REVIEW OF OPERATIONS (continued)

MOUNT WELLINGTON, VICTORIA

(GOLDSEARCH 100%)

The Mount Wellington project is located 20 kilometres south-east of the town of Jamieson and 25 kilometres north-east of the Woods Point gold mining centre in eastern Victoria. The project currently consists of three granted exploration licences and one exploration licence application, covering a total project area of 384 square kilometres (Figure 1).

The project area covers the majority of a belt of well mineralised and, in places, pervasively altered Cambrian-aged calcalkaline volcanic rocks. The Cambrian age volcanics are composed principally of intermediate to felsic volcanics and sediments interpreted to be deposited in an island arc environment. These rocks have been tentatively correlated with the highly prospective Mount Read Volcanics of western Tasmania and represent some of the oldest known rocks in Victoria. The volcanic rocks are overlain by a sequence of Silurian and Devonian sediments.

In Victoria initial drilling programs at the Mount Wellington project were completed with positive assay results returned from the Rhyolite Creek target area

Detailed geological mapping identified a number of diorite dykes which crosscut the Cambrian sequence and are undeformed and unaltered and therefore In Victoria initial drilling programs at the Mount Wellington project were completed with positive assay results returned from the Rhyolite Creek target area interpreted to possibly be Devonian in age. These dykes have similarities to the dykes hosting gold mineralisation in the Woods Point belt to the west and a genetic relationship between mineralisation at Mount Wellington and at Woods Point is postulated.

At Mount Wellington there are several known mineral occurrences. Significant gold (+/- silver and copper) mineralisation has been intercepted in drilling by previous explorers at Hill 800 and Rhyolite Hill (Table One).

At Hill 800 an inferred mineral resource of 1,118,000 tonnes with an average grade of 1.5 grams per tonne (g/t) gold for 52,200 contained ounces of gold has been calculated.

The most significant zones of alteration and mineralisation at Mount Wellington are spatially associated with significant regional aeromagnetic and gravity features in geophysical data. The scale of these geophysical signatures is consistent with the potential for large hydrothermal mineralising systems capable of producing a major ore deposit (Figure 2). The presence of deep-seated geophysical anomalies is consistent with Goldsearch’s genetic model for mineralisation based on Devonian-aged magmatic intrusions driving major hydrothermal systems.

During the year Goldsearch focussed on the Rhyolite Creek target area where previous drilling had returned encouraging gold and base metal results and had identified a significant zone of base metal bearing hydrothermal alteration.

Rhyolite Creek target
Previous drilling by Goldsearch intercepted a 5.6 metre intersection from 220 metres in hole RCD001 which returned an average gold grade (by fire assay) of 2.19 g/t with a peak one metre interval of 8.95 g/t gold. This interval also returned individual sample intervals of up to 127 g/t silver, 17.9% zinc, 1.5% lead and 0.8% copper (Table Two).

Beneath this zone, persistent elevated zinc assays were returned over significant widths. The 60 metre zone from 220 to 280 metres averages 1.1% zinc, suggesting a significant mineralising event.

Surface geochemistry suggested this zone extended up dip to the surface and is of significant lateral dimensions. Two further holes were drilled to test this mineralised zone. Both holes unfortunately intercepted intrusive dykes at critical target depths which, in part, displaced the target zones; however minor mineralisation was intercepted in both holes, proving the potential for a mineralised zone of significant lateral extent.

In RCD003, drilled 300 metres to the north of RCD001, the target shear horizon appears to be developed as two main zones and the lower of the two zones at 177.8 metres returned encouraging assay values consisting of 2.6 metres at 1.99 g/t gold, 12.6 g/t silver and 0.10% zinc.

Consistent with hole RCD001, a number of zones of elevated zinc mineralisation were intercepted in the footwall down to 454 metres in RCD003.

Further drilling is currently proposed to try and determine whether potentially economic high grades and tonnages are present within this newly defined mineralised zone. A ground induced polarisation (IP) geophysical survey has also been completed over the area to help refine future drill hole positions.

Other targets
Ongoing evaluation, including assessment of geophysical and other data from previous explorers and geological mapping by Goldsearch, has refined drill targets at Long Ridge and at Violet Hill.

Limited drilling by previous explorers at Violet Hill intercepted 25 metres at 0.2 g/t gold, 0.14% zinc and 0.1% lead from 18 metres depth. This intercept was returned from drilling in the vicinity of a major structural and geophysical target identified in recent geological mapping.

Future programs
Subject to work program approvals, Goldsearch anticipates further drilling at Rhyolite Creek, along with drilling at Long Ridge and Violet Hill. Goldsearch intends to apply for Victorian Government financial assistance with these programs under round three of the Rediscover Victoria collaborative program, applications for which are expected open in the last quarter of 2009.

During the year Goldsearch focussed on the Rhyolite Creek target area where previous drilling had returned encouraging gold and base metal results