CHALICE MINING LIMITED — Capital/Financing Update 2006

Feb 20, 2006

CHALICE GOLD MINES LIMITED

ABN 47-116-648-956

An Offer to raise up to \$7,500,000 by the issue of up to 37,500,000 New Shares in the Company at an issue price of \$0.20 per Share.

Each Bullion Minerals Emited Shareholder has a Priority Right to apply for not less than 10,000 New Stares persuant to the Offer.

This is an important document. Please consult your professional adviser(s) if you have any questions. The mineral properties described in this prospectus are at the exploration and evaluation stage and accordingly investment in the Shares offered by this Prospectes should be regarded as speculative in nature.

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DIRECTORS INTERNATIONAL		Andrew R Bombok - Executive Charman
		John R Mcthiyre - Executive Difector [111111111111111111111111111111111111 Timothy R.B. Goydet - Non-executive Director "
		Bryan W Alexander-Non-executive Director [111111111111111111111111111111111111
GOMPANY SECRETARY	Marshall
PRINCIPAL PLACE OF BUSINESS. AND REGISTERED OFFICE THE	WSTRONIANA 6000	Level 2, 1292 Hay Street Management and Contract and Contract of the U.S.
		Tel: 61 8 9322 3960 Communication and communication and communication
		Fax: 616 9322 5830 = = = = = = = = = = = = = = = = = = =
	Web: www.chdllcegold.com	Ernail info@chalicegoid.com and all and all all all all all all all all all al
CORPORATE ADVISER	Te yeally	Veriate Crous Editorial Charled
	52 Philip Stephen
		Sychiev NSW 2000 - The Terminal Con-
SOLIGITOR TO THE OFFER AND	Maile Contracted Cole
INDEPENDENT SOLICITOR	Herzog Bortescue/Holdseining
REPORTING ON TENEMENTS	50 Kings Polk Road
	West Perth WA 6005
INDEPENDEMINISTIK	Northwird Resources Fly Littling
GEOLOGIST TELEVISION	Z Matricere BOOKSTERNAME
AUDITOR AND INDEPENDENT	Alternations
ACCOUNTANT INTERNATIONAL		Charged Accountable (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) 15 Rheola Street (1999) - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 199
	West Perth WA 6005
SERRE RECISIEV		Computershare investor Services Ply Limited
		Level 2, Reserve Bank Building (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) (1999) 45 St Georges Terrace Manual Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Communist Co
	Reth WA 60 83 Committee
		Tel: 1300-557-010 ===================================
	PROPOSED ASX CODE THE CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL CHANNEL

• An independently funded and focused gold exploration and development company,
• An extensive portfolio of over 2,200 square kilometres of highly prospective gold tenements located strategically throughout Western Australia, including:
• . 150 square kilometres at Higginsville adjacent to Avoca Resource Limited's Trident gold discovery (24 targets, 6 of which warrant immediate diamond/RC drilling);
• 163,000 ounce resource (as shown in Table 4 in Section 3 of this Prospectus) at the Chalice Gold Mine (2 immediate diamond drilling targets, including extensions to the existing resource);
• . the large Yandeearra Gold Project in the West Pilbara adjacent to Range River Gold Limited's Indee Gold Project and DeGrey Mining Limited's Wingina Well and Mount Berghaus gold discoveries; and
• funded exploration of almost an entire greenstone belt at the Gnaweeda Gold Project, through a \$1,500,000 joint venture with Teck Cominco. Minimum spend by Teck Cominco of \$140,000.
• Multiple drill ready targets across established and emerging gold camps.
• 31,000 metre drilling program scheduled for the first year post capital raising (13,000 metres of RC/diamond drilling and 18,000 metres of RAB/aircore drilling).
• Historically strong \$A/\$US gold price environment.
• Board and Management team with the requisite geology, mining, corporate and business development skills needed to operate and develop an emerging resource company.

This section is not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety,

CONTENTS CONTENTS

			PAGE COMPANY
	. Investment summary and the contract of the contract of the contract of the contract of the contract of the con
	CONTENTS AND ARREST MARKETING MARKETING AND ARREST MARKETING AND ARREST MARKETING OF
	CHAIRMAN'S LETTER COMMUNIST CHAIRS AND RESIDENCE AND SERVICE OF THE CONTROL CHAIRMAN'S LETTER
	IMPORTANT NOTICE IN THE INTERNATIONAL ACCORDING THE CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CONTRACT OF A CO
	1 INVESTMENT HIGHLIGHTS AND THE CONTRACT OF A SUBSTANTIAL PROPERTY
	2 DETAILS OF THE OFFER THE MILLION CONTROL IN THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE OF THE RESERVE
	3 THE COMPANY AND ITS GOLD PROJECTS AND MALL AND THE COMPANY AND ITS
	4 PROFILES OF DIRECTORS & SENIOR MANAGEMENT 28
	5 INDEPENDENT GEOLOGICAL REPORT 29 29
	6 INDERENDENT SOLICITOR'S REPORT 4 1999 1999
	7 INDEPENDENT ACCOUNTANT'S REPORT THE THEFT THE 99 THE TERM OF THE TABLE
	8 CORPORATE GOVERNANCE CONSTRUCTION
	9 RISK FACTORS COMMUNICATION CONTINUES IN THE RISK OF THE RISK CONTINUES.
	10 ADDITIONAL INFORMATION INTITITITITITITITITITI II 16
TIME DIRECTORS' STATEMENTS
	GIOSSARY (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTRUCTION (1999) - CONSTR

CHAIRMAN'S IFTTER

Dear Investor

On behalf of the Directors. I am pleased to present this prospectus and the opportunity to invest in Chalice Gold Mines Limited ("Chalice Gold Mines").

Chalice Gold Mines has been established to create a dynamic gold exploration and development business. Completion of the Initial Public Offering will achieve a final condition for the acquisition by Chalice Gold Mines of an exciting portfolio of gold exploration properties in both new and emerging Western Australian gold camps.

The funds raised from this prospectus will be applied to an intensive, drilling focused exploration program, commencing with a number of previously delineated targets that are considered to warrant RC/diamond drilling programs.

In particular:

Eastern Goldfields

A major focus will be at Higginsville, south of Kalgoorlie where Chalice Gold Mines' interests will comprise approximately 150 square kilometres of tenements, adjacent to Avoca Resources Limited's tenements (host to the high grade Trident discovery, reported at 485,000 ounces of indicated and inferred resources at 5.0 a/t aold).

Chalice Gold Mines has identified 24 farget greas at Higginsville, 6 of which are considered to warrant RC/diamond drilling. We plan to fest these fargets within the first vear of ASX listina.

Further opportunity lies at the Chalice Gold Mine and its strike extensions, which already host a 163,000 ounce JORC compliant gold resource (details of which are set out in Table 4 in Section 3 of this Prospectus).

Within approximately 170 square kilometres of Chalice tenements, located approximately 20 kilometres to the west of Higginsville, the Company has highlighted 2 targets which warrant RC/diamond drilling (at Chalice Deeps and Minsys 4) out of 25 targets that warrant follow-up work.

With the Chalice Gold Mine having previously produced over 556,000 ounces of gold from 1995-1999, these fargets will also be a key focus within the first year of listing.

West Pilbara, Murchison

Chalice Gold Mines offers further discovery potential from its extensive ground position at Yandeearra in the West Pilbara, as well as at Gnaweeda in the Murchison (where Teck Cominco have recently agreed a \$1,500,000 70% earn-in joint venture) and at Wilga, south of Laverton.

We are looking forward to the commencement of exploration and expect to be one of the most active gold exploration companies in the Eastern Goldfields region. Indeed, in the first year of ASX listing Chalice Gold Mines plans to undertake in excess of 31,000 metres of exploration drillina.

Hook forward to welcoming you as a Shareholder of Chalice Gold Mines Limited and participating together in an active exploration program in some of Australia's most exciting gold provinces.

Yours sincerely

ANDREW BANTOCK

IMPORTANT NOTICE

This Prospectus is dated 3 February 2006 and was locaed with the ASIC on that date, No Shares will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. The context of the context of

Neither the ASIC nor ASX take any responsibility for the content of this Prospectus or the merits of the investment to which this Prognectus relates. The manufacturer

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by low and therefore persons into whose possession this document comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of those laws. This Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whorn. It would be unlawful to issue this Prospectus,

If is important that you read this Prospectus carefully, in its entirely and seek professional advice where necessary before deciding to invest in the Company, in particular, in considering the prospects for the Company, you should consider the risk factors that could affect the performance of the Company. The Offer does not take into account your investment objectives, financial situation and particular needs. Accordingly, you should carefully consider the risk factors in light of your personal circumstances and seek professional advice from your appountant. stockbroker, lawyer or other professional adviser before deciding whether to trivest. The Shares, the subject of this Prospectus, should be considered speculative. The contract of the contract of the contract of the constitution

No person is authorised to provide any information or make any representation in connection with the Otter contained in this Prospectus which is not contained in this Prospectus. The manufacture in the manufacture

WEB SITE - ELECTRONIC PROSPECTUS AND INTERNATIONAL CONTINUES.

A copy of this Prospectus may be downloaded from the Company's website at www.challcegold.com. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus.

The Corporations Act prohibits any persons passing on to another person an Application form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unattered version of this Prospectus. Any persons may obtain a hard copy of this Prospectus free of charge by confacting the Company by telephone on (08) 9322 3968 during normal business hours. The contract of the contract of the contract of the contract of the

EXPOSURE PERIOD AND ARREST MANUSCRIPT OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should be aware that this examination may result in the identification of deficiencies in the Prospectus and, in those circumstances any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act. The company of the company of the company of the company of the company of the company of the

Applications for Shares under this Prospectus will not be accepted by the Company until after the expiry of the Exposure Period. No preference will be conterred on persons who lodge applications before the expiry of the Exposure Period. The commitment continuum commitment continuum continuum continuum commitment continuum continuum

GIOSSARY TELEVISION IN THE CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CON

minister in the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of th

Certain terms and abbreviations used in this Prospectus have defined meanings which are explained in the Glossary at the end of the Prospectos, and a communities of the community of the community of the community of

I.I. IMPORTANT NOTICE

This Section is not intended to provide full information for investors intendina to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

1.2 INDICATIVE TIMETABLE

Lodgement of Prospectus
Opening Date
Closing Date (5.00pm WST)
Allotment of Shares under this Prospectus (anticipated)
Trading of Shares to commence on ASX (anticipated)

3 February 2006 15 February 2006 14 March 2006 21 March 2006 24 March 2006

The above dates are indicative only and may vary. The Company reserves the right to change the key dates of the Offer without prior notice which may have a consequential impact on other dates.

1.3 COMPANY OVERVIEW

Chalice Gold Mines Limited was incorporated by Bullion Minerals Limited on 13 October 2005 for the purpose of developing an independently focused and funded gold exploration and development company.

Chalice Gold Mines entered into a Tenement Purchase Agreement with Bullion on 18 January 2006, (the details of which are set out in Section 6 of this Prospectus) to aquire the projects the subject of this offer. The proposed acquisition will provide Chalice Gold Mines with an extensive portfolio of gold projects with drill ready exploration targets strategically located throughout Western Australia.

Further information on the gold projects is detailed in Sections 3 and 5 of this Prospectus.

1.4 BUSINESS OBJECTIVES

The Company's business objectives are to create shareholder wealth through the exploration for, and discovery and development of, mineral deposits.

In the short to medium term the Company intends to undertake the following activities:

• commence exploration including RC/diamond drilling of the priority targets within the gold portfolio, $(a)$ within the first year of completion of the Offer;
• $(b)$ identify additional RC or diamond drilling targets within the ground package in the first year, and undertake further exploration and drilling in relation to these targets in the second year following completion of the Offer;
• $\subset$ apply the Board of Directors' skills and experience in discovery, evaluation and development of mineral resources, as well as the financing of minerals mining and processing operations, in a cost effective manner to advance the Company's projects; and
• utilise the same skills to generate new gold opportunities and projects in geologically prospective (d) areas for exploration or development.

1.5 PURPOSE OF THE OFFER AND USE OF FUNDS

The purpose of the Offer is to provide Chalice Gold Mines with funding to pursue its objectives as outlined in Section 1.4 of this Prospectus.

Chalice Gold Mines is seeking to raise up to \$7,500,000 to progress the exploration and development of the portfolio of gold projects that it will acquire from Bullion. The Board has elected to accept a minimum copital raising of \$6,000,000.

INITIAN YES TIMENT HIGHLIGHTS AND RESIDENCE

. Professional completed and the complete and the complete of the complete of the complete of the complete of th	Wastolfeiner III
Budgeted Expenditure Product of the Contract of the Product of the Product of the Product of the Product of the
Drilling and exploration projects (reter fable 2 below).		ANDREW MARIE 1988
Using deals 500
Temernett ukreskilon ekoniska
1999 - Jan Alexander Stadt Barbara (

*This assumes brokerage fees of 5% are paid with respect to 80% (ie \$6.000,000) of the funds raised. This amount will be reduced or increased depending on the extent to which Bullion shareholders take up their priority subscription entitlements pursuant to the ofter (no brokerage fees are payable in respect of funds raised from such pricrity subscriptions!

.
Table 1 : Chalice Gald Mines Ltd overall budgeted expenditives for the first two years after completion of the Initial Public Offer

Table 2 : Chaice Gold Mines Ltd budgeted drilling and exploration expenditures, by gald project, for the first
Two years after completion of the initial Public Offer

The Griaweeda Project is subject to the joint venture agreement with Teck Cominca, further details of which are set out in Section 3.2.5 of this Prospectus."

Further defails an the intended drilling and exploration programs are set out below in Sections 3 and 5 of this Prospectus. The budgets of the Company will be subject to modification on an origoing basis having regard to a number of factor, holyding minimum minimum

• the ongoing results obtained from the exploration and drilling programs.
• · periodic re-assessment of undertying geological factors, including the exploration results of other regional explorers; [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[
• · the market price for gold, and

and the second property of the second property of the second property of the second property of the second property of the second property of the second property of the second property of the second property of the second

· joint venture agreements with respect to exploration and drilling activities of particular tenements.

1.6 CAPITAL STRUCTURE

The capital structure at completion of the Offer, is set out below in Table 3 below:

Shares	Number Of Shares (Minimum Subscription)	% of Shares (Minimum Subscription)	Number Of Shares (Full Subscription)	% of Shares (Full Subscription)
Shares on issue on acquisition of tenements 10	35,000,000	53.84	35.000.000	48.28
Shares to be issued pursuant to the Prospectus [2]	30,000,000	46.16	37.500.000	51.72
Total Shares on issue at the close of the Offer and Acquisition	65,000,000	100.00	72.500.000	100.00
Options
Options issued upon completion of the Offer to existing Directors and employees under the Employee Share Option Plan [3]	6.075.000		6.075.000
Options expected to be issued following completion of the Offer to future Director(s) and employees (3)	3.925.000		3.925.000

Table 3 : Chalice Gold Mines Limited proposed capital structure upon completion of fully subscribed Initial Public Offer, on the basis of full subscription

Footnotes:

• $(3)$ Details on the Shares to be issued on acquisition of tenements are set out in Section 7 of this Prospectus.
• Assumes subscriptions are received for \$7,500,000. This may be reduced proportionately if subscriptions between $(2)$ \$6,000,000 and \$7,500,000 are received.
• $(3)$ No employee options have been issued at the date of this Prospectus. The number of options included above is an Figure and the unit of the upper limit of options required to be issued to current and future Directors and
  employees pursuant to the Company's Employee Share Option Plan upon completion of the Offer to attract and retain high quality personnel. Details of the Employee Share Option Plan are set out in Section 10.3.5 of this Prospectus.

1.7 PRO-RATA DISTRIBUTION IN-SPECIE

In mid-March 2006, Bullion shareholders will be requested to approve the in-specie distribution of all 35,000,000 Shares in the Company to be held by Bullion on completion of the acquisition of tenements.

The in-specie distribution is expected to occur in 2 tranches of 17,500,000 Shares in the Company approximately 3 months and 6 months respectively after Chalice Gold Mines Shares commence trading on the ASX.

2 DETAILS OF THE OFFER

This Prospectus invites investors to apply for a total of 37,500,000 shares at a price of \$0.20 for each Share to raise $\sim$ 000000000000000000000000000000000000 up to \$7,500,000, before costs of the Offer and an annual contract to a subset of the set of the set of the set of the set of the set of the set of the set of the set of the set of the set of the set of the set of the set All Shares offered under this Prospectus will rank equally with existing Shares. Defails of the rights attaching to the Shares are set out in Section 10.2 of this Prospectus. All application monies are payable in full on application. The Otter is comprised of the Public Ofter and the Bullion Prigrity Ofter. The manufacture

2. I BULLION PRIORITY OFFER THE CONTROL CONTROL IN THE CONTROL CONTROL INTERNATIONAL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL C

The Company is offering Bullion's Shareholders registered as at 5pm WST on 14 Feburary 2006 the opportunity to become Shareholders in the Company, and the contribution of the contribution of the contribution of the contribution of

The Company has set aside as a Priority Otter a pool of up to 7,300,000 Shares for Bullian Shareholders. Bullion Shareholders may apply for as many Shares as they wish under the Bullion Priatity Ofter and are quaranteed a minimum of 10,000 Shares (at an application price of \$2,000).

The Directors of the Company who hold shares in Bullion have indicated their intention to participate in the Priority Offer Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contac

Bullion Shareholders may also barticipate in the Rublic Offer. [11] [11] [11] [11] [11] [11] [11] [11

A copy of this Prospectus will be forwarded to all Bullion Shareholders registered as at 5pm WST on 14 February 2006. This Prospectus will contain a green Priority Application Form. Buttion Shareholders who wish to subscribe for Shares pursuant to the Priarity Offer must make an application using the green Priarity Application Form and L forward it to the Company so that it is received by no later than 14 March 2006.

Sections 2.3 to 2.5 of this Prospectus set but turther details on applying for Shares. The comparison

2.2 PUBLIC OFFER SHARES OFFERED FOR SUBSORIETION

The Public Offer is open to the public including Bullion Shareholders. A minimum of 30,000,000 Shares plus any Shares not subscribed for under the Bullian Priority Offer will be available under the Public Offer.

Applications must be made on the white Public Offer Application Form enclosed with this Prospectus

Sections 2.3 to 2.5 of this Prospectos set out further details on applying for Shares.

2.3 APPLICATION FOR SHARES AND ALL AND LODGED

Applications under both the Public and Bullion Priority Offers must be for a minimum of 10,000 Shares (being Timitation) minimum application monies of \$2,000) and thereafter in multiples of 2,500 Shares (\$500). The control of the control of

Applicants under both the Public and Bullion Pricity Ofters should read this Prospectus in its entirely in arder to make an informed decision on the prospects of the Company and the rights altaching to the Shares offered by 1 this Prospectus betate deciding to apply for Shares.

If you do not understand this Prospectus you should consult your stockbroker, accountant or other professional adviser in order to safisty yourself as to the contents of this Prospectus. The Shares offered by this Prospectus are spectiblive in nature....

DETAILS OF THE OFFER $\mathcal{D}$

2.4 LODGEMENT OF APPLICATION FORMS

Application Forms must be accompanied by a cheque in Australian dollars, for the full amount of your application monies. Cheques must be made payable to "Chalice Gold Mines Limited - Share Issue Account" and should be crossed "Not Negotiable".

Application Forms must not be circulated to prospective investors unless accompanied by a copy of this Prospectus.

Completed Application Forms and accompanying cheques must be received by no later than 5.00 pm (WST) on 14 March 2006 in the case of both the Bullion Priority Offer and the Public Offer by the Share Registry:

By Delivery to:	By Post to:
Chalice Gold Mines Limited c/- Computershare Investor Services Level 2, Reserve Bank Building 45 St Georges Terrace PERTH WA 6000	Chalice Gold Mines Limited c/- Computershare Investor Services GPO Box D182 Perth WA 6840

The Company reserves the right to extend the Offers or close the Offers early without notice. Applicants are therefore urged to lodge their Application Forms as soon as possible.

An original, completed and lodged Application Form, together with a cheque for the application monies, constitutes a binding and irrevocable offer to subscribe for the number of Shares specified in the Application Form, An Application Form does not need to be signed to be a valid application. An Application will be deemed to have been accepted by the Company upon allotment of the Shares.

If the Application Forms are not completed correctly, or if the accompanying payment of the application monies is for the wrong amount, it may still be treated as valid. The Directors' decision as to whether to treat the Application as valid and how to construe, amend or complete the Application Forms is final. However, an Applicant will not be treated as having applied for more Shares than is indicated by the amount of the cheque for the application monies.

No brokerage or stamp duty is payable by Applicants in respect of Applications for Shares under this Prospectus.

2.5 ALLOCATION AND ALLOTMENT OF SHARES

Subject to the Bullion Priority Offer, the Company reserves the right to reject any Application or to allocate to any Applicant fewer Shares than the number applied for. The Company also reserves the right to reject or aggregate multiple applications in determining final allocations.

In the event an Application is not accepted or accepted in part only, the relevant portion of the application monies will be returned to Applicants, without interest.

The Company reserves the right not to proceed with the Offer or any part of it at any time before the allocation of the Shares to Applicants. If the Offer or any part of it is cancelled, all application monies, or the relevant application monies will be refunded.

The Company also reserves the right to close the Offer or any part of it early, or extend the Offer or any part of it, or accept late Application Forms either generally or in particular cases.

The allotment of Shares to Applicants will occur as soon as practicable after Application Forms and application monies have been received for the minimum subscription of Shares being offered, following which statements of shareholding will be dispatched. It is the responsibility of Applicants to determine their allocation prior to freighta in the Shares. Applicants who sell Shares before they receive their statement of shareholding will do so at their own risk.

2 DETIALLS OF THE OFFER

2.6 APPEICATION MONEY HELD IN TRUST THE THEFT

All application monies will be deposited into a separate bank account of the Company and held in trust for Applicants unlit the Shares are issued or application monies returned. Any interest that accrues will be relatived by the Company and will not be paid to Applicants.

2.7 MINIMUM SUBSCRIPTION

The minimum subscription to be raised under this Prospectus is \$6,000,000.

No Shares will be issued pursuant to this Prospectus until the minimum subscription has been achieved. Should the minimum subscription not be reached within 4 months after the date of this Prospectus, all applications monies wil be dealt within in accordance with the Corporations Act. The according to the control of

The Company believes the minimum subscription is sufficient working capital to achieve its objectives as set out in the morecents.

2 B DIVIDEND POLICY AND ALL AND ALL AND A RESIDENCE

The Company anticipates that sanificant expenditure will be incurred in the evaluation and development of the Company's projects. These activities are expected to dominate the two year period following completion of the initial Public Offer. Accordingly, the Company does not expect to declare any dividends during that period.

