EL 22301 Mount Wells North Annual report Year 5 14 April 2007 to 13 April 2008

Abstract

A joint venture between Australasia Gold (AAO) and titleholder Softwood Plantations Pty Ltd grants to AAO 100% rights to gold deposits discovered within the EL while Softwoods retains 100% rights to other commodities. AAO is operator-manager and conducts exploration for gold, and coordinates exploration for other commodities which the titleholder may wish to fund. EL 22301 covers an area of 16 sub-blocks (53.03 sq km) and was granted on 14 April 2003 for a period of 6 years. It is situated approximately 40 km NNW of Pine Creek township, and includes the Mt Wells tinfield and battery inside its southern boundary. The circumstances of the tenement have changed significantly during the year. Ownership and management of Softwood Plantations Pty Ltd have passed to Outback Metals Ltd ('Outback'), which is preparing to raise funds via an IPO to expend on EL 22301 amongst a portfolio of Northern Territory titles. The model for AAO's exploration for gold is based on the premise that extensive areas throughout EL 22301 concealed under blacksoil plains of the upper reaches of the McKinlay River and its tributaries are prospective for gold by virtue of the proximity of granite intrusions, and underlying stratigraphy and structure revealed in adjacent outcropping areas, but remain little explored. Outback Metals' targets include the Mt Wells tin deposits which are situated in the EL including potential for extension of resources, and other analogous deposits which may be revealed by exploration of both outcropping and sediment-covered parts of the EL. Australasia Gold has worked intensively to optimise target selection for reconnaissance of potential gold mineralisation concealed beneath the broad shallow valleys of the major drainages in this region. In addition to locating targets beneath the alluvial valley fill, by interpretation of magnetic datasets, the Company has undertaken a program of research to investigate the validity of sampling biogenic materials as an indicator of bedrock mineralisation. The techniques have proven effective over similar mineralisation, in similar regolith situations in more arid parts of the Northern Territory (Tanami Region), but have not previously to our knowledge been applied in the tropical circumstances of the Pine Creek region. Australasia Gold has also during the year completed an Option to Purchase Agreement with the holders of MLN's 808, 821 and 869, which cover the outcropping extent of the structure hosting the McKinlay Gold Mine. This acquisition provides additional focus to our exploration of the strike extensions of this structure to north and south within EL 22301. AAO's program completed during year 5 is consistent with that undertaken at the end of year 4 including: Target development for reconnaissance bedrock geochemical survey; in particular; interpretation of research biogeochemical orientation traverse; interpretation of regional and detailed airborne magnetic datasets; program design and preparation of MMP; ground reconnaissance; commencement of reconnaissance aircore drilling program. Outback has undertaken a broad-ranging review of the tenement data and prospectivity, in preparation of its exploration program, based on public domain data, accumulated exploration records and field reconnaissance.