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 2007 Howley Tenement Group Burnside Project NT

Abstract

The Howley group of tenements is located approximately 140km 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% Northern Gold NL, 50% Harmony Gold. In 2005, GBS made a successful takeover of Northern Gold, and entered an agreement to purchase Harmony's 50% share of the Burnside JV, giving GBS 100% control of the project. The Burnside JV (now Burnside Project) considers the Howley Group tenements as a key asset, and exploration and resource development has been active in the past few years. The work has concentrated on resource definition with infill drilling, assaying density testing, geotechnical test work as part of feasibility work. During the reporting period, significant gold mineralisation was encountered during drilling at Big Howley, Mottrams Chinese South (Extension) and Cosmo Howley. During the reporting year 260 RC hole for 23357 metres were drilled. Currently, work is in progress for block modelling, resource optimisation and upgrading the resources to JORC-compliant standard. In 2008, further infilling drilling will be carried out to supplement resource inventory. Much of the development is also anticipated in 2008 which includes geotechnical drilling, dewatering of Cosmo Howley pit, infrastructure development decline, under ground development and EIS with a budget of tens of $ millions with an anticipated start of mining in 2009.