Resource Evaluations Pty Ltd · z Page ii Executive Summary A Mineral Resource estimate for the...

Resource Evaluations Pty Ltd Level 2, 681 Murray St West Perth 6005

Ph: 08 9226 3866 Fax: 08 9226 3877

Mineral Resource Estimate for the Glencoe Deposit, Pine Creek Mineral Field, Northern Territory.

David Price MAusIMM

April 2006

Prepared for Australasia Gold Limited

Unit 12, Stirling Tiers, 49 Mount Barker Road

Stirling, South Australia 5152

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Executive Summary

A Mineral Resource estimate for the Glencoe Deposit was completed during April and May 2006 by Resource Evaluations Pty Ltd (ResEval) for Australasia Gold Ltd (AAO). The deposit forms part of the Pine Creek Gold Province in the Northern Territory, and is located 120km South East of Darwin.

Australasia Gold Ltd is the current owner of the Glencoe Prospect. Magnum Resources Ltd (MGR) was the previous owner and conducted all exploration on the prospect since discovery in 1983.

Glencoe was mined in joint venture with other parties in two phases in 1989 and 1994 with four pits having been mined to a depth of 10 -17m with 58,000t @ 2.4g/t (4,400oz) being produced. Approximately 10,000t @ 1.9g/t of this production remains in stockpiles on site.

The gold mineralisation at the Glencoe Deposit occurs primarily within metamorphosed Proterozoic sediments of the Pine Creek geosyncline and is controlled by vertical fractures systems occurring at low angles to axial plane of the folding. Minor saddle reef mineralisation occurs adjacent to the main vertical shears.

The resource for the Glencoe deposit was based on the data from 157 surface RC and 53 diamond core drillholes, and covered the 800m lateral extent of 3,300mE to 4,100mE. Vertical extent of the interpretation was 120m from surface 100mRL to -20mRL.

The Mineral Resource estimate complies with recommendations in the Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004) by the Joint Ore Reserves Committee (JORC). Therefore it is suitable for public reporting. The ResEval Mineral Resource estimate is summarised in Table A.

Table A: Glencoe Deposit April 2006 Mineral Resource Estimate 1.0g/t Cutoff, High Grade Cut 20g/t

Indicated Inferred Total Zone Tonnes Cut Au Tonnes Cut Au Tonnes Cut Au Cut Au

T g/t T g/t T g/t Ounces Oxide 208,000 2.1 45,000 2.4 253,000 2.2 17,700 Fresh 174,000 2.0 277,000 1.6 451,000 1.7 25,200 Total 382,000 2.1 322,000 1.7 704,000 1.9 42,900

Previous Estimates ERA 1989 730,000 2.3 54,000

The deposit was estimated in a standard Surpac block model using Inverse Distance to Power 2 (ID2) grade interpolation, constrained by resource outlines based on mineralisation envelopes prepared using a nominal 0.5g/t Au cut-off grade. A minimum

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downhole width of 2 metres was used for the main shears while some intervals of 1m were included in the laterite and saddle reef mineralisation.

The block dimensions used in the model were 2m NS x 10m EW x 2m vertical with sub-cells of 1m x 5m x 1m. The resource is reported with a 20g/t high grade cut, and a 1.0g/t lower cut-off grade.

The Mineral Resource was largely classified as Indicated due to the reasonable continuity of the mineralised zones and the adequate drillhole spacing. However, zones that contained wider spaced drilling (>20-30m), poor continuity and therefore lower confidence were classified as Inferred (including deeper portions of the main lodes). Small, discontinuous zones of peripheral mineralisation intersected by less than 3 drill holes were also classed as Inferred.

The deposit may have potential for economic exploitation via open pit extraction, though further work and drilling is required to improve confidence in the estimate. Areas that require further work are listed below.

1. Database Validation with Original logs

2. Grade Control/ Blast Hole Data validation especially collar elevation corrections.

3. Determination of bulk density

4. Accurate Survey of existing pits

5. Validation of 315° orientated structures.

It is recommended that optimisation studies be carried out using the ResEval estimate. The model is undiluted, so appropriate dilution needs to be incorporated in any evaluation of the deposit. Subject to the outcome of the optimisation studies, further drilling is required in the poorly tested area between the four pits, and down-dip on almost all zones, especially in the Western Zone where mineralisation remains strong and open at the Eastern end.

David Price

Senior Geologist

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Mineral Resource Summary – Glencoe Deposit April 2005 Estimate

Undiluted Mineral Resource 1.0g/t Cut-off

Class Tonnes g/t Au (Cut 20) Au (oz)

Measured - - -

Indicated 382,000 2.1 25,600

Inferred 322,000 1.7 17,300

Total 704,000 1.9 42,900

The resource estimate was completed using the following parameters:

• The Glencoe resource area extends over a strike length of 800m (from 3,300mE to 4,100mE) and includes the 120m vertical interval from Surface 100mRL to -20mRL. (All co-ordinates are in Local Grid)

• Drill holes used in the resource estimate included 157 surface RC holes and 53 surface diamond holes for a total of 9,673m of drilling. All holes were drilled by Magnum Resources between 1986 and 1988. Holes were generally drilled at 20m spacings throughout the deposit and orientated at 60° to the horizontal.

• Exact details of the sampling and assaying procedures for the drilling are unknown. However, from reports it appears that RC drilling was generally sampled at 1m intervals. The diamond drilling was variably sampled using geological boundaries.

• Detailed assay methods are unknown except gold was analysed by fire assay techniques at a commercial laboratory with routine repeats and standards being submitted.

• Drill hole collars appear to have been accurately surveyed in local grid however this has not been verified by ResEval.

• Only diamond drillholes appear to have been down hole surveyed by either a single-shot downhole camera or some form of EMS.

• Wireframes were constructed using cross sectional interpretations based on a 0.5g/t Au cut-off grade.

• Samples within the wireframes were composited to even 1.0m intervals. A high grade cut of 20g/t was applied to gold values based on statistical analysis.

• A Surpac block model was used for the estimate with a block size of 10m EW x 2m NS x 2m vertical with sub-cells of 5m x 1m x 1m.

• ID2 grade interpolation used an oriented search ellipse based on individual lode geometry, with a first pass radius of 20m and a second pass radius of 60m. Greater than 99% of the blocks were filled in the first two passes. The radius was subsequently increased to 100m until all blocks were filled. An ‘octant’ search method was used.

• Bulk density values of 2.2t/m3 and 2.6t/m3 were applied to Oxide and Fresh mineralisation based on interpreted weathering profiles. Density values were derived from standard bulk density values obtained from the AusIMM Field Geologist Manual 2004.

