Annual exploration report Elizabeth Tenement Group Union Reefs Project year ending 31 December 2008 MCN's 506, 507, 734, 735, 738 and MLN's 135, 779, 780, 822 and 856

Abstract

The Elizabeth Group of tenements is an integral part of GBS Gold Australia port folio and is located approximately 168km south-east of Darwin, Northern Territory. Total area covered by the group of tenement is 65.42 hectares. This report summarises exploration work completed for the year ending 31 December 2008. The Elizabeth tenement group is situated within the Pine Creek Orogen, a tightly folded sequence of Lower Proterozoic rocks, 10km to 14km in thickness, laid down on a rifted granitic Archaean basement during the interval ~2.2-1.87Ga. The sequence is dominated by pelitic and psammitic (continental shelf shallow marine) sediments with locally significant inter-layered cherty tuff units. Previous exploration programs have located significant gold mineralised intercepts during drilling. However, mineralisation was hosted by narrow shear systems and confined to erratic plunging shoots that have been historically mined out to 30m. During the reporting period, exploration activities at the Elizabeth Group of tenements mainly included a peripheral review, ranking exercise, reconnaissance visits, tenement administration and report writing. On 15 September 2008, GBS Gold Australia was declared under voluntary receivership which led to cessation of all exploration and mining activity. There is strong possibility that under the present circumstances where gold is holding well as compared to other commodities, an investor will come on board and operations of the company will re-commence again. An exploration program for year 2009 will include infill soil sampling and re-evaluation of the project area. If any encouraging result is received, it will lead to RC/RAB drilling.