Third annual report over EL 24092 Union Reefs Area

Abstract

The exploration licence is situated in the southern part of the Pine Creek Geosyncline, which consists of Early Proterozoic metasedimentary rocks overlying a gneissic and granitic Archaean basement. A regional shear zone, the Pine Creek Shear, extends from Pine Creek in the south and passes through the centre of the exploration licence. The Pine Creek Shear has been a major locus for the passage of gold-bearing fluids and is spatially related to the majority of gold occurrences in the Pine Creek Geosyncline. Union Reef Goldfield (located on MLN110915 excised from EL24092) kilometres north of the Pine Creek Township was discovered in 1873. In 1991 the Shell Company of Australia Ltd purchased the Union Reef tenements. By 1998, 8.07t gold was produced from ore average 1.4 g/t Au. As at December 1998 total resources were estimated to be 17.6Mt at 1.7 g/t Au. Union North was delineated a few kilometres north if the main open cut. In April 1994, the total reserve at this orebody was 8.1Mt at 2.21 g/t Au. The Project area is within a 10 kilometer radius of the major Union Reef gold resources. Copper mining was also carried out between 1875 and 1917, producing 3,450 tons of ore grading greater than 25% copper. United Uranium N.L (1967) has estimated a possible 90,000 tons of ore remaining, grading 6.1% Cu and 185 g/t Ag. The copper bearing areas are located in the southern portions of the exploration licence. In May 2006 Kastellco Geological Consultancy conducted a review of historical exploration data on the Pine Creek Tenement within the Northern Territory Geological Survey Database to identify any high potential exploration targets. The following was delineated from the review:

1. Five first and second order gold bearing geochemical trends varying from 320-1,200m of strike length with gold values between 0.27-6.6g/t that warrant further exploration.

2. Exploration work is required on the highly prospective Anomaly 1 & Anomaly 3 areas hosted within the Esmeralda Trend which is a highly prospective structural target for potential gold mineralisation.

3. Exploration work is required on the highly prospective West Copperfield area that is hosted within the Playford Creek Anticlinal Trend, a highly prospective structural target for potential gold-copper mineralisation.

4. In the northwest portion of the Pine Creek Tenement, the Pine Creek Shear has the potential to host gold mineralisation along its 6.1kms of strike with 2.1km in width. In the south east of the Pine Creek Tenement, the Shear Zone has a strike length of 3.4km and a width of 2.1km. These trends represent continuations of structural targets that host the major gold deposits in the Pine Creek area.

In April 2007, Kastellco Geological Consultancy was commissioned to carry out a follow-up exploration program based on the geochemical/structural target delineated during 2006 work program as discussed in the previous section.

In June 2007, Arnhem Exploration and Rural Services were commissioned to carry out a soil and rock chip program over five areas within EL24092. Samples were taken at 100m spaces along specific lines using a handheld GPS to establish site location. The target was B horizon to a depth of 30 cms to yield a 2 kg un-sieved sample. Where outcrop or sub-crop was present, a 2 kg rock sample was taken in place of the soil sample. Over 1546 sites were sampled and 44 duplicate samples were also taken. The rock chip and soil program delineated untested and undefined base metal zones which have never been previously been detected. Some of the assays results show there is a close association between high grade copper mineralisation with high anomalous gold. Further work is required to test these areas situated in the southern portion of EL24092. Highly anomalous lead and zinc areas defined in 2007 require further work as part of a potential RAB program to test these anomalies in the forth coming year.