Annual exploration report MLN's 13, 1130, MCN's 317, 523, 1054, 1055, 4072, 4074 for period ending 15 July 2007 Pine Creek Group Burnside Project NT

Abstract

The Pine Creek tenement group is located approximately 220km SE of Darwin NT, and around the western side of the Pine Creek township boundary. GBS Gold Australia acquired the tenement group in 2005 by a friendly take over of Northern Gold NL (50%) and Buffalo Creek Mines Pty Ltd (50%). Historically, the tenements have been the focus of alluvial and hard rock gold mining activity since 1869. More recently, Pine Creek Goldfields mined its flagship deposit 'Enterprise' until late 1994, producing 744,000oz Au from open pit operations. In August 2004 the Burnside JV purchased the Union Reefs mill, and an exploration programme began to outline potential ores for treatment at the Union Reefs mill. Initially, it involved data acquisition, and a drilling database review, followed by RC drilling. This allowed an update of the computer models showing residual mineralisation. The Czarina primary mineralisation was subjected to metallurgical testing that suggested only 70% recovery was achievable from the transition to fresh material. A resource potential review in 2004 indicated that there was potential to prove up a body of economic mineralisation through programmes of infill RC drilling and further pit shell optimisation studies. In January 2005 a Total Indicated and Inferred Resource of 1,844,559t at 1.72g/t Au for 102,062oz Au was outlined at Czarina, using a 1.0g/t Au cut-off. Drilling the down-plunge mineralised component at South Enterprise in November 2004 intersected the best mineralisation below the zone of oxidation, with recovery expected to be similar to Czarina. During the reporting period, an up-dated resource estimate of the Czarina deposit is being undertaken by Geostat Services Pty Ltd to comply with CIM Definition Standards of Mineral Resources and Reserves. Statistical and grade continuity analyses were completed to characterise the mineralisation and subsequently used to develop grade interpolation parameters. These were applied to the supplied 3D lode wire-frames. Initial work suggest that current Indicated Mineral Resource above a cut-off of 0.7 g/t Au is 731,760 tonnes, grading 2.51 g/t Au for a total of 59,120 ounces Au, with the current Inferred Mineral Resource being 84,233 tonnes grading 2.36 g/t Au for 6,404 ounces.