Annual exploration report EL 23431 Mt Bonnie West Year ending 19 December 2005

Abstract

EL 23431 is centred 140 km SE of Darwin, NT and 14 km SE of Brocks Creek. It is part of the Burnside Joint Venture, managed by Burnside Operations P/L comprising Territory Goldfields NL and Buffalo Creek Mines NL. The latter are subsidiaries of Northern Gold NL and Harmony Gold (Australia) P/L respectively. An agreement was signed in September 2005 that saw Harmony sell all its interest in the joint venture to Northern Gold NL. Subsequently Northern Gold NL has been taken over by GBS Gold of Canada. This is the third year of the licence following grant and the annual expenditure was set at $1,200.00. for the four block group. The tenement encompasses a suite of metasedimentary rocks belonging to the Lower Proterozoic South Alligator Group. The Group is part of the Pine Creek Geosyncline sequence and is contiguous with the base metal and gold mineralised localities of Mt Bonnie and Golden Dyke. The Hayes Creek Fault strikes north east through the centre of the prospect and is important in the localisation of gold mineralisation. The joint venture has been actively exploring the Burnside region since its formation in April 2002. Work to date has been focused on establishing open pit resources through RC drilling at Yam Creek-North Point, Mottrams, Chinese South Extension, and Woolwonga. Underground resources have been developed at the Zapopan Mine and Cosmopolitan Howley through diamond drilling and computer modelling. At the latter, drilling has outlined one million ounces of gold resources. During 2004 the joint venture purchased the Union Reefs mill and tenement package, at the same time selling the Brocks Creek mill to Tanami Gold NL. With the consolidation of tenement ownership in the region and with a continued favourable Australian gold price the opportunity to re open the Union Reefs milling operation is enhanced. Work on EL 23431 has been subordinate to activity on other JV tenements as the emphasis has been on establishing gold resources at established mineralised prospects. It is anticipated that the new ownership will need to undertake a thorough review of its gold assets in the region and rank them in line with their ability to yield gold resources. Work during the year comprised an updated structural interpretation. Together with reporting and work on the historical database, the expenditure amounted to $1,250.00. This barely exceeds the covenant for the year, however it is anticipated that in the event of a start-up of the Union Reefs mill overall exploration activity by the JV will escalate in 2006.