Annual exploration report MLN 1109, MLN 833 and AN 398-402, Union Reefs Gold Mine year ending 31 December 2006

Abstract

The Union Reefs gold mining centre and associated open pits, historic workings and treatment infrastructure are located 170 km SE of Darwin, NT and 12 km north of Pine Creek. The mining centre is enclosed by MLN 1109 that totals 3,998.0ha. There are other tenements such as MLN 833 and AN 398-402 of small size, which are also included in this project for the purpose of group reporting. The mining centre was the subject of open pit mining and treatment under the ownership of Acacia Resources Ltd and more recently by AngloGold (Ashanti) Limited. During this period the Union Reefs mill on MLN 1109 inclusive MLN 833 treated a total of 20,225,360t at 1.47g/t Au for the recovery of 957,523 fine oz gold. Production ceased on 27th July 2003 and following a period of negotiations, MLN 1109, along with the mine infrastructure and satellite tenements, were purchased in August 2004 by Buffalo Creek Mines P/L and Territory Goldfields NL. The latter comprise the Burnside Joint Venture (2002) which is now wholly controlled entity of GBS Gold Australia P/L. Geologically, the mining centre is situated within a 300m wide structural corridor trending NW. The corridor comprises tightly folded and sheared pelitic to arenitic sediments of the Palaeoproterozoic Burrell Creek Formation and inliers of underlying Mt Bonnie Formation. Two sub parallel lines of historic gold workings comprise the focus for the array of open pits mined in recent years. With the re-commissioning of Union Reef mill in September 2006, GBS Gold P/L are concentrating on securing the feed stock for the mill from several projects. At present, gold ore is being mined from the Brocks Creek mine, supplemented from Fountain Head and Rising Tide deposits. In addition, a number of other deposits/prospects are being drill tested for additional resources for the mill. MLN 1109 (inclusive MLN 833, AN 398- 402) contains old mines where gold resource is depleted and what is left behind from previous operations, has been ranked low. During 2006, a review of these tenements has identified gold potential of the area and a number of targets were identified which will require drilling leading to resource definition.