Annual exploration report for MCN 4902 - 4905 and MCN 4907 Fountain Head South, year ending 7 August 2004

Abstract

MCN's 4902 - 4905 and 4907 comprise two small groups of mineral claims located south of the Fountain Head tenement group and west of the Yam Creek locality, 140 km SSE of Darwin. They lie on the Ban Ban (14/3-III) and Burrundie (14/6-IV) :50,000 sheets. The claims were originally granted to Dominion Gold Operations Pty. Ltd. in 1996 and were subsequently transferred to R. M. Biddlecombe (80%) and Territory Goldfields N.L. (20%) later that year. MCN 4907 was granted to R. M. Biddlecombe on the 3rd of August 1995. Territory Goldfields N.L. and R. M. Biddlecombe entered into an option agreement over MCN's 4902 - 4905 and 4907 on the 16th of October 1996. Northern Gold N.L. carried out digital terrain modelling, airborne magnetic interpretation and ground geological reconnaissances to evaluate the prospectivity of the tenements. During April 2002 the tenement holders and Northern Gold NL entered into a joint venture with Buffalo Creek Mines Pty Ltd that merged selected assets within a 30 km radius of the Brocks Creek gold treatment plant. The objective of the agreement was to explore for gold resources and treat them at the Brocks Creek Mill. The Fountain Head South tenements were included in the joint venture. MCN's 4902-4905 and 4907 are proximal to the Fountain Head, Yam Creek and Mt Bonnie gold resource projects and have been included in the overall gold asset review of the merged joint venture project area. No field work has been carried out on the tenements in the current year, however remote sensing to determine structural controls in the area have been carried out. Concurrently the Joint Venture has carried out underground development and mining at the Zapopan gold deposit at Brocks Creek, conducted diamond drilling at Cosmo Howley and RC drilling at Fountain Head. This activity is an integral part of the resource identification process within the greater Burnside Region. To further this objective the JV purchased the Union Reef mill and tenement package from AngloGold (Ashanti) in August 2004. The mill at Brocks Creek was sold as part of this restructuring. The gold prospectivity of the tenements will be re-ranked during the coming year to take into account the impact of the Union Reefs infrastructure.