Annual exploration report Elizabeth Tenement Group Union Reef Project year ending 31 December 2006 MCN 506, MCN 507, MCN 734, MCN 735, MCN 738, MLN 135, MLN 779, MLN 780, MLN 822 and MLN 856

Abstract

The Elizabeth Group of tenements is approximately 7 km north west of the Union Reefs Gold Mine and 168 km SE of Darwin, NT. This report summarises exploration work completed within the Elizabeth Group of tenements for the year ending 31st December 2006. In 2005, GBS made a successful takeover of Northern Gold, and entered an agreement to purchase Harmony's 50 percent share of the Burnside JV, giving GBS 100% of the project by April 2006. During 2006 work completed over the Elizabeth MLNs and MCNs consisted of; Planning for the upcoming field season; Administrative Duties; Report Preparation; and Field Reconnaissance. Work in the region has been delayed because company resources have been concentrated on the recommencement of mining in the district by GBS Gold. Commissioning of the dual-mill 2.5Mtpa Union Reefs CIL gold plant in the Northern Territory commenced as of September 2006. The two initial open pit (Fountain Head and Rising Tide deposits) ore sources came online mid September and High Grade ore was sourced from the Brocks Creek Underground Mine (Zapopan) in late September. Exploration in the Elizabeth region will be an integral part of GBS Golds plan to continue to replenish supply to the mill. The region is considered important for review to assess the impact in the rise of the gold price.