Subject to the Company achieving sustained profitability, the Directors will consider paying dividends, subject to available cash flow and conflict realitenents and control the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of the control of

2 2 ASX ISLENCTI

The Company will apply to ASX within 7 days after the date of this Prospectus for admission to the Official List and for Official Quotation of the Shares, other than those existing Shares that the ASX treats as restricted securities as defined in ASX Listing Rules. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of

If the Shares are not admifted to official quatation within 3 months after the date of this Prospectus, none of the Shares offered by this Prospectivi will be allotted or issued, in that circumstance, all Applications will be dealt with In accordance with the Corporations Act

The fact that ASX may admit the Company to the Official List is not to be taken in any way as an indication of the merits of the Company or the Shares. ASX, its officers and employees take no responsibility for the contents of this Prospectus. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract

2.10 INVESTMENT RISKS AND CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLER CONTROLLE

The business of the Company thvolves mineral explaration and thvestment in mining tenements and accordingly. investments in the Shares offered by this Prospectus should be considered speculative. The key risks associated with an investment in the Company are outlined in Section 9 of this Prospectus."

2 I LBROKER FERR TO THE

The Company reserves the right to pay a fee of up to 5% in respect of applications todged by any member organisation of ASX, licensed securities dealer or the holder of an Australian Financial Securities Licence and ITT TH accepted by the Company provided the relevant stamp of the organisation is on the Application Form.

No brokerage or commission is payable by Applicants in respect of Shares issued pursuant to this Prospectus. The commission is a commission of the commission of the commission of the commission of the commission of the com

3.1 OVERVIEW OF THE COMPANY AND ITS GOLD PROJECTS

The Company has secured the rights to acquire Bullion's gold assets through a conditional Tenement Purchase Agreement, detailed in Section 6 of this Prospectus.

Chalice Gold Mines' exploration tenements will initially be held 100% by Chalice Gold Mines, subject to the joint venture agreement with Teck Cominco in relation to the Gnaweeda Project (described further in Section 3.2.5 of this Prospectus). Additionally, the rights to nickel exploration on certain of the Company's Higginsville and Chalice tenements will remain with Bullion, and are subject to the Cowan Nickel Joint Venture between Bullion and Equinox Minerals Limited, as described further in Section 6 of this Prospectus.

Chalice Gold Mines will be managed by a team with extensive experience in exploration, mining and corporate management.

The gold projects are strategically located throughout Western Australia, comprising 5 separate major areas (shown in Figure 2).

Figure 2 : Chalice Gold Mines Ltd project locations

Challce Open Pit looking north,

(ก)

S THE COMPANY AND ITS GOID PROMECTS

Eastern Goldfields Participation (1999) and the Contractor Contractor (1999) and the Contractor Cold Chalice Gold Mines' Eastern Goldfields interests include the gold rights to over 320 square kilometres of tenements In the historic Higginsville and Chalice gold camps. The community of the control of the control of

The Higginsville-Chalice area has reported over 1, 200,000 ounces of historical gold production, approximately 50% each from the Chalice Gold Mine and the Hiaginsville area (Including the Poseidon South, Fairplay and Two Boys bedrock mines and a number of palaeochannel deposits). The district is located between the highly endowed Statement ives (15,000,000 othices) and Norseman (7,000,000 othices) gold camps.

More recently, Avoca Resources Limited (Avoca) has announced the discovery of the high arade aold resource at Trident (reparted by Avoca as 2,990,000 tonnes at 5.0 g/t gold for 485,000 ounces of JORC compliant resources comprising 449,000 ounces of indicated resources and 36,000 of interred resourses), a blind deposit located just north of the historic Poseidon South, Two Boys and Falrplay gold mines, which collectively produced over 420.000 ounces.

Further details are provided in Sections 3.2.1 and 3.2.2 of this Prospectus. The manner

West Pilbera manufacture in the manufacture of the West Pilbera manufacture in the United States The Yandeearra project comprises a tenement package of over 1.400 square kilometres in the West Pilbara of Western Australia, contiguous with both Range River Gold Limited's (Range River) Indee Gold Project and De Grey

Mining Limited's (De Grey) Turner River Gold Bell. The province is a newly emerging gold district.

Further details are provided in Section 3.2.3 of this Prospectus. The annual contractor

Laverion

Chasee Gold Mines' interests comprise a recently granted tenement covering 7 sub-blocks located 15 kilometres south east of AngloGold Ashariti's Cleo gold mine and approximately 55 kilometres south of Laverton in the highly endowed Laverton Tectonic Zone, which hosts the Granny Smith, Sunrise Dam and Red October gold deposits Further details are arovided in Section 8.2 4 of this Prospectus. The Marie Broton Chalice Gold Mines will hold Interests to over 470 square klicmetres of tenements, representing almost an entret greenstone belf, at Chaweeda in the Murchison Region of Western Australia, approximately 30 kilometres natheast of Meekatharia. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the c Teck Cominca has recently agreed to commence a joint Venture to spend \$1,500,000 to earn a 70% equity interest CI CH3W5803 - Communication and communication and communication . . . . . . . . . . . . . . . . . . . . Futbor details are analded in Section 8.2.5 of this Propoectus ...

3.2 GOLD PROJECTS

A detailed description and analysis of the Company's aold projects can be found in the Independent Geologist Report, included as Section 5 of this Prospectus.

Details of the agreements relevant to the various projects are included in the Independent Solicitor's Report, included as Section 6 of this Prospectus.

3.2.1 HIGGINSVILLE

Principal Targets

Chalice Gold Mines has identified 24 targets at Higginsville, 6 of which are considered to warrant immediate RC or diamond drilling, applying a similar geological interpretation of exploration potential to that applied at Avoca's recent high grade discovery at Trident. In particular, 10 kilometres of strike of the Poseidon Thrust, inferred to be the controlling structure of gold mineralisation at Trident, lie within Chalice Gold Mines' Higginsville project and are either untested or contain significant drill results which warrant follow-up drilling.

Location and Tenure

Chalice Gold Mines' Higginsville gold project will comprise 34 tenements (a tenement schedule is presented in Section 6 of this Prospectus) covering 150 square kilometres of granite-greenstone belt centred on the old Higginsville gold mining centre (Figure 3).

Figure 3 : Higginsville and Chalice Projects - location and regional geology

3 THE COMPANY AND ITS GOID PROJECTS

The Higginsville mining centre is located around 80 kilometres by road south of Kambalda, or 50 kilometres by road natih of Norseman in the Higginsville mining district, near the southern end of the Norseman-Wiluna Greenstone Be The project area is traversed by the Coolgardie-Norseman Highway, and associated rail line and water pipeline

The Higginsville region is notably located between the world class St ives and Noneman gold mining centres Historical open pit and minor underground operations in the Higginsville mining centre have previously produced around 690.000 ounces of gold. Higginsville lies contiguous to and to the south of Avoca's recent high grade discovery of literature and

Project Geoldby

The geology of the higginsville area comprises a sequence of north, north-west trending, east dipping matic ultramalic units overlain by a metasedimentary package (Figure 4). The malic ultramalic package comprises amphiboille facies high magnesian basall, komaillies and minor interflow clastic sedimentary rocks intruded by differentiated gabbros. The package shows repetition, probably across a series of east dipping thrust faults. The overlying metasedimentary package comprises letsic voicaniclastic rocks and psammo-pellitic sequences, equivalent to the Black Flag Beas of the Kalgoorie Domain to the north with with the with the

The matic-ultramatic package is interpreted to be a D₂ thrust stack, separated from the overlying metasediments by the moderately east dipping Poseidon Thrust, and from underlying metasediments by the Higginsville Thrust. These structures are jogs in, or splays off, the regionally significant Zuleika Shear, host to several world class gold deposits to the north.

A complex regolith is developed over the Archaean sequence, including Tertiary palaeochannels, a Tertiary laterite profile, and playa lake sediments associated with Lake Cowan.

Two broad styles of gold mineralisation are developed. Gold deposits in bedrock comprise either quartz vein systems associated with splays off the D₂ thrusts, developed preferentially in the granophyric phases of differentiated dolerites (eq, Trident and Poseidon South with production of 312,000 ounces and JORC compliant resources of over 485,000 ounces of gold, comprising 449,000 ounces of indicated and 36,000 ounces of inferred resources), or lodes developed in the fault splays in high magnesian basalts (eg, the Two Boys gold mine, production approximately 82,000 ounces). Approximately 300,000 ounces of gold has been produced from Tertiary palaeochannels, principally from the Challenger-Swordsman system.

Exploration History and Potential

In October 2003 Bullion acquired Resolute Limited's (Resolute) residual interests in its Higginsville assets. Bullion subsequently applied for extensive areas of open ground in the Higginsville region. These have been granted and now form the bulk of Bullion's Higginsville gold project.

Previous exploration by Resolute identified a number of anomalies and mineralised targets on the tenements to be aquired by Chalice Gold Mines, including numerous significant drilling intercepts warranting further review (Figure 4).

Exploration by Avoca has outlined further mineralisation at the Trident deposit, which is sited to the north of the Poseidon South open pit. The most recent quoted indicated resource for Trident is 2,990,000 tonnes at 5.0 g/t gold for 485,000 ounces, with recent drilling intersections announced as including 27 metres at 88g/t from 355 metres, including 10 metres at 229q/t gold from 369 metres in drill hole HIGD047.

An extensive review of gold exploration targets within Chalice Gold Mines' Higginsville project area has outlined 24 exploration targets, ranging from mineralised systems with significant drill hole intercepts through to geological targets containing both prospective structure (eq. sections of, and splays off, the Poseidon Thrust) and prospective stratigraphy (differentiated gabbroic or doleritic rocks).

Chalice Gold Mines consider the Higginsville project's mineralisation model is similar to that at Trident and that it is significant that previous shallow drilling in the project area has not tested the deeper stratigraphic and structural contacts that have been the focus of Trident exploration to date.

Four of the priority prospects at Chalice Gold Mines' Higginsville project (Figure 4) include:

• MITCHELL BASEMENT NORTH: located just west of the Mitchell palaeochannel open pit mine and approximately 200 metres north of the Mitchell Basement South prospect. Aircore drilling has intersected significant gold mineralisation in weathered basalt beneath approximately 15 metres of transported cover on the western flank of the Mitchell palaeochannel. The best intersections occur on drill section 6483050 mN (Figure 5), including 3 metres at 10.68 g/t Au from 58 metres in MAC1812 and 3 metres at 1.55 g/t Au from 67 metres in MAC1813. The orientation of the mineralised structure is not apparent and follow-up RC drilling is proposed.

3 THE COMPANY AND ITS GOUD PROJECTS

Elgure 5 : Mitchell Basement Natin Prospect - adss-section 6483050mN showing gold fargets

• MITCHELL BASEMENT SOUTH: The prospect is located directly to the west of the Mitchell palaeochannel open plf, and to the east of the interpreted position of the Poseidon Thrust, Here, aircore and RC drilling has intersected numerous zones of gold mineralisation in weathered basalific bedrock beneath transported cor on the western flanks of the palaeochannel (Figure 6).

Significant intersections include 4 metres at 93 g/t A0.31 metres, including 1 metre at 367 g/t.Au from 32 metres in MAC1835, 4 metres at 7.25 g/t Au in MAC1844 from 32 metres, 6 metres at 7.98 g/t Au in MRC0032 from 40 metres and 1 metre at 121 g/t Au in MAC1807 from 70 metres (end of hole). The manner The mineralisation may be associated with a flat lying splay off an interpreted structure on the basalt-ultramatic contact located immediately to the east. The structure can be traced north and south of the section and temains untested by drilling. Follow-up RC drilling is proposed. An account of the control of the control of the

Figure 6 : Mitchell Basement South Prospect - cross-section 6482560mN showing gold targets

· POSEIDON FOOTWALL: a package of mafic volcanic and/or intrusive rocks located in the footwall of the Poseidon Thrust (Figure 7). This package and structural position is host to mineralisation at the Poseidon South, Two Boys and Fairplay mines, and the Trident prospect, to the north (shown schematically in Figure 8). The target is developed under shallow transported cover, and is considered by Chalice Gold mines to not have been adequately drill tested to date.

3 THE GOMPANY AND ITS GOID PROJECTS.

Article (1984)
Reception (1986) l Fachwall Präspect with Higginsville-style depasits shown schematically, projected along strike of the

. NAWOCK, where previous exploration has located significant diffilesuits over 2,000 metres of strike, but with drilling oriented at a low angle to the interred strike direction, and not adequately testing the mineralised structure....................................

A further 8 targets are considered to warrant first pass or follow up afrace drilling (Figure 4). These targets around 5 kilometres south of Trident at Poseldan Footwall, focated along the interpreted continuation of the Roseldon Thrust, Other targets include abid anomalous intercepts in historical drilling that warrant tollow up drilling, soil anomalies not drill tested, and conceptual targets developed over priority structures but buried under transported cover and not adequately tested by existing surface geochemical techniques.

3.2.2 CHALICE

Principal Peree is Chalice Gold Mines has identified 2 key initial targets for diamond drilling in the Chalice mining lease (Figure 9) with a turther 5 that warrant early follow up aircore or RC drilling in the regional tenements.

Location and Tenute

The Challce project comprises 49 tenements (a tenement schedule is presented in Section 6 of this Prospectus) covering 172.8 square kilometres of granite-greenstone bett, giong the western margin of the Norseman Wilund belt within the Widglemootha-Higginsville district of the Archaean Bastern Goldfields Province of Western Adstrata (Figure 3)

The Challee project is centered on the Challce Gold Mine, which produced over 550,000 ounces of gold (at an average grade of over 5g/f) from open pit and minor underground operations between 1995 and 1999.

Figure 9 : Chalice Project tenements, interpreted geology and exploration targets

Project Geology

The Chalice fenements are located over a sequence of matic and ultramatic volcanic rocks which lie between the Boorabbin Batholith to the west, and the Widgiemooltha and Pioneer Domes to the east, near the southern end of the Norseman-Wiluna Greenstone Belt. Af Chalice, the greenstone sequence has been intruded by a series of granitic sills and dykes thought to be related to the Pioneer Dome and the Boorabbin Batholith. The stratigraphy strikes broadly north-northwest to north, and comprises up to four ultramatic sequences separated by amphibolite developed after tholelitic basalt. A series of large layer parallel shear zones are developed within and on the margins of the mafic-ultramafic packages, including the structure that controls gold mineralisation at Chalice.

Within the Chalice open pit, Main Lode mineralisation is hosted in a steeply west dipping shear zone in amphibolite sandwiched between the hanaing wall and footwall ultramafics. Discontinuous remnants of a highly altered komatilte are developed between the Main Lode and the footwall ultramatic, and are named the Middle Ultramatic ("MUM"). These are mineralised locally. Within this sequence, several types of granitoid intrusive helve been recognised, including the Western Granite (part of the Boorabbin Batholith and developed above the hangingwall ultramafic), Dyke 2 (a steeply west dipping feature with lesser sub-parallel structures), and the Basal Pegmatite, Dyke 2 is spatially related to the high grade core of the deposit, whilst the Basal Pegmatite is generally flat lying, and separates the Deeps 1 and Deeps 3 mineralisation from the Main Lode mineralisation mined in the open pit (Figure 10).

្រុ

3 THE COMPANY AND ITS GOID PROJECTS

Figure 10 . Chalce Gold Mine lang section - showing the existing open ph, down plunge extensions and exploration targets

Exploration History and Potential

The most significant historical mining was undertaken by Resolute and its corporate predecessors, including Samantha Gold NL (collectively called Resolute), Resolute commenced mining at Challce in May 1995 an ceased friging activities in early 1999.

Resolute mined 3.07 million tomes of ore at 5.59g/1 Au (for 556.000 ounces of contained gold) from open pit and minor underground workings developed above the Basal Peamatife (Figure 10). Exploration beneath the open pit delineated turther mineralisation, and at the cessation of mining Resolute had defined further 162,700 ounces of gold resources (iterrited in Table 4 below) around of b kwa tezore za shu Deeps & bodies.

$O(10.100)$ erate all'etatt Metaliakoa Incloated WESTER Elgari References

Table 4: Existing resources, Chalicle Gold M

Formates and the company of the company of the company of the company of the company of the company of the company This classification under the JORC code relies on the material assumption that further mineralsation of significant grade and width be discovered down plunge of the existing resources. Should no further mineralisation be discovered, the company marneed to reasses the classification of these resources under the requirement of the Australasian Code for Reporting of exploration.
Tesults, Minerall Resources and Ore Reserves ("JORC code") 2004 that Resources must have re economic extraction. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contr

æa

Bullion acquired the Chalice mining lease and applications along strike in October, 2003.

During 2005 Builion tested both the Main lode and Middle Ultramafic lode (or MUM lode), a second lode horizon developed around 20-30 metres below the Main lode horizon, in positions above and below the existing Chalice Deeps 3 mineralisation. Significant gold results (plotted in Figure 10) were reported from both lodes, indicating the Chalice gold mineralised system is open at depth down plunge from the historically defined resources, and that further MUM lode is developed below the limits of the current open pit.

Additional exploration targets along the Chalice line of strike include Minsys 4, located just south of the Chalice open pit, and the Cavalier and Cavalier South prospects (Figure 9), where historical exploration has produced highly anomalous gold results in drilling.

The defineation of new resources to extend the current inventory defineated at Deeps 1 and 3 will be the main focus of exploration and drilling activities at Chalice. Several targets are outlined below:

• EXTENSIONS OF DEEPS 4: recent diamond drilling of the Deeps 4 shoot has demonstrated that the Chalice mineralised system continues at depth beneath a sub-horizontal granite dyke which previously defined the base of the Deeps 3 mineralisation.

Although buik grades were low, narrow high grade intercepts were reported, and there is considered to be potential to locate a Chalice style target along and down plunge of these intersections. Results were highly encouraging as they revealed that the prospective stratigraphic mine sequences containing the lode horizons have not been closed off and extend to depth and along strike.

The low to moderate grade intercepts encountered may be on the margins of more substantial high grade core, An extended drill program is proposed to test the Main lode horizon seeking to identify the position of a possible high grade shoot.

• MINSYS 4 is located south of the open pit where the regionally north-northwest trending sequence swings into a northerly trend, the amphibolite package appears thickened compared to material along strike, and broad zones of alteration and gold anomalism are developed in drilling. The pattern is consistent with the empirical controls on the Chalice open pit, and the system may represent the up-plunge expression of a new Chalice system developed at moderate depths (around 300 metres, as plotted on Figure 10).

A further 23 realonal or mine site targets have been defined. 14 of which warrant initial or follow up RAB or Aircore drilling.

$3.2.3$ YANDEEARRA

Principal Targets

Chalice Gold Mines has identified 17 initial gold targets at Yandeearra, including 2 which are considered to warrant immediate RC drilling.

Location and Tenure

Chalice Gold Mine's interests in the West Pilbara gold district (Figure 11) will include a tenement package of over 1,400 square kilometres at Yandeearra, contiguous with both Range River's Indee Gold Project (with published JORC compliant resources of 529,000 ounces of gold, comprising 123,000 ounces of measured, 277,000 ounces, of indicated and 129,000 ounces of inferred resources in several deposits) and De Grey's Turner River Gold \$6t (including a published resource of 203,000 ounces of gold at Wingina Well comprising 61,200 ounces of measured, 101,700 ounces of indicated and 40,400 ounces of inferred resources). A tenement schedule is presented in Section 6 of this Prospectus.

Figure 11 : West Pitbara Gord Bistrict - Yandeearra project location

The project is approximately 100 kilometres south of Port Hediana, and access can be gained from estabilished roads and bush tracks off the North West Coastal Highway.

The 100% interest in the terrement package was earnt by Bullion pursuant to an agreement with Farno-McMahor Ply Limited Famo Ply Limited and Dorsch Resources Ply Limited (Famo Group).

With access to much of the area only recently approved by the traditional owners. large, shategically located but largely unexplored area. This

Hescopter- assted exploration at Yandeeara Project

sol samping at Haly Raspect (andsejous Reject )

Project Geology

The Yandeearra project straddles the boundary between the Central Pilbara Tectonic Zone and the East Pilbara Granite-Greenstone terrane within the early Archaean Pilbara Block.

The south-eastern part of the project area incorporates the north-easterly-trending Pilbara Well greenstone belt. This consists of basalts, ultramatics and slijcified sediments which have undergone deformation and metamorphism. The greenstone lithologies are overlain by cherts of the Cleaverville formation.

The northern part of the project area is dominated by turbiditic sediments of the Mallina Formation, with numerous interbedded differentiated matic/ultramatic intrusives of the Millindinna Intrusion and the Satirist Gabbro.

The granitic terrane of the East Pilbara Granite-Greenstone terrane occurs to the southeast of the tenements. To the south of the tenements, outcropping flat-lying basaltic volcanics and sediments of the Fortescue Group of the Hamersley Basin partly obscure the underlying lithologies.

Exploration History and Potential

Most of the historical mines at Yandeearra, which predominantly lie within the granted exploration tenements, have had only minor investigations for gold and base metal by modern exploration techniques. The fimited amount of modern exploration completed within the region is due to a previous moratorium on mining and exploration within the Yandeearra Aboriginal Reserve.

Following the lifting of the exploration moratorium and the granting of a number of exploration licences, the Farno Group undertook initial geological mapping, stream sediment sampling, grid soil sampling and first pass RAB drilling targeting gold and base metals in the Pilbara Well Greenstone Belt.

Pursuant to the joint venture with Farno, exploration and drilling by Bullion has included aircore, RAB, RC and vacuum drilling programs at several prospects within the project area, mostly in the Mallina Basin. This work has outlined 17 significant gold in soil anomalies, of which 8 anomalies remain untested by drilling. Of the 9 targets drill tested, each has reported significant gold results in broad spaced drilling, with 2 considered by Chalice Gold Mines to warrant immediate RC drilling.

Outside of the immediate tenement area, recent exploration activities in the Pilbara region have highlighted the prospectivity of the Mallina Basin and its relatively under-explored status.

3.2.4 Wilda

Principal Targets

Chalice Gold Mines has identified 2 gold exploration targets at Wilga. Although grass roots in nature, Chalice Gold Mines Considers the tenement is located within a fertile, well endowed gold belt adjacent to a major, mineralised structure, and further exploration is warranted.

Location and Tenure

The Wilga tenement is located 50 kilometres south of Laverton and 15 kilometres south, south, east of Anglogold-Ashanti's Cleo gold mine (Figure 12).

.
Figure 12 : Wilga Project – location and regional geology [1] [1] [1] [1] [1] [1] [1] [1] [1] [1]

Project Geology William

The geology of the area consists of outcropping Archaean basalts, peridolife and thin banded iron formation. within the central section of the licence area. This area has been the focus of much of the past exploration effort as the western and eastern part of the licence is dominated by Quatemary colluvium and transported alluvium on the northern margin of Lake Carey. The Carey

Mineralisation in the area is hosted by banded iron/chert formations, quartz veining and shear zones within the basallic sequences. Visible gold has been noted from the area associated with the banded fron formations (BIFs) and reconnatsance rock chip sampling of the outcrop has produced assays of 7.8g/1 and 5.1g/1 gold.

