A variety of genetic models, ranging from magmatic through hydrothermal to syngenetic, have been postulated in the past for the formation of gold deposits in the Pine Creek Geosyncline. Gold and base metal mineralization in the Pine Creek Geosyncline is commonly associated with granite intrusions and have often been classified as high temperature contact aureole deposits. A secondary host rock control has also been suggested due to the association of gold mineralization with carbonaceous metasedimentary rocks, such as at Cosmo Mine.

Native gold is the main mineralization mineral and is commonly present as micron sized grains; coarse nuggets are rare. Gold is commonly associated with pyrite, arsenopyrite and pyrrhotite and in places with minor base metal sulphides. Quartz, chlorite, sericite and carbonates are the common gangue minerals in the gold-quartz deposits.

All gold deposits in the Northern Territory show some structural control at the regional and deposit scales, with most deposits within the Pine Creek Orogen trending northwest southeast.

Base metal mineralization in the Pine Creek Orogen strike significantly differently than the gold veins, suggesting different discrete mineralizing events. They are syngenetic.

Cosmo gold mineralization is hosted across a stratigraphic sequence (‘Cosmo Mine Sequence”) that lies between a major dolerite sill (‘Zamu’ dolerite unit) and a thick package of high sulfide, graphitic mudstone (‘Pmc’ unit). This sequence is folded across the major Cosmo Howley Anticline with numerous limb parallel faults found to splay and roll inwards across the anticline nose as they migrate northwards down plunge. Also of major significance is the shallow (-40o to -55o) east-west F1 Fault which shows local steps and thrust related jogs and is suggested to be at least partly contemporaneous with limb parallel faults. The majority of gold mined to date comes from within ~200m above or below the F1 Fault so an empirical major control on mineralization is credited to this fault.

The Company is currently mining the Cosmo Deposit as an underground mine at a current depth of 600mRL. The Cosmo workings are accessed via a decline commencing from the southern wall of the Cosmo open pit. The mining activity at Cosmo has progressed from the Eastern Lodes utilizing Avoca-style cut and fill stoping to the Hinge Zone and Western Lodes where uphole open stoping is employed.

Ore was previously mined by a combination of Modified Avoca and Long-hole Open Stoping when isolated stopes were extracted. Mining is now focused on the Hinge Zone and Western Lodes where the uphole open stoping will speed up access to stope ore as upper stopes will be mined without the requirement to backfill.

Uphole Open Stoping is sequenced from the top down. As soon as the drill drive is completed, Stope development can begin. Rib pillars are left at intervals along the length of each panel to support the hangingwall without the requirement of back filling. Sill pillars are not required to regulate stope development. All underground production mineralization is trucked via the decline to the surface ROM stockpile adjacent to the Cosmo open pit. Mineralization is then loaded into on-highway haul trucks to be transported 67km to the Union Reefs processing plant.

Development waste is used for stope backfill as dictated by the production schedule. Waste not immediately required for backfill is typically stockpiled underground close to stope backfill locations. Occasionally when there is insufficient capacity to stockpile waste underground it is brought to surface and stockpiled in the Cosmo pit for future use as stope backfill.

The sequence for each mining block commences once the decline has reached the level of the lower access. The lower levels have priority as stoping of the top level can only commence upon completion of the lower two levels. Stoping on each level retreats from the northern and southern extents back to a central access. Stopes on the upper levels of a panel with no stopes beneath can commence prior to the lower levels.

The mining sequence in the Western Lodes is from top. The sequence for each mining block commences once the decline has reached the upper ore drive access. Stoping on each level retreats from the extents of the drill drive back to the access drive. Stopes on the lower levels of each panel can commence when bogging is complete in the upper levels.

Access to the mineral resource would be via a continuation of the current decline commencing from the 600mRL down. Decline standoff is kept at a minimum of 30m from planned stope voids.

Stopes are backfilled with rock generated from waste development in the decline, stockpiles and access drives. Stopes requiring CRF (Cement Rock Fill) backfill have cement slurry delivered to a waste rock stockpile for mixing prior to placement in stope voids. Any waste rock deficit is supplemented with surplus waste rock material from surface.

Any ore production from the Cosmo Mine is processed at the Union Reefs processing facility, which is approximately 67 km from the mine via the haul road and public roads.

The plant currently has a maximum capacity (depending on mineralization type) for 2.5Mtpa and is configured with three-stage crushing and two single-stage milling circuits. Prior to the plant being placed on care and maintenance in 2003, the milling rate at Union Reefs was typically 335tph at a P80 of 75µm. Plant availability was typically 96-98%.

ROM ore is crushed at a rate of up to 2.5Mtpa in a three stage crushing circuit incorporating a primary jaw crusher operating in open circuit and a secondary and tertiary cone crushers operating in closed circuit with a double deck banana screen. Crushing circuit product, at a nominal size of 12mm is conveyed to the grinding circuit via the Fine Ore Bin (“FOB”).

The FOB, with a live capacity of 2,500 tonne, provides a buffer of approximately ........