Ann: Quarterly Activities Report and Cashflow, page-25

High PB,

You have hit the nail on the head with your post. The type of soil sampling that has been used BLEG (Bulk Leach Extractable Gold) is a very sensitive analytical method that uses sodium cyanide to leach out the fine gold in a sample. This is gold that is in atomic form or colloidal gold that is far more mobile and capable of travelling further. When we are talking about younger cover sequences that are barren and might be many tens of metres thick (or more) then we have the problem of trying to understand the mechanisms whereby this fine gold is able to travel up to the near the surface, from the bedrock below, where we have collected the initial soil samples. The concept of gold being carried down as rain and surface waters perculate down is easy enough to understand but the mechanism to explain how the gold travels up through a younger cover sequence is harder to fathom. What’s more the deeper the cover sequence the harder it is to imagine a mechanism that can transport the gold up even if it is in a very fine and transportable form.

The gold anomalies at the surface on the prospect can only be explained in one of two ways. Firstly that they relate to the underlying older bedrock and are caused by gold leaking upwards or secondly they have been formed by gold migrating a long way from further south where the bedrock is exposed and not covered by the younger sediments. This could happen due to the action of wind or water transporting the gold along the surface.

So the first test is really to see if any of the anomalies are correlatable to gold that occurs in the bedrock and this really means drilling deep enough to penetrate the overlying sediments. The company has completed some gravity surveys which they claim are useful to help identify both deep seated structures that might be related to the faults that could be responsible for gold mineralisation regionally and also they may help to detect undulations at the base of the cover sequence which might help locate areas where the bedrock is shallower. Any zones where you have coinciding BLEG anomalies and gravity signatures indicating shallower bedrock are the most logical places to start drilling. If these zones also conform to tectonic structures on the geophysical imagery, even better.

So what happens if the aircore drill is not powerful enough to reach the bedrock? Well I suppose in this case samples can be collected and subjected to more BLEG analysis again to see if the gold anomalism detected near surface in the overlying sediments persists within those sediments at greater depth. If this is the case the argument for the origin of the anomalies being surface transported gold from the south gets less strong and the argument for the gold being correlated to gold mineralisation in bedrock gets stronger. In this case it will then be a question of getting a bigger drill rig, like an RC rig, and repeating the drilling to ensure that the bedrock is tested.

Another consideration is the state of weathering of the bedrock before it got covered by the younger sediments. All land surfaces get weathered in unpredictable and varying ways. Some land surfaces are weathered in situ by the action of water percolating up and down with little disturbance to the land profile. Other weathering regimes are a combination of this same action with more erosion effects. Then you also have potential for depositional surfaces (collubium/alluvium wind blown sand etc) which have been derived from the bedrock to exist above the bedrock and below the younger sedimentary cover. That would further complicate the search. Looking for gold or any mineral under younger sediments is much more difficult than starting with a weathered surface derived from products of the underlying rocks.

So as shareholders we need to understand these difficulties and not necessarily expect great success on the first few passes. Any gold found under the cover sequence will be a major milestone in the hunt. If the gold is ore grade that will be even better. What needs to be defined are bedrock gold anomalies, then we can look for the primary bedrock sources of gold. It’s a process and not an easy process so don’t get too excited yet. Esh