4) a construction of the construction of the construction of the construction of the construction of the construction of the construction of the construction of the construction of the construction of the construction of t

Exploration History and Potential

Delta Gold NL (Delta Gold) commenced the first major exploration program in the region for gold with a broad spaced soil sampling program which outlined anomalous gold geochemistry at Wilga.

Follow up exploration by Delta included an exploration program of gridding, soil sampling, rock chip sampling and RAB and RC drilling.

Historical exploration defined an extensive gold anomalous zone, over 1,500 metres long and up to 500 metres wide, centred on the banded iron formation. Broad spaced RAB drifting has reported significant gold results.

Chalice Gold Mines considers that the results from the historical exploration described above warrant follow-up exploration activity, and that there may be an extensive area of greenstone developed under shallow surficial cover that has not been tested to date.

Gold exploration targets include the strike and depth extensions of the mineralised corridor defined by previous drilling.

GNAWFEDA $3.2.5$

Project managed and funded by Teck Caminco

Chalice Gold Mines will hold interests in over 470 square kilometres of tenements covering almost an entire greenstone belt at its Gnaweeda project in the Murchison region, 30 kilometres east of Meekatharra, Western Australia (Figure 13).

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$3$ THE COMPANY AND HIS GOUD PROJECTS

On 28 July 2005, an exploration joint venture was signed with Teck Cominco in respect of Gnaweeda. Under the agreement Teck Cominco can earn a 70% interest in the project by spending \$1,500,000 over three years (minimum expenditure of \$140,000). The contract of the contract of the contract of the contract of the contract of The Teck Cominco agreement is symmatised in Section 6 of this Prospectos. The

The agreement with Teck Comingo associates Chalice Gold Mines with a major international mining house on terms providing significant exploration upside exposure,

Historical exploration has defined an extensive gold and arsenic anomalous zone, over 15 kilometres long and up to 750 metres wide, within a package of malic and felsic rocks (the Fairway Magnetic Package, or FMP). Gnaweeda is considered prospective for gold mineralisation, either developed within the FMP, or in structure along the 50 kilometres of strike interpreted within Challce Gold Mine's tenements. [10] [10] [10] [10] [10] [10] [10] [10]

EXPLORATION AND DRILLING PROGRAM AND EXPENDITURE
Exploration and Dilling Program - Higginsville The proposed forward exploration and drilling program for the Higginsville project includes.
1. Phase TIRC drill testing of 6 high priority targets including the Poseldon Footwall, Mitchell Basement Nat Mitchell Basement South and Nawock prospects, following up existing significant drill results
2. Phase I Aircore dril testing of 8 moderate priority targets.
3. Field checking, surface geochemical sampling of low priority target areas, and
4. Phase 2 RC diamond drilling to follow-up mineralisation defined by Phase One programs.
Exploration and Drilling Program - Challce The proposed forward exploration and drilling program for the Chalice project includes:
1. Phase 1 diamond drilling of the advanced targets at Deeps 4 and Minsys 4; with a contribution of the control
2. Phase 1 aircore and RC diffing of 13 pricitly regional targets; the state of a
3. Field checking regolith and geological mapping and surface geochemical sampling over regional larget of 9 first press respectively.community in the material
4. Phase 2 diamond drilling following up significant results from Chalice Deeps. Minsys4 and the regional exploration to rules
Exploration and Drilling Program - Yandeearra
The proposed farward was program for the Yundeearra project comprises:
1. Exploration for indee-style gold deposits in the Maliha Formation lunbiattic sediments, including RC driling at two targets, and RAB or alreare drilling at a further 11 targets; and
2. Exploration for Shear-hosted gold deposits in the Pilbara Well Orcenstone Belf.

Exploration and Drilling Program - Wilga

The proposed forward exploration program for the Wilga project, comprises:

• 1. Acquisition and interpretation of available multi-client and company aeromagnetic data;
• 1. Field inspection, geological and regolith interpretation;
• 1. Extension of the surface geochemical coverage in areas amenable to surface sampling techniques, particularly to the south of the previously defined gold anomalies;
• 1. Auger or vacuum geochemistry programs in areas of interpreted thin transported cover; and
• 1. RAB or aircore drilling to test strike continuity of previously defined gold mineralisation and first pass drill testing of geochemical anomalies generated from the surface geochemical programs.

Exploration and Drilling Expenditure Budget

	Minimum Subscription		Full Subscription
Project	Year $1$ \$	Year $25$	Year $1$ \$	Year $2$ \$
Higginsville :	937.700	653.000	1.125.300	1.033.300
Chalice 2	738.150	596.250	1.109.650	767.250
Yandeearra 3	424.000	298.200	497.450	464.550
Gnaweeda 4
Wilgas	125.600	97.500	134.300	175.000
Total	2.225.450	.644.950	2.866.700	2.440.100

Footnotes:

• 1 A breakdown of the Company's exploration expenditure by activity is presented in Section 5, Table 1 of this Prospectus.
• 2 A breakdown of the Company's exploration expenditure by activity is presented in Section 5, Table 2 of this Prospectus.
• 3 A breakdown of the Company's exploration expenditure by activity is presented in Section 5, Table 3 of this Prospectus.
• 4 Exploration at this project is expected to be funded by Teck Cominco persuant to the subject Joint Venture Agreement (refer further Section 6 (Schedule B, Section 4) of this Prospectus).
• 5 A breakdown of the Company's exploration expenditure by activity is presented in Section 5, Table 4 of this Prospectus.

Table 5 : Chalice Gold Mines Ltd budgeted drilling and exploration expenditures, by gold project, for the first two years after
completion of the initial Public Offer

The budgets of the Company will be subject to modification on an ongoing basis having regard to a number of factors, including:

• the onaoina results obtained from the exploration and drilling programs:
• periodic re-assessment of underlying geological factors reflecting the exploration results of other regional explorers;
• the market price for gold; and
• joint venture agreements with respect to exploration and drilling activities of particular tenements.

ANDREW R BANTOCK, BCOM, ACA

EXECUTIVE CHAIRMAN IN THE THEFT Mr Bantock is currently the Managing Director of Bullion Minerals Limited. Mr Bantock has extensive professional corporate and commercial experience in the resources, resource contracting and intrastructure sectors having previously been with GRD Limited, where he served 6 years as the Executive Finance Director.

Prior to his 10 years with GRD, Mr Bantack warked in Australia and internationally with a leading global accounting and financial services organisation. Mr Bantock has been Managing Director of Buffon since September 2004.

MR JOHN R MOINTYRE, BSC (HONS), MAIG EXECUTIVE DIRECTOR COMMISSION

Mr Mcinilyte has over 19 years experience in mineral exploration throughout Australia, covering gold, hickel, platinum group metals, copper-gold, unconformity related gold-PGE-uranium, tOCC style copper-gold-uranium and zinc-lead mineralisation. Mr Maintyre araduated from the University of Western Australia in 1985 with First Class Honours in Geology, and has spent the last ten years in either senior management roles with junior companies, or consulting to both junior explorers and major miners. He is a member of the Australian institute of Geoscientists, the Geological Society of Australia, and the Society of Economic Geologists. The Contract

MR TIMOTHY R & GOYDER NON-EXECUTIVE DIRECTOR

Mr Goyder is currently the Chairman and a substantial Shareholder of Bullion Minerals Limited. Mr Goyder has extensive experience in the resource industry and is currently Managing Director and the proprietor of Grimwood Davies Pty Linited, a contract drilling company, based in Kalgoorle, Western Australia.

Mr Goyder has been involved in the formation and management of a number of publicly listed companier

MR BRYAN W ALEXANDER, BSC, MAUSIMM NON-EXECUTIVE DIRECTOR

Mr Alexander is a qualified geologist with over 15 years experience in the exploration and mining industry. Mr Alexander is currently providing geological contracting and consulting services through Archaean Exploration Services Pty Limited (Archaean Exploration). Most recently Archaean Exploration has been responsible for directing the exploration, underground mine geology and acquisition activities for a private exploration and mining syndicate."

Prior to this Mr Alexander has been responsible for the management of exploration bases and the implementation of substantial exploration and resource definition programs for several gold exploration and mining companies.

MR RICHARD K HACKER RCOM ACA ACIST COMPANY SECRETARY AND ARREST AND A LITTLE COMPANY

Mr Hacker has extensive protessional and corporate experience in the resources sector both in Australic and the United Kingdom. For the last 5 years he has worked in senior finance roles with global energy companies including Centrica Pic and more recently. Woodside Petroleum Limited. Prior to this, Mr Hacker worked for seven years with leading accounting practices. Mr Hacker is both a Chartered Accountant and Charleted Secretory, Million

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ABN 67 067 522 098 MINING INDUSTRY CONSULTANTS

6 Muir Place Booragoon Western Australia 6154 Email: raycary@northwind.com.au Tel: +61 (8) 9364 6634 Mob: 0412 987 734 Fax: $+61(8)$ 9316 1138

1 Feburary 2006

The Directors Chalice Gold Mines Limited Level 2 1292 Hay Street West Perth Western Australia 6005

Dear Sits

INDEPENDENT CONSULTING GEOLOGIST'S REPORT for INCLUSION IN PROSPECTUS

Northwind Resources Pfy Ltd ("NRPL") has been engaged by you to prepare an Independent Consulting Geologist's Report ("Report") describing five mineral exploration projects which Chalice Gold Mines Limited ("CGML") is to acquire from Bullion Minerals Limited ("Bullion"). The projects are all located in Western Australia. The report is to be included in a prospectus inviting subscriptions for 37.5 million new shares in CGML at an issue price of 20 cents per share to raise a total of \$7.5 million before the costs of the issue ("Prospectus"). The minimum amount to be raised by CGML is \$6 million. CGML proposes to lodge the Prospectus with the Australian Securities and Investments Commission on or about 3 Feburary 2006. It is intended that a significant part of the funds raised will be used for the purposes of exploration and evaluation of the mineral properties.

The Report has been prepared by Mr RE Cary, the Principal of NRPL. Mr Cary is a Fellow of the Australasian Institute of Mining and Metallurgy wherein he is accredited with Chartered Professional status in Management, a Fellow of the Australian Institute of Geoscientists, a Member of the Mineral Industry Consultants Association and a Member of the Australian Institute of Company Directors. Mr Cary trained as a geologist and has over 35 years of diversified mining industry experience including exploration, resource evaluation, feasibility studies, project development, mining operations, corporate and asset acquisitions, project financing and company directorships. He has prepared numerous public and private evaluations of companies, mining operations and exploration projects.

The Report has been prepared in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Mineral and Petroleum Securities for Independent Expert Reports ("The Valmin Code"). Mr Cary has the appropriate qualifications and experience, and the independence, to qualify him as an "Expert" according to the definition of same in The Valmin Code. As part of this review, Mr Cary visited the Yandeearra project area on 3 November 2005, and the Higginsville, Chalice, Wilga and Gnaweeda projects between 11 and 13 November 2005. The locations of the project tenements are shown on maps included in the Report.

5 INDEPENDENT GEOLOGIST'S REPORT THE THEFT

In preparing the Rebort, NRPL has refled upon information provided to it by the Directors of CGML, together with other published and unpublished reports and data. CGML has warranted in writing that all material information in its possession has been made available and that, to the best of its knowledge and understanding, such information is complete, accurate and true. NRPL has not independently verified any of the information provided by CGML. nor did if conduct an audit of CGML or any of its associated entities. CGML has stated that all informatio provided by it may be presented in the Report and that none of the information is regarded as confidential Where information has been derived from sources which are not in the public domain, consents have been obtained from the respective authors to quote their work in our Report. The Report has been prepared to include information available up to and including 31 January 2006. The principal sources of information are included in a bibliography at the end of the Report. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the con

The legal status of tenements, including Native Title considerations, is the subject of a separate independent Salicitar's Report which appears in Section 6 of the Prospectus. These matters have not been considered in any detail in our Report, however, if has assumed that CGML will have lawful access to the tenements for the purposes of conducting exploration and evaluation activities. NRPL has not been asked to comment on any vendor or promoter considerations to be paid by CGML. The potential consequences of exploration and mining on the environment within the project areas have not been assessed. The manufacturer and containing the contact of

The mineral properties discussed in the Report are exploration projects, and as such, are inherently speculative in nature. Nonetheless, NRPL considers that they are to be acquired by CGML on the basis of sound technical merit and are sufficiently prospective, subject to varying degrees of exploration risk, to warrant their further exploration and assessment. COML has prepared staged work programs specific to the potentiator each of the projects, other than for Gnaweeda which is subject to a joint venture wherein the incoming party is sole funding exploration.

CGML intends to raise a minimum of \$6 million, and up to \$7.5 million. The exploration and evaluation programs summarised in the Report anticipate total expenditure of \$3.9 to \$5.3 million depending upon the amount raised. so that at reast half the amount raised is to be committed to the exploration, evaluation and administration of the mineral properties. The proposed exploration budgets also exceed the articipated minimum annual statutory expendible commitments for each of the project areas. CGML plans to spend between \$2.2 million and \$2.9 million in the first year of assessment. The contract of the contract of the contract of the contract of a second

The statements and opinions included in the Report are given in good faith and in the befiel that they are not faise, miseading or incomplete. Copies of the relevant sections of the Report in draft form were provided to CGML together with a wilfren request for comment as to enors of fact or mishterpretation, material omissions, or substantive disagreement as to the assumptions contained therein. Whilst evidence may be available to support our conclusions. and whist we believe our conclusions to be appropriate at the date of the Report. these could alter materially over fime in the light of new information which might affect our views with regard to the prospectivity of the lenernents and their resource potential, metal prices, exchange rates and other relevant factors. The manufacture

Neither NRPLinot its principals has any relationship with CGML or Bullion which could teasonably be construed as affecting their independence in the preparation of the Report. Neither NRPL nor its principals has any inferest or entitlement, direct or indirect, in fenements held by CGML or Bullion, or in the securities and assets of CGML or Butlion, their principal shareholders, or any aftter company believed to be associated with CGML or Bullion, In July 2005, NRPL assisted Bullion in its assessment of tenements in Queenstand that it was considering purchasing This work was conducted on a consulting basis, with payment on the basis of hourly professional fees and the time taken in the appraisal of the apportunity. This prior relationship with Bullion has in no way affected NRPL's independence in the preparation of this Report, in the current circumstance, NRPL is entitled to receive a teell based upon hourly rates for the time taken in the preparation of the Report, plus reimbursement of out-of-pocket expenses necessarily incurred in the completion of its brief from you. This tee is payable regardless of the findings of the Report, or the success of the proposed capital raising.

INDEPENDENT GEOLOGIST'S REPORT $\mathcal{L}$

The terms of NRPL's appointment include the provision of an indemnity whereby CGML will indemnity and compensate NRPL in respect of preparing the Report against any and all losses, claims, damages and liabilities to which NRPL might become subject under any applicable law or otherwise arising from the preparation of the Report, and which arises wholly or in part from CGML or any of its officers providing NRPL with any false or misleading information, or the failure of CGML or its officers in providing material information.

NRPL has consented to the inclusion of the Report in its entirety in the Prospectus in the form and context in which it appears, and has not withdrawn that consent prior to the lodgement of the Prospectus with the Australian Investments and Securities Commission. NRPL has only been involved in the preparation of the attached Report, and has authorised and/or caused issue of only that portion of the Prospectus, other than references to and comments relating to the Report elsewhere in the Prospectus. Neither the whole nor any part of the Report, nor any reference thereto may be included in or with, or attached to, any documents, circular, resolution, letter or statement without the prior written consent of NRPL as to the form and context in which it is to appear.

Yours faithfully

NORTHWIND RESOURCES PTY LTD

R CARY BSc., FAUSIMM (CP), FAIG, MMICA, MAICD Director & Principal

5 INDEPENDENT GEOLOGIST'S REPORT

TABLE OF CONTENTS TO A CONTENT OF THE CONTENT OF THE CONTENTS OF THE CONTENTS OF THE CONTENT OF THE CONTENT OF
I EXECUTIVE SUMMARY
2 INTRODUCTION 3 HIGGINSVILLE
Ø. Previous Exploration and Production
Ceology and Mineralsation CASTERING Regional Geology ENEM MONTAN
$3.22 -$ Profectionalisty (1) 36-100 Exploration Policiposer
3.4 Exploration Targets
Proposed Exploration Program and Budget CHAUCE COMPANY
Previous Exploration and Production
- 50 Catalogy and Respublikation Chalice Mineralisation and a control control of the change of the change of the change of the change of the change of the change of the change of the change of the change of the change of the change of the change of the ch EMEM WWW.
Interpreted Mineralisation Controls Allerte mann Work Completed by Bullion (1999) 1999 ESTE MANAGERIA DE LA PRODUCTIVA DEL
4.3.1 Dewn pange Extensions of Challce Lode System 4.3.2 Regional Exploration
4.4 Exploration ratgle to the second state of the second state of the second state of the second state of the second state of the second state of the second state of the second state of the second state of the second state
Challce th/e Deposit at Depth ENERGIA DE MARINA DE LA PERSONA DEL PERSONA DEL PERSONA DEL PERSONA DEL PERSONA DEL PERSONA DEL PERSONA DEL 4.2.2 Regional Turgets
455 Projected Exploration Program and Sudget
SUPPLY AND FEARER a ya mwaka CARCHOON
Mineralisation and Competitor Activity $\mathcal{L}^{\text{max}}_{\text{max}}$ Elsiofcal Exploration - 5
exploration by Baltice External Constitution
5.4:1 Results of Exploration for Indee style Targets and Communications of the Communication of the Communication 5.4.2 Pibona Well Greenstone Bell Exploration Results mammaning man
5.4.3 PCE Exploration (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) 5.5 Exploration Targets Communication
5.4 Proposed Exploration Program and Budget
6 WILGA AND THE MAIN 6.1 Geology and Mineralsation
6.2 Previous Exploration (1999) 1999 Previous Exploration (1999) 1999 6.3 Exploration Targets, Work Proposals and Budget
7 GNAWEEDA WARD AND A CONSTRUCTION
Geology and Miceralisation and a construction of the construction of the construction of the construction of the construction of the construction of the construction of the construction of the construction of the construct 700 mmum 7.2 Previous Exploration and Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact Contact C
7.3 Mork Completed by Bullion and Community and Community and Community and Community and Community and T.4 Exploration Opportunities and Prospectivity Community Community Community Community Community Community Community
8 PRINCIPAL SOURCES OF INFORMATION CONTINUES CONTINUES.
GLOSSARY OF TECHNICAL TERMS AND ARREST MANAGEMENT AND A STATE OF THE STATE OF STATE OF STATE AND THE STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STATE OF STAT
e de la construcción de la construcción de la construcción de la construcción de la construcción de la construcción

EXECUTIVE SUMMARY $\mathbb{R}^2$

Chalice Gold Mines Limited ("CGML") is to acautre the interests held by Bullion Minerals Limited ("Bullion") in five gold projects located within Western Australia. The projects are Higginsville, located between Kalgoorlie and Norseman in the Eastern Goldfields, Chalice, to the west of Higginsville, Yandeearra, south of Port Hedland in the Pilbara region, Wilga, to the south of Laverton in the North Eastern Goldfields and Gnaweeda, which is located to the east of Meekatharra in the Murchison (Figure 1). Nickel rights within the majority of the Higginsville and Chalice tenements are excluded.

$(s3)$

5 INDEPENDENT GEOLOGIST'S REPORTIFIEDED

Substantial exploration has been conducted over most of the projects, which in all cases has demonstrated the presence of significant gold mineralisation, At Chalice, the now-depleted 720,000 ounce Chalice gold deposit is included within the tenements to be acquired by CGML, whilst at Higginsville, there is an endowment of over $1/2$ . million ounces in previously mined deposits and recently discovered resources within adjoining tenements, Recent discoveries immediately to the north of the Yandeearia tenements have combined resources of around 730,000 ounces in a previously under-explored region with a history of anly small scale mining and very limited production. Wilga is located to the south of an area which is host to a number of very large aold deposits hosting in aggregate over 13 million cunces of gold. Exploration to date has been tairly limited. At Gnaweeda, extensive gold and arrenic anomalism has been outlined beneath an extensive mante of transported cover in all cases, the historical exploration record has been critically reviewed, with the result that numerous targets have been identified, which will be the focus of COME's exploration programs. The contribution of the contribution

Higginsylle is located over a sequence of late Archaean matic and ultramatic volcariic rocks near the southern end of the highly mineralised Norseman-Wilung greenstone belt, Here, bedrock gold deposits are associated with splays from tegional fault structures, and are developed preferentially in the granophyric phases of differentialed dolerites or gabbros, or in high magnesium basells. Significant gold accumulations also occur at shallow depths In buried palaeochannels. CGML's principal larget is the Poseidon Footwall prospect where mineralisation akin to that in the recently discovered 485,000 conce Trident resource is to be explored for in a possible southward extension of the gabbroic sequence hosting frident. Historical drilling in the area was related principally to the evaluation of the Milchell palaeochannel system, was generally widespaced and shallow, and often did not test the underlying bedrock. Other targets include follow-up of bedrock gold mineralisation encountered in previous drilling at Mitchell Basement South and Mitchell Basement North, investigation of regional structures or tavourable geology identified beneath transported caver and follow-up of gold anomalies in salls and previous drilling.

Although the Challce resource is largely depleted, drilling beneath the old open pit has demonstrated that the altered amphibolite which hosted the orepody continues to depth and is mineralised. Diamond drilling is planned to test for repetitions of the Chalice deposit down plunge from existing drilling that may have intersected the margins of a more substantial system. A review of the geological and structural controls on the Chalice orebody has also generated several conceptual largets located at moderate depths. There is also scope to additio previously identified, but presently sub-economic tritheralsation beneath the open pit, which could provide a worthwhile addition to production in the event that a new underground mine were to be established. A review of the regional database has identified numerous targets, including drillholes with significant gold mineralised intercepts requiring follow-up, magnetic and/or structural largets beneath the Quaternary caver, areas with anomalous levels of gold in sell samples and areas underlain by greenstone lithologies that are completely unexplared. The manufacture in the manufacture

The Yandeearra project stradates the boundary between the Central Pilbard Tectonic Zone and the East Pilbard Granite-Greenstone Terrane, Within the Central Ribara Tectonic Zone, Mallina Formation furbiditic sediments host substantial gold mineralised resources in a number of deposits associated with the regionally significant Malling Shear Zone at Indee and Windina Well. The project tenements ile mostly within an Aboriainal reserve, where a moratorium on exploration that was in piace until 1998 effectively preciuded evaluation by modern techniques. until Builion's involvement from mid-2002. Exploration for Indee-style deposits since then has identified extensive greas with significant gold and arsenic anomalism, with follow-up RAB and directe drilling reporting widespread gold mineralisation, but no economic deposits. Numerous soil anomalies remain untested by drilling, and many mineralised drifthole intercepts require follow-up RC drifting. Exploration over the Pilbara Well greenstone belt has identified several large areas with anomalous gold in solls, two at which have been continned as mineralised by drilling, Wilthin the Mailina Basin, differentiated mafic-ultramalic complexes are targets for PGE and/or nickel Copper miheralisation, and strongly magnetic features in areally extensive, but only recently recognised high magnesium basalts may represent differentiates with patential to hast magmatic-associated rackel sulphide deposits.

