Annual exploration report, Howley Tenement Group MLN 809, 884-892, 993, 1000, 1027, 1053, 1062, MCN 1014-1015, 1231-1232, 3422, 4299, 4860-4861, year ending 31 December 2004

Abstract

The Howley report group is located approximately 140 km SSE of Darwin, NT. The group comprises tenements that cover the southern sector of the Howley Anticline, an economically important fold structure that hosts numerous historic gold mines and prospects. These include the important Cosmopolitan Howley mine and its satellites including the Phantom, Chinese No. 1, Chinese No. 2, Chinese South and Big Howley. Most have been the subject of historic underground and more recently, open pit mining. From the late 1980's the project was owned by Dominion Mining Limited. They conducted exploration and open pit mining work centred on the main pit at Cosmo Howley. Due to adverse economic circumstances mining was suspended in 1995 and the gold treatment plant and other infrastructure was prepared for sale and mothballed. Territory Goldfields N.L. purchased the Howley group tenements from Dominion in late 1994 and independently conducted exploration programs along the Howley Line until April 2002. On April 4th 2002 the 'Burnside Joint Venture' was formed between Territory Goldfields N.L. and Buffalo Creek Mines. It merged the tenements and local infrastructure assets of the two companies, and included the Howley group tenements, those surrounding the Brocks Creek treatment facility, and the facility itself. The joint venture is managed and operated by Burnside Operations P/L. The joint venture initially refurbished the camp and office infrastructure at Cosmo and Brocks Creek to form the support base for exploration in the region. Resource definition drilling was carried out at advanced stage properties; initially Princess Louise and North Point on the Yam Creek trend. Then Mottrams and Chinese South Extension within the Howley trend were also RC drill tested. Decline access was installed at the Zapopan deposit near the Brocks Creek facility in 2003 and a parcel of development ore was toll treated at the Union Reefs mill with pleasing results. Extensive underground diamond drilling confirmed the presence of a significant gold resource. Also during 2003, the joint venture conducted computer geological and resource modeling of the Cosmo Howley deposit. This model led to a two stage resource definition diamond drilling program to enable evaluation of the 'Cosmo Deeps' target beneath the existing open pit. The first stage of this work commenced in late 2003 and was completed in 2004, comprising a program total of RC and precollared diamond drilling comprising 12 holes for an advance of 6,213.56m. Detailed stratigraphic logging and computer geological modelling followed on from the work and new mineral resource estimates were created from a block model. By year?s end the new resource estimate for the Cosmo Deeps totalled 7.5 million tonnes @ 4.30g/t Au. Pre feasibility work was in progress on the potential for the resource to be mined as an underground gold operation. Resource remodeling and technical review was also undertaken at the Mottrams and Chinese South Extension deposits towards the end of 2004. Expenditure for 2004 totalled $1,307,978.32.