PHILIPPINES

PANAON ISLAND GOLD PROJECT - Goldsearch earning 50%
(gold)

During the quarter underground and surface diamond drilling commenced at the Pinut-an deposit on Panaon Island. The Pinut-an deposit is interpreted to represent a low-sulphidation epithermal gold system and is considered to have potential to host significant high-grade gold mineralisation.

Despite early problems due to difficult drilling conditions, which resulted in poor core recoveries, significant progress has been made following optimisation of the drilling equipment. To date, one surface drill hole and one underground drill hole have been completed and second holes from both the surface and underground have commenced (Table 1).

Results from the first two completed holes were mixed. Due to poor recoveries, no core was retrieved from primary “Vein C” target depths. The level of phyllic - argillic alteration of the core on either side of this zone, partly responsible for the poor recoveries, was however encouraging. A number of narrow secondary target depths intersected vuggy and sugary quartz veins with pyrite and galena, silicified zones and quartz breccias over widths of up to 1.75 metres. These zones are interpreted to represent extensions to the “Vein A” and “Vein B” zones along with a number of secondary structures and vein splits. Diamond drill hole UDH - 2, which is still in progress, has intercepted a 3.6 metre wide zone of argillised and moderate to heavily silicified andesite with multiple veinlets and veins up to 0.2 metres wide from 28.9 metres. The veining typically consists of vuggy and sugary quartz with pyrite, galena (+/- sphalerite, chalcopyrite). This zone is interpreted to be an extension of the high-grade “Vein C” target. A second zone of similar mineralisation, interpreted to be a split off the “vein C” zone, was intercepted between 54.90 metres and 55.60 metres.

Assay results from the drilling to date are expected soon.

Surface geological mapping has continued to define new potential target areas and potential extensions to the known vein systems at Pinut-an, Pinut-an South and Caingin Point.

The project, which is a 50/50 joint venture with the Medusa Mining/Philsaga consortium, is targeting a small high-grade gold mine capable of producing between 100 to 200 tonnes per day of high-grade ore. Medusa/Philsaga are operators on behalf of the joint venture.

NORTHERN TERRITORY

BLOODS RANGE (EL 5701) – Goldsearch earning 70%
(gold, copper)

A program of auger geochemistry, to further evaluate previously identified mineralisation returning rock chips up to 30 grams per tonne (g/t) gold, has been delayed and is now scheduled to be completed by early September.

QUEENSLAND

MARY KATHLEEN PROJECT (EPMs 14019 and 14022) – Goldsearch earning 75%
(uranium, copper, gold)

During the quarter, reconnaissance geological mapping and prospecting continued at Mary Kathleen. A gamma ray spectrometer sampling program and detailed mapping program was completed at the Elaine Dorothy prospect. The spectrometer survey highlighted a zone of high readings associated with a metamorphosed dolerite dyke, which intrudes a sequence of calcareous and arenaceous metasediments. The Elaine Dorothy prospect is located approximately six kilometres south of the Mary Kathleen Uranium Mine and a small number of drill holes have been completed at the prospect by previous explorers. This current program has resulted in a significant improvement in the understanding of the structural and geological controls of this previously identified uranium mineralisation at Elaine Dorothy.

Reconnaissance work to date has identified three main target areas worthy of further work at Mary Kathleen (Figure 1). Future programs are now dedicated to defining targets for drill testing.

VICTORIA

SANDY CREEK PROJECT (EL 4812) – 100% Goldsearch
(gold)

No work was completed at Sandy Creek during the quarter as the main tenement area is inaccessible during the winter months. A proposed drilling program to test the high grade O’Dells target is scheduled for the December 2006 quarter.


ST ARNAUD (ELA 4669 - 100% Goldsearch - Sedimentary Holdings earning 75%)
(gold)

During the quarter Goldsearch entered into a joint venture with Sedimentary Holdings Limited (Sedimentary) whereby Sedimentary can earn an interest of up to 75% of ELA 4669 by paying Goldsearch $25,000 and spending $500,000 over three years. Sedimentary must spend a minimum of $250,000 by the later of either the first anniversary of the granting of the tenement or the approval of a work plan and a minimum of a further $125,000 by the second anniversary of the grant of tenement.

Upon Sedimentary earning 75% Goldsearch can elect to dilute to 10% and be free carried to completion of a feasibility study within eight years. If Sedimentary does not deliver a feasibility study within eight years the ownership of the tenement reverts to 75% Goldsearch, 25% Sedimentary.

ELA 4669 is located immediately east and south of the town of St Arnaud where historic production was mainly from the Lord Nelson and Lady Nelson mines. Historical production by the Lord Nelson Company was reported to be 322,400 ounces of gold at an estimated average grade of 15.9 g/t gold. The Lord Nelson shaft exploited steeply west-dipping multiple, fault-hosted quartz veins with a northnorthwest strike. Up to five lines of mineralisation 0.5 kilometres to 1.5 kilometres apart are known in the St Arnaud field.

The Lord Nelson Shaft is approximately 250 metres along strike from the Goldsearch tenement boundary and it is probable that the Lord Nelson “line of lode” extends into ELA 4669. Historical records also suggest that at least 5,000 tons of ore was mined from within ELA 4669.

SOUTH AUSTRALIA

MUSGRAVE BLOCK - SOUTH AUSTRALIA - 100% Goldsearch - Independence Group NL earning 51%)
(nickel, copper, gold)

A presentation was made to the Executive Board of Anangu Pitjantjatjara Yankunytjatjara by representatives of Goldsearch and Independence during May. This is a major move forward for the joint venture.

Preliminary anthropological surveys over four key tenements in South Australia are scheduled to commence in August. This work is a key part of the final stages of having these priority tenements granted and obtaining access for exploration.

STATEMENT