Chairman’s Statement

Your directors are looking to the future with GUARDED confidence and welcome your support and look forward to meeting with you at our annual general meeting on 30 November 2009

The previous year has certainly been one of challenges for all companies in the resources sector. In view of the financial uncertainties experienced during the year the directors have initiated a number of strategies to help the Company through this difficult period.

Central to these strategies was the decision by the Goldsearch board to reduce directors' fees by 33% and executive salaries by 20% for the time being. All ongoing operations were re-evaluated and as a result a number of non-key exploration properties have been disposed of.

However, despite these cut backs during this past year of extremes the Company has still achieved some pleasing advances on its main areas of operation. There has been exploration progress in Victoria, the East Musgrave Block in South Australia and in Queensland and Sweden.

Perhaps most exciting is that since balance date Goldsearch has entered into a new joint venture on our Queensland Cloncurry district tenements with China Yunnan Copper Australia Limited. China Yunnan Copper Australia also has some existing tenements adjacent to the Goldsearch areas and through its very supportive major shareholders is committed to long term exploration in this region. This part of Australia has once again come to the attention of major international mining companies following the significant copper and molybdenum discoveries by Cudeco Limited and Ivanhoe Australia Limited.

At Mount Wellington in Victoria a drilling program was partially funded by the Victorian State Government under its collaborative Rediscover Victoria initiative. As a result of the successful and on schedule completion of this program, Goldsearch is hopeful of receiving further funding for drilling under this proactive initiative, the aim of which is to promote and stimulate mineral exploration in Victoria.

Early in the year, work programs continued in the Musgrave Block where BHP Billiton Limited was funding the joint venture between Independence Group NL and Goldsearch. However since balance date BHP Billiton has formally withdrawn from the joint venture and the equity interests in the joint venture have reverted back to Goldsearch 49% and Independence Group 51%.

Despite the withdrawal of BHP Billiton the current joint venture remains committed to the project. Independence Group is currently undertaking geophysical programs over anomalies identified in the previous work program with the aim of identifying targets to be tested by drilling. If these programs are successful, and once relevant heritage approvals are in place, drilling will commence immediately, with expectations of early 2010 results.

This area of the Musgrave Block, despite its prospective geology, remains poorly understood due to the previous restrictions on mineral exploration. Much of the present knowledge of the region is derived from regional mapping, geochemical programs, research projects and remote surveys carried out and sponsored by State or Commonwealth Government agencies approximately 35 years ago.

During this past year gold has appreciated approximately 25% to a present price of US$1,000 per ounce with predictions that the gold price will reach US$1,150 per ounce during the coming year

Even though Goldsearch believed its equity investment portfolio would continue to perform well it was decided, subsequent to balance date, to adjust the exposure to Independence Group and Rex Minerals and to purchase a significant and strategic holding in Morning Star Gold NL. This involved the purchase of 5 million options at a price of $0.10 each, which were exercised immediately by the payment of a further $0.10 per option to Morning Star Gold. This investment further spreads our portfolio risk and improves our exposure to gold.

During this past year gold has appreciated approximately 25% to the present price of over US $1,000 per ounce with many predictions of further price gains during the coming year. The illusion of stability, plenty, peace and security has been shattered by recent events and in this time of tension the perception about gold, silver and resource investments is gradually improving with interest in investment in gold and resource stocks re-surfacing. This re-awakening could be just the beginning.

Continuing economic uncertainties and intensified personal and national security issues will drive an increasing number of investors to protect their capital with gold, silver and precious metal stocks. Your Company is well positioned to take advantage of this new interest and is expecting and planning a significant increase in exploration activities this year.

Goldsearch continues to actively pursue joint venture opportunities and resource investments with a recent focus on other miners which have drill indicated gold resources. The intention is to add to our resource base with early cash flow potential while international perceptions about the precious metals markets are still in the early stages of what could become a major bull cycle. Details of the Company’s exploration activities are described in the following Review of Operations.

Your directors are looking to the future with guarded confidence and welcome your support and look forward to meeting with you at our annual general meeting on 30 November 2009.

John Landerer CBE AM
Chairman
26 October 2009