Annual exploration report MLN 766 and MLN 1060 Year ending 1 December 2005

Abstract

The Bridge Creek Project comprises MLN 766 and MLN 1060 at Bridge Creek, approximately 125 km SSE of Darwin and 35 km southeast of Adelaide River. The tenements cover a sector of the Howley Anticline, approximately 12 km along strike north from the Cosmopolitan Howley Gold Mine. Burnside Operations P/L (Burnside) is manager of the tenements following finalisation of a joint venture agreement between Territory Goldfields NL (Northern Gold NL subsidiary) and Buffalo Creek Mines Pty Ltd (Harmony Gold Australia Ltd subsidiary) in April 2002. The JV merged certain mining assets within a 30 km radius of the Brocks Creek mill and included the Bridge Creek tenements. The assets were managed on a 50-50 basis with Burnside Operations P/L managing the JV. Intensive gold exploration including reverse circulation drilling, diamond drilling, resource modelling and metallurgical test work had been previously carried out on the Bridge Creek primary resource that lies within the tenements. A design pit, in part based on a global resource of 584,000t @ 1.81g/t Au, indicated that the resource was then marginal to sub economic. The tenements are considered to be at a mature stage of exploration and not requiring additional drilling prior to development. Such development could only occur at a very favourable gold price and with a mill operating in the region. In August 2004 the JV purchased the [2.8Mt/a] mill and tenements at Union Reefs, and concurrently sold the Brocks Creek mill to Tanami Gold NL. Following extensive exploration work in the region by the joint venture, an agreement was reached in September 2005 with Harmony that would see the sale of Harmony's equity to Northern Gold NL. In turn Northern Gold NL was subject to a friendly takeover by GBS Gold. During 2005 the joint venture undertook a mining evaluation study of the Bridge Creek property. It is anticipated that the outcome of the consolidation of assets and takeover will be the facilitation of a new start up of the Union Reefs mill. This combined with a presently benign Australian gold price should assist the economics of the Bridge Creek resource.