Annual exploration report for MLN 51 to MLN 57 inclusive, Caroline Group, Union Reefs Project, year ending 4 November 2005

Abstract

The Caroline Lease Group (MLN 51-MLN 57) is situated 170 km SE of Darwin, NT, and 8 km north of Pine Creek. The lease group was acquired as part of the purchase of the Union Reefs mill and underlying tenement assets by Burnside Operations P/L in August 2004. The project assets had been previously owned by AngloGold (Ashanti) Australia Ltd who carried out mining and milling operations at Union Reefs prior to closure in July 2003. The Caroline tenements are situated 4 km south of the mill and have not yet been the subject of modern open pit or underground mining operations. The Caroline leases were initially the subject of a base metals search in the late 1960's. Subsequent soil and costeaning work by Aztec Resources showed gold and arsenic anomalism occurred adjacent to a zone of historic shallow base metal workings. Acacia Resources Limited explored the area in the 1990's. Exploratory RC drilling located narrow but significant gold intercepts towards the southern end of the group, adjacent to a regionally significant but barren dolerite dyke. To date the Caroline prospect has not been sufficiently attractive to warrant mining of the narrow, sporadic resource. It is likely that any progress towards mining at Caroline will come from mining in the adjacent Esmeralda ERL 130 or at advanced stage projects elsewhere within the Burnside Joint Venture. At Esmeralda a significant gold resource has been outlined, but mainly due to the proximity of the Darwin gas pipeline, mining has been deferred. Any decision to re-locate the pipeline would attract a very high financial cost. The Caroline Group of leases is already at a mature stage of exploration. No field work was completed on the Caroline leases during the report period, however the structural interpretation was updated. With reporting and the interpretation expenditure for the year totalled $700.00. The Joint Venture is expected to focus expenditure on developing sufficient gold ores from its known first rank deposits at Burnside with a view to initiating a mill start-up at Union Reefs. The action of Harmony Gold in selling its interest in the Joint Venture in 2005 may bring forward the decision date to re start milling operations. In the interim, having a low ranking, activity at Caroline Group will be confined to data acquisition and review.