Annual exploration report Elizabeth Group, Union Reefs Project MCN 506, MCN 507, MCN 734, MCN 735, MCN 738, MLN 135, MLN 779, MLN 780, MLN 822 and MLN 856 Year ending 31 December 2005

Abstract

The Elizabeth Group of mineral claims and mining leases lie at the northern end of the Union Reefs gold mining project some 168 km SE of Darwin, NT. The tenements were owned and managed by AngloGold (Ashanti) Limited until August 2004 when they were purchased as part of the Union Reefs Project tenements by the Burnside Joint Venture. In September 2005 Harmony Gold commenced the sale process of its 50% equity in the Burnside JV. This is expected to be finalised in the first quarter of 2006 and will see the consolidation of the Burnside-Union Reefs assets under the ownership of GBS Gold Australia P/L. The historic Elizabeth gold workings trend NNW for approximately 2 km and lie within a sheared and folded Lower Proterozoic metasediments in a zone up to 400 m wide. MLN 856 situated approximately 1 km WNW of the group is included within the report schedule. The historic workings at Elizabeth are centred on a shear-hosted vein system up to 2m wide, dipping steeply east and interpreted to be part of the broader Pine Creek Shear Zone. Mineralisation is associated with quartz veins occurring dominantly within greywacke or along shale-greywacke contacts. Modern gold exploration has comprised RC drilling (35 RC holes for a total of 2,812 m) plus one core hole drilled by the NT Mines Department. Rock chip sampling, mapping and computer modelling have also been reported. A detailed airborne magnetic and radiometric survey included the Elizabeth workings. Exploration work declined in the period 1999-2003 due to the effects of takeover activity and impending closure and resale of the Union Reefs mining operation. Since acquisition by the Burnside JV work has comprised structural interpretation and a review of previous drilling. The reviews show that the Elizabeth group workings are only likely to provide low tonnage medium grade gold mineralisation. This assessment arises from a combination of factors including historic underground mining having depleted some of the near surface resources, plus narrow widths and short strike lengths of the ore shoots. This has placed the Elizabeth tenements on a low ranking pending re opening of the Union Reefs mill. This report describes exploration within the tenements during the year ending 31st of December 2005. Work during the year focused on RC drilling mineralised targets at Pine Creek and conducting mining reviews of the main Union Reef open pits. This work had the objective of outlining sufficient resources to enable a new start up of the mill. Expenditure during the year on Elizabeth group covered reporting only and amounted to $950.00.