Annual report on EL 10368 Auquest Project period ending 16 June 2009

Abstract

EL 10368 is one of the significant tenements within GBS Gold Australia's portfolio 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. In 2008 GBS Gold Australia entered into a JV agreement with Rum Jungle Uranium Limited to explore uranium and gold in the Toms Gully area. As a result during 2008, a high resolution airborne geophysical survey (magnetic and radiometric) was flown over the project area. In addition an in-depth technical review of the EL 10368 together with other tenements in the package was also undertaken. Findings based on available data suggest that the tenement is 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. Technical review of the project area has identified gold and uranium potential of the project area. In the next reporting year, ground-truthing of the project area will be undertaken. In areas of black soil cover, aircore drilling will be required to retrieve bed rock samples. All soil, rock chip samples will be assayed for gold, uranium and base metal mineralisation. If encouraging results received, it will lead to RC drilling.