ARKeX gradiometry system – a key to future exploration success Kitty Hall Chief Executive, ARKeX Ltd

Contents Introduction to ARKeX Introduction to Gravity Gradient Imaging Gradiometry technology Funding ARKeX Funding challenges

Introduction to ARKeX

Introduction to ARKeX Airborne geophysical services for exploration – mining and oil Two challenges: MARKET development TECHNOLOGY development There is always a third challenge! RAISE DEVELOPMENT CAPITAL

Introduction to ARKeX Developing the market – survey services provided using technology adapted from the defence sector Have grown from 1 to 3 systems Requires capital Developing proprietary technology to be 10x more sensitive This will expand the market significantly Development capital has been raised c. £30m to date From Venture Capital funds

What does ARKeX do? BlueQube is a unique proprietary offering from ARKeX: Gravity Gradient Imaging (GGI) Magnetic Gradient Imaging High Grade LiDAR Specialist processing Integrated interpretation The key element of BlueQube is Gravity Gradient Imaging

Introduction to Gravity Gradient Imaging

Introduction to Gravity Gradient Imaging The Earth’s gravity field is not uniform and varies with changes in the underlying geology Measuring the Earth’s gravity field allows the explorationist to image the sub-surface geology To do this from the air provides cost effective coverage of wide areas Traditional Gravimeters measure the total gravity field Gravity Gradiometers measure the rate of change (gradient) of the gravity field

Basic facts – gravity, gravity gradiometry Gravity measurement cannot distinguish between acceleration (motion of plane) and changes in gravity. Error in gravimetry therefore related to how well the motion of plane can be measured independently. This leads to “GPS limit” and this is what fundamentally limits distance over which airborne gravimetry gives good results

Gravity vs Gradiometry Ideal World Gravity Meter Accelerometer detects changes in gravity due to the variations in the subsurface Gravity Profile (Gz)

Gravity vs Gradiometry Real World Gravity Gravity Meter Equivalence Principle No gravimeter can distinguish between gravity and linear acceleration. Airborne gravity uses GPS to measure linear accelerations to correct “measured” gravity. Measured Gravity Profile Filtered Gravity Profile

Gravity vs Gradiometry Real World Gradiometry Gravity Gradient Meter Each accelerometer measures same plane acceleration The difference in outputs is independent of plane motion Gradiometry is the ideal choice for a moving platform Gravity Gradient Profile (Gzz) Ideal World (Gzz) Filtered Gravity Profile

World’s First Gravity Gradiometers US tax dollars drove the development of the world’s first true dynamic gravity gradiometer in the 1970s A gradiometer system was developed for use on submarines for defence purposes This technology was eventually de-classified and applied to exploration from 1997 onwards This technology, produced by Lockheed Martin in the USA, remains tightly controlled by the US Government because of its military origins The cost? c.$250m

Gradiometry Technology

Lockheed technology There are two members of the Lockheed family of gradiometers – FTG (Full Tensor Gradiometer) ARKeX has 3 FTGeX systems, our own proprietary adaptation of the Lockheed FTG ‘Falcon’ system A collaborative development between Lockheed and mining giant BHP Billiton

Lockheed Martin Full Tensor Gradiometer - FTG

ARKeX Fleet: 2 Cessna Caravans, 1 Twin Otter

Advantages of BlueQube Quick and cost effective Airborne survey covers terrain too difficult or too expensive for other methods Compliments other datasets (EM and Seismic) Environmentally friendly – passive measurements only & footprint is minimal Oil and Mining

Technology needs Current systems measure 7-10 E/ rt Hz However, mining requirements are very exacting To resolve smaller ore bodies a system with enhanced resolution is required measuring at 1 E/ rt Hz “E/ rt Hz” is the measure of resolution of a gravity gradiometer

Kimberlite pipe example The following examples are based on some modelling for a diamond exploration company They provided the dimensions, density contrasts and an areal layout of ‘kimberlite pipes’ to be modelled The first example shows how the pipes would look with in an ideal world with an instrument with no noise The second shows the resolution with a 10E/rtHZ tool The third shows the resolution with a 3E/rtHz tool The fourth shows the resolution with a 1E/rtHz tool

Gradient response in an ideal world – no noise 12.6, 7.1, 3.1, 0.8 Ha pipes Crater length = 50m Diatreme length = 850m Crater density contrast = -0.27 g/cc Diatreme density contrast = -0.17 g/cc Survey line spacing : 100 x 120 m Image is inverted for clarity

Gradient response from 10E/rt Hz instrument Only largest kimberlites can be seen

Gradient response from 3E/rt Hz instrument Large and medium kimberlites can be seen

Gradient response from 1E/rt Hz instrument All kimberlites can be seen

The solution? ARKeX’s EGG has a target resolution of 1E/ rt hz This sensitivity is achieved through using superconducting circuitry EGG sensor operates at -269 deg Celsius (4 deg Kelvin)

Exploration Gravity Gradiometer - EGG

Funding ARKeX

ARKeX Milestones 2004 Company launched - £4m 2005 First FTGeX system 2nd funding round - £5.5m 2007 Second FTGeX system Venture loan - $10m Purchase of ARK Geophysics 2008 Third FTGeX system First EGG in flight trials 3rd funding round - £15.4m ($30m)

Funds raised 83% equity 17% debt Specialist energy funds: 53% General funds: 40% Other:7% UK: 47% Europe 53%

Current plans Commercial deployment of EGG technology Build and deploy EGG systems worldwide Further development of GGI market in oil and mining Potential also in defence/ security sector

Funding Challenges : What next?

London: Oil & Gas Equipment & Services FTSE 350: 22 companies AIM: 12 companies Geophysical companies: 2

Alternatives to London AIM Oslo AXXESS Axxess market established May 2007 Less stringent listing requirements than a full stock exchange market “Welcomes younger, smaller and less widely held companies” Identical market monitoring and continuing obligations to the full Bors

Oslo: Oil & Gas Equipment & Services Bors: 45 companies AXXESS: 7 companies Geophysical companies: 8

Conclusion ARKeX has the most advanced technology in gravity gradiometry for exploration Access to capital has been from Europe rather than UK Future IPO – London or look elsewhere?

Gravity Gradient Imaging : Completing the picture