Annual group report for ML 29781, ML 29782, ML 29783, ML 29785, ML 29786, ML 29812, ML 29814, MLN 1058 and MLN 1083, Mount Bundy, Rustlers Roost and Quest 29 Projects 1 December 2015 to 30 November 2016

Abstract

The GR304-13 tenement group (ML 29781, 29782, 29783, 29785, 29786, 29812 and 29814 and MLN 1058 and 1083) is located some 100 kilometres south-east of Darwin, and incorporates the historic mining operations at Toms Gully, Rustlers Roost and Quest. A number of the ML's in the tenement group are a consolidation of a package of historic MC and MCN's, which were consolidated in 2013, see Table 1. Primary Gold has managed these tenements since February 2013 when they were transferred to the company as part of the acquisition of the Mt Bundy Project from Crocodile Gold Australia Operations (CGAO). The tenements are mostly underlain by sediments of the South Alligator Group, namely the Koolpin Formation, Gerowie Tuff and Mt Bonnie Formation. The exception being the Tom's Gully Group which are dominantly underlain by the older Wildman Siltstone of the Mt Partridge Group, exposed in a gently SW plunging antiform. The Mount Bundy Granite intrudes the South Alligator and Mount Partridge Groups and is central to the mineralisation located at Tom's Gully. The licenses contain significant auriferous quartz vein systems that have been exploited by previous operators. In 2014 Primary Gold lodged a Mine Management Plan (MMP) with the Northern Territory Department of Mine and Energy with regards to the recommencement of operations at Tom's Gully. The MMP was referred to the Environmental Protection Agency (EPA) who in late 2014 advised Primary that an Environmental Impact Statement (EIS) would be required. During 2015 Primary Gold focused on the completion and lodgment of this study. Following the EPA assessment of the EIS in late 2015 a request for further information was received. As the company remains committed to the recommencement of operations at Tom's Gully work in 2016 was commenced to collect data and information required to address the issues identified by the government and public stakeholders. This work is still continuing. To date a flora and fauna surveys across the Tom's Gully, Rustlers Roost and Quest 29 Areas have been completed. The company is working towards a final approval of the EIS and will update the proposed MMP as required. Also during the period senior management and the board was changed. As such exploration activity during the current reporting period has been limited to: Ongoing metallurgical test work on the Tom's Gully ore body; Seeking an Aboriginal Areas Protection Authority Certificate and Department of Primary Industry and Resources (DPIR) approvals to undertake RC drilling at the Rustlers Roost and Quest 29 areas; The collection of information and data in preparation for the submission of a supplement to the Environmental Impact Statement with respect to the recommencement of underground mining at Tom's Gully. This will be continued in 2017, when work will focus around the further collection of environmental data and interpretation of this data for the supplement; Ongoing care and maintenance operations at historic sites; Desktop review of the historic data which were compiled into coherent GIS projects using a Micromine program thus allowing the integration of grass-root exploration data with exploration drill holes and block models creating a single comprehensive 3D exploration model of the project area. Completion of the desktop study has helped to identify and prioritize exploration targets which are proposed for drilling in 2017; Approximately a three week long prospecting program was undertaken by the company geologists. The main objective of this work was to assess the brown-field exploration opportunities, which included investigation of the quartz veins exposed on the surface, identification of the drill sites proposed for delineating the gold mineralisation at the Rustlers Roost and Quest deposits and sampling of selected outcrops, in total, 6 outcrops were sampled. Primary's exploration activities for the year 2017 are focused on advancement of the know resources to the commencement of mining and increase the mineral inventory by the discovery of new mineral zones in close proximity to known deposits. To advance this a drilling program is proposed that focuses on further delineating of the gold lodes at the Rustlers Roost and Quest (Q29 and Q30) deposits where mineralization was not fully constrained (left open along the plunges and at depth) by past drilling.