Annual exploration report ERL 89 Big Howley Year ending 18 September 2005

Abstract

ERL 89 is located 130 km SSE of Darwin, NT, and 5 km NW of the Cosmopolitan Howley Gold Mine. It covers a sector of the Howley Anticline, a complex regional fold within South Alligator Group sediments of Lower Proterozoic age. The structure strikes and plunges shallow north-westerly within the tenement and in the region hosts a number of important gold deposits, including the Chinese 1, 2 and 3 deposits, the Big Howley deposit, and the major Cosmo Howley deposit. Previous exploration by Northern Gold N.L. comprised geochemical sampling and RC drilling. The work concentrated on the South Ridge Prospect, a 2 km long mineralised zone coincident with the Howley Anticlinal structure and along strike from the Big Howley open pit. An inferred resource of 204,000 t at 2.4 g/t Au was estimated at South Ridge by Northern Gold N.L and an ERL was applied for to protect the then sub economic resource. In April 2002 Territory Goldfields NL and Buffalo Creek Mines NL entered into a joint venture that merged certain tenement assets within a 30 km radius of the gold treatment plant at Brocks Creek and included ERL 89. In August 2004 the joint venture negotiated the sale of the Brocks Creek mill to Tanami Gold NL and simultaneously purchased the mill at Union Reefs in a dealing with AngloGold (Ashanti). At a rated 2.4 Mt per annum, the Union Reefs mill is larger than the original Brocks Creek facility and can more economically treat lower grade gold ores. It also requires very little lead time before start up. The South Ridge resources and extensions to the Big Howley pit have been the subject of technical reviews as part of the overall assessment of advanced stage gold deposits in the Burnside region. This review factored in the economic impact of the Union Reefs mill purchase and movements in the Australian gold price. The review concluded that the South Ridge and Big Howley extension rank low compared to other deposits along the trend that have been drilled by the Burnside Joint Venture. The Burnside Joint Venture will continue resource reviews on South Ridge in ERL 89 as part of the overall resource reassessment of the Burnside region. It has been recognised that the South Ridge inferred resource is narrow (1-4m) and has a lower priority ranking than other deposits in the Joint Venture area. The purchase of the Union Reef mill is expected to escalate the scheduling of the better grade open pit deposits in the Burnside Region. Expenditure on the tenement will have a lower priority until treatment is renewed at Union Reefs and MLNA 1129 is approved. Infill RC drilling will be required at some stage to upgrade the resource to indicated.