ML 23216, MLC 176 and MLC 177 Chairot Third annual report 19 July 2004 to 18 July 2005

Abstract

Mineral Leases ('MLs') C176, C177 and 23216 cover the Chariot Gold Mine and associated infrastructure. This report documents exploration work completed on MLs 23216, C176 and 177 during the period 19 July 2004 to 18 July 2005. Exploration targets are shallow oxide haematite-ironstone and deeper primary gold deposits.Two RC pre-collared diamond drill holes were completed in August 2004 at Chariot to test for plunge extensions to the orebody at depth. Due to severe hole deviation two attempted RC precollars were abandoned. The first hole, CHUD280, successfully intersected the ore hosting northern shear approximately 90 m below the 14 Level but no significant ironstone or gold values were returned. The second hole, CHUD282 was drilled to test for extensions west of 13 Level. The hole lifted approximately 20 m (i.e. 12 Level) and intersected mixed sheared ironstone-chlorite rock in the northern shear. The best result from this zone was 5.4 m at 10.2 g/t Au from 328.3 m. A program of RAB drilling was completed in February 2005 to test for mineralised extensions and new ironstone lenses in the northern shear to the east and west of the open pit. Previous drilling was on 40 m sections. Ironstones and sheared rocks anomalous in Au and Bi had been intersected in this earlier wide-spaced drilling. Seven holes for 553m were drilled west of the Chariot pit (CHRB2-8) and 3 holes were drilled to the east (CHRB11-13) for 219m. Five holes immediately east of the pit could not be drilled due to infrastructure and buried cables. Ironstone and fault rocks with anomalous Cu and Bi were intersected in most holes, however, no economic gold mineralisation was located. A significant program of underground reserve infill, extension (i.e. step-out) and geotechnical diamond drilling was completed during the year. Consecutive programs were completed as the decline progressed and provided drill access. The decline had reached 12 Level by February 2005 thus allowing completion of the delineation of the ore body from 8 to 14 Levels. This drilling was completed in early May and the rig was demobilised. A total of 136 holes for 11,775 m were completed, which included 42 holes for 4,431.5 m classified as extension drilling (i.e. outside the pre-2005 Ore Reserve envelope). These holes were principally designed to test for extensions to, or new ore shoots on the west, below 14 Level and east of the known ore reserves. The main findings from the underground drill program were that the ore body occurred as a series of lenses or ore shoots and that previous strike and dip projections were optimistic. To the east the gold mineralisation pinches out sharply. To the west the gold mineralisation thins out gradually before pinching out. A revised ore reserves statement for Chariot is included in this report.