The Wilaa project lies in a highly prospective area, but has been only cursority explored, and that largely over areas of outcropping basalt, peridotite/dunite and thin BIF. The majority of the tenement is covered by Quaternary colluvium and transported alluvium and has received little attention. Gold mineralisation has been identified in association with BIF from surface sampling, and in RAB drilling of soil geochemical anomalies. The project is grass roots in nature, but is located within a fertile, well endowed gold belt, and lies adjacent to a major mineralised structure in the Laverton Tectonic Zone. Work planned includes interpretation of multi-client geromagnetic data. extension of the existing surface geochemical coverage, shallow geochemical drilling in areas of transported cover and follow-up drilling of known gold mineralisation and geochemical anomalism, as well as newly generated targets.

Gnaweeda covers almost the entire 56 kilometre length of a small greenstone belt to the east of Meekatharra. Widespaced shallow drilling through transported cover has outlined extensive gold and arsenic anomalism over at least 15 kilometres of strike. Within this, closer spaced drilling across a 750 metre wide, 5 kilometre strike interval has intersected extensive, but generally low grade gold mineralisation in association with mafic rocks, with higher arade mineralisation associated with auartz veinina in altered felsic intrusives. The drilling has achieved only limited penetration into the Archaean basement. Aeromagnetic data indicates that the host structure to the system may extend over the full length of the greenstone belt. Drilling beneath outcropping copper-zinc-silver anomalous gossans in felsic volcanics in the late 1970s intersected massive sulphides, however, no testing for base metals was undertaken in conjunction with the later gold exploration. Further targets may well be developed for volcanic-hosted massive sulphide deposits beyond those already tested. Historical drilling suggests that a series of large magnetic anomalies may be sourced by either a dismembered layered matic-ultramatic intrusion or a dismembered lava lake. Both scenarios present opportunities for the discovery of accumulations of nickelcopper-PGE bearing sulphides.

CGML has prepared exploration programs and budgets for the Higginsville, Chalice, Yandeearra and Wilga projects for a period of two years. The Gnaweeda project is the subject of a joint venture with a third party which is sole funding exploration to earn its interest. The exploration proposals have been reviewed in the course of preparing this report, and found to be consistent with the mineralisation models and the exploration potential perceived by CGML. Programs and budgets have been prepared in anticipation of successfully raising the \$7.5 million maximum subscription, with reduced programs proposed in the event that only the minimum of \$6 million is achieved, in all cases, the nominated expenditures are adequate to meet the costs of the proposed exploration, and will satisfy the statutory expenditure obligations for the tenements. The expenditure proposed by CGML is summarised in the table below.

$\sim 10$

		Maximum Subscription \$7.5M		Minimum Subscription \$6.0M
	Year 1	Year 2	Total	Year 1	Year 2	Total
Exploration staff & field support	\$637,600	\$627,600	\$1,265,200	\$558,000	\$540.800	\$1,098,800
Drilling	\$1,696,000	\$1,420,000	\$3,116,000	\$1,188,000	\$788,500	\$1,976.500
Geochemistry & assaying	\$309,400	\$168,600	\$478,000	\$258,200	\$94,100	\$352.300
Geological studies	\$24,500	\$12.500	\$37,000	\$24,500	\$12,500	\$37,000
Geophysics	\$3,000		\$3,000	\$3,000		\$3,000
Gis	\$24,000	\$24,000	\$48,000	\$21,600	\$21,600	\$43.200
Tenements & associated costs	\$172,200	\$187,400	\$359,600	\$172,200	\$187,400	\$359,600
Total	\$2.866.700	\$2,440,100	\$5,306,800	225.500	\$1,644,900	\$3.870.400

Chalice Gold Mines Limited - Summary of Proposed Exploration Expenditure

5 INDEPENDENT GEOLOGIST'S REPORT

Numerous technical terms and abbreviations are used throughout this report. Reference should be made to the Glossary of Technical Terms at the rear for explanations and definitions.

2 INTRODUCTION AND ARRESTS

Chalice Gold Mines Limited was incorporated on 13 October 2005 as a 100% owned subsidiary of Bullion Minerals United. CGML is purchasing the interests that Bullion holds in live aold projects in Western Australia in return for shares in CCML. Buttion is to refain the interest if holds in a nickel exploration joint venture aver parts of two of the project areas. The projects to be acquired by CGML are the subject of this Independent Consulting Geologist's Report ("Report") to the directors of CGMI, IT THE TELL TELL TELL TELL TELL TELL TELL

Bullion has assembled comprehensive databases from the results of historical exploration conducted over the projects from open file data held by the Department of Industry and Resources in Its Western Australian Minerals Exploration ("WAMEX") database, internal company reports generated by previous holders of the tenements, and the results of its own exploration. Using this data, CGML has developed defailed programs and budgets for the further exploration and evaluation of the lenements, which have been comprehensively documented in a Business Plan. The Business Plan forms the basis for this Report, together with reviews of the respective databases and visits to each of the project areas by Northwind Resources Ply Ltd over the period 3 to 13 November 2005 in the company of Mr Bryan Alexander, the author of the Business Plan and a Non-Executive Director of CGML ......

The greas held under tenements, types and numbers of tenements and relevant agreements covering the tenements are discussed briefly in the appropriate sections of this Report by way of background. The legal status of the tenements, including Native Title issues and status, and any relevant agreements, is discussed in detail in the independent Seliditor's Report in Section 6 of this Prospectus.

3 HIGGINSVILLE COMPANY

The Higginsville adid project comprises 34 tenements with an agareagte area of about 150 square kilometres centred on the old Higginsville mining centre. Higginsville is located about 80 kilometres by toad south of the nickel mining centre of Kambalda, and doout 50 kilometres north of the gold mining centre of Norseman in the Higginsville Mining District of the Coolgardie Mineral Field (Figure 2). The major regional centre of Kalgoonie is located 50 kilometres to the north of Kambalda. Historical open pit and underground mining operations in the district have vielded around 720,000 aunces gold trom bedrack Archaean deposits and Tertiary paideochannel deposits. More recently, drilling by Avoca Resources Limited ("Avoca") at its fident project has identified Indicated and interred Mineral Resources containing 485,000 outsides gold. The community of the community of the community of the control of the control of the control of the control of the control of the control of the control of t

Figure 2 : Higginsville-Chalice regional geology & tenements

$\left( \widehat{37}\right)$

RANGE AN

5 INDEPENDENT GEOLOGIST'S REPORT

Bullion applied for extensive creas of open ground in the district in October 2003, most of which has since been granted. The tenements (Figure 3) include 5 exploration ficences ("E"), 28 prospecting ficences ("P") and 1 prospecting licence application. The prospecting licence application has entered the Native Title negotiation process. The annual statutory expenditure commitment for the granted tenements is \$263,000. Twenty one of the tenements are subject to the Cowan Nickel Joint Venture ("CNJV") wherein Equinox Resources Limited ("Equinox")
may earn up to a 60% interest in the nickel rights within the tenements concerned, with Bullion retaining right to gold and all other minerals. Equinox must meet the \$187.520 in statutory expenditure commitments for the CNJV tehements, although Bullion (and after its acculation of the project, CGML) must report any non-rickel exploration to Equinox to assist Equinox in meeting its abligations. Bullion's interest in the CNJV is not being Tonstered to CGXI Communication

The Hischsvile project was inspected on 11 November 2005. Access throughout the area is good, the project with the being traversed by the Goldfields-Esperance Highway and humerous exploration tracks

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3.1 PREVIOUS EXPLORATION AND PRODUCTION

The project covers parts of the historic Hiadinsville and Eundynie aold mining centres. Pre-1980s exploration was largely for Kambalda-style volcanic-associated nickel deposits, with only minor exploration for gold, and this mostly close to historical workings. In 1983, Samantha Gold NL ("Samantha") commenced exploration around the old workings, and by 1987, had acquired a significant land holding in the area. Extensive use was made of soll geochemistry to assess the prospectivity of the area, which resulted in the discovery of the gabbro-hosted Poseidon South gold deposit in 1988, the Challenger-Swordsman palaeochannel deposits in 1991, and later, the Mitchell and Gravevard-Aphrodite palaeochannel deposits, Exploration and mining continued following Samantha's takeover by Resolute Ltd ("Resolute") early in 1994, and by the cessation of mining early in 1999, the area had produced around 587,000 ounces of gold from open pits, including more than 300,000 ounces from the palaeochannels. A further 25,000 ounces was produced from underground mining. Mining of the Two Boys deposit by an unrelated joint venture produced a further 82,000 ounces of gold in 1997/98.

In July 1999, Resolute joint ventured the bulk of the area to Western Minina Corporation ("WMC") which continued both gold and nickel exploration until the project was sold to Gold Fields Ltd ("Gold Fields") as part of the sale by WMC of its St Ives gold assets. Exploration by both WMC and Gold Fields was focussed on discovering high grade aold deposits that could be treated through the St Ives mill, and resulted in the discovery of extensions to the lodes historically mined in the Poseidon South pit at the Trident deposit.

In October 2003, Resolute sold its Higginsville assets to Bullion, which included its Higginsville database and the nickel rights to a number of tenements held by Gold Fields, In April 2004. Gold Fields sold its Higginsville assets to Avoca, which, following a re-interpretation of the Gold Fields drilling results and further drilling, has estabilished resources containing 485,000 ounces gold at Trident. A series of more recent very high grade intersections is not included in the estimate. The Trident resource is located approximately 5 kilometres north, along strike of Bullion's Poseidon Footwall prospect.

3.2 GEOLOGY AND MINERALISATION

3.2.1 Regional Geology

The Higginsville project is located to the east of the Chalice project (Section 4 of this report), over a sequence of mafic and ultramafic volcanic rocks which lies to the east of the Pioneer and Widgiemooltha Domes near the southern end of the late-Archaean Norseman-Wiluna Greenstone Belt (Figure 2). The Norseman-Wiluna Greenstone Belt is the dominant feature of the Eastern Goldfields Province of the Archaean Yilgarn Craton or Block, and hosts, among many others, the Norseman, St Ives and Kalgoorlie gold deposits, the Kambalda sulphide nickel deposits and major nickel sulphide and gold deposits at Leinster, Mt Keith and Wiluna to the north. Higginsville is strategically located between world class gold deposits at St Ives to the north (15 million ounces) and Norseman to the south (7 million ounces).

The Yilgam Block is characterised by a series of narrow, steeply dipping, generally north - northwest elongate volcano-sedimentary sequences or areenstone belts which are for the most part separated by large masses of granitic rocks. Within the Eastern Goldfields Province, the greenstone stratigraphy comprises complex sequences of mafic and ultramafic lavas and intrusives, with intercalated felsic volcaniciastics, extrusives and intrusives, and volcano-sedimentary rocks, which have been intruded by oval-shaped granitoid batholiths. The greenstone belts show evidence of major dislocation by north-south trending crustal sutures which have had a profound effect on both their geometry and distribution. Many of these faults are traceable for hundreds of kilometres and effectively sub-divide the greenstone belts into a series of tectono-stratigraphic Domains or Terranes. These faults are believed. to have been the conduits for the mineralisina fluids which formed the maiority of the Archaean aold deposits. East-west trending, Proterozoic aged dolerite dykes occur as late intrusives throughout the region,

5 INDEPENDENT GEOLOGIST'S REPORTILLILLI

3.2.2 Project Geology

The Hiadinsville district is traversed by the north trending Zuleika Shear, a regionally extensive teature which h defines the boundary between the Coolgardie and Kambalda Domains within the Eastern Goldfields Province. The Zuleika Shear is host ta several large gold deposits to the north. At Higginsville, a pile of notth-nothwesterly trending. easterly dipping matic-ultramatic units is overlain by metasediments. The matic-ultramatic sequence comprises amphibolite facies high magnesian ("high-Mg") basall, komatilies and minor interflow clastic sedimentary rock which have been infruded by differentiated gabbros. The malic-ultramalic package shows repetition, probably across a series of east dipping thrust lawits and is interpreted to be a D. thrust stack separated from the overwing metasediments by the moderately east dipping Poseidon Thrust, and from the underlying metasediments by the Higginsville Thrust, These structures are jogs in, or splays off, the Zuleika Shear. The overlying metasediments comprise leisic volcaniciastic rocks and psammo-pelliic sequences, equivalent to the Black Flag Beds of the Kalgootle Bornain to the notth,

A complex readility is developed over the Archaean sequence, including Terflary palaeochannels, a Terriary laterite profile and playa lake sediments associated with Lake Cowan.

Two broad styles of gold mineralisation are present. Gold deposits in bedrock comprise either quartz vein systems associated with splays off the D_s thrusts, which have developed preferentially in the granophyric phases or differentiated dolerites or gabbros (e.g. Poseidon South and Trident), or lodes developed in the fault splays in high-Mg basalis (e.g. Two Boys). Around 300,000 ounces has also been produced from Tertiary palaeochannels including the Challenger Swardsman, Michell and Graveyard-Aphrodite systems,

3.3 FXPIORATION DATABASE COMMUNICATION

Bullion acquired Resolute's Hiladinsville database in October 2003. The data includes dialial drill hole and surfac geochemical data, digital geromagnetics, including both located and aridded data and images, and som hardcopy data for individual projects. Other digital information has been sourced from the Geological Survey of Western Australia's Eastern Goldfields Dafaset. A solid geology interpretation at 1:25,000 scale covering most of the Cowan 1:100,000 map sheet has been compiled based on the detailed aeromagnetics, published geology end diff fole likelear information. The

The aeochemical database contains 60,653 records, of which 6,299 accur within the Higginsville tenements. The bulk of the geochemical data was generated from surface samples, which were probably -60 mesh soft samples analysed for gold only. Significant areas of the tenements have not been sampled, or are covered in regolith where traditional soil sampling may not have been effective. The contract of the contract of the contract of the

The database also contains 15.666 drillhole collar records, of which 2.089 occur within the tenements. Although there is a significant number of drilholes, the buik of the drilling was reiated to the Mitchell palaeochannel system. and did not always test the bedrack below. Similarly, in areas of Lake Cowan, significant lake caver is developed, and bedrock drill coverage is limited, with a control and a control of the control and control and control and control and

3.4 EXPLORATION TARGETS

The historical exploration data, including surface and drillhole aeochemistry, aeromaanetic data and the solid aeoloay interpretation has been reviewed by CGML. Drillhole cross sections have been aenerated and interpreted where there is sufficient lithological information, and maximum downhole gold values have been extracted and plotted. The review generated a total of 24 targets at differing stages of advance ranging from grass-roots, to targets defined by significant, that is, potentially economic intersections in drillholes. The main targets identified by the study may be generally categorised as follows:

• Outcropping geological targets: Areas of outcrop or sub-crop on significant regional structures and/or prospective geological units where there has been no previous exploration for gold. These targets will be assessed by surface geochemical techniques.
• . Butied geological targets: Areas with significant regional structures and/or prospective geological units under cover where conventional soil sampling has not identified any zones of interest. In instances where it is thought that the regolith may be masking bedrock anomalism, testing will be by well targeted RC drilling traverses.
• . Soil anomalies: Areas of outcrop or sub-crop with low level gold-in-soil anomalism. These zones will be tested by analed RAB or aircore drillina.
• * Supergene anomalies: Areas of supergene gold anomalism, or supergene gold mineralised intercepts reported from drilling which have had fimited effective follow-up. These targets will be tested by angled RAB or aircore drilling.
• . Bedrock gold systems: Areas of bedrock gold anomalism reported from drilling which have not been effectively followed-up. These zones will be tested by RC drilling.

The more important targets identified by the review are:

. Poseidon Footwall: Potential has been identified for Trident-style mineralisation hosted in gabbroic rocks in the footwall of the Poseidon Thrust below Tertiary cover. The target area includes 2 kilometres of greenstone strike bounded by the Poseidon Thrust and associated stacked D_a splay structures, which is an extension of the Trident-Poseidon South-Two Boys-Fairway stratiaraphic package, Minor low-level gold-in-soil anomalism has been identified, with RAB or aircore drilling over the target area only shallow, and broadly spaced (mostly 400 metre by 100 metre).

Figure 4 is a schematic showing the interpreted position of the Poseidon Thrust on section 6482400 mN where RAB and aircore drilling intersected zones of strong quartz veining in the interpreted position of the Poseidon Thrust. An aircore hole sited 80 metres to the west and in the footwall of the interpreted Poseidon Thrust position reported 2 metres at 0.82 g/t Au at hole bottom which may represent supergene mineralisation derived from adjacent mineralised structures. Several 200 to 250 metre deep RC stratigraphic traverses are proposed to test for splay structures in the footwall of the Poseidon Thrust, and differentiated dolerite-gabbro intrusives which could be the stratigraphic equivalent of the Trident-Poseidon South host. A number of conceptual targets are depicted in Figure 5.

5 INDEPENDENT GEOLOGIST'S REPORT

Rigure 4 : Higginsville Project - Poseidon Footwall Target

^.<br>Figure 5 : Poseidon Factwall farget, tection 6462560mN, showing schematically Higginsvite style deposits projected from along strike

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. Mitchell Basement South: The prospect covers an area approximately 500 metres saugre located directly to the west of the Mitchell palaeochannel open pit, and to the east of the interpreted position of the Poseidon Thrust. Here, aircore and RC drilling has intersected numerous zones of gold mineralisation in weathered basaltic bedrock beneath transported cover on the western flanks of the palaeochannel (Figure 6). Significant intersections include 4 metres at 93 g/t Au from 31 metres, including 1 metre at 367 g/t Au from 32 metres in MAC1835, 4 metres at 7.25 a/t Au in MAC1844 from 32 metres, 6 metres at 7.98 a/t Au in MRC0032 from 40 metres and I metre at 121 g/t Au in MAC1807 from 70 metres (end of hole). The mineralisation may be associated with a flat lying splay off an interpreted structure on the basalt-ultramatic contact located immediately to the east. The structure can be traced north and south of section and remains untested by drilling. It is also possible that the drill section is oriented at a low angle to the strike of the mineralised structure. Follow-up RC drilling is proposed.

Figure 6 : Higginsville Project - Mitchell Basement South target cross-section 6482560mN

. Mitchell Basement North: This target is located approximately 200 metres north of the Mitchell Basement South prospect. Aircore drilling has intersected significant gold mineralisation in weathered basalt beneath approximately 15 metres of transported cover on the western flank of the Mitchell palaeochannel. The best intersections occur on drill section 6483050 mN (Figure 7), including 3 metres at 10.68 g/t Au from 58 metres in MAC1812 and 3 metres at 1.55 g/t Au from 67 metres in MAC1813. The orientation of the mineralised structure is not apparent, and follow-up RC drilling is proposed.

$\left( 43\right)$

5 INDEPENDENT GEOLOGIST'S REPORTILLILLILLI

Figure 7 Higginsville Project - Mitchell Basement North target cross-section 6483050mN [11] [11] [11] [11] [11] [11] [11] [11

• . Mitchell North Endi An east northeast trending feature coincident with the northern limits of economic agia mineralisation in the Mitchell palaeochannel is evident in imaged aeromagnetic data. The feature may represent a mineralised structure which provided the source for the gold in the palaeochannel, or it may represent an intrusive dyke which formed a local palaechigh which varied the local bedrock topography and water table resulting in the precipitation and accumulation of the paideochannel gold mineralisation directly to the south. A program of aircore and/or RC drilling is proposed.
• . MRC001: The target is a zone of begrook gold mineralisation encountered in aircare holes drilled through the Milchell polaecarcinage. Anomalous gold, including 6 metres at 0.62 g/l Au from 36 metres in MAC0107, 3 metres at 2.32 a/t Au from 36 metres in MAC0981 and 2 metres at 1.60 a/t Au from 38 metres in MAC0362 accurs over several hundred metres of strike in association with weathered, locally quartz veined basalt, No deep drill testing has been undertaken, and RC drilling is proposed. The manufacturer of
• Nawock: RAB and RC anting has intersected high aracle abid mineralisation in association with awartz veined ultramatics and sediments, including 5 metres at 11,33 a/1 Au from 30 metres in LCA0182, 3 metres at 1,65 a/1 Au from 29 metres in LDC002 and 4 metres at 33 a/1 Au from 103 metres in LCC006. The intercepts accur mostly on a single east-west drill section, which may suggest that the drilling is at a low angle to the strike of the mineralised structures. The prospect is coincident with a prominent palaeohigh that may reflect a zone of slicification associated with the gold mineralisation. RC drill lesting is planned to define the trend of the mineralisation, with follow up diamond drilling proposed to identify the lithological structural controls on mineralisation.

3.5 PROPOSED EXPLORATION PROGRAM AND BUDGET

The work program proposed for Higginsville is:

• · drill testing of high priority targets, including deep stratigraphic RC drilling of the Poseidon Footwall target and RC drilling at the Mitchell Basement North, Mitchell Basement South and Nawock prospects.
• extensional and infill aircore drilling of moderate priority targets.
• field checking and surface geochemical sampling of low priority target areas. RC and diamond drilling to follow-up mineralisation defined by phase one programs.

Expenditure of \$1,125,300 is proposed for Year 1, and \$1,033,300 in Year 2 if the full \$7.5 million is raised. Expenditure in Year 1 will be reduced to \$937,700, and in Year 2 to \$653,000 if only the \$6 million minimum subscription is raised. The reductions will be effected by scaling back the work programs for testing lower priority targets and follow-up work in Year 2, whilst testing of high priority targets in Year 1 will remain largely unchanged. The proposed exploration expenditure is summarised in Table 1 and the principal exploration targets are illustrated in Figures 3 to 7.

