Annual Technical Report MCN's 506, 507, 734, 735, 738, MLN's 51-57, 135, 779, 780, 822, 856, 1109, 833, and MA's 398-402, Union Reefs Project - Union Reefs Gold Mine GR192/11, 16 August 2011 to 15 August 2012

Abstract

The Union Reefs Group comprises 24 tenements (MCN's 506, 507, 734, 735, 738, MLN's 51-57, 135, 779, 780, 822, 833, 856, 1109 and MAs 398-402) and is located about 170 km SE of Darwin, NT and 12 km north of Pine Creek. This group of tenements also represents the location of the one and only operating process plant in the district and currently processes the ore from the Cosmo Deeps mine which is in development. This report takes into account the Elizabeth group of tenements located to the north of the Union Reefs mining camp. This area was previously reported separately but is now included in the Union Reefs Group reporting. The geology of the Union Reefs mining centre is dominated by the NW striking Pine Creek Shear Zone, a 300m wide corridor of folded and sheared metasediment package that largely comprises Burrell Creek Formation and structural inliers of Mt Bonnie Formation. The host sequence including the Pine Creek Shear Zone is confined to the east by the Allamber Springs Granite and to the west by the Tabletop and McCarthys Granites. Rocks within this zone have been tightly folded and in high strain areas, subjected to fold limb failure. Gold mineralisation extends over a length of 3.5km, 400 meters width and to a vertical depth of over 300 metres. Numerous historical workings have been developed over the northwest striking Pine Creek Shear Zone and associated Union and Lady Alice Lines. The Lady Alice Line follows the axis of the Lady Alice Anticline. Mineralisation is associated with quartz-sulphide veining, compromising 1mm to 2 metre thick lode-style veins in sheared pelites, stockwork veins in greywacke and sheeted vein systems in thinly interbedded pelites and psammites. Exploration activities during the reporting period included a program of RC and diamond drilling over the Prospect, Crosscourse and Orinoco deposits (MLN 1109). A total of 75 diamond holes (18,750.9 m) and 14 RC holes (1,003 m) were drilled for a total of 19,753.9m. Results from the drilling were used to update the Union Reefs resource models. Similar to the review and update in the previous reporting year, geological and mineralogical wireframes were updated, compositing of assay intervals conducted, statistical analysis of Au composites with top cuts applied, and domaining for the purpose of variography and the block modelling process. 3D block models were generated using MineMap software. Other activities included a review of historic data and the purchase of new satellite images. Also during the past reporting year a detailed review of both the Esmeralda and Elizabeth areas was completed, recommending further work to be complete on these tenements in the coming few years. Elizabeth has significant potential and is a similar ore-body to that seen at Prospect. Esmeralda is a highly ranked deposit to the south of the Union Reefs processing plant which could supply significant tonnage to the plant in the coming years. Further work is required to get this deposit into the short term mine plan, which is anticipated in the coming year. Exploration activities for the following year include the finalisation of Mineral Resource estimates for the Prospect, Union North, Union South, Crosscourse, Orinoco, Lady Alice and Millars deposits. Some drilling is planned on the Esmeralda deposit in the south and further geological mapping and sampling will be completed at Elizabeth. The major work planned on the project for 2012-13 will be the exploration drive to test the mineralisation below the Prospect Pit. This will assess the suitability of the project for longer term mining activities.