Annual exploration report MLN 13, MLN 1130, MCN 317, MCN 523, MCN 1054, MCN 1055, MCN 4072, MCN 4074 for period ending 15 July 2010 Pine Creek Group, Burnside Project

Abstract

A strategic landholding on the eastern side of Pine Creek township forms the Pine Creek Group of tenements, which comprises 8 tenements (MLNs 13, 1130, and MCNs 317, 523, 1054, 1055, 4072, 4074). This group is located approximately 220 km SE of Darwin. Crocodile Gold Australia acquired the tenement group in 2009 by purchasing liquidated assets of GBS Gold Australia. Historically, the tenements have been the focus of alluvial and hard rock gold mining activity since 1869. More recently, Pine Creek Goldfields mined its flagship deposit 'Enterprise' until late 1994, producing 744,000oz Au from open pit operations. In the central part of the tenement group, the tightly folded host greywacke-siltstone facies sequences of the South Alligator and Burrell Creek Group are present, which have been intruded by the Cullen Batholith. Gold mineralisation within the Pine Creek group is focused in the axial zones of parallel major upright folds. The most productive is the Enterprise Anticline; others are International-Czarina anticlines. The folds plunge shallowly towards 135 degrees at around 10 degrees and the limbs dip southwest and northeast at around 65 degrees. There are a number of gold deposits located within this geological setting. Amongst these, Czarina contains an Indicated Mineral Resource of 731,760 tonnes, grading 2.51 g/t Au for a total of 59,120 ounces Au. Significant activity during the year under review was sale of Pine Creek group of tenements to Crocodile Gold Australia. This transaction was completed on 6 November 2009 and since then new owner has commenced evaluation and ranking of tenement groups prelude to mining operation. Since 6 November 2009, a review of Pine Creek group is also underway which suggests that it has good potential due to significant resource present at Czarina and could increase substantially with further resource definition program. In the next reporting year, evaluation of gold resources within the project area will continue, and this will involve resource modelling and optimisation at Czarina. In addition, the project area will be subjected to rock chip sampling and if encouraging results received, some RAB/RC drilling may also take place.