Cowarra Gold Project

What are the possible targets?

1. A large 0.5 to 1 million oz deposit underlying the mineralisation at surface, which is persistent but widely dispersed within the well defined 300-400m wide, mineralised corridor. Pros: Such a target would be very attractive to one of the majors as a farm-in proposition. A find of this magnitude would be able to support a stand-alone mine; and a project of such significance should make for easier permitting. Cons: Deep target(s) would be very costly to explore by a combination of geophysical methods (chiefly electrical ground surveys) and by targeted, deep RC and diamond drilling.

2. A small open cut deposit of 30,000oz plus contained ozs. Pros: An inferred resource has already been outlined on the property by RC drilling; no underground mine development would be needed. Cons: The resource would likely be too small to support a stand alone mine; the deposit would have a high ore: waste ratio due to the known distribution of the mineralised veins; the runoff mine grade would likely be too low to allow for trucking of the ore for any distance; any mine life would be short and the capital cost of mine, processing plant and tailings dam establishment would also be very high relative to potential revenues.

3. A small, high-grade underground deposit based on remnant ore blocks and possible extensions outlined by previous mining, underground sampling and current drilling. Pros: Mineralised blocks have been located from accurate historical records and current drilling (e.g. Ambassador mine); the target(s) would have a relatively high contained gold content for given tonnage; there would be no requirement to process the material extracted on site. Cons: There would be a high cost of accessing the deposit(s) which would require the driving of a decline and some underground development; the risks associated with ground stability would need to be carefully managed, which could be costly; a suitable site and third party would have to be found to process extracted material off-site.

4. Re-process tailings. Pros: No new mining would be involved; older tailings deeper in the dams may be high grade. Cons: Extensive and technically difficult sampling would have to be carried out to estimate the size, grade and characteristics of the resource; indications are that recovery would be low from refractory material; there would be a high capital cost involved in permitting, establishment of mine infrastructure, construction of a processing plant and provision of a new tailings dam.