Annual exploration report on MLN's 4, 206, 1020, 1034, MCN's 1172, 4785 period ending 28 February 2008 Fountain Head Burnside Project NT

Abstract

The Fountain Head tenement group is located about 135km SE of Darwin, Northern Territory, and 10km east of the Brocks Creek mine office, on the McKinlay River and Pine Creek (1:100 000) sheets. Following the formation of the Burnside Joint Venture on 4th April 2002, management was placed under the Burnside Operations P/L. Since 2005, the Burnside Operations is wholly owned subsidiary of GBS Gold Australia Pty Ltd. The Fountain Head gold deposit was operated from 1883-1951. The Fountain Head deposits were subjected to a first pass review by GBS that ranked the tenement group considerably high and a program of drilling was undertaken to extend the resource base. The Mt Bonnie and Burrell Creek Formations are the host to the gold mineralisation which occurs within the Fountain Head Anticline, and was exposed in the face of a trial mining pit developed by Dominion in 1985. This fold is gently plunging, asymmetric and has a tight closure. It has a steeply dipping (~70 degrees) north east limb and a more gently dipping [50-65 degrees] south west limb. During the reporting period, a total of 127 RC holes were drilled for 9178 metres. 9178 composite geochemical samples were retrieved and analysed for Au. A number of drill holes met with significant gold mineralisation such as THRC078, THRC079 and THRC087 ranging from 3.13 to 9.34 g/t. THRC079 contained mineralised intercepts of 7 metres at 9.34 g/t. Another drill hole THRC078 has strongly mineralised intercepts at 110 metres depth (7 metres at 3.73 g/t) and 121 metres depth (4 meters at 4.92 g/t). A eight metre intersection of gold mineralisation was encountered in drill hole THRC087 ranging from 3.13 to 5.5 g/t. A new resource estimation for Fountain Head and Tally Ho was calculated using revised kriging parameters because earlier block model was consistently underestimating ore grades during mining. Currently, mining operation from the Fountain Head and Tally Ho open pits is underway. Next year exploration may include further pit optimisation, pit stability investigations and further resource drilling.