Annual exploration report ERL 97 Western Arm year ending 18 September 2006

Abstract

During the year ending 18 September 2006 work within ERL 97 was deferred to deposits of higher ranking in the short term. GBS Gold has commenced operations of the dual mill 2.5Mtpa Union Reefs CIL Gold Plant. The two initial open pit ore sources are at the Fountain Head and Rising Tide Deposits, with the high grade ore to be sourced from the Brocks Creek underground Mine (Zapopan). Work was also minimal due to the acquisition of the Burnside Joint Venture by GBS Gold Australia Pty Ltd as of the 1 April 2006. Mineralisation on ERL 97 is associated with two sets of quartz veining that dip steeply to the west and east. These orientations appear to be related to west dipping, bedding parallel, quartz veining associated with bedding parallel thrusting and east dipping duplex structures linking the west dipping thrusts. These form a complex stockwork zone of quartz veining with sub horizontal higher grade shoots. A variety of vein types are present at Western Arm. These include stockwork zones, bedding parallel laminated veins, K-felspar rich veins and massive white veins, which appear to have different gold grades. Modelling by Bill Makar in 2005 estimated that a global resource of 630,000t at 1.7g Au/t is present over a strike extent of nearly 3km. Within this resource, mineralised entities identified at a higher cut off and constrained by 20 m deep pit shells amounted to 11,000t at 2.8g Au/t. This was judged uneconomic at the date of estimation.