Table 1: Higginsville Project Program and Budget

		Maximum Subscription \$7.5M			Minimum Subscription \$6.0M
	Year 1	Year 2	Total	Year I	Year 2	Total
Exploration staff & field support	\$234.800	\$234,800	\$469,600	\$213,200	\$206,000	\$419,200
Drilling	\$724,000	\$684,000	\$1,408,000	\$574,000	\$364,000	\$938,000
Geochemistry & assaying	\$119,500	\$67,500	\$187,000	\$103,500	\$36,000	\$139,500
Gis	\$8,000	\$8,000	\$16,000	\$8,000	\$8,000	\$16,000
Tenements & associated costs	\$39,000	\$39,000	\$78,000	\$39,000	\$39,000	\$78,000
Total	\$1.125.300	SI 033.300	\$2,158,600	\$937.700	\$653.000	\$1,590.700

5 INDEPENDENT GEOLOGIST'S REPORT

4 CHAINE

The Chalice project is centred on the now depleted Chalice gold mine which produced over 3 million tonnes of ore between 1995 and 1999 from a large open bit, plus minor production from underground. The Chalice mine is lacated about 90 kliometres south of Kambalda, and about 60 kilometres north of Norseman, in the Higginsville Mining District of the Coolagrale Mineral Field (Figure 2). Access is via the sealed Goldfields Esperance Highway thence by the old Chalice mine access road and local tracks. The old Higginsville mining centre, close to CGMUs Higginsville project, lies about 22 kilometres to the north east. The manufacturer

Button acquired the Chalice mining lease from Resolute in October 2003, and later applied for turther tenements in its own name. The tenements now held cover an area of 172.5 square kilometres, and comprise 3 exploration licences, 44 prospecting licences and a single mining lease ("M") which covers the old Challee mine, included in this area is a prospecting licence over which the CNJV holds an option. The granted tenements have an aggregate annual statutory expenditure commitment \$481.860, however, 33 of the tenements are subject to the CNJV (see opening comments Section 3) under which Equinox must meet \$370,220 in statutory expenditure committent for hose tenements.

Exploration by Resolute and Butlion has identified a series of aeochemical anomalies and mineralised intercepts In driffholes which require toflow-up. CGML has reviewed the extensive database and has developed numerous exploration targets. The Chalice project was visited on 11 November 2005. The manufacturer and the

411 PREVIOUS EXPLORATION AND PRODUCTION

Prior to the discovery of the Chalice deposit by Samantha in September 1993, there had been no history of mining in the area, despite the region being well endowed with gold at Naseman, Higginsville and \$1 Ives, and nickel at Widgiemootha and Kambalda. The first reported exploration in the area was in the period 1968 to 1971 when .
Newmont Mining Corporation conducted a search for nickel sulphide mineralisation in ultramalic rocks around the Pioneer Dome. The work included maanetic surveying, geological mapping, soll geochemistry and surface prospecting for gossans, in the Chalice area, activities were restricted to outcrops within the mostly residual soil covered ultramalic stratigraphy. Despite drilling intersecting sheared sulphidic and quartz veined lithologies, no gold asays were completed.

In the early 1970s, fiatconbridge Nickel Inc. explored for nickel, without success, and in the early 1980s, Lachlan Resources Nil held tenements in the area. In 1987, Billion Australia Ltd ("Billion") conducted a small BLEG stream sediment sampling program over ground which includes the Chalice deposit. The highest gold value reported was 2.5 ppb from a stream located doout 1 kilometre south east of Chalice. Follow-up BLEG sampling produced a peak sample value of 7 ppb gold. however, no further work was completed to identify the source of the anomaly.

infill soil sampling of the Billiton anomalies in 1993 by the Widgiernoothia Joint Venture, comprising Samantha Great Southern Mines NL and Newmex Exploration Limited, outlined a gold-in-soil anomaly with a peak yalve of 360 ppb aold. Follow-up RC drilling returned a number of strong intercepts, including 38 metres at 10.86 g/t Au from 4 metres in WMC 9 and 30 metres at 24.8 g/f Au from 6 metres in WMC13. The discovery was announced fro September 1993 and by January 1994, an inferred Resource of 3 million tonnes at a grade of 6 1 g/1 Au containing 596,000 ounces gold had been outlined. In January 1995, a Proved and Probable Ore Reserve of 2.8 million tonnes at a grade of 5.4 g/t Au was announced. Mining commenced in May 1995, and by the cessation of operations in January 1999, 3.1 million forms of ore grading 5.5 (f/f Au confairing 556,000 ounces gold had been produced included in this is 218,000 tonnes at a grade of 5.0 g/t Au which was mined by underground methods

Exploration by Resolute showed that mineralisation continues beneath the open pit, and down plunge in the socalled "Deeps" shoots. Measured Resources of 300,000 tonnes at a grade of 3.3 g/t Au and Indicated Resources of 70,000 tonnes at the same grade containing a combined 39,200 ounces gold were estimated beneath the final pit fimits to a depth of around 200 metres, whilst inferred Resources of 1.2 million tonnes at a grade of 3.2 g/t Au containing 123,500 ounces gold were outlined in the Deeps 1 and Deeps 3 positions to a depth of about 500 metres (Flaure 8). An underground mining pre-feasibility study in 1998 identified potentially mineable resources of 457,000 tonnes at a grade of 5.29 g/t Au above a cut-off grade of 3.0 g/t Au containing 77,500 ounces gold. The study assumed mechanised mining of the ore and treating it at the since removed Chalice mill, but concluded that either or both of higher grades or a much larger tonnage would be necessary for profitable development. Although the current gold price is much higher than that assumed for the study (A\$475/ounce), the capital reautred to establish underground access and to re-establish a mill on site, or the additional costs which would be incurred for trucking to a third party mill for toll treatment would probably still render development of the known mineralisation uneconomic. More recent editions of the JORC Code specifically state that portions of a deposit that do not have reasonable prospects for eventual economic extraction must not be included in Mineral Resources, which, in the absence of the previous infrastructure, and until new, economically viable resources are discovered in close proximity, probably makes the classification of the Resolute estimated resources as such today, a moot point.

Figure 8 : Chalice Project - longitudinal projected location showing previous mining, mineralisation outlines and drill targets

Resolute conducted an extensive regional exploration program concurrent with the mining operations and reported significant gold intersections from drilling at the Cavalier and Cavalier South prospects, about 4.5 kilometres south of Chalice, at Frank's Find, and at Vendetta, about 25 kilometres north of Chalice (Figure 9). Resolute did not conduct any further exploration along the Chalice trend after 1998

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5 INDEPENDENT GEOLOGIST'S REPORT

Roure's Challee Project - geology and regional largets New York RC disting at Challce Project

1999 - Jan Alexandria de Alexandria de la contrada de la contrada de la contrada de la contrada de la contrad

4.7 GEOLOGY AND MINERALISATION

The Chalice tenements are located over a sequence of matic and ultramatic volcanic rocks which lie between the Boorabbin Batholith and the Widgiemooltha and Pioneer Domes, near the southern end of the Norseman-Wiluna Greenstone Belt. At Chalice, the greenstone sequence is metamorphosed to amphibolite facies, and has been intruded by a series of granitic sills and dykes thought to be related to the granites of the Pioneer Dome to the east, and the Boorabbin Batholith to the west. The stratigraphy strikes broadly north-northwest to north, and comprises up to four ultramatic sequences separated by amphibolite after tholeitic basalt. Beneath the maticultramatic sequence are felsic volcaniclastic sediments and the intrusive aranites of the Pioneer Dome, whilst the top of the sequence has been conformably intruded by the Boorabbin Batholith.

Within the Chalice open pit, the sequence comprises the Western Granite ("WG") which is part of the Boorabbin Batholith, the Hanging Wall Ultramafic ("HUM"), the Host Amphibolite ("AH") which is the principal host to the gold mineralisation, and the Footwall Ultramafic ("FUM"), Within the Host Amphibolite, there are discontinuous remnants of a highly altered komatiite which are thought to represent a once continuous ultramatic unit termed the Middle Ultramafic ("MUM"). Within this sequence, several types of granitoid intrusive have been recognised, including the Western Granite, Dyke 2, which is a steeply west dipping feature with lesser sub-parallel structures, and the Basal Pegmatite. Dyke 2 was, at least, spatially related to the high grade core of the deposit, whilst the Basal Pegmatite is generally flat lying, and separates the Deeps 1 and Deeps 3 mineralisation from the Main Lode mineralisation mined in the open pit (Figure 8). Age dating suggests that the mineralisation is broadly contemporaneous with the Western Granite and Boorabbin Batholith, but marginally older than the apparent emplacement of Dykes 1 and 2 and the Basal Pegmatite.

The mafic-ultramafic sequence has been deformed by a series of early, broadly layer-parallel shear zones developed on the margins of individual units, or entirely within the Host Amphibolite. The dominant fabric is S,, which is parallel to layering, and with which the bulk of the mineralised veining and mineralisation within the Chalice deposit was conformable. A number of late faults have been recognised, including a strike parallel, subvertical fault with a west down movement that appears to displace the extensions to the Deeps 3 resource.

4.2.1 CHALICE MINERALISATION

The bulk of the production from Chatice was hosted by calc-silicate altered amphibolite located between the HUM and MUM. Gold mineralisation was associated with 1 to 30 centimetre thick quartz-diopside-albite-titanite veining with minor to trace pyrrhotite, pyrite, magnetite, scheelite, chalcopyrite, calcite and apatite. The veins were emplaced parallel to the S, foliation and were locally folded and boudinaged. Total sulphide was generally less than 5%, and the veins were not always gold mineralised. Pervasive quartz-feldspar-diopside-titanite (± minor pyrrhotite, and trace garnet, hornblende, biotite, calcite and apatite) wall rock alteration associated with the veining appears to overprint the S, fabric. As with the veining, gold mineralisation did not always occur where there was alteration.

Four broadly layer-parallel mineralised positions have been identified, viz:

• Main Lode, which yielded the bulk of the tonnage mined from the open pit. Main Lode occurs in the Host Amphibolite above the MUM and is continuous with the southern, up dip extensions of the Deeps mineralisation (Figure 8). The cross-cutting Basal Pegmatite separates the Main Lode below the pit from the Deeps mineralisation, which has been displaced southward below the pegmatite. Down plunge, the extensions to the Deeps 3 mineralisation have again been offset to the south by a sub-horizontal granite dyke, and fan interpreted strike parallel sub-vertical fault with west block down movement. The Main Lode horizon is interred to extend southward from Chalice and ultimately through the Cavalier and Cavalier South prospects 4 kilometres distant. To the north of the Deeps extensions, it appears likely that the Main Lode horizon is significanity displaced by the Western Granite. The down dip margin of the Main Lode appear to either abruptly decrease in grade in otherwise altered amphibolite, or locally, especially in the Deeps, truncate against the HUM.

5 INDEPENDENT GEOLOGIST'S REPORT

• MUM Lode, comprising mineralisation located in or near MUM lithological units. High grade ore was mined from underground from MBM Lodes on the north end of the pit, and from shallow positions at the south end of the pli. The highly variable position of the MUM within the stratigraphy and its discontinuous nature are a result of folding and shearing, with MBM Lode mineralisation only sporadically developed along strike. The manufacture
• · Footwall lode, comprising a series of continuous, but low grade intersections located at or near the contact between the Host Amphibolite and the Footwall Ultramafic, especially in the south end of the pit. Within the pit, and in the Deeps areas, the horizon remains largely untested by drilling. The manuscript contains a manuscript
• Other lades, comprising a series of discrete mineralised horizons developed parallel to Main Lode in an philbothe particularly in the Deeps 3 position. These are generally developed below the Main Lode, above the MUM, and I often remain untested by drilling in the Deeps. The manufacturer and the manufacturer and the manufacturer and

Several other mineralisation styles are developed away from the Main Lode environment, including some palaeochannel material near the western side of the Chalice mining tease and mineralisation in amphibolite below the FUM to the east of the pit. The contract of the contract of the contract of the contract of the contract of the pit.

4.2.2 Interpreted Mineralisation Controls (1999) 1999 (1999) 1999 (1999)

CGML has concluded that the mineralisation at Chalice is hosted in D, shear zones in a number of stratigraphic positions, and that the mineralisation developed synchronously with granite emplacement and peak metamorphic conditions. The bulk of the mineralisation mined to date has been sourced from the Main Lade structure. The following are features of the main body of mineralisation mined from the open pit:

• . The deposit is located where the overall north north westerly striking stratigraphy swings to a north-south orientation. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the c
• . The mineralisation is developed in an apparent thickening of the Host Amphiboite between the FURA cinquility. The manufacturer of the
• . The greatest accumulation of gold is associated with the steeply west dipping Dyke 2, which has been described as a l'istrairea granite" located within a shear zone. The community of the company
• · Mineralisation is associated with fold structures, either as intrololial features in high strain zones, or as gross teatures such as the MUM Lodes in the south end of the pit. The mineralisation in the Deeps occupies an intratolial position. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the cont
• High grade shoots plunge shallowly to the north-northwest (parallel to F2 fold axes, www.www.www.www.www.www.web.com
• No zoning has been recognised in the calc-silicate alteration system to date. The manner of the

4.3 WORK COMPLETED BY BULLION THE THEFT THE TELL TELL THE TELL THEFT

4.8.1 Down-plunge Extensions of Chalice Lode System (1111) 1111

a bandar a shekarar ta 1990 a ta 1990

Following a review and re-litterpretation of the results of previous ariling below the Chalice open pit, Bullian completed three pre-collated diamond drill holes to test the Deeps mineralisation in the March quarter of 2005. The holes targeted mineralisation in either the Main Lode or the MUM Lode positions, with the deeper holes targeting mineralisation on the other side of the interpreted strike parallel fault and beneath the flat lying granite dyke which separates the Deeps 3 position from Deeps 4 (figure 8). Four RC pre-collars totalling 820 metres, and three diamond liais for it, 146 metres of coring were completed. Hole collar positions were established by survey, and all heles were downhole surveyed by both magnetic and gyroscopic methods. Directional drilling techniques were employed to ensure the targets were intersected where planned. The holes were routinely logged and sample and the samples assayed for gold! Samples reporting significant gold values were re-assayed using screen fire (1111) (111) discly fechniques. The manufacturer and the contract of

The first hole was planned to probe a large untested position between the Basal Pegmatite and the Deeps 3 resource. The first pre-collar BCRC001 was abandoned due to excessive deviation. BCRD002 was directed toward the same target at a vertical depth of 200 to 250 metres, and reported intersections of 2.7 metres at 4.52 g/t Au from the Main Lode position and 4.0 metres at 5.73 a/t Au from the MUM Lode (Flaure 8). The Main Lode Intersection is similar in tenor to nearby driliholes beneath the Basal Pegmatite. Bullion noted that there is a significant area of untested MUM Lode between the BCRD002 intersection and the underground workings which exploited this structure immediately beneath the open pit.

A 298 metre deep pre-collar was drilled for BCRC003 with the intention of testing a similar target to BCRD002, and although penetrating to within 30 metres of the Main Lode position, was not core drilled to the planned target.

BCRD004 intersected the Main Lode sequence at a vertical depth of about 550 metres and was extended into the footwall to fest other potential lode positions, including the Footwall Lode associated with the FUM, BCRD004A was wedged off BCRD004 to test the Main Lode position at the same depth as BCRD004, about 40 metres to the north. Best intercepts in BCRD004 were 17.4 metres at 1.67 g/t Au, including 2.9 metres at 5.1 g/t Au in Main Lode, and 14.5 metres at 1.33 g/t Au in MUM Lode, BCRD004A intersected 10.45 metres at 2.59 g/t Au, including 1.55 metres at 6.74 a/t Au in Main Lode, In both holes, the aold mineralisation occurs in association with intense auartz-feldspardiopside-pyrrhotite atteration in the interpreted offset position of Main Lode beneath the granite dyke.

Although clearly not economic, the intersections confirm the continuation of the Chalice mineralised system beneath the granite dyke, with potential remaining to locate a Chalice-like deposit either along strike or down plunge of the intersections in BCRD004/4A.

$4.3.2$ REGIONAL EXPLORATION

The Resolute surface aeochemistry and drilling database has been used to develop layer files for use in a GIS package. Maximum down-hole gold values have been extracted from the drilling database and plotted. The drilling database has also been used to generate a complete set of drilling cross sections throughout the project area which have been interpreted with respect to geology, regolith, alteration, structure and gold mineralisation. In addition to the Cavalier, Cavalier South, Vendetta and Frank's Find prospects, this work has identified a number of individual holes and clusters of holes which are clearly anomalous and warrant follow-up drilling.

The surface geochemistry database comprises almost 21,000 records for gold only. Gold-in-soll values have been plotted and interrogated using GIS software and referenced to mapped geology and aerial photography. This work identified several subdued gold-in-soil anomalies (>10 ppb) in areas of thin transported soil cover that warrant follow-up. Parts of the project area, particularly to the south of the Chalice mine, are blanketed by a variable thickness of Tertlary transported cover. Soll geochemical programs conducted over these areas are considered to have been largely ineffectual and shallow drilling will be required to obtain meaningful samples. Any gold-in-soil values in these areas below the 10 ppb threshold may be significant.

A detailed aeromagnetic and structural interpretation has been prepared using the Resolute detailed aeromagnetic data, bottom-of-hole geological and geochemical data from the drilling database and any available outcrop mapping. The interpretation has been used as the basis for the identification and development of structural and/or geological targets.

5 INDEPENDENT GEOLOGIST'S REPORT

4.4 EXPLORATION TARGETS AND THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF THE STATE OF

4.4.1 Chalice-style Deposits at Depth All All All All All All All All All Al Several targets with optential for the discovery of Chalice-sivie mineralisation have been identified below the Chalice open pit; and the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the cont

• . Drilling of the Deeps 4 target beneath a fiat lying granite dyke early in 2005 intersected only madest gold. grades, albeit over substantial widths, with higher grades reported over narrower internal intervals. The drilling confirmed the continuation of the Chalice mineralised system at depth, and potential exists along strike and down plunge to discover higher grade mineralisation in a Chalice-like geological setting. Bullion's attiing may have intersected the margins of a more substantial system, and an extended drilling program is proposed to continue testing of the Main Lode position. The continues are also assets a continue to the
• A conceptual target designated MinSys 4 has been identified at depth to the touth of the existing open pit (Flaure 8). Here, the regional strike of the sequence swings to a northerly trend. the amphibolite sequence appears to have thickened and broad zones of calc-sliicate alteration and gold anomalism have been. outlined by RC and diamond drilling including 12 metres at 2.57 g/t Au from 114 metres and 4 metres at 4.24 g/t from 172 metres. These features are similar to those observed for the Chalice deposit, and may represent the up-plunge expression of a Challce-Style deposit which may be located at moderate depth.
• . A further conceptual target has been developed wherein a substantial lode may be developed in a large scale liexure in the Footwall Lode system, analogous to a similar liexure in the MUM Lode in the southern end of the open pit. The down-plunge extensions of this flexure should intersect the down dip extension of the Dyke 2 granile which was associated with the best mineralisation in the Chalice orebody. CGML believes the combination of these factors suggests potential for the development of a Chalice-like deposit at depth.
• . Potential has also been identified to incrementally add to the resources defined by Resolute in Main Lode resources at Deeps 3, and to define new resources in Deeps 2 and in MBM Lode targets at depth. The target sizes, of themselves, are unlikely to be economic, however, successful exploration would have the potential to add to the resources available for mining from a significant new discovery.

442 Regional Taigets

Targets have been sub-divided into first pass targets, soil geochemical anomalies requiring follow-up, magnetic and/or structural targets and existing drillhole geochemical anomalies, in all, 21 targets have been identified, four of which CGML considers high priority, with eleven warranting first pass or further RAB or aircore drilling. The targets are shown in Figure 9 and are discussed below. The contract the control of

Drilhole Geochemical Anomalies

1994 - Paul III, martin 1995 - Ann ann an Brentann ann an Dùbhaich ann an Dùbhaich ann an Dùbhaich ann an Dùb

The drilling database has been used to generate hard copy cross sections through greas with anomalous drillhole results away from the Chalice mining tease. These were used in conjunction with aerial photography, interpreted geology and deromagnetic data to generate drilling targets. The drillhole geochernical targets include Cavalier, Cavallet South, D9, Vendetta and Frank's Find, as well as weak gold mineralisation (to 0.25 g/t Au over 1 metre) present in ciriling of three other locations. The control of the control of

• At Cavalier, several significant gold intersections, including 2 metres at 36.7 g/t Au from 134 metres in WMC0363, 4 metres at 2.03 g/t Au from 50 metres in WMC0994. Timetre at 7.80 g/t Au from 73 metres in WMC0395 and 4 metres at 3.89 g/t Au from 47 metres in WMA0922, have been reported from diracre, RC and diamond drilling adjacent to, and on a granite-greenstone contact. Anomalous gold values are present over 800 metres of strike, with some of the higher grade intercepts coincident with the granite greenstone contact. Although the anomaly has been tested at depth on most sections, and the higher grade zones appear to be limited. in their strike extent, drill core is to be re-logged in an attempt to determine the structural controis on, and style af gold mineralisation, and a state of the state of the state of the state of the state of the state of

• . Aircore, RC and diamond drilling at Cavalier South has intersected substantial widths of low grade gold mineralisation over 1 kilometre of strike, predominantly within granite, and close to the granite-greenstone contact, intersections include 12 metres at 0.57 g/t Au from 58 metres to end-of-hole in WMA0834 and 4 metres at 9.59 a/t Au from 40 metres in WMC0486. Diamond drill testing returned broad intersections of low grade mineralisation including 13 metres at 0.25 g/t Au from 148 metres in WMD0205 and 21 metres at 0.20 g/t Au from 128 metres in WMD0206. The mineralised zone remains open to the south, within the granite, and there is scope for additional aircore drilling. Following re-loaging of drill core to determine the structural controls on mineralisation, a deep hole may be drilled to test for cross-cutting structures.
• . Reasonably intensive RAB and RC drilling at the D9 anomaly includes a RAB drill intercept of 16 metres at 8.39 g/t Au from surface in WMR0643. A single, immediately adjacent follow-up RC hole reported 6 metres at only 0.28 g/t Au from surface, suggesting that the drilling may be oriented at a low angle to the mineralised structure. There is scope for some follow-up drilling oriented at a high angle to the existing drill sections.
• At Vendetta, gold mineralisation (up to 4 metres at 5.8 g/t Au and 1 g/t Au over 10 metres) has been intersected by RAB and RC drilling over a 500 metre strike extent of altered mafic-ultramatic rocks. The main mineralised zone is open to the north west, and the intersection of the mineralised structure with an interpreted aranite to the north west will be the target of further exploration.
• The Frank's Find prospect covers an area of mafic and ultramatic sub-crop where RAB drilling has reported intersections up to 8 metres at 1.6 g/f Au within a bedrock geochemical anomaly extending over 1.5 kilometres of strike. The mineralisation remains open to the west on several sections in the central part of the prospect area.

Magnetic and/or Structural Targets

These were generated by processing of geromagnetic data in conjunction with geological and structural interpretations. The targets comprise untested features with relatively high magnetic relief and/or areas with apparent demagnetisation which may be associated with magnetite destructive alteration along interpreted structures. Of the six targets identified by the analysis, two have been designated as high priority. One of the targets occurs in an area of high magnetic susceptibility which may indicate an ultramatic unit or magnetite altered matic unit. The feature coincides with a flexure in an interpreted structural feature in an area of transported cover. The target is regarded as a Chalice look-alike.

