Annual report on exploration licence EL 10368 Auquest Project period ending 16 June 2008

Abstract

EL 10368 is situated in the Toms Gully area and is located 100 km SE of Darwin. It comprises 8 blocks covering 14 km2. On 25 July 2007, GBS Gold Australia Pty Ltd acquired all tenements including EL 10368 and Toms Gully gold mine held by Renison Consolidated Mines NL, Northern Territory. EL 10368 is located within the Pine Creek Orogen, which has been interpreted as an intra-cratonic basin lying on an Archaean basement. It contains a 14 km thick sequence of Palaeoproterozoic sediments, accompanied by lesser volcanics, granitic plutons and dolerite intrusions. The northern portions of the project area contain the oldest sediments of the Mount Partridge Group that is unconformably overlain by the South Alligator Group. The southern portion of the Project area is comprised of the Burrell Creek Formation, which conformably overlies the South Alligator Group. During the reporting period, GBS Gold Australia embarked on an in-depth technical review of the EL 10368 together with other tenements in the package. Initial findings based on available data suggest that the tenement is very prospective for gold and uranium mineralisation. Geological setting of the area is ideal for medium size gold deposit, where prospective lithologies of the Koolpin Formation, Mt Bonnie Formation Gerowie Tuff and Burrell Creek Formation which have been intruded by the Mount Bundy Intrusive complex further north. These formations have been folded in north-easterly trending folds and together with the presence of contact aureoles point towards characteristic features of gold mineralised settings in the Pine Creek Orogen. An in-depth review is underway to assess the full potential of Toms Gully Group of tenements including EL 23178. The main purpose of this program will be to understand, geological and structural setting of the area to elucidate mineralising processes for gold, uranium, base metals and iron ore. A detail geophysical interpretation of available data is also underway to provide assistance in targetting areas of possible mineralisation. It is anticipated that selected areas will be mapped in detail, and a program of soil/rock chips sampling will be undertaken. In areas of black soil cover, aircore drilling will be required to retrieve bed rock samples.