Annual exploration report Yam Creek / North Point Group year ending 31 December 2006, MLN 214, 341, 343, 349, 823-832, 858-863, 940, 1112, MCN 46-47, 49-50, 624-625, 898-899, 4428, 4430, 4432, 4434

Abstract

The historical Yam Creek/North Point gold district is located approximately 150km SSE of Darwin. It mainly covers important Yam Creek alluvial and bedrock gold mining field which was discovered in 1872. Gold mineralisation occurs as quartz vein systems, hosted by structurally prepared sites within cyclic greywacke-mudstones of the Palaeoproterozoic Mount Bonnie Formation. Episodic gold production has been reported from underground as well processing of alluvial/elluvials cover material. The area has been the subject of modern gold exploration since the late 1970's. Exploration, post 1988 was managed by Northern Gold NL and its subsidiaries and Acacia Resources (AngloGold) subject to option agreement. The Burnside Joint Venture was initially created with the objective of exploring, developing and mining gold deposits within the Brocks Creek region and milling the ores at the Brocks Creek treatment facility. The Brocks Creek mill was sold to Tanami Gold NL in August 2004. At the same time, the Burnside Joint Venture purchased the Union Reefs mill, located 35km to the SE of Yam Creek, from AngloGold (Ashanti) Ltd. Since formation of the joint venture the Yam Creek and North Point area has been subjected to RC drilling programs that were designed to prove up gold resources that could supplement mill feed for a full scale mining operation in the area. During 2003 a geo-statistical consultant was commissioned to conduct a resource study on the North Point and Princess Louise gold deposits. In light of the recent acquisition of the Union Reefs mill, an internal technical review of the North Point and Princess Louise gold resources was undertaken. This review warranted further exploration and evaluation of the whole project, leading to drilling and assaying in 2006. At North Point 6 diamond holes were drilled for 403 m whereas 48 RC holes were drilled for 3790 m. At Princes Louise 3 diamond and 28 RC drill holes were drilled .This program provided evidence of significant gold mineralisation which can provide additional ore feed to the recently re-commissioned mill at Union Reefs. The data obtained will be further evaluated and modelled in order to prove up the gold resources in 2007, in addition to further infill drilling and ore optimisation. A seperate report on Iron Blow is included. The Iron Blow base metal-gold deposit represents the largest of the available base metal deposits in the Pine Creek Orogen. Together with the nearby Mt Bonnie deposit, they represent a substantial start towards achieving a critical mass of tonnage to support a base metals mining operation in the Pine Creek Area. The key lease MLN 214 was originally granted to EA Witte and K Jessop as ML 650B on the 6 January 1972 for a period of 21 years. The ownership of this principal tenement has changed many times. Now GBS Gold Australia P/L are the sole owner of the project. The Iron Blow mineralisation and related tenements underlie a stratigraphic sequence in the lower Mount Bonnie Formation (South Alligator Group). These include interbedded siltstone, pyritic and carbonaceous shales, greywacke, chert, hornfels, carbonate and minor conglomerate. Carbonaceous slates are the most common rock type exposed in the open cut, with silicified siltstone, hornfels and greywacke units exposed to the west. The Iron Blow deposit comprises two steeply dipping (75 east) conformable, polymetallic sulphide-silicate lodes. The eastern or upper lode has strike length of about 80 m, a maximum thickness of 10 m and extends down dip to 100 m below surface. The western or lower lode lies about 50 m to the west of upper lode. Striking over 150 m with a maximum thickness of 30 m, it extends over 200 meters below surface. This load contains two sulphide lenses which contain much of the known ore reserve. In the previous exploration programs, a non-JORC compliant resource of 92,000t at 8.1 percent Zn, 0.4 percent Cu, 1.8 percent Pb, 186g/t Ag, 1.5g/t Au for the Eastern Lode and 850,000t at 6.7 percent Zn, 0.4 percent Cu, 0.7 percent Pb, 87.3g/t Ag, 1.9g/t Au for the Western Lode, has been established. A technical review of the previous data were undertaken in order to evaluate the resource potential of the project and devise a program of exploration to test the mineral potential of the Iron Blow mineralisation.