REVIEW OF OPERATIONS (continued)

During the year Goldsearch’s interest in the project climbed to 100% following the dilution and subsequent withdrawal of Central West Gold

MARY KATHLEEN, QUEENSLAND

(GOLDSEARCH diluting to 30%)

Goldsearch is exploring for Mary Kathleen-style uranium/rare earth element deposits and copper/gold deposits in the highly prospective Mount Isa Inlier, North Queensland. The project area is located to the north and south of the former Mary Kathleen mine between Mount Isa and Cloncurry and is comprised of three granted tenements, EPM 14019, EPM 14022 and EPM 15257 covering a total area of approximately 160 square kilometres. During the year Goldsearch’s interest in the project increased to 100% following the dilution and subsequent withdrawal of Central West Gold.

More recently Goldsearch signed a joint venture agreement with China Yunnan Copper Australia, whereby China Yunnan can earn up to a 70% interest in the project by spending $1.5 million within three years.

As further consideration China Yunnan Copper Australia will issue Goldsearch with 3,000,000 unlisted options exercisable at $0.40 each.

Copper/gold exploration
The joint venture proposes to continue evaluation of a number of high priority copper (+/- gold) targets previously evaluated by Goldsearch including the Pindora and Hardway targets.

Previous drilling by Goldsearch returned encouraging results at Pindora including 4 metres at 2.5% copper, 0.24 g/t gold. Drilling also returned encouraging widths of elevated copper at the Hardway target including 49 metres at 0.26% copper.

A review of historical exploration data has also highlighted a number of other areas worthy of further exploration, including the Mount Dorothy area where drilling by previous explorers intercepted 26 metres at 0.86% copper.

Rock chip sampling at Jubilee by previous explorers returned values up to 26% copper and 7.8 g/t gold.

At the King Solomon target, a zone of oxide copper mineralisation has been exploited by shallow open cuts over a strike length of approximately 1.6 kilometres.

Uranium/REE exploration
Mineralisation at the former Mary Kathleen uranium mine is hosted in metamorphosed calcareous sediments of the Corella Formation proximal to the Burstall Granite, an upper plate granite with elevated uranium levels. Key factors in targeting further uranium mineralisation are the regional faults intersecting the reactive Corella Formation lithologies and associated source granite.

The joint venture has a priority target at Elaine Dorothy, located six kilometres south of Mary Kathleen on the trace of the Mary Kathleen Syncline. The Elaine Dorothy target area is a distinct uranium anomaly in the airborne radiometric data.

Limited drilling at this prospect by Mary Kathleen Uranium Ltd, the operators of the former mine during the late 1950’s, intercepted high-grade Mary Kathleen-style mineralisation in Corella Formation rocks. Goldsearch completed a small program of confirmation drilling in December 2006. This program confirmed the existence of the mineralised zone which extends over at least 500 metres in strike. Better results in the previous historic drilling include 2.3 metres at 0.262% U3O8 from 26 metres in hole ED2, 9.5 metres at 0.036% U3O8 from 13.5 metres in hole ED4 and 2 metres at 0.134% U3O8 from 100 metres in hole ED11.

Best results from four holes drilled by Goldsearch were 1 metre at 0.047% U3O8 and 0.988% rare earth oxides from 83 metres in hole MKRC4.