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• The Mineral Resource was largely classified as Indicated due to the reasonable continuity of the mineralised zones and the adequate drillhole spacing. However, zones that contained wider spaced drilling (>20-30m), poor continuity and therefore lower confidence were classified as Inferred (including deeper portions of the main lodes). Small, discontinuous zones of peripheral mineralisation intersected by less than 3 drill holes were also classed as Inferred.

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Table of Contents Executive Summary ................................................................................................................................ ii 1. Introduction and Project Summary.................................................................................................1

1.1. General .................................................................................................................................1 1.2. Competent Persons and Responsibilities...........................................................................2

2. Geology and Mineralisation ............................................................................................................3 3. Mining Status ...................................................................................................................................5 4. Previous Estimates..........................................................................................................................7 5. Drilling Data .....................................................................................................................................7

5.1. General .................................................................................................................................7 5.2. Sampling and Assaying Procedures...................................................................................8 5.3. Quality Control......................................................................................................................9 5.4. Collar and Down Hole surveys............................................................................................9 5.5. Data Excluded From Estimate.............................................................................................9

6. Database Verification ....................................................................................................................10 7. Resource Estimate........................................................................................................................10

7.1. Geology and Resource Interpretation...............................................................................10 7.2. Preparation of Wireframes.................................................................................................10 7.3. Sample Statistics................................................................................................................10

7.3.1. General...........................................................................................................................10 7.3.2. Deposit Statistics ...........................................................................................................11 7.3.3. High Grade Cuts............................................................................................................11

7.4. Geostatistical Analysis .......................................................................................................13 7.4.1. General...........................................................................................................................13 7.4.2. Results ...........................................................................................................................13 7.4.3. Discussion of Results....................................................................................................15

7.5. Block Model ........................................................................................................................15 7.6. Grade Interpolation.............................................................................................................16 7.7. Bulk Density........................................................................................................................17 7.8. Resource Classification .....................................................................................................17 7.9. Results ................................................................................................................................18 7.10. Model Validation.................................................................................................................19

8. Conclusion and Recommendations.............................................................................................21 9. References ....................................................................................................................................22

List of Appendices

Appendix 1: Glencoe April 2006 Resource Tables

Appendix 2: Glencoe April 2006 Resource Validation Tables

Appendix 3: Surpac String File Descriptions

1. Introduction and Project Summary

1.1. General

Resource Evaluations Pty Ltd (ResEval) was contracted by Australasia Gold Limited (AAO) to complete a resource estimate for the Glencoe Gold deposit. The deposit is located in Pine Creek Mineral Field approximately 120km SSE of Darwin, in the Northern Territory. The location of the Glencoe Project is shown in Figure 1.1.

Figure 1.1: Glencoe Deposit – Regional Location

Australasia Gold Ltd is the current owner of the Glencoe Project. The previous owner Magnum Gold N.L. conducted all exploration at the project between 1984 and 1989. Limited exploration has been completed since this time. The majority of geological work (including drilling and field work) conducted at Glencoe has been carried out by geological consultants Earth Resources Australia (ERA).

Data provided to ResEval by AAO included reports, interpreted geology sections and some resource outlines generated by Ore Reserve Evaluation Services (ORES). A database of exploration and grade control drill holes was also provided. The resource area and drilling at the project is shown in Figure 1.2. Drill Hole information has been located in local grid co-ordinates which are aligned to the major direction of mineralisation. This grid is on a magnetic bearing of 124°.

Figure 1.2: Glencoe Deposit - All Drilling and Resource Wireframes

The current resource estimate was carried out in the ResEval Perth office during April and May 2006. The ResEval work included reviewing the drill hole data, generating cross sections, interpreting ore outlines based on a 0.5g/t Au cut-off grade and then creating wireframes within which resource estimation was carried out. Surpac Mining software was used for all modelling and estimation procedures.

1.2. Competent Persons and Responsibilities

The Mineral Resource estimate complies with recommendations in the Australasian Code for Reporting of Mineral Resources and Ore Reserves (2004) by the Joint Ore Reserves Committee (JORC). Therefore it is suitable for public reporting.

The team of people involved in the preparation of this report are listed as follows: • Mr P Payne (ResEval Principal) responsible for the auditing the Mineral

Resource estimation. • Mr D Price (ResEval Consultant) responsible for interpretation, digitising,

wireframe construction, statistical analysis, Mineral Resource estimation and classification.

West Zone

North Central

Mid Central

South Central

2. Geology and Mineralisation

The following information was obtained from reports by ERA (1988 and 1989) and ORES (2003).

The lithologies of the project area comprise a sequence of inter-bedded sandstones and siltstones of the Mount Bonnie Formation. The lithologies strike approximately East/West at Glencoe and form a series of moderately folded anticlines and synclines.

Mineralisation within the Glencoe Prospect is related to sub-vertical shears proximal to anticlinal crests of folds within the sediments (Figure 2.1). Certain lithologies (particularly carbonaceous mudstones) show pronounced dilation in the fold hinges and give rise to saddle reef mineralisation extending out from the main shear zones. Subsidiary fracture systems and cross trending tensional features combined with minor intrusions of lamprophyre dykes produce an irregular network of mineralisation concentrated in 4 zones and a number of smaller peripheral occurrences. These zones are shown in Figure 1.2.

Figure 2.1: Anticline in Folded sediments at West Pit

The main mineralised shears typically strike East/West with a variable dip from vertical to 60° to the south. The thickness of mineralisation varies from 2-10m wide and typically forms continuous pods in excess of 100m long. Some of the shears in the South and North pits appear to have a North/West orientation of 315° which slightly conflicts the previous models. This trend requires further validation though pit mapping or drilling if possible.

Mineralisation in the shears shows a strong association with quartz veining, brecciation and chloritisation with gold occurring intergranular to sulphides pyrite, arsenopyrite and chalcopyrite. Late stage chlorite alteration with associated shearing and brecciation overprint earlier veining and appears to enhance gold grades.

The saddle reef mineralisation is less continuous than the main shears, with mineralisation typically extending for 20-80m along strike and only 10-20m laterally. The mineralisation is usually 2-3m thick with local thickening of up to 5m. Quartz

Mineralised Shear

veining and chlorite alteration are also strongly associated with the mineralisation in the saddle reefs.

Surface laterite mineralisation covers much of the area at Glencoe especially above the main shears. This mineralisation is typically low grade 0.5-2.0g/t and only 1-2m thick.

Minor basic igneous intrusives occur around the deposit these are found as lamprophyre dykes sub-parallel to the main shears in the region. These dykes exhibit varying degrees of micaceous and chloritic alteration and contain significant sulphide and gold when mineralised.

Moderate weathering has occurred in the region to oxidise sulphides in the upper 30m of the deposit.

