Annual exploration report for EL 23506 for period ending 8 May 2007 McKeddies Northern Territory

Abstract

EL 23506 is located approximately 40 km NE of Pine Creek, and contains a number of mineral prospects/anomalies such as gold, iron, tin and manganese. The tenement falls on the Pine Creek 1:250,000 sheet and is located on the McKinlay River 1:100,000 sheet to the north, and Pine Creek 1:100,000 sheet to the south. Agreements for exploration rights to EL23506 have been made between the Title holders and two companies; GBS Gold Australia subsidiary Terra Gold, and Territory Iron Limited (TIL). EL 23506 is situated within the Pine Creek Orogen, a tightly folded sequence of the Palaeoproterozoic rocks. The tenement area covers the Palaeoproterozoic Namoona Group (Masson Formation) and Mount Partridge Group (Mundogie Sandstone and Wildman Siltstone). These rock formations have been intruded and contact metamorphosed by the Zamu Dolerite and members of the Cullen Batholith During the reporting period, a technical review of the tenement was undertaken which identified potential for several commodities. The main exploration activity was carried out by Territory Iron Limited which led to drilling of 5 RC holes for 146 metre, and intersected 4m at 62.57% Fe in FERC004. However, iron ore resource identified was too small and could not warrant any mining operation. In the year 2007-08, GBS plans to conduct a through review of the project area for all mineral commodities. This will include reconnaissance field survey, available geophysical data appraisal, and rock/chip sampling. This may lead to RAB/RC drilling over the tenement area. Territory Iron has during 2005-06 explored 10 blocks of EL 23506 for iron ore under a Heads of Agreement signed in December 2004 with holders, Messieurs Teelow, Orridge and Clarke. In September 2006, Des Lascelles, an experienced consultant iron ore geologist, was commissioned to assess the iron ore potential of the ironstone outcrops and review drilling results undertaken by Territory Iron in late 2005. Findings from the 2-day field work were that, 'surface outcrops consist of goethite-hematite with abundant quartz in the form of massive veins and brecciated clasts of siltstone indicating the deposits would be low-grade and not economic for mining' and that, 'the deposits are too small to even consider selective mining and up-grading by downstream processing'. He concluded that no further work was warranted in the area.