The company which has an exploration management with a total of over 50 years expertise in exploring and developing mines in Victoria has targeted what can be described as "second tier" Central Victorian Goldfields. ie those that were discovered in the first flush of gold fever in the 1860's but then neglected due to the discovery of other larger goldfields with better infrastructure and access.

Major gold mining activity ceased in the late 1880's in Victoria for a number of reasons. However, the common misconception of "the mines ran out of ore" is not justified in the majority of cases as exploration and "interpretation" in recent years has shown.

The four main reasons for the cessation of mining in Victoria's smaller historic goldfields and the reason to believe a good resource potential still exists are as follows.

• The larger and easier diggings (more infrastructure and less isolated) at Bendigo and oncoming of the 1914 - 1918 war took many able bodied men from the smaller fields.
• Accurate recording of geology and stope outline was considered to be of little value with the resultant poor understanding of structures and trends of ore zones etc. This factor led to inefficiencies and early abandonment of reef lines. Natural disasters like shaft collapse also accelerated early abandonment.
• Exploitation of reef lines was also hampered in the early days by the size of the lease and many of the reef lines were worked by small syndicates or family operations and a common cause for the closing of many mines operated by a family was the retirement of the father and the sons not having the same tenacity or enthusiasm to keep the mine operating.
• Increasing apathy for mining over at the start of the 20th Century and the general increase in eagerness to farm the land as the financial returns and the way of life there became more attractive

Nagambie's exploration focus is the search for shallow gold deposits in these smaller historic goldfields of Victoria, which is the second highest State in Australia for production and prospectivity but currently second last in exploration investment.

These fields with little only sporadic work mainly near surface had interesting results as shown in official gold returns. The company has assigned "Exploration Groups" to focus its exploration in these areas and developed specific projects areas in which an encouraging number of prospects have been discovered as shown in the accompanying table.

The company will be targeting areas within Central Victoria that:

• contain confirmed gold mineralisation;
• are smaller gold fields but have histories of significant gold production;
• have received little modern exploration attention;
• can be effectively tested by shallow drilling of geophysical and geochemical targets;
• are regarded as having the potential to host commercial gold deposits;

EXPLORATION GROUP AREAS IN CENTRAL VICTORIA

Sampling Methodologies

Surface Rock Chip Samples

Surface rock chip and grab samples are collected by field-personnel using hammer and chisels. Rock chips are immediately placed into cloth or plastic sample bags, secured with a plastic zip tie, and labelled with a Nagambie project/prospect sample number. Most of the rock chip samples are semi-continuous chip channel samples and are typically two (2) metres in length, but this depends upon the nature of the outcrop and/or road cut being sampled.

The bagged samples are then transported to the Nagambie field office where they were stored in a secure area pending shipment to a certified laboratory sample prep facility.

Talus Debris (Float) Samples

Talus debris or float samples are collected in those areas of low outcrop density or cover. Many of the areas in which Nagambie works are covered with a thin veneer of rock talus or float; however this float material has not been transported very far and is basically a result of in situ weather and erosion of the bedrock.

The objective of collecting this type of sample is to test if it would be useful in the identification of thinly buried/covered mineralization.

Costean Samples

Costeans are typically excavated to bedrock with an average depth of 0.5 - 1.5 metres and a width of 0.8 - 1.5 metres, using a large excavator. If bedrock is not encountered within approximately 1.5 metres, then for safety reasons the costean is discontinued. All loose rock is cleared away from the floor of the trench to expose a clean smooth bedrock surface. Sample intervals, typically two (2) metres in length, but variable depending upon the nature of the bedrock, are then marked by a geologist on the costean floor and the nominated side is logged.

Channel samples are then taken to a depth of 3 to 4 cm with the aid of a hammer and chisel; with emphasis on constant sample volume for the length of the sample interval. Rock chips are immediately placed into a plastic sample bag, secured with a plastic zip tie, and labelled with a Nagambie project/prospect sample number. The bagged samples are then transported to the Nagambie field office where they were stored in a secure area pending shipment to a certified laboratory sample prep facility.

The costean is then backfilled.

Reverse Circulation Drill Samples

Reverse circulation drill samples are collected immediately at the drill-hole site. Reverse circulation drilling is completed with dry conditions; however if water is encountered, the drilling method is converted to diamond drill core to insure sample integrity. Dry drill sample cuttings are collected in a cyclone over a two (2) metre sample interval and then passed through a riffle splitter to sequentially reduce the sample size. One-eighth of the sample (9-10 kg) is then placed into a pre-labelled plastic bag, sealed with a plastic zip tie, and identified with a Nagambie project/prospect sample number. The bagged samples are then transported to the nearest Nagambie field office, where they are stored in a secure area pending shipment to a certified laboratory sample prep facility.

The remaining seven-eighths of the sample are then stored in a large, labelled plastic bag at the drill site for future reference. The reference samples from mineralized intervals are transported to the Nagambie field office. A small representative sample of the rock cuttings from each interval is placed into a plastic sample tray for subsequent geological logging of the hole by the geologist. On completion of the program all samples in the field are disposed of as prescribed by the appropriate regulations.

Diamond Drill Core Samples

Rock drill core obtained from diamond drilling are taken from the drill core barrel and immediately put into wooden, plastic or steel boxes, marked with the project/prospect, drill-hole number and depth information, as provided by the drill contractor under the supervision of Nagambie personnel. The filled core boxes are then transported to the Nagambie field office, where they were stored in an area dedicated to drill core storage.

The core is then measured, sample intervals marked, and photographs taken of each individual box. In addition, core recovery and RQD information is taken before the core is cut and sampled, as well as a “quick log” of the core, completed by a geologist; noting the sample quality, main rock types, main alteration, and main character of the mineralization (i.e., oxide versus sulphide, etc.).

Nagambie field staff then sawed the core in half lengthwise; one half of the sampled core interval is returned to the core box, while the other half of the sampled core interval is placed into a plastic bag labelled with a Nagambie project/prospect sample number and then sealed with a plastic zip tie. The sealed bags are then returned to the secure storage area pending shipment to a certified laboratory sample prep facility.

A more comprehensive geological log of each drill hole is subsequently completed from the remaining half of the drill core stored in the boxes, or RC cuttings. Upon completion of the drill program, the drill core boxes are carefully stacked in the field office drill core area for that project.

Sample Transport Procedure

Samples are assembled and stored in a dedicated, secure storage area at the Nagambie field office pending shipment to a certified laboratory sample prep facility. For shipment, several individual sealed samples are placed into larger, labelled and sealed bags. Shipment is typically by contract truck transport, with all necessary authorizations, directly from the Nagambie field office to the certified laboratory sample prep facility.

Geochemical Analysis Procedures

All sample preparation is completed at an internationally certified laboratory sample prep facility (i.e., international standards ISO 9001:2000 and ISO 17025:1999). Surface rock and drill samples are dried and entirely crushed to -10 mesh size (70% of the sample smaller than 2mm) and then a 250 gm split is pulverized to -200 mesh (85% or the sample smaller than 75 microns) to produce a sample pulp; which are then analysed for various elements.

Nagambie implements a quality assurance (QA) and quality control (QC ) program to ensure the reliability of all litho-geochemical sampling and analyses of both surface samples and drill samples from all of its projects.

All samples are shipped directly to certified laboratory sample prep facility in sealed bags with unique Nagambie project/prospect sample number. Samples are prepared and analysed only at internationally certified labs which control their data quality with the use of reagent blanks, reference materials, and replicates. All lab control results pertinent to Nagambie data, such as standards, blanks, and duplicates must be reported Nagambie.