3. Mining Status

Limited mining as part of a bulk sampling program has been completed at Glencoe. This was completed in 2 phases, firstly by Magnum Gold between 1989 and 1990 when 4 pits were mined to a depth of 10m. This material mined was trucked to the Mount Bonnie mill for processing. The second phase of mining was by Territory Gold in a joint venture with Magnum Gold in 1994 when the West Pit was deepened to a depth of 15-17m. The ore mined in the second phase has not been processed and is currently stockpiled on site at Glencoe.

Total production from Glencoe is 58,730t @ 2.33g/t for 4,400oz of gold. This compares reasonably with the ResEval April 2006 ‘in pit’ mined estimate of 64,300t @ 2.48g/t for 5,130oz of gold. A summary of the mined tonnes and ResEval resource contained within the various pits is shown in Table 3.1.

Table 3.1 Comparison of Ore ‘Mined’ with Material ‘In-Pit’ (at 1.0g/t cutoff) Tonnes Au Grade g/t Au Ounces

1989-1990 (mill reconciled) 48,965 2.43 3,825 1994 (stockpiled) 9,765 1.88 590

Total 58,730 2.33 4,415 ResEval Resource ‘In_pit’ 64,300 2.48 5,130

The pit outlines and topography used to define the mined material were generated by ResEval from drill hole data to form a digital wireframe and is not an actual survey pick up of the topography. The bases of the pits were set as the bottom of the blast holes. The outlines of the 4 pits are shown in Figures 3.1 and 3.2.

The reconciliation between the reported production figure and the ‘in pit’ mined value from the ResEval model is reasonable given the accuracy of the current pit outlines. It is possible that the difference between the two figures is due to the incorrect shape of the pits used to constrain the mined material.

Figure 3.3 shows a photograph of the West Pit, the water in the pit is from surface runoff and not ground water.

Figure 3.1: Extent of Existing Open Pits

Figure 3.2: Cross Section Projection of Existing Open Pits

Figure 3.3: View of West Pit - Looking West.

The reported production figures for the first phase of mining are well documented and reported in the Magnum Gold 1990 exploration summary. Limited information is available on the second phase of mining but reported tonnes appear to match the estimated tonnes from the ResEval ‘In-pit’ model and visual estimates from stockpiles on site (Australasia Prospectus 2004).

The reported resource excludes mineralisation within the pit outline.

4. Previous Estimates

Two previous estimates of the Glencoe Deposit have been completed, both by ERA in 1989. Both used polygonal interpretations to estimate tonnages and grades. All models have used similar estimation parameters, though some of the details of the previous estimates are unclear. Full details of the estimation parameters for both the previous estimates can be found in the associated resource reports (Milligan 1989).

A summary of the results and a comparison with the ResEval estimate is shown in Table 4.1.

Table 4.1 Previous Mineral Resource Estimates

Estimate Tonnes Au (g/t) Ounces

ERA (1989) 0.5g/t COG 1,444,000 1.9 87,300 ERA (1989) 1.0g/t COG 730,000 2.3 54,000

ResEval 2006 ID2 1.0g/t COG 704,000 1.9 42,900

It should be noted that the ERA model has classified the upper portion of the resource >40mRL as a Measured resource. This is not considered appropriate by ResEval because of current geological understanding of the mineralisation and uncertainties in dimensions of the existing pits.

The ResEval estimate compares well with the previous estimates in terms of tonnage but at a lower grade. The lower grade in the ResEval model is as a result of the smoothing effects of the inverse distance interpolation as opposed to the polygonal estimation previously used. When the ResEval model is reported at a 0.5g/t cut off, a resource of 1,360,000t @ 1.5g/t is estimated which again compares well with the ERA model.

5. Drilling Data

5.1. General

Three Access databases containing drill hole data for the Glencoe Project were provided to ResEval by AAO, one contained all Exploration Drill data (magnum.mdb) and two contained all blast hole data (TJVb.mdb and TerrGold.mdb). These databases

were combined into a single database (magnum.mdb). The database was loaded into Surpac mining software and reviewed. No errors were noted.

A level correction of -1000m was applied to collars of all blast holes to match the exploration data. This level correction has not been verified and appears to be inconsistent with the exploration collars in some areas. Holes GCRC284-GCRC305 were also excluded from the resource estimate due to inconsistencies in the dip of the holes. There dip in the database is recorded as -60° to the south, while they are described as being drilled vertically in the ERA report (1988).

The full database contained records for 3056 drill holes, all in close proximity to the resource area. A plan of the resource area and drillhole locations is shown in Figure 1.2.

A summary of the drilling data within the resource area is shown in Table 5.1.

Table 5.1: Summary of Glencoe Drilling Project In Resource Number Metres Number Metres

Grade Control Blast Holes 2,687 12,883 - -

RC 310 11,240 157 6,547 Diamond Core 59 3,707 53 3,126

Total 3,056 27,830 210 9,673 5.2. Sampling and Assaying Procedures

Limited documentation on sampling and assaying procedures for drilling was provided to ResEval.

In general, drilling was carried out on roughly a 20m x 10m pattern with some wider 30-40m spaced sections being drilled in the West Zone. The majority of holes are drilled to grid north at 60°. Some holes have also been drilled to the south; these holes often drill down the dip of mineralisation and conflict with adjacent drilling. For this reason holes GCRC019, GCRC021, GCRC049 and GCDDH009 have been excluded from the estimate.

Exact details of the sampling and assaying procedures are unknown. However, from the ERA report the RC drilling and the open-hole diamond pre-collars were generally sampled at 1m intervals (Figure 5.1) with the entire sample being riffle spilt. The diamond drilling was completed using HQ wireline equipment and variably sampled using geological boundaries and cut using a diamond saw. One half of the core was submitted for assay and the other retained in core boxes on site. (It is believed that the core no longer exists (Trevor Ireland 2006 ).

Samples were sent to a commercial laboratory where they were analysed by fire assay techniques. It is believed routine duplicates and standards were submitted with the samples, this has not been confirmed by ResEval.

Histogram of Sample Widths

0

2000

4000

6000

8000

10000

12000

14000

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5More

Sample Length (m)

Freq

uenc

y

0%

20%

40%

60%

80%

100%

120%

FrequencyCumulative %

Figure 5.1: Sample Length Histogram for All Glencoe Drilling

5.3. Quality Control

Quality control data was not available to ResEval.

5.4. Collar and Down Hole surveys

Drillhole collars appear to have been accurately surveyed in local grid however this has not been verified by ResEval.

All Diamond drillholes appear to have been down hole surveyed by either a single-shot downhole camera or Electronic Multi Shots (could not be confirmed). RC holes have not been downhole surveyed; planned dip and azimuths have been assumed.

5.5. Data Excluded From Estimate

A total of 23 holes were excluded from the resource estimate. GCRC284-GCRC305 were two lines of close (5m) spaced holes drilled on sections 3,520mE and 3,980mE. They were removed because of the inconsistencies between the dip information in the database and the information in the ERS report which states the holes were drilled vertically. GRRC019, GCGC021 and GCDDH009 were also excluded as they were drilled down the dip of mineralised structure and would have created a estimation bias. Table 5.2 shows the holes excluded and the reason for exclusion.

