REVIEW OF OPERATIONS (continued)

EAST MUSGRAVE Joint venture, SOUTH AUSTRALIA

(GOLDSEARCH 49%)

The East Musgrave Block tenements cover parts of the highly prospective Giles Complex Proterozoic rocks and its interpreted extension into the eastern Musgrave Block in South Australia. Significantly limited drilling by Kennecott in the early 1970’s at the Tuckerbox target (held under EL 3955) intercepted disseminated nickel-copper sulphides in one of three shallow holes completed.

The nickel-copper sulphide mineralisation intercepted by Kennecott consisted of up to 5% pyrrhotite-chalcopyritepentlandite- pyrite over a down-hole width of approximately six metres adjacent to the southern margin of a major dyke. The Tuckerbox dyke is a differentiated mafic to ultramafic dyke complex with mapped dimensions of approximately 15 kilometres in length by 150 metres in width. The Tuckerbox dyke and other associated Giles Complex intrusives are considered excellent targets for magmatic nickel-copper deposits.

The Tuckerbox dyke and other associated Giles Complex intrusives are considered excellent targets for magmatic nickel-copper deposits

The East Musgrave Joint Venture is a joint venture between Goldsearch Limited (49%) and Independence Group NL (51%).

In 2007 the joint venture signed an agreement with BHP Billiton for BHP Billiton to potentially earn a 65% interest in the project by spending $25 million or by delivering a bankable feasibility study within 10 years. In July 2009 BHP Billiton formally withdrew from the joint venture, having committed approximately $1 million in exploration expenditure. BHP Billiton’s withdrawal was based on an internal corporate directive to focus on increasingly more advanced exploration/development projects.

The project covers approximately 1,500 square kilometres consisting of two granted exploration licences and 11 exploration licence applications. All tenements currently lie within the Anangu Pintjantjatjara Yankunytjatjara freehold aboriginal lands. Following the execution of an exploration access agreement with the Anangu Pintjantjatjara Yankunytjatjara and subsequent grant of the two highest priority applications within the project area, initial field programs commenced in 2008.

Regional geochemical sampling and gravity geophysical surveys have been completed over prioritised areas within the two granted tenements (Figure 3).

This work has defined a total of ten target areas for further evaluation. The two highest priority targets have been selected for further evaluation using ground elctromagnetic (EM) geophysical surveying, with the aim of identifying conductive nickel sulphides in the subsurface. These programs commenced in September 2009 and, if suitable targets are generated, drilling is scheduled for early in 2010.

The project covers approximately 1,500 square kilometres consisting of two granted exploration licences and 11 exploration licence applications