of 104.5 g/t Au in trench and 260.0 g/t Au in float rock. 2,540 ppb Au in BLEG, 1.49 g/t Au in stream sediment and 387.0 g/t Au in pan-concentrate. High-grade gold quartz veins and variably altered intrusive suites (similar to mineralized porphyry systems) offer very attractive targets. Logistics for exploration and development are very good. Further detailed exploration is strongly warranted. East New Britain Property (ELA 1356) Large ELA covering 2,112 km2. Doilene Prospect Limited bulldozer trenching included 10.9m of 26.9 g/t Au (incl. 40cm of 136.4 g/t Au and 1.0m of 147.8 g/t Au), 2m of 16.9 g/t Au, 4m of 9.84 g/t Au, 3.5m of 5.14 g/t Au & 3m of 4.65 g/t Au. Visible gold and anomalous pan concentrate gold values are noted associated with an altered intrusive dyke. Limited previous soil sampling. Scout drill testing required of this coastal prospect. Mali Prospect Toxic element anomaly defined over an 80 km2 area associated with the Sikut caldera. LK1 Breccia Prospect Outcrop sampling up to 2.5m of 9.6 g/t Au, with grab samples to 17.8 g/t Au. Palang Hill Prospect 500m by 100m brecciated and veined zone. Trenches to 12m of 2.64 g/t Au in the central part of the prospect and 15m of 2.13 g/t Au in the northern section of the area. A 2.5 m rock-chip channel sample returned 9.66 g/t Au + 0.198%Cu + 12 g/t Ag. Angbitki Creek Prospect Alluvial platinoids (Pt, Pd) and gold occur in two adjacent tributaries. Pan concentrates to 29.44 g/t Au (385ug), 22.7 g/t Pt (282ug) and 0.45 g/t Pd (5.5ug). No follow-up in the 3 km2 target area. Unique in the PNG islands. Central New Britain Property (ELA 1360) 2565km2 ELA proximal to the provincial capital /deep water port of Kimbe, West New Britain Province. Uasilau/Yau Yau Prospect Elongate 9,000 x 2,000m zone of anomalous copper in region with variable ash cover and gold anomalism (where evaluated). Large associated area of advanced argillic alteration - possible epithermal gold mineralization. Gold analyses are limited, but significant gold anomalous areas in soils and rock-chips warrant follow up in addition to the porphyry copper potential. Pelepuna Prospect Located ~14 km south of Uasilau. Zinc-+/-gold skarn - data to be better complied and evaluated. Gold analyses are limited, but significant gold anomalous areas in soils and rock-chips warrant follow up.Mt Du Faure Prospect Fracture controlled, northwesterly trending zone (5 kms by 1 -2 kms) of advanced argillic alteration and arsenic and mercury anomalies. Located on the northern side of partially eroded extinct Quaternary volcano with excellent logistics. Iglik Prospect A major gold anomalous zone defined by stream sediment sampling (up to 233 g/t Au in PC). Limited bulldozing showed quartz porphyry dykes and quartz-limonite vein stockworks with up to 3m of 4.5 g/t Au and four inconclusive holes were drilled. North Iglik To 16.5 g/t Au in anomalous stream sediments. Never effectively followed up. General Many unchecked drainage anomalies. Uasilau porphyry copper occurrence and associated possible epithermal targets - no work in >20 years. New Hanover Island Property (ELA 1359) ELA covers 2014km2 over several geologically prospective environments. 15 kilometre long (width undefined), highly prospective broad discontinuous northwest trending zone, on the south coast of the island. Quartz veins up to several metres wide contain gold grades of up to 5 g/t. Many prospects and mineralised areas identified by floats and sub-crops of intrusives which have been hydrothermally altered, brecciated and mineralised by cherty and fine grained silica, quartz, pyrite and arsenopyrite. Zone defined by anomalous gold in stream silts, pan concentrates and soils. Significant BLEG anomalies in the Sania and Taimo Rivers. Very good, only marginally tested area with potential for large 'high sulphidation' gold deposits. Systematic detailed exploration is strongly warranted. Southern New Ireland Property (ELA 1357) ELA covers 479km2 with 3 main prospects Danlillian River Four by two kilometre area of intense argillic alteration. Pan concentrate anomalies and low gold in rock occurrences. Indicative of a high-sulphidation epithermal system. Palabong Prospect Gold in stream sediment and pan concentrates. Silicified and clay altered rocks. Large area of intensely altered granodioritic intrusive / acid volcanics. Palabong / Hirudan Plutonic Complex Prospective