Table 5.2: Data Excluded From Estimate Hole ID Reason

GCRC284-305 Inconsistent downhole survey information GCRC019 Down-dip, apparent grade bias GCRC049 Down-dip, apparent grade bias

GCDDH021 Down-dip, apparent grade bias GCDDH009 Down-dip, apparent grade bias

6. Database Verification

Database verification was not carried out by ResEval.

7. Resource Estimate

7.1. Geology and Resource Interpretation

ResEval constructed mineralisation outlines using a 0.5g/t Au cut-off. These were used to provide overall geometry to mineralised zones. A minimum downhole length of 2m was used with no edge dilution for the main vertical shears. In the laterite and saddle reefs mineralisation a minimum downhole length of 1m was sometime used to maintain continuity. Generally up to 4m of internal dilution was permitted in the intersections, however in some cases, larger areas of anomalous mineralisation were included to provide continuity to interpretations.

Resource outlines were generally extrapolated to a distance of 10m from drillhole intersections unless supported by adjacent drill holes.

7.2. Preparation of Wireframes

The interpreted sectional outlines were manually triangulated to form wireframes as shown in Figure 7.1.

Figure 7.1: Oblique View of Glencoe Resource Zone Wireframes (Looking NW)

To form ends to the wireframes, the end section strings were copied to a position midway to the next section and adjusted to match the dip, strike and plunge of the zone. The wireframed objects were validated using Surpac software and set as solids.

7.3. Sample Statistics 7.3.1. General

The wireframes of the mineralised zones were used to code the database to allow identification of the resource intersections. Separate intersection files were generated

for each object. Surpac software was then used to extract 1.0m downhole composites within the intervals coded as resource intersections.

The composites were checked for spatial correlation with the objects, the location of the rejected composites, and zero composite values. Individual composite files were created for each object in the wireframe models.

7.3.2. Deposit Statistics

The composite sample data for each resource zone was imported into GeoAccess software for analysis. Summary statistics are shown in Table 7.1.

Table 7.1: Summary Statistics of Glencoe 1m Resource Composites Parameter All Zones Main Shear Zones

Number 2300 1316 Minimum 0 0 Maximum 60.4 60.4

Mean 1.61 1.54 Median 0.62 0.59 Std Dev 3.99 3.58 Variance 15.98 14.89 Coeff Var 2.48 2.48

Sichel Stats Mean 1.48 1.46

V 1.72 1.82 Gamma 2.36 2.49

Percentiles 10 0.12 0.10 20 0.22 0.19 30 0.32 0.29 40 0.47 0.41 50 0.62 0.59 60 0.81 0.78 70 1.13 1.11 80 1.74 1.83 90 3.31 3.17 95 5.80 5.27

97.5 9.07 9.04 99 17.53 15.99

As expected, the data is positively skewed and application of a high grade cut is considered appropriate prior to using the data for any linear grade interpolation.

7.3.3. High Grade Cuts

To assist in the selection of an appropriate high grade cut, the composite data was imported into GeoAccess software and a log-probability plot and histogram were generated. The data showed an approximately lognormal distribution for the dataset. The plots are shown in Figure 7.2 and 7.3.

Figure 7.2: Probability Plot Glencoe Deposit 1m Composite Data – All Zones

Figure 7.3: Log Histogram Glencoe Deposit 1m Composite Data – All Zones

A number of methods can be used to help select an appropriate high grade cut value. The least subjective method used by ResEval is to progressively cut the data until the cut mean equates to the uncut Sichel Mean. A cut value of 21g/t was required for this to occur. Another method involves investigation of log probability plots looking for breaks and inflexions in the distribution. There is a small but distinct inflexion in the plot at 20g/t and a break at 40g/t. It was decided to apply a high grade cut of 20g/t to all composites greater than 20g/t as it was supported by two statistical features. It also matched the cut value used in previous estimates. The application of a 20g/t cut resulted in 20 values being cut.

7.4. Geostatistical Analysis

7.4.1. General

Due to the multi lode nature of the mineralisation, it was not considered appropriate to analyse each of the lodes separately. Instead, the 1m assay composites for the 4 main lodes (objects 1, 4, 10 and 12) were combined and reviewed. Surpac software (version 5.1) was then used for geostatistical analysis of the 1m composite data.

7.4.2. Results

To determine the nugget, an omnidirectional variogram with a 1m lag was used, reflecting the down hole composite spacing. This resulted in a variogram with a very short range of 2m and a nugget of approximately 33%. The omnidirectional variogram is shown in Figures 7.5. A single structure spherical model was fitted to the variogram.

Figure 7.5: Omnidirectional Variogram for Au Objects 1, 4, 10 and 12

Directional variograms were then derived using 10m-12m lags to reflect the typical spacing of the drill hole data and to produce a variogram that could be easily modelled. The direction of greatest continuity was found to be 315o which is similar to the geometry of the mineralisation for some of the lodes (though not as expected considering the main east-west mineralised trend). The major axis variograms were modelled using the nugget derived from the omni-directional variograms. Poor variogram structures were generated in the major direction of continuity; this is shown in Figure 7.6 a single structure spherical model was fitted. The model fitted has a range of 13m.

Down dip (semi-major) variograms were then derived in a direction perpendicular to the major axis (Figure 7.7). The semi-major axis variograms were also poor but were fitted using the nugget and C1 values determined from the horizontal model.

Figure 7.6: Directional Variogram in Major Direction for Au Objects 1, 4, 10 and 12

Figure 7.7: Directional Variogram in Minor Direction for Au Objects 1, 4, 10 and 12

A summary of the fitted variogram models is shown in Table 7.3.

Table 7.3: Variogram Models for Au Nugget C1 A1 C2 A2 Objects 8, 18, 29 Relative Variance

Omnidirectional 1m Lag 33% 66% 2 0% 2 Along strike 315o, 12m lag 66% 13 0% 13

Down Dip -60o/225o 12m Lag 66% 5 0% 5

7.4.3. Discussion of Results

The results of the variography generally matched the interpreted geology and geometry of the main mineralised zones with an overall east-west strike. The nugget variance was typical at 33%, and the variogram range was approximately equal to the typical drill hole spacing in the better drilled portion of the deposit.

However, due to the poor variogram model generated it was not considered appropriate to estimate grades using geostatistical methods. If more drill hole information becomes available, the variogram model may improve and geostastical estimations may be considered.

7.5. Block Model

A block model was created using Surpac software to encompass the full extent of the deposit. Block model parameters are listed in Table 7.2.

