Annual exploration report on MLN 4, MLN 206, MLN 1020, MLN 1034 and MCN 1172, MCN 4785 Fountain Head Burnside Project for period ending 28 February 2009

Abstract

The Fountain Head project is centered 135 km SE of Darwin, NT and 10 km east of the Brocks Creek mine office, on the Ban Ban (14/3-III) and Burnside (14/2-II) 1:50,000 sheets. Following the formation of the Burnside Joint Venture on 4 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 deposits were subjected to a first pass review that ranked the tenement group considerably high and a program of drilling was undertaken to extend the resource base. In the following, a summary of resource definition program during 2008-09 reporting year is presented. The purpose of this campaign was also pit optimisation which could lead to more effective mining operation to feed the Union Reef gold plant. Drilling in the Fountain Head open pit operation has concentrated on the Tally Ho lodes which are located on a shear zone diverging from the main Fountain Head anticline lode structures. This drilling targeted the lower portion of the interpreted depth extensions and defined additional ore material that should extend the Fountain Head open pit mine life. The Tally Ho lodes are interpreted to represent the near-surface expression of a larger and previously overlooked gold system. It remains open at depth and along strike. Further drilling is planned to test these zones and a new resource model is under preparation. Current drilling campaign covered 34 RC drill holes for 3458 metres. A total of 3473 chip samples retrieved during drilling were assayed for gold. Although further drilling is required, these drilling results suggest that a cut-back to the existing open pit is economically feasible and indicate an increase in the average grade of the Tally Ho lodes with depth. In addition to the extended open pit potential, the higher grade tenor and significantly increased true widths of up to 14 metres, suggests that there may also be scope for deeper mineralisation that might support an underground mining operation.