Annual report on MLN 1058 Toms Gully Gold Mine year ending 2 August 2010

Abstract

MLN 1058 hosts the Toms Gully Gold mine and processing plant, and is located approximately 90 km south east of Darwin, Northern Territory, and some five kilometers south of the Arnhem Highway. It covers about 681.8 hectares and was granted on 8 March 1989 and will expire on 2 August 2014. In November 2009, Crocodile Gold Australia purchased MLN 1058 and other assets held by GBS gold Australia (liquidated). The Project area is located within the northern portion of the Pine Creek Orogen. It mostly contains the Wildman Siltstone, a sequence of tightly folded strata with an unconformable contact with the Koolpin Formation, which covers south-western corner of MLN 1058. Towards south-east, Mount Bundey Granite intrudes the host sequence, imparting contact metamorphic aureole which could be several kilometers wide. During the reporting period, a drilling program was undertaken to extend the resource base further. It involved drilling of 34 holes for a total of 105742 metres. Of the 34 holes drilled, only 5 were RC, whereas remaining were collared as RC and had diamond tails. A total of 6702 chip and core splits were assayed for gold by North Australian laboratories located at Pine Creek. Drilling program returned significant intercepts with strong gold mineralisation. TGDDH027 has the most outstanding assay up to 11.9 g/t gold at a depth of 258.04 to 259.7 with an interval of 1.65 metres. GDDH028 comprised an intersection of 1.5 metres with a grade of 10.3 g/t at a depth of 249.6 metres. Another drill hole TGDDH008 also contains rich gold intercepts at depth of 219.0 to 230.64 metres which is 7.69 g/t and covers 11.64 metres. In the next reporting period, drilling results achieved during 2009-10 will be finalised and resource modeling will be undertaken in order to establish a new resource base. A feasibility study will be undertaken to commence mining and processing at Toms Gully. It is possible to undertake a new program of drilling to define new resource at Toms Gully.