The block model used a primary block size of 10m EW x 2m NS x 2m vertical with sub-cells of 5m x 1m x 1m.

The parent block size was selected on the basis of 50% of the average drill hole spacing.

Table 7.2: Block Model Parameters Model Name Glencoe406.mdl

Y X Z Origin (minimum y,x,z) 1,700 3,170 -100

Extent 500 1000 250 Block Size (Sub-blocks) 2 (1) 10 (5) 2 (1)

Rotation None Attributes:

min_dis Distance to nearest sample av_dis Average distance to samples

num_sam Number of samples used for block grade interpolation au_uncut Au grade in all zones using uncut grades au_cut20 Au grade in all zones using grades cut to 20g/t

sg Bulk density class Ind, Inf

class_code Ind = 2, Inf = 3 pod Wireframe object number

mined Y,N area Area of Project West, North, Mid, South pass 1=interpolated in first pass, 2=2nd pass, 3=3rd pass type Air, Oxide, Fresh

7.6. Grade Interpolation

The ID2 algorithm was selected for grade interpolation. This was to allow a degree of smoothing within the model. An octant search was used. An oriented search ellipse was used for the interpolation. The ellipse was only given moderate anisotropy to allow for the search to account for flexures in the strike and dip of the mineralisation. The moderate anisotropy of the search ellipse also increases the effect of the smoothing, which is considered appropriate for the spotty nature of the mineralisation. No plunge was used and the strike and dip of the ellipse was adjusted to reflect the strike of each mineralised zone.

Greater than 99% of the blocks were filled in the first two passes. Parameters used in the estimate are listed in Table 7.3.

Table 7.4: ID2 Interpolation Parameters for Glencoe Estimate Interpolation Run

Parameter Pass 1 Pass 2 Pass 3

Search Type Octant Octant Octant

Bearing

Dip Variable – Adjusted to match the wireframe geometry

Plunge 0° 0° 0°

Major-Semi Major Ratio 1 1 1

Major-Minor Ratio 2 1 1

Max Search Radius 20m 60m 100m

Max Vertical Search 999 999 999

Minimum Samples 8 2 2

Maximum Samples 32 32 32

Block Discretisation 3 X by 4 Y by 3 Z 3 X by 4 Y by 3 Z 3 X by 4 Y by 3 Z

Percentage Blocks Filled 53% 47% <1%

7.7. Bulk Density

Bulk density values were assigned by ResEval and were derived from the standard tables in the AusIMM Field Geologist Manual. The values ranged from 2.2t/m3 in the oxide zone to 2.6t/m3 for the fresh rock. The base of oxidisation was determined from the interpreted cross sections provided by AAO.

No bulk density measurements for site material could be located and it is considered important that if the project progress, measurements are obtained for the different zones and areas.

7.8. Resource Classification

Resource classification was carried out on the basis of continuity of mineralisation and drill hole spacing. The Mineral Resource was largely classified as Indicated due to the reasonable continuity of the mineralised zones and the adequate drillhole spacing. However, zones that contained wider spaced drilling (>20-30m) and/or poor continuity were considered to be defined with lower confidence and were classified as Inferred.

Small, discontinuous zones of peripheral mineralisation intersected by less than 3 drill holes were also classed as Inferred.

The resource block model has an attribute “class” for all blocks within the resource wireframes coded as either “ind” for Indicated or “inf” for Inferred.

The Indicated and Inferred portions of the deposit are shown in Figure 7.3.

Figure 7.3: Mineral Resource Classification in Cross Section Looking North (Red=Inferred, Green=Indicated)

7.9. Results

The full results of the Mineral Resource estimate for the Glencoe deposit is tabulated in detail in Appendix 1 of this report. A summary of the estimate is shown in Table 7.4.

Table 7.4: Glencoe Deposit April 2006 Mineral Resource Estimate 1.0g/t Cutoff, High Grade Cut 20g/t

Indicated Inferred Total Zone Tonnes Cut Au Tonnes Cut Au Tonnes Cut Au Cut Au

T g/t T g/t T g/t Ounces Oxide 208,000 2.1 45,000 2.4 253,000 2.2 17,700 Fresh 174,000 2.0 277,000 1.9 451,000 1.7 25,200 Total 382,000 2.1 322,000 1.7 704,000 1.9 42,900

To show the tonnage and grade distribution throughout the entire deposit, a bench breakdown has been prepared and is shown graphically in Figure 7.4.

Glencoe Deposit: Tonnes and Grade Per 10m Bench

0

24,000

48,000

72,000

96,000

120,000

100 90 80 70 60 50 40 30 20 10

-

-10

Bench Top RL

Tonn

es

0.0

1.0

2.0

3.0

4.0

5.0

g/t A

u

Tonnes Per 10m Bench Cut20 g/t Uncut g/t

Figure 7.4: Glencoe Deposit Remaining Mineral Resource –10m Bench Breakdown

The grade-tonnage curve for the resource is shown in Figure 7.5.

Glencoe Deposit Grade-Tonnage Curve

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

0.00

0.50

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.0

0

Cutoff Grade g/t

Tonn

es

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Gra

de g

/t

Tonnes Cut g/t

Figure 7.5: Glencoe Grade-Tonnage Curve

7.10. Model Validation

In order to check that the interpolation of the block model correctly honoured the drilling data, validation was carried out by comparing the interpolated blocks to the sample composite data. Validation results for the deposit are summarised in Figures 7.6 and 7.7. Full details of the validation are included in Appendix 2 of this report.

Comparison of ID2 and Composite Grades by RL

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

100 90 80 70 60 50 40 30 20 10 0

-10

Bench Top (RL)

Vol

(BC

M) &

Com

ps (*

100)

0.0

0.4

0.8

1.1

1.5

1.9

2.3

2.6

3.0

Gra

de (A

u g/

t)

ID2 Volume Comps*300 Model Uncut Model Cut20 Comps Uncut Comps Cut20g/t

160

Figure 7.6: Glencoe Project Validation Plot by Elevation

Comparison of ID2 and Composite Grades by Easting

0

20,000

40,000

60,000

80,000

100,000

3230

3260

3290

3320

3350

3380

3410

3440

3470

3500

3530

3560

3590

3620

3650

3680

3710

3740

3770

3800

3830

3860

3890

3920

3950

3980

4010

4040

4070

4100

4130

Section (E)

Vol

ume

(BCM

) Com

ps*3

00

0.0

0.8

1.6

2.4

3.2

4.0

Gra

de (A

u g/

t)

ID2 BCM Comps*300 ID2 Uncut ID2 Cut20 Comps Uncut Au Comps Cut20

Figure 7.7: Glencoe Project Validation Plot by Easting

The validation plots show a reasonable correlation between the composite grades and the block model grades for the comparison by elevation. The model grades are typically lower than the composite grades due to the smoothing effects of the interpolation. This is especially evident at the 10mRL where single high grade composites have been smoothed by surrounding samples.

