Annual exploration report SEL 10341 Pioneer Union Reefs Project year ending 30 September 2006

Abstract

SEL10341 'Pioneer' is located 165 km SE of Darwin, NT. It forms part of the Union Reefs Project tenements and is subject to the Burnside Joint Venture, managed by subsidiaries of Northern Gold NL and Harmony Gold (Australia) Ltd in equal shares. The tenement of 18 blocks was granted to AngloGold (Ashanti) Australia Ltd on 30th September 2003, transferred to the Burnside JV subsequent to purchase of the mill and tenements in August 2004. During 2005 a statutory reduction of 9 blocks, comprising the western sector of the SEL, was registered and consolidated with all other Burnside-Union Reef assets under the ownership of GBS Gold Australia P/L during the first quarter of 2006. The tenement occupies a position that straddles the Pine Creek Tectonic Zone (PCTZ), a NNW trending shear suture that passes through the Pine Creek and Union Reefs gold fields. Rocks belonging to the Burrell Creek Formation predominate with fold enclaves of older South Alligator Group sediments present within the shear zone and flanking this zone to the north west. The metasedimentary sequence is limited by contacts with granite batholiths of the Cullen Suite to the northeast and southwest. The SEL encloses the Elizabeth Group of mineral leases and claims covering old workings on the PCTZ. Interpretations of the structural setting of the Elizabeth Group suggest it occupies sheared out anticlines within the PCTZ. These NNW axes and strike faults have been cut obliquely by later WNW fracture swarms that are thought to have focused gold mineralisation in the Union Reefs field. During the year ending 30th September 2006 work within SEL 10341 was deferred in preference to deposits of higher rank in order to ensure the commencement of mining and milling in 2006. As a consequence, GBS Gold has successfully commenced both open pit mining at the Rising Tide Deposit and milling operations of the dual mill 2.5Mtpa Union Reefs CIL Gold Plant. Work on SEL 10341 was also restricted due to the acquisition of the Burnside Joint Venture by GBS Gold Australia Pty Ltd, which was successfully completed as of the 1st of April 2006. Earlier this year there was a severe shortage of professional geologists to enable any successful and thorough exploration activities to be undertaken. Leading up to the end of this reporting year, as well as in the extension period for the report preparation, a desk top review of the project as well as a reconnaissance field trip was completed.