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We have developed a new helicopter-borne transient electromagnetic system, known as ORAGS-TEM, which was designed for the detection of unexploded ordnance (UXO) through very low altitude measurements. This system has already achieved considerable success in demonstrations over prepared test grids and a bombing site at the former Badlands Bombing Range (BBR) in South Dakota. UXO ranging in size from 113 kg (250 lb) bombs to 60 mm illumination shells and 7 cm (2.75 in) rocket components were detected by both magnetometer and transient electromagnetic technologies during these trials, conducted in September, 2002. The signal/noise ratio (SNR) observed in TEM measurements during these trials was high, prompting us to ask, “What degree of UXO discrimination can be achieved through detailed analysis of this airborne TEM dataset?” Given the degree of spatial averaging and sampling limitations imposed by the system's flight height and speed, we felt that a very detailed analysis of the type performed by Pasion and Oldenburg would not be practical. Instead, we developed an improved transient analysis technique based on the Matrix Pencil Method to improve the accuracy of exponential decomposition of the observed transients. Where target SNR values of 10 or higher were present this method yielded repeatable results that reliably distinguished compact, long-time-constant targets such as bombs and artillery shells from short-time-constant targets such as thin-walled scrap from practice bombs. As system sensitivity and resolution continues to improve, we expect that similar target discrimination methods will become standard data analysis tools.