The comparison by Easting is not as clear due to the erratic nature of the mineralisation along strike. The effect of the smoothing is still evident and model grades are still typically lower then the composite values. A larger parent block size and larger first pass search may be warranted to further smooth the model. Some form of kriging interpolation may also help in further smoothing the model especially at the extremities of the model where data is limited. In general, the trends shown by the composited data are honoured by the block model.

8. Conclusion and Recommendations

The resource estimated by ResEval for the Glencoe Deposit represents moderate mineralisation adjacent to and below existing open pits. The mineralisation remains open in all directions.

The deposit appears to have potential for economic exploitation via open pit extraction as a satellite deposit to an existing operation within trucking distance. If this possibility exists, it is recommended that optimisation studies be carried out using the ResEval estimate. The model is undiluted, so appropriate dilution needs to be incorporated in any evaluation of the deposit. Subject to the outcome of the optimisation studies, further drilling is required down-dip on almost all zones, especially in the Western Zone where mineralisation remains strong and open at the Eastern end.

In conjunction with optimisation studies additional work is also required to improve the confidence of certain areas of the model, these are listed below.

1. Database Validation with Original logs

2. Grade Control/ Blast Hole Data validation especially elevation corrections.

3. Determination of SG

4. Accurate Survey of existing pits

5. Validation of 315° orientated structures.

.

David Price

Senior Geologist

9. References

Milligan, I. M, 1988: Glencoe Prospect. Exploration 10 31st December 1987. Earth Resources Australia report A/236 for Magnum Resource Ltd. Milligan, I. M, 1989: Glencoe Gold Project, Resource Estimation Report. Bampton, K, 2003: Glencoe Gold Project, Resource Notes.

Appendix 1

Glencoe Deposit

April 2006 Resource Tables

IndicatedBench

Top Tonnes Uncut Cut20 Tonnes Uncut Cut20 Tonnes Uncut Cut Uncut CutRL T g/t g/t T g/t g/t T g/t g/t Ounces Ounces110 9,086 1.76 1.75 9,086 1.76 1.75 514 511100 56,199 2.26 2.12 56,199 2.26 2.12 4,083 3,83090 80,960 2.18 1.97 897 1.14 1.14 81,857 2.17 1.96 5,707 5,16180 58,069 2.48 2.32 20,397 2.05 1.94 78,466 2.37 2.22 5,974 5,60470 3,586 3.56 3.29 56,082 2.26 2.07 59,668 2.34 2.14 4,485 4,11260 23,920 2.47 2.07 23,920 2.47 2.07 1,900 1,59250 30,602 2.26 2.03 30,602 2.26 2.03 2,224 1,99740 28,704 1.94 1.87 28,704 1.94 1.87 1,790 1,72630 13,780 1.74 1.74 13,780 1.74 1.74 771 7712010

Total 207,900 2.29 2.12 174,382 2.16 1.98 382,282 2.23 2.06 27,449 25,303

InferredBench

Top Tonnes Uncut Cut20 Tonnes Uncut Cut20 Tonnes Uncut Cut Uncut CutRL T g/t g/t T g/t g/t T g/t g/t Ounces Ounces110 2,497 1.72 1.62 2,497 1.72 1.62 138 130100 13,574 3.24 2.47 13,574 3.24 2.47 1,414 1,07890 14,894 2.97 2.29 14,894 2.97 2.29 1,422 1,09780 11,187 3.20 2.77 3,146 2.61 2.04 14,333 3.07 2.61 1,415 1,20370 2,717 2.62 2.62 26,793 1.71 1.55 29,510 1.79 1.65 1,702 1,56460 45,994 1.49 1.49 45,994 1.49 1.49 2,203 2,20350 43,095 1.44 1.44 43,095 1.44 1.44 1,995 1,99540 42,900 1.61 1.60 42,900 1.61 1.60 2,221 2,20730 43,641 1.80 1.78 43,641 1.80 1.78 2,526 2,49720 43,381 1.72 1.71 43,381 1.72 1.71 2,399 2,38510 20,033 1.49 1.48 20,033 1.49 1.48 960 953- 6,318 1.29 1.29 6,318 1.29 1.29 262 262

-10 1,508 1.23 1.23 1,508 1.23 1.23 60 60-20-30

Total 44,869 3.02 2.45 276,809 1.61 1.58 321,678 1.81 1.71 18,716 17,634

BenchTop Tonnes Uncut Cut20 Tonnes Uncut Cut20 Tonnes Uncut Cut Uncut CutRL T g/t g/t T g/t g/t T g/t g/t Ounces Ounces110 11,583 1.75 1.72 11,583 1.75 1.72 652 641100 69,773 2.45 2.19 69,773 2.45 2.19 5,497 4,90890 95,854 2.30 2.02 897 1.14 1.14 96,751 2.29 2.01 7,129 6,25780 69,256 2.60 2.39 23,543 2.12 1.95 92,799 2.48 2.28 7,389 6,80670 6,303 3.15 3.00 82,875 2.08 1.90 89,178 2.16 1.98 6,187 5,67660 69,914 1.83 1.69 69,914 1.83 1.69 4,103 3,79550 73,697 1.78 1.68 73,697 1.78 1.68 4,219 3,99240 71,604 1.74 1.71 71,604 1.74 1.71 4,011 3,93330 57,421 1.79 1.77 57,421 1.79 1.77 3,296 3,26820 43,381 1.72 1.71 43,381 1.72 1.71 2,399 2,38510 20,033 1.49 1.48 20,033 1.49 1.48 960 953- 6,318 1.29 1.29 6,318 1.29 1.29 262 262

-10 1,508 1.23 1.23 1,508 1.23 1.23 60 60-20-30

Total 252,769 2.42 2.18 451,191 1.83 1.74 703,960 2.04 1.90 46,165 42,937

Total

Oxide Fresh Total

Total Glencoe Deposit - Indicated and Inferred >1.0g/t

Oxide Fresh

TotalOxide Fresh

Glencoe DepositApril 2006 Resource Estimate 1.0g/t Cutoff

BenchTop Tonnes Uncut Cut20 Tonnes Uncut Cut20 Tonnes Uncut Cut Uncut CutRL T g/t g/t T g/t g/t T g/t g/t Ounces Ounces110 19,327 0.71 0.71 19,327 0.71 0.71 441 441100 55,154 0.76 0.76 55,154 0.76 0.76 1,348 1,34890 67,903 0.77 0.77 728 0.71 0.71 68,631 0.77 0.77 1,698 1,69880 40,073 0.76 0.76 23,868 0.76 0.76 63,941 0.76 0.76 1,562 1,56270 1,694 0.77 0.77 71,097 0.76 0.76 72,791 0.76 0.76 1,779 1,77960 85,397 0.73 0.73 85,397 0.73 0.73 2,004 2,00450 67,704 0.75 0.75 67,704 0.75 0.75 1,633 1,63340 49,244 0.78 0.77 49,244 0.78 0.77 1,235 1,21930 39,507 0.80 0.80 39,507 0.80 0.80 1,016 1,01620 21,294 0.75 0.75 21,294 0.75 0.75 513 51310 20,124 0.75 0.75 20,124 0.75 0.75 485 485- 8,177 0.83 0.83 8,177 0.83 0.83 218 218

