Annual exploration report ERL 130 Esmeralda Union Reefs Project year ended 16 December 2008

Abstract

ERL (Exploration Retention Licence) 130 is located about 210 km SE of Darwin, NT, and 8km north east of Pine Creek. GBS Gold Australia Pty Ltd acquired the tenement in April 2006 as part of a take over and acquisition of the companies that ran the Burnside Joint Venture. Previous exploration by Cyprus Gold Corporation and Acacia Resources had outlined two significant adjacent and sub parallel gold resources (A and B), known as Esmeralda deposit which is located some 4km south of the Union Reefs mill. AngloGold estimated that the deposit at 0.7g/t cut off, contains a combined inferred resource of 1.26Mt at 1.62g/t Au. (66,000oz). Within the project area geology is dominated by clastic rocks of the Mt Bonnie Formation that is the uppermost formation of the South Alligator Group, and the Burrell Creek Formation which is the lowest unit of the Finniss River Group. They have been intruded by the Palaeoproterozoic granites such as Allamber Springs towards east and Tabletop Granite towards west. TMI image of the project area shows that Pine Creek Shear Zone runs through ERL 130 which appears to be one of the controlling factors in hosting gold mineralisation at various stratigraphic horizons in the Orogen. The Shear Zone is characterised by low to moderate magnetic highs which host many gold deposits in the Orogen. Geological setting and geophysical signature of the project area points toward additional potential for gold mineralisation. During next reporting year, ground-truthing of the Esmeralda deposit and surrounding will take place to assess further targets in the area. In addition, Soil sampling will be undertaken to detect further anomalies. If encouraging results received, it will lead to RC/RAB drilling.