for epithermal vein and disseminated precious metal mineralisation. Tanga Island Property (ELA 1358) ELA covers 79km2 over discrete 'Lihir Deposit' type targets. Sereng Prospect I.P. survey conducted. Almost circular (~250m in diameter) strong chargeability and resistivity anomaly revealed coincident low resistivity anomaly possibly in altered zone from a fossil geothermal system, open to the southeast. Weakly anomalous soils, with up to 1.9 g/t Au in float. Limited hand / bulldozer trenching and 12 fairly ineffective 'aircore' holes drilled with 9 revealing open vugs infilled with pyrite, indicative of boiling (a very good indicator in epithermal systems). Put Cliff Prospect Defined by cliffs of strongly ferruginous weathered smectite clay and strongly altered fault breccia boulders. Six air core holes completed which showed major zones of strong hydrothermal alteration (argillisation) and associated pyritisation. No additional effective follow up completed on the island for 18 years. ABOUT Papua New Guinea Papua New Guinea (PNG) is situated slightly north of eastern Australia. The country is a stable democracy with many positive political and economic attributes, including a Westminster style democratic government, separation of political and judicial powers, well defined mining / taxation law (based on Australian models) and English language. PNG was administered by Australia prior to independence in 1975 and Australia continues to exert a major influence over it. The nation consists of a mainland and a number of smaller islands, of which New Ireland and New Britain are the largest. The country covers an area of 462,840 square kilometres and has 8,300 kilometres of coastline. Geologically the country is comparatively recent in origin. It is situated in a zone where the Earth's crust is weak, forming part of the 'Ring of Fire' around the edges of the Pacific. Earthquakes are common and much of the country was been formed by volcanic and intrusive activity. This geological activity has endowed the country with rich deposits of gold, copper, silver, oil and natural gas. After World War 1, Papua New Guinea began to attract interest due to its endowment of gold. The metal is very much part of the history of the country and responsible for its rapid development over the past 25 years. John MacGillivery confirmed the actual presence of gold in 1890, which sparked a series of gold rushes to the islands of Sudest (a property in the portfolio), Misima and Woodlark and the discovery of the country's first big goldfield in the Wau-Bulolo Valley. More gold was soon discovered and by 1926 hundreds of European miners where exploring in PNG. PNG is home to very large mineral deposits and has a long history of profitable resource developments. Placer Dome was 'born' and commenced operations in PNG in the 1930's and has always been a 'major player' in the country. According to the former Placer Pacific's Exploration Manager (Greg Hall - 1995), "PNG is one of the most enriched copper and gold sections of the earth's crust and ranks ahead of countries such as Brazil, West Africa, Indonesia, Chile and the Philippines." Some of the current gold mines and projects in PNG include Lihir (>45M ozs Au - Rio Tinto operator), Porgera (>26M ozs Au - Placer Dome operator), recently closed Misima (~4M ozs Au - Placer Dome operator), Tolukuma (>1.5M ozs Au - DRD operator), Morobe (5 to 10 M ozs Au - Harmony Gold operator) and Kainantu (>1.5M ozs Au - Highlands Pacific). Porphyry copper-gold mines / deposits on the island include Grasberg (>52M ozs Au +12.5Mt Cu - actually in Irian Jaya), Ok Tedi (>10M ozs Au + 3Mt Cu), Panguna (> 16 M ozs Au + 5 Mt Cu) and Frieda (>9M ozs Au + 5.3 Mt Cu). A major lateritic nickel project is set to proceed at Ramu with total resources of ~220 Mt of 0.98% nickel +0.1% cobalt. Interest in exploration / development in PNG increased markedly in the last year, as evidenced from several major project purchases and JV's, from South African and Canadian mining companies seeking projects with exceptional contained metal potential. Summary Strong management, a large portfolio of projects, and no apparent overhang of disappointed stockholders, gives aggressive speculators a chance to be early in a developing play. [South Pacific Minerals website] Peter Grandich Grandich Publications P.O. 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