Soil Geochemical Anomalies

Six gold-in-soll geochemical anomalies have been identified which are either untested, or have not been adequately tested. These include a +10 ppb layer-parallel anomaly traceable over 1 kilometre of strike within an area of matic-ultramatic outcrop and sub-crop, with a peak greater than 50 ppb gold. A second +10 ppb anomaly extending over a similar strike interval has been identified.

FIRST PASS TARGETS

A first pass target has been identified at Vendetta North West, where a 5.5 kilometre extension of the greenstone sequence at Vendetta lies under recent cover, with no record of any surface geochemical sampling or drilling.

5 INDEPENDENT GEOLOGIST'S REPORT IN THE THEFT

1989 - Johann Stoff, fransk politik (f. 1989) 4.5 PROPOSED EXPLORATION PROGRAM AND BUDGET THE THEFT THE TELL THE CGML has developed a tarward exploration program for the Chalice project as follows:

• . Phase I diamond drilling comprising two step-out holes north of SCRD004A to test tor extensions and a possible high grade care to the Deeps 4 larget, and drilling to test the concept of a Chalice analogue at the MinSys 4 prospect and the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the c
• Phase one aircore and RC drilling of regional geochemical and magnetic and/or situatural targets.
• · Relationecking, regailth and geological mapping and surface geochemical sampling over first pass targets if the fill the regolith is amenable. Auger or vacuum drilling, or partial leach sampling will be undertaken in areas where the transported cover is interpreted to be thin. The manufacturer and containing the transported cover is interested
• · Given encouragement in the initial exploration, follow-up diamond drilling will be completed at Chalice Deeps, MinSys 4 and any encouraging regional exploration targets. The community of the community of the community of

CGML has budgeted for expenditure of \$1,109.650 in Year 1 and \$767,250 in Year 2 should \$7.5 million be raised. If only the minimum subscription is raised, the expenditure in Year 1 will be reduced to \$738,150, and in Year 2. to \$596,250. As with Higginsville, expenditure to test high priority targets will be largely unchanged, however, the amount of drilling proposed for testing of lower priorily targets and follow-up drilling has been reduced. The proposed exploration expenditure is summarised in Table 2. The contract of the contract of the contract of the

Table 2: Chalide Project Program and Budget (Change Community) and Changes (Changes Changes Project Program and

			Maximum Subscription SZ 5M Minimum Subscription S6.0M
			Year 1 Year 2, Jolal Year 1 Year 2 Total 1
Exploration staff & field \$288,800 \$288,800 \$577,600 \$244,800 \$244,800 \$489,600 \$489,600 \$489,
	\$696.000 \$883.000 \$1,079,000			1533.933 425 560 1282 589
Geochemistry & 359,650 \$20,250 \$79,900			44, 30 33, 33 34, 34, 35, 35, 35, 35, 36, 37, 38, 39, 39, 39, 39, 39, 39, 39, 39, 39, 39
G8 48.000 \$8.000 \$8.000 \$8.000
Tehements & $$57,260$ $$67,200$ $$124,450$			THE CONSTRUCTION OF STATISTICS
			station and the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of

64) a galvania arrantzaria del comunico

YANDEEARRA 5.

Yandeearra comprises over 1,400 square kilometres of tenements located about 100 kilometres south southwest of Port Hediand in the West Plibara Gold Field (Figure 10). The tenements are located largely within the Yandeearra Aboriginal Reserve, where a moratorium on exploration and mining that was in place until 1998 resulted in the area being virtually unexplored by modern methods prior to Bullion's involvement from mid-2002. The project covers part of the Archaean Mallina Basin, an emerging metallogenic province where recent exploration has identified new gold resources at Range River Gold Ltd's ("Range River") Indee project and De Grey Mining Ltd's ("De Grey") Turner River project, which includes the Wingina Well prospect.

Figure 10: Yandeearra Project - location, geology and prospects

Access to the southern part of the project is available from Port Hedland via the sealed North West Coastal Highway and the Great Northern Highway for 100 kilometres, then by 45 kilometres of good quality graded road to the Mugarinya Aboriginal Community which lies about 8 kilometres south of the tenements. Access to thenorthern tenements can also be gained from a number of tracks from the North West Coastal Highway, however, best access is via the indee project or south from the Mallina Station Homestead on local station fracks. Good access throughout the remainder of the area is possible on four wheel drive bush tracks.

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5 INDEPENDENT GEOLOGIST'S REPORT IN THE THEFT

The tenernents presently include 8 granted exploration licences, 5 exploration licence applications, 7 prospecting licence applications and 2 mining lease applications beneficially held by Bullion. Production based royalties are payable to the original vendors of most of the tenements ("Famo Group"), who also retain the rights to any alluvial acid. The development of any hard rock mineral discovery will take precedence over the alluvial rights. Bullion also has an option to purchase 4 mining leases and 2 prospecting licences over the historical Friendity Creek acid/tin alluvial mining area for \$125,000 payable before 29 March 2007. The vendors again retain alluvial rights, with Bullion to meet the cost of annual rents and rates, and half the annual statutory expenditure commitment. Bullion's share of the associal expenditure commitment for all the tenernests is \$410,780.

Some of the exploration licences are due for partial surrender, however, a part of the area to be surrendered will be reapplied for as mining leases. Following the partici surrenders and lodgement of the mining lease applications, the fenement area is expected to reduce to 1,453 square kilometres. These actions, together with other changes In tenements, will change the annual expenditure commitments. Figure 10 shows the tenement outline after the partial surrenders. The contract of the contract of the contract of the contract of the contract of the contract of

The majority of the tenements are located within the Yandeearra Aboriginal Reserve and are subject to a Native Title claim by the Kariyana group. Tenement applications outside the Reserve may be subject to the Kariyaria claim and a further claim by the Ngaluma/Indibandi group. The Friendly Creek tenements are located on a Town Common and are not subject to Native Title. A Reserve Access Agreement is in place for the Farno Group tenements, and Bullian has been made a party to that agreement. The Farno Group also has an Exploration Agreement with the Karlyana group over other of the granted exploration licences. Further Bullion and the Fame Group have signed a Deterred Heritage Agreement with the Pibora Native Title Service on behalf of the Native Title claimants that allows access to undertake low impact exploration without the need for a heritage survey, .
Heritage surveys will be required for any future high impact exploration, including ahiling.

Two heritage surveys have been completed between Bullion and the Kariyana Group, the first conducted on a line clearance basis, and the most recent on a regional site avoidance basis. This has provided greater flexibility by allowing drilling to proceed in a logical manner based on results. It is likely that any further heritage surveys will be similarly conducted. The contract of the contract of the contract of the contract of the conducted of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the c

The Yandeearra project was inspected on 3 November 2005. The Community Community Community Community

SAL GEOLOGY COMPANY

Halici (Branching Ge

The project is located in the north-central part of the east-west elongate Archaean Pilbara Craton. The Pilbara Craton can be sub-divided into two major components, viz, a granife-greenstone tenain exposed in the north and the uncontormably overlying volcano-sedimentary sequence of the Hamersley Basin which outcrops over the southern half of the craton and along its eastern margin. The northern granife-greenstone terrain has been further sub-divided into the East Pilbard and West Pilbara Granite-Greenstone Terranes, which are separated by the north easterly trending Central Pilbara Tectoric Zone. The Malkha Basin forms the major component of the Central Pilbara Tectonic Zone and consists of a thick sequence of turbiditic and mass-flow deposits. The East Pilbara Granife-Greenstone Terrane is dominated by large ovoid granifold-gneiss complexes partly surrounded by greenstone belts of fairliv folded volcanic and sedimentary tooks.

The Yandeeama tenements straddle the boundary between the Central Pilbara Tectonic Zone and the East Pilbara Granite-Greenstone Terrane (Figure 10). The south eastern part of the area incorporates the north easterly Irenaing Pilbara Well greenstone belt, which consists of basalts and ultramatics with silicited sealments that have undergone up to three phases of ductile deformation and metamorphism. Late stage brittle deformation has resulted in the formation of a series of north easterly trending faults with dextral offsets. Greenstone lithologies are overlain by cheris of the Cleaverville Formation to the northeast. The manuscription of the context of the Cleaverville of

The north eastern part of the project area is dominated by Mallina Formation furbiditic sediments with numerous interbedded, differentiated matic/ultramatic intrusives of the Millindinna Intrusion complex and the Safrist Gabbro suite. Granific rocks of the East Pilbara Granite-Greenstone Terrane accur to the south east of the tenements. To the south, outcropping, flat lying Hamersley Basin basalite volcanics partly obscure the underlying lithologies. The contact between the Hamersley Basin and the underlying granite-greenstone terrain is an angular uncontormity. The Hamersley Basin rocks typically dip shallowly to the south. The community of the south and the state of the

Regolith conditions are varied, with physiographic divisions closely matching major geological divisions. In the south, lithologies of the Hamersley Basin Fortescue Group and the Pilbara Well greenstone belt form a well dissected erosional region of undulating hills. To the north, areas underlain by the Mallina Formation form low hills and sand plains, whilst those underlain by aranitoid rocks comprise the aeolian sand plain and alluvial-colluvial plain divisions.

5.2 MINERALISATION AND COMPETITOR ACTIVITY

Gold was discovered in the Pilbara in 1888, with the resultant rush producing discoveries at Mallina. Pilbara Creek, Eging, Hong Kong, Towerang and Station Peak. With the exception of Malling and Towerang, all occur within Butlion's granted tenements. Towerana produced about 29,000 ounces gold, whilst Station Peak produced around 11,400 ounces at an average grade of 27 g/t Au.

In more recent times, the prospectivity of the area and its relatively underexplored status have been highlighted with significant gold discoveries at Indee and Wingina Well. The larger of these is Range River's 529,000 ounce Indee Project which is located immediately north of the project area. The mineralisation is associated with the regionally significant Mallina Shear Zone, and is characterised by a gold-pyrite-arsenopyrite association developed within zones of shearing and quartz veining within Malling Basin turbiditic sediments. The most advanced prospects are Camel 1 and Withnell with a combined Measured, Indicated and Inferred Resource of 7.6 million tonnes at 1.7 a/t Au containing 400,000 ounces of gold above a 0.5 g/t Au cut-off. Another four deposits including Calvert (49,000 ounces) and Towerana (29,000 ounces), contain a combined 2.8 million tonnes at 1.4 g/t Au for a further 129,000 ounces in the Indicated and Inferred Resource categories. Feasibility studies are well advanced at Withnell and Camel 1. De Grey has also enjoyed success at its Wingina Well Prospect where drilling has defined resources of 3.4 million tonnes at 1.8 g/t Au containing 203,000 ounces of gold above a 0.5 g/t Au cut-off. Gold and PGE exploration is continuing on numerous other prospects.

Tantalum is mined from the Wodaina deposit on the eastern extension of the Pilbara Well Greenstone Belt and alluvial mining operations at Friendly Creek produced 167 tonnes of tin concentrate between 1969 and 1982.

5.3 HISTORICAL EXPLORATION

Previous exploration is limited to work around the Station Peak and Egina workings, and nickel and base metal exploration in the Pilbara Well Greenstone Belt. Only minor drilling had been completed prior to Bullion's involvement.

The earliest work is dominated by the activities of The Utah Development Co Ltd ("Utah"). Utah's search was focussed on nickel, and it conducted extensive soil and auger geochemical sampling, and percussion and diamond drilling in the early to mid 1970s. In 1998, Kilkenny Gold NL identified gold targets outside the Yandeearra Aboriginal Reserve at Nunyerry and Malvern Hill. At Nunyerry, aircore drilling of narrow quartz veins in sediments reported true widths of up to 2.5 metres at 5.26 g/t Au and 1 metre at 10.8 g/t Au. The Malvern Hill prospect returned gold assays up to 1.0 g/t Au in soil sampling, with the full extent of the anomaly not yet defined.

Little further work was completed following the imposition of the moratorium on mining and exploration within the Yandeearra Aboriginal Reserve. The moratorium was lifted for the Farno Group in 1998, and following the grant of a number of exploration licences, Farno Group undertook regional geological mapping, stream sediment sampling, arid soil sampling and first pass RAB drilling targeting gold and base metals.

Most of the historical mines have been assessed to only a limited extent for gold and base metals using modern exploration techniques.

5 INDEPENDENT GEOLOGIST'S REPORTUILLILLILLI

5.4 EXPLORATION BY BULLION COMMUNISION IN THE CONTROL OF THE CONTROL

Bullion's initial efforts were concentrated on follow-up of known mineral occurrences and faraets denerated by the Farna Group within the central exploration licences £47/590-591 and 755, which were the only accessible areas at the time. Minor rock chip and soil sampling was completed, and eleven RC holes totalling 690 metres were in drilled at the Station Peak and Egina Prospects. At Egina, four shallow holes were drilled targeting the historical copper/gold workings. All intercepted varying amounts of copper oxides in a clay-rich zone in the weathered zone. Minor quartz veining did not produce any significant gold anomalism. The best result was 15 metres at 1,22% copper from 20 metres depth from a composite sample taken from hale BYRC001. The manner

At Station Peak, seven RC holes for 462 metres were drilled to test for possible strike and depth extensions of the North Reef Main Lode, BYRC007 and BYRC008 both intersected the lode in its anticipated position, with BYRC007 reporting 2 metres at 8.5 a/1 Au from 47 metres above a 1 a/1 Au cut-off and BYRC008 reporting 2 metres at 4.3 a/1 Au trom 26 metres and 2 metres at 6.4 g/t Au from 71 metres. The mineralisation is accompanied by quartz vehing and semi-massive pyrite. The remaining drifholes failed to report any significant mineralisation.

During this time, Buillon actively pursued the granting of the northern exploration licences with a view to searching for indee-style targets in areas of poor outcrop. The tenements were granted early in 2003, and a more comprehensive regional exploration program commenced. A low-level deramagnetic survey on 200 metre line spacings was commenced over the northern half of the project area, eventually covering approximately 1,000 square kilometres with the acquisition of 4,987 line kilometres of data. Following data compilation, a full interpretation was completed which identified numerous largets for follow-up. [11] [11] [11] [11] [11] [11] [1

Subsequent to this, extensive low impact geochemical sampling was completed over a number of areas. Initially around 1,800 auger holes were drilled in areas of interpreted transported cover, however, it was jater realised that much of this work was ineffective. Areas under transported cover with minimal sub-crop/outcrop were lag sampled (-5 millimetre/+2 millimetre), while areas with good outcrop in well dissected erosional landscapes were sampled by collecting the -80 mesh fraction of the salis. Soll and lag sampling was generally completed on a 400 metre by 100 metre GPS-based grid, with any anomalism followed-up by increasing the sample density. Nearly 3,500 lag samples and 4,400 soil samples were collected. The contribution of the contribution of the contribution

Recent geochemical work includes a program of vacuum drilling comprising 1,666 holes for 7,871 metres designed to sample the transported cover/upper saprolite interface. Following on from this, a program of -200 mesh partial leach sampling was completed over greas of the Central Shear Zone where this is located under transported cover south of mineralisation identified in previous surface sampling. Several new soil anomalies were identified.

The RAB and aircore chiling, whilst predominantly targeting indee-style mineralisation, also includes some drilling within the West Pilpara Greenstone Belt, A total of 24,306 metres in 220 RAB and 342 directe holes has been completed over a number of compaigns.

The work completed by Bullion is summarised in Figure 11. Community

Outercropping Bf +1.angembeck Ranges, Yandeeard Project

Figure 11: Yandeearra Project - geology and summary of Bullion work

5.4.1 Results of Exploration for Indee-style Targets

Exploration for Indee style deposits has been focussed within the more northerly of the tenements where a number of structural corridors have been identified under partial sand cover. Some of these are splays off the Mallina Shear which hosts the Indee deposit to the north. The two more significant structures are the Central and Wohler Shear Zones which have been the subject of on-going investigations by geochemical sampling, rock chip sampling and geochemical vacuum drilling. This work has produced significant gold and arsenic anomalism and generated a number of encouraging prospects.

Five soil anomaties have been partially tested by broad spaced regional RAB and aircore drilling (Figure 12). Widespread mineralisation has been reported, however, for the most part, the mineralised intercepts average 0.5 g/t Au to 1 g/t Au, with occasional assays to 5 g/t Au over down-hole intercepts of 1 to 2 metres from relatively shallow depths. The stand-out result was from BYAC080 at the Fir prospect where a 1 metre interval from 7 metres reported 268 g/t Au. Attempts to replicate the intercept by scissor drilling were not successful. The next best intercept at Fir was 2 metres at 6.58 g/t Au from 37 metres in BYAC351. At the Holly prospect, the best intercepts were 4 metres at 24 g/t Au from 51 metres in BYRB139 and 2 metres at 7.10 g/t Au from 47 metres (including 1 metre at 13.64 g/t Au) in BYAC113. At Mistletoe, the best result was I metre at 23.32 g/t-Au from 25 metres in BYAC047, at Spruce, 1 metre at 8.62 g/t Au from surface in BYAC102, and at Aspen 1 metre at 2.24 g/t Au from 36 metres at hole bottom in BYAC260. A drill section through one of the main target areas at Holly Prospect is shown in Figure 13.

e de la construcción

5 INDEPENDENT GEOLOGIST'S REPORTIFIEDU

. . . . . . . . . . . . . . . . . . . .

Figure 12 : Kondesand Project - driling resultation indee-style targets

Allin Maria (Allin Maria (

Yandeearra Project - looking toward Mi Langeribeck .................................... 1989 - Johann Stoff, Amerikaansk politiker (f. 1989)

Figure 13 : Yandeearra Project - Holly Prospect drill section 7685400mN

Numerous soil anomalies remain untested, and CGML believes that further RAB and aircore drilling and followup RC drilling has an excellent chance of outlining significant gold mineralisation. Although generally weak and sporadic, mineralisation is widespread, with occasional high grades reported over albeit narrow intervals. Many of the zones of gold and arsenic anomalism remain open along strike and at depth and have only been partially tested. Additional drilling is warranted.

5.4.2 Pilbara Well Greenstone Belt Exploration Results

Historically, gold mineralisation within the Pilbara Well greenstone belt has been associated with east-northeast trending quartz veins or the structural contact between greenstones and the Yule Granitoid Complex. The aeromagnetic interpretation and soll geochemistry has outlined layer parallel shear zones with coincident goldin-soil anomalies. Five large discrete gold-in-soil anomalies have resulted from this work, with the most prospective of these the John Bull Shear Zone, where significant gold anomalism is present over 5 kilometres of strike.

Within the John Bull Shear Zone, the Arizona prospect has yielded rock chip results up to 110.5 g/t Au with visible gold present. This is associated with quartz stockwork veining in porphyry units and carbonate altered matic units. A nine hole, 834 metre RC drilling program has been completed at Arizona targeting the porphyry units. The holes intersected only low tenor mineralisation, with best results of 9 metres at 1.7 g/t Au from 42 metres in BYRCO13, and 7 metres at 1.9 g/t Au from 35 metres in BYRC015. Similar lithologies and results were reported by the Farno Group from a number of RAB traverses drilled over soll anomalies approximately 5 kilometres along strike to the southwest. CGML believes that there is reasonable potential to find a significant high arade mineralised zone due to the extent of the gold-in-soil anomalism and the relatively limited testing which has been completed to date.

5 INDEPENDENT GEOLOGIST'S REPORT

Elsewhere in the bell, recent RAB and aircore drilling at the West Kangan Prospect targeted a Wingina Well-style target. Gold anomalism can be traced over a strike of 400 metres and is open in all directions. Better results include 1 metre at 4.97 g/t Au from 11 metres and 10 metres at 0.44 g/t Au from 20 metres in BYAC361, and 1 metre at 3.50 a/1 Au from 9 metres in BYRB197. Only a small section of the structural contact and favourable strationabliv has been tested, and turther work is required to fully evaluate the area. The community of the community of the

Several greenstone associated soli anomalies remain untested or are open along strike. A strong anomaly derived trom condomerate at the base of the Fortescue Group has been detected, however, similarly sourced anomalies are widespread in the Pitbara. The contract of the contract of the contract of the contract of the contract of

5.4.3 PCE Exploration

The primary PGE farget in the realon is mineralisation associated with the Millindinna intrusion. De Grey has reported PGE mineralisation within the intrusion at the Three Kings Prospect near Mt Dove, where low tenat PGE values and very low arder nickel and capper values occur in a peridotite unit about 20 metres below its contact with a pyroxenitic unit. The regional aeromagnetic interpretation has identified approximately 140 strike kilometres of prospective Millindinna thtrusion within the project area, in up to live separate boales. Each body may contain differing amounts and types of contaminants and has the potential to host its own unlave mineralisation style.

Bullion has completed a reconnaissance soil and rock-chip sampling program over the exposed parts of the Millindinna Intrusion Within its tenements, in total, 217, -80 mesh soil samples and 130 rock chip samples were collected from 15 traverses in the Langenbeck, Millindlinna, Sathist and East areas. All samples were assayed for platinum, palladium, gold, copper riickel and chromium. At Langenbeck, anomalous PGE values occur on all six traverses, confirming the anomalism reported from previous exploration. The anomalous values however, occur in the middle of the pyroxenite unit, not near the top of the underlying peridotite as at Three Kings. Maximum values were 57 ppb platinum + palladium-in-soli on a traverse in an area where a previous soli survey defected 102 ppb. and 165 ppb platinum + palladium in a feldspathic pyroxenite on another traverse. The anomaly extends over 5 kliometres of strike. Outside the Langenbeck crea, PGE values are at times sightly elevated, mainly in the upper gabbroic unit, in the East area, slight PGE entichment occurs near the top of a peridatife as af Three Kings,

5.5 EXPLORATION TARGETS AND ALL AND ANY

CGML considers Yandeearra a highly prospective project in an emerging metallogenic province, based on newly discovered resources in adjacent ground at Indee and Wingina Well. Outside of these, there has been only very limited modern exploration. The principal targets examined to date have been indee-style gold mineralisation in the northern tenements and shear hosted gold mineralisation in the Pilbara Well Greenstone Belt. Geochemical prospecting techniques have delineated nineteen gold-in-sall anomalies, of which eleven have been partly tested by first pass drilling. Each of these reported significant gold mineralisation, with the results at two of these warranting RC follow-up. Eight largets remain untested by drilling, each of which is considered moderate to highpriority and warranting first pass RAB or aircore drilling. The main gold prospect areas and a drill summary plan of the northern part of the project area are presented in Equite 12. The manufacturer of the projection of the project

Regional geochernistry has disp generated a number of potential PGE ± nickel-copper targets, as well as nickel targets. A 5 kilometre long zone of PGE anomalism has been outlined in the Langenbeck area which warrants follow-up festing. Elsewhere, localised, but prominent magnetic units have been identified in dreas mapped as Saftlist Suite globbros. These may represent serpentinised olivine-bearing cumulate phases in basel depressions within the sills, and if so, have the potential to host accumulations of magmatic sulphides containing PGE $\pm$ nickel-copper mineralisation. Some 35 kilometres of strike of gabbroic sill are mapped in the western part of the tenements. There has been no further investigation of these targets due to the primary focus on the gold potential of the project. First pass testing of the 90 kilometres of strike of Millindinna intrusive bodies interpreted within the project is proposed. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contr

A priority nickel target is presented by generally thin, but extensive basalt and high-Mg basalt flows within the Mallina Basin that were only mapped in 2000. Schists after these basalts form units up to 300 metres thick with locally preserved spinifex textures. The detailed aeromagnetic interpretation identified strongly magnetic units within the generally non magnetic high-Ma basalt flows, which may represent olivine cumulate filled channels with potential to host magmatic nickel sulphides akin to those at Kambalda.