-10 1,027 0.85 0.85 1,027 0.85 0.85 28 28-20

Total 184,151 0.76 0.76 388,167 0.76 0.76 572,318 0.76 0.76 13,961 13,945

Glencoe Deposit Low Grade (0.5-1.0g/t Au)Oxide Fresh Total

BenchTop Tonnes Uncut Cut20 Uncut Cut20RL T g/t g/t Ounces Ounces Tonnes Uncut Oz Cut Oz100 69,773 2.5 2.2 5,497 4,908 6,977 550 49190 96,751 2.3 2.0 7,129 6,257 9,675 713 62680 92,799 2.5 2.3 7,389 6,806 9,280 739 68170 89,178 2.2 2.0 6,187 5,676 8,918 619 56860 69,914 1.8 1.7 4,103 3,795 6,991 410 38050 73,697 1.8 1.7 4,219 3,992 7,370 422 39940 71,604 1.7 1.7 4,011 3,933 7,160 401 39330 57,421 1.8 1.8 3,296 3,268 5,742 330 32720 43,381 1.7 1.7 2,399 2,385 4,338 240 23810 20,033 1.5 1.5 960 953 2,003 96 95- 6,318 1.3 1.3 262 262 632 26 26

-10 1,508 1.2 1.2 60 60 151 6 6Total 703,960 2.0 1.9 46,165 42,937 140,792 9,233 8,587

Indicated and Inferred Resources 1.0g/t CutoffGlencoe Deposit April 2006 Resource Estimate

Per Vertical Metre

Glencoe Deposit: Tonnes and Grade Per 10m Bench

0

24,000

48,000

72,000

96,000

120,000

100 90 80 70 60 50 40 30 20 10

-

-10

Bench Top RL

Tonn

es

0.0

1.0

2.0

3.0

4.0

5.0

g/t A

u

Tonnes Per 10m Bench Cut20 g/t Uncut g/t

Glencoe Deposit: Tonnes and Ounces Per Vertical Metre

0

2,500

5,000

7,500

10,000

100 90 80 70 60 50 40 30 20 10

-

-10

Bench Top RL

Tonn

es/V

m

0

400

800

1,200

1,600

Oun

ce/V

m

TVM OVM Cut OVM Uncut

Grade CutoffRange Tonnes Cut20 Cut20 Grade Tonnes Cut20 Cut20

g/t T g/t Ounces g/t T g/t Ounces0.0-0.25 8,480 0.2 0.2 0.00 1,543,376 1.39 68,7270.25-0.5 176,811 0.41 0.41 0.25 1,534,896 1.39 68,6720.5-0.75 282,933 0.63 0.63 0.50 1,358,085 1.52 66,3420.75-1.0 306,864 0.88 0.88 0.75 1,075,152 1.75 60,6111.0-1.5 359,500 1.21 1.21 1.00 768,288 2.10 51,9281.5-2.0 168,038 1.76 1.74 1.50 408,788 2.89 37,9422.0-2.5 95,521 2.28 2.21 2.00 240,750 3.67 28,4342.5-3.0 43,580 2.91 2.73 2.50 145,229 4.59 21,4313.0-3.5 32,113 3.62 3.24 3.00 101,649 5.31 17,3543.5-4.0 23,241 4.45 3.76 3.50 69,536 6.09 13,6164.0-4.5 13,708 5.1 4.22 4.00 46,295 6.91 10,2914.5-5.0 10,035 5.63 4.71 4.50 32,587 7.68 8,0435.0-5.5 6,690 6.59 5.24 5.00 22,552 8.59 6,2275.5-6.0 5,334 8.07 5.7 5.50 15,862 9.43 4,8096.0-6.5 4,067 8.34 6.26 6.00 10,528 10.12 3,4256.5-7.0 2,133 9.87 6.72 6.50 6,461 11.24 2,3357.0-7.5 1,574 11.08 7.23 7.00 4,328 11.92 1,6587.5-8.0 807 10.35 7.71 7.50 2,754 12.39 1,0978.0-8.5 294 10.26 8.18 8.00 1,947 13.24 8298.5-9.0 199 11.02 8.67 8.50 1,653 13.77 7329.0-9.5 618 13.49 9.28 9.00 1,454 14.15 6619.5-10.0 242 12.74 9.78 9.50 836 14.63 393

>10 594 15.4 10.56 10.00 594 15.40 294Total 1,543,376 1.39 68,725

Incremental Resource Cumulative ResourceGlencoe Deposit April 2006 Resource Estimate

Glencoe Deposit Grade-Tonnage Curve

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

0.00

0.25

0.50

0.75

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

9.00

9.50

10.0

0

Cutoff Grade g/t

Tonn

es

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Gra

de g

/t

Tonnes Cut g/t

Appendix 2

Glencoe Deposit

April 2005 Validation Plots

WireframePod Pod Resource Model Uncut Model Cut20 Number of Uncut Cut20

Number Volume Volume g/t g/t Comps g/t g/t1 183,001 182,820 1.08 1.07 575 1.15 1.142 14,961 15,000 1.67 1.45 93 2.03 1.574 82,021 82,465 1.09 1.07 254 1.61 1.435 7,828 7,080 0.94 0.94 7 0.94 0.946 23,308 23,150 0.75 0.75 79 0.81 0.817 64,565 64,740 1.45 1.36 259 1.52 1.448 4,987 5,175 0.78 0.78 20 0.86 0.869 18,100 18,120 2.31 2.31 75 2.04 2.04

