Annual exploration report Pine Creek Project Tenements Year ending 15 July 2005, EL 23583, MLN 13, MLN 1130, MCN 317, MCN 523, MCN 1054, MCN 1055, MCN 4072 and MCN 4074

Abstract

This is the second group annual report for the Pine Creek Gold Project. The project has been managed by Burnside Operations P/L on behalf of the Burnside Joint Venture since acquisition of the project in mid 2002. The parties to the joint venture are Territory Goldfields NL and Buffalo Creek Mines P/L which are subsidiaries of Northern Gold NL and Harmony Gold (Australia) Limited respectively. Initially, annual reports were written on an individual tenement anniversary basis. Group reporting was first approved for the 2003-2004 year. This current year also corresponds with the second anniversary of EL 23583 which shares a common report due date with the other tenements in the group. The Pine Creek Goldfield, discovered in 1869, was initially the scene of intensive alluvial and bedrock mining between 1894 and 1915. It is situated within metasediments of Lower Proterozoic age that have been tightly folded within the tectonic corridor of the Pine Creek Shear Zone. The host sediments, of greywacke-siltstone-mudstone facies have been metamorphosed to spotted phyllitic hornfels by the adjacent and subjacent Cullen Batholith. Bedrock gold mineralisation was initially exploited by shallow shafts, adits and drives. This work was focused on rich oxidised quartz-sulphide veins in the axial zone of shallow southeast-plunging anticlinal folds. From the late 1980s the area was the subject of intensive exploration and open pit mining until closure of the Renison Group mining and milling operation in 1995. Following closure the plant was sold and the area rehabilitated. The flagship mine, the Enterprise pit, was filled with water from Pine Creek while the other shallow pits were variably backfilled with rock waste. Waste dumps and heap leach sites were contoured, seeded and tailings areas sheeted. A vigorous acacia understorey has re established. By the close of mining in 1994 close to 12Mt of open pit ore had been treated for the recovery of 744,000oz gold. Following acquisition by the Burnside Joint Venture a data acquisition and drilling database review was conducted to begin the quantification of residual gold ores within the project area using 3D computer modelling of the host geology. During the year ended 15th July 2005 the joint venture carried out programs of RC exploratory drilling to outline potential ores for treatment at the Union Reefs mill, the latter having been purchased by the joint venture in August 2004. Both bedrock mineralisation and low grade waste dumps were tested in the program which totalled 56 holes for 2,346m. The dumps tested gave disappointing results, while bedrock drilling identified mineralisation that allowed an update of the computer models. The Czarina primary mineralisation was subjected to metallurgical testing that suggested only 70% recovery was achievable from the transition to fresh material. An alluvial gold treatment agreement existed between the Burnside JV and a local prospector. During the year the activity ceased allowing rehabilitation within MCN 523 and MCN 1055. Expenditure on the group tenements during the year totalled $371,166.00. For the coming year it is proposed to spend a total of $266,000 on exploratory drilling. Within EL 23583 the company conducted a review and compilation of previous exploration work. It is apparent that the present location of the Stuart Highway and the Darwin Adelaide Railway reserve seriously impinge on the more prospective eastern half of the licence.