With the world-class Wodgina tantalum/tin deposit located in the vicinity, there is potential for hard rock tin/ tantalum mineralisation in the Friendly Creek area, where tin concentrates have been won from small alluvial deposits. The source of the alluvial tin has not been identified, although potential buried targets have been pinpointed from regional aeromagnetics. Additional alluvial occurrences in the region may also be identified with further investigations.

5.6 PROPOSED EXPLORATION PROGRAM AND BUDGET

CGML's proposals for further work at Yandeearra are summarised below:

• Exploration for Indee-style aold deposits in the Mallina Formation turbiditic sediments high priority. This will include RC drill testing for primary gold mineralisation down dip from the oxide mineralisation reported in previous drilling at the Holly Prospect, and infill and extensional aircore drilling of mineralisation in previous drilling at the Holly, Aspen and Spruce prospects. First pass aircore drilling of already defined surface geochemical anomalies is also proposed, as well as drill verification of the effectiveness of the partial leach surface geochemistry, Additional surface aeochemistry programs are to be completed over the strike extensions of previously defined prospects and over structural and conceptual targets in areas of transported cover.
• . Exploration for shear-hosted gold deposits in the Pilbara Well Greenstone Belt high priority. Further RC drill testing of the surface geochemical gold anomaly over the John Bull Shear Zone is proposed.
• . Exploration for PGE ± nickel-copper deposits within Millindinna Intrusion and Satirist Suite gabbroic sills low priority. Field confirmation of magnetic interpretations, comprising mapping and rockchip sampling of outcropping targets and surface geochemical programs over targets where the regolith is amenable to these techniques. Drill testing of priority targets defined by the mapping and surface geochemistry will follow.
• Exploration for nickel deposits at the base of high-Mg basalt flows within the Mallina Basin and within ultramatic rocks within the Pilbara Well Greenstone Belt - low priority. Outcropping targets will be mapped and rockchip sampled, with surface geochemical sampling to be completed over targets where the regolith is amenable to this approach. Priority targets defined by the mapping and surface geochemistry will be drill tested.

CGML proposes to spend \$497,450 in Year 1 and \$464,550 in Year 2 if the full \$7.5 million is raised. This will be reduced to \$424,000 in Year 1 and \$298,200 in Year 2 by adopting a similar strategy to the other projects should only the minimum subscription be raised. The exploration budget is summarised in Table 3 and the principal exploration targets are shown in Figure 14.

5 INDEPENDENT GEOLOGIST'S REPORT

ibie 3; Yandeeard Project Brogram arabituseed waa waarun waa waa waxaa waxaa waxaa k
	Maximum Subscription S7.5M Minimum Subscription \$6.0M
		Year 1 Year2 Total Yearl Year2 To
vation staff & field = = \$101,000 = \$96,000 = \$197,000 = \$87,000 = \$82,000 = \$16
where the contract the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the stat			Market Company of the Company of the Company of the Company of the Company of the Company of the Company of th

Maria Barat

. . . . . . . . . . . . . . . . . . . .

20
20:00

popolitik

.
$$218.500 \qquad $203.000 \qquad $426.530$				8173593 - 835,669 - 826,679
960chemistry & assaying = = \$93.250 = = \$65.850 = = \$159.100 = =				A-7457283 - 325723 - 325 10 10 10 11
9000dcdistudes - \$12,500 \$12,500 \$25,000 \$25,000
$\frac{1}{26}$ , and $\frac{1}{26}$ , $\frac{1}{2600}$ , $\frac{1}{2600}$ , $\frac{1}{2600}$ , $\frac{1}{2600}$ , $\frac{1}{2600}$			THE REPORT OF STARTING AND STARTING AND RELEASED
enements & associated $-$ \$66,200 $-$ \$76,200 \$142,400 \$66,200 \$142,400 \$142,400
		Exact The Executive State States States States States

W

δ. WILGA

A sinale exploration licence, E39/1003, comprising 7 sub-blocks, or about 21 saugre kilometres, and iving about 55 kliometres south of Laverton, is held by Bullion south of Wilga Well (Figure 15). Access is via the graded gravel road from Laverton to Sunrise Dam (the Bindah Haul Road) and thence via good station fracks throughout the area. The Wilga project was visited on 12 November 2005.

Figure 15: Wilga Project - location, regional geology and major deposits

6.1 GEOLOGY AND MINERALISATION

E39/1003 is located near the eastern margin of the Laverton greenstone belt in the north east of the Eastern Goldfields Province of the Yilgarn Craton (Section 3.2.1). Wilga lies within the Burtville Domain, adjacent to the Laverton Tectonic Zone ("LTZ") which separates the Burtville Domain from the Laverton Domain to the west. The LTZ is dominated by acid to intermediate volcanic and volcaniclastic rocks, including fault bounded polymict conglomerates, and minor mafic and ultramatic rocks. It is characterised by structurally disrupted stratigraphy, with extensive faulting, folding and shearing, variable metamorphic grade, and extensive, alteration and metasomatism. The LTZ is host to world class gold deposits at Cleo/Sunrise Dam (37,2 million ounces), Gramy Smith (>1.3 million ounces) and Wallaby (>3.8 million ounces), as well as several lesser deposits including Keringal, Golden Delicious, Jubilee, Red October and Fortitude.

5 INDEPENDENT GEOLOGIST'S REPORT

The sequence to the east of the LTZ is dominated by extensive high-Mg basalt and kornatilte, with lesser basalt, dolerite, gabbro and BIF. Minor clastic sediments and shales are present on a focalised scale. The sequence is less deformed than the adjacent LTZ, with metamorphism generally to greenschist facies, reaching amphibolite with with with facies near contacts with external granitoids. Near the centre of the Wilag tenernent is an outcropping, northsouth trending sequence of basaits, peridotite/dunite and thin 8IF (Figure 16). The area of butcrop has been the focus for much of the past exploration effort as the western and eastern parts of the ficence are dominated by Quatemary colluvium and transported alluvium on the northern margin of Lake Carey.

Rgure 16 : Wilga Project - geology and exploration results

Gold mineralisation in the immediate area is hosted by BiF/chert formations, apartz veining, and shear zones within the basaltic sequences. At the RSVG prospect, visible gold has been noted in association with BIF, and reconnaissance rock chip sampling of the outcrop has reported assays of 7.8 g/t Au and 5.1 g/t Au (Figure 16). $\,$

6.2 PREVIOUS EXPLORATION

The first exploration in the area was conducted by US Steet International Inc. and Australian Selection Pty Ltd. during the 1970s and early 1980s, targeting nickel-copper mineralisation, investigations were limited to ground reconnaissance, ground magnetic surveys and nickel/copper sell geochemistry. It was concluded that furthe wak in the region would require drilling due to the lack of outcrop. Early gold exploration was undertaken by Nord H Resources Pacific Pty Ltd. which drilled 88 dirtrack holes averaging 9 metres deep at the RSVG prospect in 1981-83. Reporting of the work is however incomplete, and the exact tocation of the drilindies is unknown. WAMEX reports that the highest gold assay was 0.3 g/l Au and the highest attenic yalue 350 ppm. It is not known whether these are from the same semple.

In 1986 Delta Gold NL ("Delta") commenced the first major aold exploration program in the region based on a broad spaced, 500 metre by 500 metre offset grid. BLEG soil sampling outlined anomalous gold concentrations in solls at Wilga, with results up to 26 ppb gold. The mineralised BIF at the RSVG Prospect was also targeted, with 5 RC holes drilled. Scissor drillholes WRC14 and WRC23 intersected 1 metre at 2.95 g/t Au from 47 metres to end-of-hole, and 3 metres at 1.15 g/t Au from 45 metres respectively.

Follow-up work by Delta included gridding, soil sampling, rock chip sampling and RAB drilling. The -80 mesh soil sampling identified anomalous gold-in-soll values coincident with the mineralised BIF, with a peak value of 297 ppb gold. The anomaly is open towards the south where first pass BLEG sampling had produced only minor anomalism, The soil anomaly was tested by 31 RAB drilholes totalling 455 metres which reported a best result of 2 metres at 4.7 g/t Au from 10 metres in WHR129. This intercept remains open at depth and towards the south. Other intersections include 8 metres at 2.95 g/t Au from 2 metres in WHR12, which appears to be closed off by scissor drilling, 4 metres at 1.35 g/t Au from 24 metres to end of hole in WHR08, and 4 metres at 1.7 g/t Au from 2 metres in WHR07.

6.3 EXPLORATION TARGETS, WORK PROPOSALS AND BUDGET

CGML has identified two gold exploration targets, namely, the strike and depth extensions of the mineralisation defined by Delta's drilling, and potentially mineralised structures under cover. Although grass roots in nature, the tenement is located within a fertile, well endowed gold belt, adjacent to a major mineralised structure in the LTZ.

The work proposed at Wilga Project comprises:

• acquisition and interpretation of multi-client and company aeromagnetic data.
• field inspection followed by geological and regolith mapping and interpretation.
• extension of the surface geochemical coverage in areas of amenable regolith, particularly to the south of the identified gold anomalies.
• auger or vacuum geochemical sampling in areas where the transported cover is interpreted as thin.
• . RAB or aircore drilling to test the strike continuity of known gold mineralisation and first pass drill testing of geochemical anomalies generated from the surface geochemical programs.
• A review of the nickel sulphide exploration potential of the tenement has also been recommended.

First year expenditure of \$134.300 is proposed, with \$175.000 scheduled for Year 2 if the maximum amount is raised. Expenditure in Year 1 will be reduced to \$125,600, and in Year 2 to \$97,500 if only the minimum subscription is raised. Table 4 summarises the exploration budgets.

Table 4: Wilga Project Program and Budget

		Maximum Subscription \$7.5M			Minimum Subscription \$6.0M
	Year 1	Year 2	Total	Year 1	Year 2	Total
Exploration staff & field support	\$13,000	\$8,000	\$21,000	\$13,000	\$8,000	\$21,000
Drilling	\$57,500	\$145,000	\$202,500	\$52,500	\$75,000	\$127,500
Geochemistry & assaying	\$37,000	\$15,000	\$52,000	\$33,300	\$7,500	\$40,800
Geological studies	\$12,000		\$12,000	\$12,000		\$12,000
Geophysics	\$3,000		\$3,000	\$3,000		\$3,000
Gis	\$2,000	\$2,000	\$4.000	\$2,000	\$2,000	\$4,000
Tenements & associated costs	\$9,800	\$5,000	\$14,800	\$9,800	\$5,000	\$14,800
Total	\$134.300	\$175.000	\$309.300	\$125,600	\$97.500	\$223.100.

5 INDEPENDENT GEOLOGIST'S REPORT

7 GNAWEEDA

Bullion holds interests in 447 square kilometres of tenements at the Gnawaeda project, about 30 kilometres east of Meekatharra in the Murchison District of Western Australia. The fenements extend over a north-south distance of about 50 kilometres (Figure 17). Access is via the Great Northern Highway and/or the Meekatharra to Wiluna road. thence by a network of pastaral station tracks throughout the area. The Gnoweeda tenements were inspected on 16 November 2005. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contr

Figure 17 : Gnaweeda Froject - tocation and regional geology [100]

The tenements comprise four exploration licences and two prospecting licences. Exploration licences E51/926 and E51/927 are subject to an agreement under which Bullion may acquire a 100% interest in the tenements by the payment of \$100,000 in either shares or cash within a 3 year period from 31 July 2004, by which time, Bullion was to have spent \$30,000 on exploration. E51/1027 is subject to an option agreement under which Bullion may acquire a 100% interest by the payment of \$5,000 within 18 months of 25 January 2005, with the vendors retaining a 1% net smelter rovalty, E51/1074, P51/2514 and P51/2515 are held by Bullion. The combined expenditure commitment for the tenements is \$149,380 per annum. Standard heritage agreements have been negotiated with Native Title claimants which enable exploration access.

On 10 January 2006, Bullion entered into a Heads of Agreement with Teck Cominco Australia Pty Ltd ("Teck") for the formation of an exploration joint venture over the Gnaweeda tenements. The agreement provides for Teck to earn an initial 51% interest by spending \$750,000 over 3 years. Teck may then elect to spend a further \$750,000 to earn an additional 19% interest for a total of 70%. Teck must spend a minimum of \$140,000 before it can withdraw

7.1 GEOLOGY AND MINERALISATION

Gnaweeda covers a small greenstone belt that is interpreted to be the northern-most extension of the Southern Cross Province of the Yilgarn Craton. The 56 kilometre long greenstone sequence is narrow, up to 10 kilometres wide, and arcuate. It is bounded to the west by a 6 to 10 kilometre wide belt of gneissic and massive granitoids which separate it from the Murchison Province, Meekatharra - Mt Magnet greenstone belt, and to the east by a major granitoid bett. The bulk of the greenstones are covered by shallow Quaternary colluvial to alluvial material, whilst to the north, and along its eastern margin, the belt is partially concealed by west-northwest trending outliers of basinal sediments and volcanics of the Proterozoic Yerridah Basin.

Several narrow litho-tectonic sub-domains have been identified within the belt. The Western sub-domain comprises a broadly conformable package of non-magnetic mafic volcanics and intrusives, with extensive, continuous, narrow, interbedded, strongly magnetic units which are probably ultramatic rocks. The latter define large-scale isoclinal folds and possible stratigraphic repetitions wherein the layering is conformable with the greenstone margins.

The Central sub-domain comprises either gabbro or dolerite, within which there are discontinuous and locally weakly magnetic ultramatic rocks, and discrete lenses or packages of felsic volcanics, sediments and felsic intrusives, which again, broadly parallel the gross strike of the greenstone belt. Stratigraphic dips appear to be to the east. This apparently foliated or lineated magnetic package, termed by Bullion the Fairway Magnetic Package ("FMP"), is moderately irregular and patchy, and appears to represent a high strain or broad shear zone developed within the areenstones.

The Eastern sub-domain contains a sequence of complexly folded, variably magnetic, mainly matic and ultramatic volcanics, including stronaly magnetic remnants of olivine orthocumulate which are possibly disgagregated fragments of a larger layered mafic-ultramafic intrusion. Layering is often at a high angle to the gross strike of the greenstones, and appears to have been intruded or truncated by the eastern granitoids.

The boundary between the Central and Eastern sub-domains appears to be a major structure, or at least the eastern margin of a broad high strain zone including the Western and Central sub-domains. Gold mineralisation in the FMP appears to be related to this structure. A province-scale crustal feature, the Evanston-Edale Fault, has been mapped to the south of Gnaweeda, and the high strain zone referred to above may be the extension of this structure. Numerous predominantly northeast-southwest and east-west oriented matic dykes are evident. throughout the area.

The Quaternary cover is typically around 20 metres thick, with locally, narrow palaeochannels to 80 metres deep which appear to parallel the north westerly trend of the modern drainage channels. North of the Turnberry prospect (Figure 18), the cover decreases to around 4 metres, whilst over the Western sub-domain, cover ranges from around 10 metres to 50 metres in depth. Throughout the bulk of the Turnberty and St Annes prospects the depth of cover is less than 40 metres.

e gazar e

5 INDEPENDENT GEOLOGIST'S REPORT

.
Figure 18 : Ghaweedia Project - image of fotal magnetic stiensity showing RAB
geochemical anomalies and principal prospects

Old gold workings have been mapped at Mistletoe and Bunarra. There is no record of production from Bunarra, however, the Mistletoe mine has reported production of 15 kilograms (around 490 ounces) of gold from 444 tonnes of ore mined, as well as 37 kilograms (around 1,200 ounces) of dollied and alluvial gold. The extensive transported cover would have rendered the bulk of the belt non-amenable to traditional prospecting techniques.

7.2 PREVIOUS EXPEORATION

Modern exploration commenced in 1978 with Esso Australia Ltd ("Esso") searching for volcanic-hosted massive sulphide ("VHMS") style base metal deposits in the central parts of the project area. Esso's efforts were focussed on aossanous outcrops which occur in association with felsic volcanics in the vicinity of Bunarra Bore. Dominion Mining Ltd explored the Bunarra Bore area for gold between 1986 and 1992 and in 1985, \$1 Joe Minerals completed some sampling and shallow drilling to the west of the Bunarra Bore base metal prospects. More recent base metals exploration, including some drilling, was conducted by Outokumpu Exploration Australia Pty Ltd in 1991-92. BHP Minerals Pty Ltd ("BHP") drilled a magnetic anomaly within the greenstones in 1983 and intersected olivine orthocumulate rocks.

Between 1993 and 1999 Newcrest Mining Ltd ("Newcrest"), and then Australian Gold Resources Ltd ("AGR") in a joint venture with Newcrest, completed extensive exploration for gold within the project grea. Newcrest initially drilled four widely spaced RAB traverses across covered parts of the areenstone belt in 1993. An intersection of 12 metres at 8.7 g/t Au prompted a series of drilling programs over the next 5 years wherein RAB, aircore, RC and diamond drilling outlined significant, but irregular gold mineralisation around the original intersection, by then named the Turnberry prospect. Several other anomalous prospects were identified over a north-south strike length of 15 kilometres, Intersections at Turnberry included 12 metres at 8.7 g/t Au, 24 metres at 2.7 g/t Au, 3 metres at 6.2 g/t Au, 16 metres at 2.58 g/t Au and 1 metre at 21 g/t Au.

Mines and Resources Australia Pty Ltd ("MRA") explored the area around the old Mistletoe gold workings and to the east of Newcrest's ground between 1992 and 1999. In addition to gold around Mistletoe, MRA identified the MRA-Bunarra gold prospect to the north east of the old Bunarra gold workings. MRA also explored over ground now covered by E51/1074 and E51/1027.

Helix Resources Ltd joint ventured into the area in 2002-03 and compiled various datasets, including an interpretation of aeromagnetic data, and undertook heritage surveys, but did not complete any on-ground exploration.

7.3 WORK COMPLETED BY BULLION

All open file reports relating to the project area have been reviewed, and all pertinent reports copied and filed. An Access digital database of drillhole and soil geochemical data has been assembled and validated using data sourced from Newcrest, AGR and MRA archives. Soil, rockchip and drillhole data from old exploration programs not readily available in digital format, comprising principally, results from base metal exploration programs in the Bunarra area, has been manually entered into the electronic database. Maximum down-hole gold and arsenic values, and end-of-hole lithologies have been identified and converted into Mapinfo format. Depth of cover was derived from the logged geology, or where this data was incomplete, by interpreting down-hole geochemistry. Image enhancements of total magnetic intensity have been prepared using all available open file, public domain or multi-client aeromagnetic survey data.

Following compliation of the digital database, areas of drilling with significant gold anomalism, significant bedrock gold intersections or interesting geology were identified and drilling cross sections plotted. All drillhole sections from the top of the Mistletoe prospect to the base of the Bunarra prospect have been plotted and reviewed for potential gold exploration targets. The interpretation work also included the preparation of plans showing maximum down-hole gold and arsenic values, depth of cover and end-of-hole lithology.

Sections warranting follow-up work, either as supergene targets requiring bedrock definition by RAB or aircore drilling, or bedrock targets to be tested by RC drilling, were flagged for future action. The database and target inventory have been passed on to Teck.

5 INDEPENDENT GEOLOGIST'S REPORT THE THEFT

7.4 EXPLORATION OPPORTUNITIES AND PROSPECTIVITY

Chaweeda is considered prospective for gold mineralisation developed either within the FMP, or in other structures along the 50 kilometres of greenstone strike within the tenements. Historically, exploration through most of the project area has comprised shallow RAB or aircale drilling due to the transported nature of the regalith. North and south of the denser drilling completed at the Turriberry and St Annes prospects, drill testing has been by 200metre spaced vertical holes on 400 metre spaced lines, with vertical infill drilling on either 50 metre by 100 metre. or 50 metre by 50 metre spacings around anomalous results. The drilling achieved only limited penetration into the Archaeon basement. The contract of the contract of the contract of the contract of the contract of the contract of

Notwithstanding, extensive gold and arsenic anomalism has been identified under cover over 15 kilometres of strike within the FMP matic and felsic rocks. Anomalous thresholds have been determined at 100 ppb gold and 200 pom arsenic, aenerally in bottom-of-hole samples. Arsenic values up to several thousand opm have been reported. The spread of gold and arsenic, anomalism has been interpreted to indicate the development of an extensive alteration zone or plumbing system, with aeromagnetic data indicating that the host shucture to the system may extend a further 8 kilometres to the north and 30 kilometres to the south.

Detailed atliking has been undertaken over only 5 kitometres of strike, with atiling in the Tumberry - St Annes area identifying gold-arsenic mineralisation over 6 kilometres of strike in a zone up to 750 metres wide within a (probably) east dipping sequence of matic and fetsic volcanic, and sedimentary rocks. Extensive, but generally low grade mineralisation is developed in matic rocks, with higher grade material associated with quartz veining in attered fesic intrusives. Extensive, strong arsenic anomalism extends along and across strike, A series of mineralised fargets that wantint further RC drilling has been developed. The manufacturer and the manufacturer of

Broad spaced vertical reconnaissance drilling over a further 9 kilometres of strike north and south from Tumberry and SI Annes has identified extensive supergene gold and arsenic anomalism, potentially developed above or dispersed taterally from mineralised systems similar to those drilled at Tumberry-St Annes. For the most part, this drilling only just intersected bedrock beneath the cover. Almost no work has been completed within the sequence to the west of the FMP, although anomalous supergene gold and arsenic has been reported from broad spaced arting. No follow up work has been completed. Relatively titlle work has been completed on the Explorer submokerates and the control of the control of the control of the control of the control of the control

in addition to the gold exploration potential, further fargets may be developed for VHMS style cooper-zinc-goldsiver deposits within the FMP. A series of weakly copper-zinc-silver mineralised gossans in telsic volcanic rocks has been located near Bunara Bore. Drilling beneath the gossans intersected massive sulphide mineralisation In rocks correlated with the eastern margin of the FMP. Despite this, no base metals assays or other exploration was completed in conjunction with the gold exploration. Effech kilometres of strike of the EMP remains unlested for base metals, including the drea around and to the north of Turnberry where the FMP thickens, has a highly variable magnetic character, and has extensive gold anomalism.