10 30,969 30,640 3.09 2.52 168 3.40 2.7512 82,195 82,425 1.29 1.29 235 1.33 1.3313 21,492 21,705 1.26 1.26 32 1.35 1.2714 4,665 4,585 5.7 4.43 38 5.85 4.5415 2,730 2,700 0.6 0.6 9 0.60 0.6016 6,489 6,480 5.4 3.68 26 4.18 3.0417 15,999 16,240 1.07 1.07 36 1.26 1.2618 4,819 4,905 4.28 2.88 41 2.15 1.7019 1,891 1,890 1.1 1.1 10 1.20 1.2021 7,021 7,025 1.41 1.41 25 1.26 1.2622 1,227 1,225 0.53 0.53 13 0.53 0.5323 817 655 1.19 1.19 4 1.23 1.2324 2,308 2,275 1.09 1.09 24 1.04 1.0425 1,246 1,220 0.64 0.64 5 0.70 0.7027 12,060 11,920 0.97 0.97 31 1.00 1.0028 2,257 1,995 0.43 0.43 11 0.48 0.4829 1,764 1,725 3.14 3.14 8 3.18 2.9431 497 470 1.47 1.47 5 1.46 1.4633 749 745 0.65 0.65 3 0.65 0.6534 1,952 2,005 1.91 1.91 15 1.90 1.8335 15,814 15,390 1.19 1.19 82 1.09 1.0836 1,839 1,870 0.84 0.84 17 0.89 0.8937 842 820 0.8 0.8 6 0.82 0.8238 5,007 4,880 1.04 1.04 25 1.01 1.0139 855 915 0.99 0.99 4 0.75 0.7540 2,837 2,800 3.47 3.47 13 3.79 3.7941 2,238 2,220 1.29 1.29 13 1.29 1.2942 2,554 2,575 0.83 0.83 9 0.91 0.91

Total 633,904 632,850 1.40 1.32 2,270 1.62 1.48

Glencoe Deposit Validation by PodBlock Model Composites

BenchTop Resource Model Model Number of Comps*300 Comps Comps Comp RatioRL Volume Uncut g/t Cut20g/t Comps 300 Uncut g/t Cut20g/t BCM/comp110 36,085 1.39 1.38 100 79,805 1.93 1.7 171 51300 1.45 1.45 46790 81,345 1.57 1.41 547 164100 2.00 1.75 14980 75,130 1.64 1.54 474 142200 1.66 1.44 15970 73,780 1.36 1.27 359 107700 1.85 1.84 20660 72,280 1.08 1.03 259 77700 1.34 1.30 27950 65,250 1.14 1.1 213 63900 1.19 1.07 30640 53,930 1.22 1.2 108 32400 1.11 1.11 49930 41,475 1.29 1.28 78 23400 1.22 1.16 53220 28,340 1.28 1.27 34 10200 2.07 2.07 83410 17,680 1.03 1.03 15 4500 0.84 0.84 11790 6,750 0.92 0.92

-10 1,000 1.06 1.06 Total 632,850 1.40 1.32 2,258 677,400 1.63 1.51 280

Note: Calculated validation grades may differ from resource grades due to weighting by volume, not tonnes.

Block Model CompositesGlencoe Deposit Block Model Validation by RL

Comparison of ID2 and Composite Grades by RL

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

100 90 80 70 60 50 40 30 20 10 0

-10

Bench Top (RL)

Vol (

BC

M) &

Com

ps (*

100)

0.0

0.4

0.8

1.1

1.5

1.9

2.3

2.6

3.0

Gra

de (A

u g/

t)

ID2 Volume Comps*300 Model Uncut Model Cut20 Comps Uncut Comps Cut20g/t

160

Section Resource Model Model Number of Comps*300 Comps Comps Comp RatioE Volume Uncut g/t Cut20g/t Comps 300 Uncut g/t Cut20g/t BCM/comp

3230 1,040 1.22 1.11 7 2,100 0.74 0.74 1493260 11,805 2.24 1.83 15 4,500 3.61 3.08 7873290 9,875 2.29 1.74 39 11,700 2.42 1.88 2533320 3350 3380 1,030 1.58 1.58 3410 5,675 1.38 1.38 13 3,900 1.18 1.18 4373440 6,650 0.58 0.58 10 3,000 0.50 0.50 6653470 10,080 0.74 0.74 14 4,200 1.40 1.40 7203500 17,510 0.85 0.85 89 26,700 1.00 1.00 1973530 18,130 1.08 1.08 117 35,100 1.40 1.40 1553560 26,815 1.29 1.17 133 39,900 1.54 1.42 2023590 32,275 1.47 1.33 143 42,900 1.72 1.49 2263620 24,335 1.35 1.3 81 24,300 0.95 0.85 3003650 23,980 1.48 1.47 94 28,200 1.36 1.33 2553680 25,320 1.16 1.15 71 21,300 1.01 1.00 3573710 20,980 1.05 1.01 39 11,700 1.48 1.38 5383740 23,025 0.87 0.87 61 18,300 0.73 0.73 3773770 5,245 1.16 1.16 3800 3830 1,600 1.99 1.99 14 4,200 1.97 1.97 1143860 8,150 2.75 2.64 20 6,000 2.23 2.23 4083890 22,995 1.68 1.44 106 31,800 2.18 1.64 2173920 43,955 1.07 1.06 175 52,500 1.22 1.22 2513950 39,465 1.3 1.3 101 30,300 1.75 1.74 3913980 45,740 1.37 1.37 211 63,300 1.52 1.53 2174010 53,885 1.28 1.19 166 49,800 1.48 1.29 3254040 75,710 1.76 1.64 377 113,100 2.39 2.12 2014070 67,065 1.46 1.34 124 37,200 1.58 1.39 5414100 9,950 1.74 1.73 34 10,200 1.54 1.54 2934130 565 1.35 1.35 4 1,200 1.47 1.47 141

Total 632,850 1.39 1.31 2,258 677,400 1.63 1.50 280Note: Calculated validation grades may differ from resource grades due to weighting by volume, not tonnes.

Block Model CompositesGlencoe Deposit Block Model Validation by Easting

Comparison of ID2 and Composite Grades by Easting

0

20,000

40,000

60,000

80,000

100,000

3230

3260

3290

3320

3350

3380

3410

3440

3470

3500

3530

3560

3590

3620

3650

3680

3710

3740

3770

3800

3830

3860

3890

3920

3950

3980

4010

4040

4070

4100

4130

Section (E)

Volu

me

(BC

M)

Com

ps*3

00

0.0

0.8

1.6

2.4

3.2

4.0

Gra

de (A

u g/

t)

ID2 BCM Comps*300 ID2 Uncut ID2 Cut20 Comps Uncut Au Comps Cut20

Appendix 3

Glencoe Deposit

Surpac String File Descriptions

(All relevant files are included on the Compact Disc

inside the back cover of this report)

DIRECTORIES -3DMs

• res406.dtm -0.5 g/t Au resource wireframe • boc406.dtm -Base of Oxidation

-BModel

• Glencoe_406.mdl -resource block model • Macros.zip -block model macros

-Data • magnum.mdb -Access database

-Nat_Surf & Workings • Topo1.dtm/str -natural surface topography DTM

-Reports&Spreadsheets

• Glencoe Deposit April 2006 Resource Estimate.pdf - Resource report

• Glencoe April06 Resource Tables.xls -Resource tables

-Sections • Glencoe Sections.Zip -Access database

The Glencoe Deposit Mineral Resource estimate was completed using Surpac Mining Software version 5.0M.

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