Annual exploration report MLN's 809, 884-892; 993, 1000, 1027, 1053, 1062 MCN's 1014-1015; 1231-1232; 3422; 4299; 4860-4861 for period ending 31 December 2006 Howley Tenement Group

Abstract

The Howley report group is located approximately 140 km SSE of Darwin, NT. The group comprises tenements that cover the southern sector of the Howley Anticline, an economically important fold structure that hosts numerous historic gold mines and prospects. These include the important Cosmopolitan Howley mine and its satellites including the Phantom, Chinese No. 1, Chinese No. 2, Chinese South and Big Howley. Most have been the subject of historic underground and more recently, open pit mining. Territory Goldfields NL (a Northern Gold subsidiary) purchased the Howley group tenements from Dominion in late 1994 and independently conducted exploration programs along the Howley Line until April 2002. On 4 April 2002 the 'Burnside Joint Venture' was formed between Territory Goldfields NL and Buffalo Creek Mines. It merged the tenements and local infrastructure assets of the two companies, and included the Howley group tenements, those surrounding the Brocks Creek treatment facility, and the facility itself. The JV parent companies were 50 percent Northern Gold NL, 50 percent Harmony Gold. 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 percent control of the project. The Burnside JV (now Burnside Project) considers the Howley Group tenements as a key asset, and exploration has been active in the past few years. The work has concentrated on resource definition with infill drilling, density testing, petrography, geotechnical test work as part of feasibility work. During the reporting period, significant gold mineralisation was encountered during drilling at Chinese South (Extension) Cosmo Howley and Mottrams. Currently, work is in progress for block modelling, resource optimisation and upgrading the resources to JORC-compliant standard.