Historical drilling by BHP suggests that several large, north westerly trending magnetic anomalies hosted within the Eastern sub-domain are sourced either from a large, dismembered layered matic-ultramatic intrusion (e.g. Windimung and Namdee which are hosted within the Southern Cross Province approximately 200 kilometres to the south), or from a large, dismembered kornatilitic lava lake (analogous to MI Kelih, to the southeast). Both scenarios have potential for the development of nickel-copper-PGE bearing sulphide deposits. At least 7 kilometres of strike of this material is interpreted within the project tenements, with no exploration reported other than BHP's limited work. Limited drilling in the Western sub-domain suggests extensive discrete magnetic units may be sourced from ultramatic rocks, possibly after kornalitie. Up to 30 kilometres of strike of these units are evident, with no reported нске ехриизи, полношните полношните п

Teck has not yet commenced field work on the project. The context of the context of the context of the context of

8. PRINCIPAL SOURCES OF INFORMATION

• Avoca Resources Limited, April 2004. Acquisition of the Higginsville Gold Project. ASX Announcement dated 5th April 2004. www.avocarespurces.com.au
• Avoca Resources Limited, October 2005 Spectacular Intersection from Trident, ASX Announcement dated 5th October 2005, www.avocaresources.com.au
• Avoca Resources Limited, October 2005. Quarterly Report for the three months ending 30 September 2005. www.avocatesources.com.au
• Blockley, J.G., 1980. The Tin Deposits of Western Australia with Special Reference to the Associated Granites. Western Australia Geological Survey, Mineral Resources Bulletin 12.
• Bonwick, C.M., 1995. Discovery of the Chalice Gold Deposit, in New Generation Gold Mines: case histories of discovery. Australian Mineral Foundation.
• Brinkley, M., 2001. The Chalice in-wall ramp and the mining of the north wall remnant. Unpublished report for Resolute Limited.
• Bucci, L.A., Hagemann, S. G., Groves, D. I., and Standing, J. G., 2002. The Archaean Chalice gold deposit: a record of complex, multistage, high-temperature hydrothermal activity and gold mineralisation associated with granitic rocks in the Yilgarn Craton, Western Australia in Ore Geology Reviews, 19, pp 23-67.
• · Bucci, L.A., McNaughton, N. J., Fletcher, I.R., Groves, D. I., Stein, H.J., and Hagemann, S. G., 2004. Timing and duration of high temperature gold mineralisation and spatially associated granitoid magmatism at Chalice, Yilgarn Craton, Western Australia. Economic Geology, 99, pp 1123-1144.
• Chalice Gold Mines Limited Business Plan, November 2005. Unpublished company report.
• Croesus Mining NL. Website www.croesus.com.au and company Annual Reports.
• . De Grey Mining Ltd, October 2005. Quarterly Operations Report for the three months ending 30 September 2005.
• Gindalbie Gold NL 1998 Annual Report.
• · McIntyre, J.R., 2003. Interpretation of Airborne Magnetic Data, Yandeearra Project, North Pilbara Region, Western Australia. Unpublished report No: LF09/03 for Bullion Minerals Limited.
• McIntyre, J.R., 2004. Chalice Gold Project. Information Memorandum. Unpublished report for Bullion Minerals Limited.
• McIntyre, J.R., and Kerr, L., 2004, Chafice Minina Lease, Technical Review and Proposed Program, June 2004, Unpublished report for Bullion Minerals Limited.
• Newman, C., Williams, R., Collis, G., Brown, G., and Parker, B., 2005. The discovery of the Trident gold deposit Western Australia in NewGenGold 2005 Conference Proceedings pp 73-84.
• · Ruddock, I., 1999. Mineral Occurrences and Exploration Potential of the West Pilbara. Western Australia Geological Survey, Report 70.
• · Range River Gold Ltd, March 2005. Market Update Indee Gold Project. ASX Announcement dated 4 March 2005.
• · Resolute Limited. 2002 Annual Report.
• · Smithies, R.H., and Farrell, T.R.., 2000. Geology of the Satirist 1:100,000 Sheet. Western Australia Geological Survey, 1:100,000 Geological Series Explanatory Notes
• Williamson, G., 2005. Higginsville Gold Project. Proposed Exploration Program, March 2005. Unpublished report for Bullion Minerals Limited.

Northwind Resources Pty Ltd

R CARY BSc., FAUSIMM (CP), FAIG, MMICA, MAICD

Director & Principal

5 INDEPENDENT GEOLOGIST'S REPORT

	GTOSSARY OF TECHNICAL LERMS
ET THE COLOR DESIGNATION AND RELEASED FOR THE COLOR OF THE COLOR OF THE COLOR OF THE COLOR OF THE COLOR OF THE deromagnetic survey	Measurement of the earth's magnetic field from a surveying aircraft. for the purpose o recording magnetic characteristics of rocks.
ENTERE PRODUCTION	A method of rotary drilling whereby rock chips are recovered by air flow returning inside menum
EN HENRI CHILTERIAN -------------------------------------	A common reak-forming mineral, sodic piagiociase. Unconsciidated detrital material deposited by a stream or fiver. A change in mineralogical composition of a rock commonly brought about by reactions
cingification	with hydrothermal fluids or weathering metamorphic rock composed predominantly of the mirerois CONTRACTOR	Gizeccio de Car on
CILIVIII ONIHEIKOIN Ginefacteis	. Mineral assemblage produced by medium to high grade regional metamorphism, and consisting mainly of amphibole minerals and plagfoclase feldspar. The contribution of A value of group of values different from the expected norm. If
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, --------------------------------------	A mineral group with the general composition calcium phosphate. An element, usually occurring as attendaytife. I
Amiteixen	A mineral, fon artenic sulphide or artenical pyrite. Frequently associated with primary gold reneralizators. The oldest rocks of the Precambrian era, older than about 2,500 million years, www.
EXECUTIVE AND STATE Chiefshachillinis	Acquiate determination of metal content of are, concentrates and metal products. Drilling technique for use in relatively soff rocks or unconsolidated materials wherein a
SCREEZE ROAD GUARDIOR	rod filled with duger fights is used to somple recovery. The many Thely banded sedimentaly rack comprised of alternating layers of silica and iron oxides
EXECUTE	and of Place realish age." A volcanic rock of tow sliica (<55%) and high for and magnesium composition, composed primarily of plagiaciase and pyroxene minerals. The manufacturer and all the manufacturer
DIRECTOR COMPANY	base metal Example 2018 Referring to the transition elements, including copper, zinc and lead. The igneous and metamorphic crust of the earth, underlying sedimentary deposits
	basin A large depression in the earth's crust in which younger sedimentary and volcanic rocks are progressively deposited. The contract of the contract of the contract of the contract of the contract of
EXECUTIVE STATE	Large, generally circular arelliptical body of intrusive rock at least 40 square kilometres in area: usually gradie www.www.www.www.ww
	bedrock in the situ solid rock effriend surface or overlain by unconsolidated material (1111-1111-1111-1111-1111-1111-1111-11 Bill and the Bandedhan bindlen , and the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of the state of th
	billion 1.000 million 1.000 million biolite State of the Common Common Contract Common Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract

GALLERY PROPERTY OF THE HUNTER CONTROLLED TO THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL OF THE CONTROL

5 INDEPENDENT GEOLOGIST'S REPORT

BLEG	Bulk Leach Extractable Gold, a semi quantitative measure of cyanide extractable gold contained in a sample.
boudinage	A structure developed in strongly deformed rocks in which an original competent or stronger layer lying between more easily deformed layers has been stretched and broken at regular intervals to form bodies resembling boudins or sausages.
carbonate	A compound containing the radical CO3; commonly calcium carbonate or calcium- magnesium carbonate.
calcite	A mineral composed of calcium and carbonate.
calc-silicate	A rock composed of calcium-silicate minerals.
chalcopyrite	A copper-iron sulphide, an important copper ore mineral.
chert	Fine grained sedimentary rock composed of cryptocrystalline silica.
chlorite	A platy hydrous silicate related to mica.
clastic	Components of a sedimentary rock that were deposited by erosion and transportation of mineral and rock fragments.
colluvium	Loose soil or rock fragments accumulated by slow down-slope creep or rain-wash, as found at the base of slopes or hills.
conglomerate	Cemented clastic rock comprised principally of rounded gravel or pebble sized fragments.
craton	Large, and usually ancient, stable mass of the earth's crust.
cumulate	Igneous rock containing a framework of touching crystals which were concentrated by fractional crystallisation of an igneous melt.
D., D., ełc.	Successive phases of deformation.
deformation	A general term for the process of folding, faulting, shearing, compression or extension of rocks as a result of stress.
diamond drilling	A method of obtaining a cylindrical core of rock by drilling with a diamond impregnated bit.
diopside	A pyroxene group mineral.
dip	The angle at which a planar feature is depressed from the horizontal; always measured perpendicular to strike.
dolerite	A medium grained mafic intrusive rock composed mostly of pyroxene and plagioclase minerals.
domain	Zone within a region or a mineralised body exhibiting relatively consistent structural characteristics.
dome	A roughly symmetrical up-fold; may be used to describe a small dome-shaped granite intrusive.
drilling	Penetration of sub-surface strata by rotational cutting equipment in order to obtain samples from depth.
dunite	An ultramatic rock consisting almost entirely of olivine.
dyke	Thin, sheet-like intrusion of magmatic rock.

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5 INDEPENDENT GEOLOGIST'S REPORTITION

EXISTENT COMPANIES	kod. Which formed from the velicitieshen of motter rock Which Rowed emin's mile communi-
THE STATE OF	Successive generations of folding resulting from D., D., etc. deformation.
։ Հանրապետություն Լունի Հանրապետ	The aspect belonging to a geologic unit of sedimentation, including mineral composition type of bedding, fossil content, etc.) (boks of any origin formed within certain pressure to a participant of the pump
$\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1$	A fracture in rack glong which there has been relative displacement of the two side either vertically of horizontally. The manufacture community contracts the
${ \ldots }$ , $\alpha$ $\cup$ $\gamma$ $\gamma$ $\gamma$ $\gamma$ $\gamma$	A group of abundantly accuring potassium, sodium and calcium diumino-slicate minerals which are constituents of witually all igneous rocks. The construction of the constituents
ETA RENA	Descriptive of light coloured rocks containing an abundance of feldspars and quartz.
MARKET	Assay technique for precious metals in which a relatively large sample is fused with fluxes to separate the contained metals from gangue minerals. The mineral
799 74 1414 74	A bend in strata of any planar studiore.
ESLO L'ASI	Rock mass below a tast or are deposit.
Example	Gears gold be forgett
ອາທິດທີ່ 22 ອົງນາງ ໃຈ ໃນ 1 ອົງ U ໄດ້ອົງ ໃຈ ອັນຟາດທີ່ທາປປໄທ	Coarse grained, datk coloured igneous rock of similar composition to basalt and dolerite ile, low in slica with relatively high levels of fron and magnesium minerals. The manning
Main's U.S.	Non-volusible component of cres
$7.3237777777777777777777777777777777777$	A group of distinctive metamorphic minerals of variable composition.
	Systematic sampling of rocks, soil, soil gas and/or plants to identify areas with anomatous concentrations of metals of other elements. The concentration of
ENERGIST MONDERN 187	The study of the abundance and distribution of elements in rocks, or their weatherin products, by chemical methods.
	Process of identifying and recording the surface distribution of rock types, their age relationships and the structures affecting their distribution.
emaa	A folioled rock folioed by registral freiomolphism –
	gossan computer the product of the state of the oxidation and leaching of sublide mirerals. The manufacturer and the
	GPS Actonym for Global Positioning System, a safellite-based navigation system, and the Actonym for Global Positioning System.
virte Comm	The concentration of the valuable component in an ore, generally expressed as a percentage for base and other metals, or as grams per torme for precious metals.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,	A coarse-grained igneous rock containing mainly quartz and feldspar minerals and subordirake military. The contract of the contract of the contract of the contract of the contract of the contract of
$\frac{1}{2}$	A granite-like rook in which the mineral crystals lack either external faces or have uncharacteristic shapes; a field term for a coarse grained felsic rock resembling granite. The manuscription
	Rock displaying granophyric fexture, that is, time grained intergrowths of quartz and in the motion alkalikelaksel?

E Ante prosecuto de l'altitudi del control de la constantina del control de la constantina del control de la c

5 INDEPENDENT GEOLOGIST'S REPORT

greenschist facies	Facies of weakly metamorphosed rocks produced under low temperature conditions.
greenstone	A term commonly applied to low metamorphic grade rocks of basic composition and comprised of the minerals chlorite and amphibole. Commonly applied to Archaean rock sequences dominated by these rock types.
greenstone belt	Generally elongate, fightly folded sequence of Archaean volcanic and sedimentary rocks enclosed by granite.
hanging wall	Rock mass above a fault or ore deposit.
homblende	A common mineral of the amphibole group.
hydrofhermal	Pertaining to hot aqueous solutions having temperatures up to 400°C. These transport metals and chemicals in solution and may deposit them under specific conditions to form mineral concentrations.
image enhancement	Computer manipulation of two dimensional digital data such as aeromagnetic or geochemical data to give the impression of three dimensionality or topographic relief.
intratolial	Occurring within a fold.
isoclinal fold	A fold in which the limbs have parallel dips.
intrusive	A mass of rock formed by magma cooling beneath the earth's surface.
igneous	Rocks that have solidified from molten rock (magma).
JORC Code	Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 Edition. Prior editions original (1989,1992,1996 and 1999) were also known as the JORC Code. The JORC Code sets out minimum standards, recommendations and guidelines for the public reporting within Australasia of Exploration Results, Mineral Resources and Ore Reserves wherein these terms are rigidly defined. The JORC Code is binding upon members of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists, and is included in the listing rules of the Australian and New Zealand Stock Exchanges.
komatiite	An ultramatic rock of volcanic origin with high magnesium content.
laterite	Surface induration of re-precipitated iron oxides derived from tropical climate weathering of underlying bedrock.
lava	Liquid rock which issues from a volcano or fissure, or the solidified equivalent of same.
lithology	The physical character of a rock; rock type.
iode	A fabular or vein like deposit of valuable mineral between well defined walls.
mafic	Descriptive of rocks composed dominantly of magnesium, iron and calcium-rich rock- forming silicates.
magnetic anomaly	Zone where the magnitude and orientation of the earth's magnetic field differs from adjacent areas.
magnetic susceptibility	Measure of the degree to which a substance is attracted to a magnet.
magnetite	Magnetic iron ore, and oxide of iron.
metamorphic grade	The extent to which a rock has been changed from the original as a result of metamorphism; generally determined by the development of assemblages of minerals which are characteristic of the temperature and pressure attained at the peak of metamorphism.

$\circled{r}$

5 INDEPENDENT GEOLOGIST'S REPORTHUILLILLI

frister (safezes) nivîzn	Process of change in rock composition, structure, texture and mineralogy induced by increases in temperature and pressure, other than changes resulting from Siloofassykallysidelle
netije en poleten mangem	A rack that has been modified by the effects of pressure, heal and fluids within the ecritics crust. The manufacturer of the second contract of the second contract of the second contract of the s
	Melandphosed sedimentary rack. Th
1884 (eksesseriesi en	Descriptive of processes relating to the chemical alteration of a rock. The manufacturer
nalatele life i els	Naturally occurring concentration or accumulation of metals or their ore minerals
WORKSHOUTH RESEARCH	Concentration or accurrence of mineralised material for which there are reasonable prospects for eventual economic extraction. Within Australasia, the detailion classification and reporting of Mineral Resources is strictly governed by JORC Code
MARIDIAL IN PRID	A fault on which the hanging wall has moved downwards relative to the tootwall.
թոգ շ ուր գրարություն («) է 3,1 0 1 . 7 . 8	An olive green magnesium iron silicate (Mg,Fe)2S04, common in mafic and ultramafic in terus reaks minim
Trime Wellors Internet	Mining process whereby waste or overburden is progressively removed from the riatural ground surface down to expose the ore for mining.
41.	Mineral bearing rock that may be mined and treated at a profit, with a minimum
OR SHORE	Économically recoverable portion of a Mineral Resource, including dilowances for mining diktion and mining losses. Within Australasia, the definition, classification and reporting of Ore Reserves is strictly governed by the JORC Code. The manufacturer and the
E TA LITERATUR DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE L LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PARTIE DE LA PAR	Cumulate rock with a high proportion of crystallised trapped intercumulus liquid with th crystals displaying well developed crystal faces.
CHACH	Attaxposite of bedred at surface
WA 22 13 22 MI	Part of a stratified sequence that has been defactied from the main body by erosion
	Andent ilver channel haw infiled with younger sediments.
E STATISTIKA KANSAN KANSAN PARANGAN PANG	itspegleiche Benen dieutzellunde aus partial leach analysis Andivical lech lique whereby weakly bound elements of interest, typically on the surface
	or sample gram, die assolved to analysi, was biten used to i kursamples to mutove – detection limits and reduce interference from high background values of elements interest which may be bound up in soil particles.
TEXTURE	Coarse grained rock formed from crystallisation of end stage volatiles from a large coding rock mass. Generally granitic in composition, and often containing valuable, a rare and trassual minerals, and the contract of the contract of the contract of the contract of the contract of
n S	TEMPERADE EN 1999
percussion drilling	Drilling technique where an air driven hammer is used to penetrate hard tormations.
E BELLE	A general term for intrusive ultramatic igneous racks dominantly consisting at oilvine an kuckkautektspor
Text	An abbreviation for the platinum group elements, reterring to rutherium, rhodium paladium, esmian, ilidium and piatinum.

GALL CONTRACTOR OF THE CONTRACTOR CONTRACTOR CONTRACTOR

5 INDEPENDENT GEOLOGIST'S REPORT

playa or playa lake	Shallow central basin in a desert plain in which water gathers after rain and is quickly evaporated.
plunge	The departure of a fold nose or other essentially linear geological structure from the horizontal as measured in a vertical plane.
polymict	Comprising many different rock types, usually with reference to a conglomerate.
porphyry	A rock with conspicuous crystals in a fine grained ground mass.
ppb or ppm	Parts per billion or parts per million.
pre-collar	Top part of drillhole usually drilled by percussion or RC methods as a pre-cursor to diamond drilling.
Proterozoic	The younger part of the Precambrian Era, being between 545 and 2,500 million years ago.
psammite	Rock composed of sandy particles; a sandstone.
pyrite	An iron sulphide mineral.
pyroxenite	A coarse grained igneous intrusive rock dominated by the mineral pyroxene.
pyrrhotite	An iron sulphide mineral.
quartz	A common rock forming mineral, silicon dioxide; often occurs as discrete veins or veinlets occupying fractures or openings within rocks and shears. Quartz veins are common hosts for gold mineralisation.
Quaternary	Post-Tertiary era from about 1.8 million years ago to the present.
RAB drilling	Rotary airblast drilling; a rotary drilling technique in which sample is returned to surface outside of the drill rod string by compressed air.
RC drilling	Reverse circulation drilling; a method of drilling whereby rock chips are recovered by airflow returning inside the drill rods rather than outside, thereby [usually] providing more reliable samples.
reconnaissance	A general examination or survey of a region with reference to its main features, usually preliminary to a more detailed survey.
regolith	Mantle of weathering and erosional products covering bedrock.
resource	In-situ mineral occurrence from which valuable or useful minerals may be recovered.
$S_1, S_2$ , efc.	Schistosity or cleavage associated with D 1 , D 2 , etc. deformational events.
saprolite	A soft, earthy clay-rich, thoroughly decomposed rock formed in place by chemical weathering of rocks.
scheelite	A fungsten mineral, calcium tungstate, CaWO4.
schist	A metamorphic rock with a platy or foliated texture.
screen fire assay	Assay fechnique for precious metals in which the pulverised sample is screened to recover coarse fraction of pulp which is assayed separately, before a relatively leage sample is fused with fluxes to separate the contained metals from gangue minerals
sediment	Rocks formed by the deposition of solids from water,
serpentinised	Hydrothermally altered magnesium rich rock dominated by serpentine minerals.

balles a

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5 INDEPENDENT GEOLOGIST'S REPORT

Stelle (Indonesia)	Finely laminated sedimentary rock in which the constituent particles are predominantly
	GLAND BEATING
5981-1011 EXCLEMENT	A pianar zone of distocation in rock similar to a tault. The manufacturer in the control of the Relatively small, generally steeply plunging zone of higher grades within a larger minoralised bridy.
soillsemotive 534378013	Systematic collection of samples of soil at a series of locations in order to study the distribution of geochemical values in the sol. The contract of the contract of the Nehvork of ime veining in dirock mass
	Composition, sequence and correlation of stratified rock in the earth's crust
SALARI III STILLING	Perfaining to geological structure. A mineral compound characterised by the linkage of sulphur and a metal
81063386	A term to describe a mineral deposit or enrichment formed near the surface generally Ey desecreing pressing vales
EN EN EN HITTINGS	An unusual metal which is used in the manufacture of semi-conductors. Offen tound in association with tin, and a state of the contract of the contract of the contract of the contract of the contract of
- E=" Fail ( o ) U { af Indian Example 2002	Of, pertaining to or designating the rock structure and external forms resulting from the deformation of the earth's crust
းျမတ္မတာ အားမားေျပာက္ကားတာမွာတယ္။ ႏိုးႏွင့္အစား ေတြျဖစ္ပြဲ ေတြေၾကာင္း ေျ $\mathcal{E} = {x_1, x_2, \ldots, x_n}$	Zone of structural dislocation, usually on a large scale. Afea of land to which access has been granted for mineral exploration or development under the relevant mining act or statute. The manufacturer and the manufacturer
E SER SI MUM $\mathbb{H}^{u_0}$	Average metallic content of an ore (or its grade), mineral, matte or impure metal. A subdivision of geological time covering the period from 65 to 1.6 million years ago.
18013118	A matic rock of volcanic origin containing a higher proportion of silica than 5027303 2553 370000000000000000000000000000000000
	thrust or thrust fault A low angle (shallowly inclined) fault or shear on which the roaks on the top have up and over the rooks of the Bottom -
ECTUMUM PTAN Efter fundet	Another name for the mineral sphere, calcium titanium silicate
E PI E VI E V E E SAMMINIMUM MANUSCUL	Sediment formed by deposition from furbidity current.
Ditection is a communication of the contract of the contract of the contract of the contract of the contract o	igneous racks consisting essentially of ferromagnesian mirrerals with trace quartz and folio Seine
Distriction	An erosional surface or depositional break that separates younger strata from 0.001110334
Veicuum chiline	Diffing technique whereby a hole is drifted by a rataling blade bit and the samp recovered through the bit and into the drilling rods by a vacuum. The manner
vein man and a $\left[\frac{1}{2},\frac{1}{2},\frac{1}{2}\right]$ , $\left[\frac{1}{2},\frac{1}{2},\frac{1}{2},\frac{1}{2}\right]$ , $\left[\frac{1}{2},\frac{1}{2},\frac{1}{2}\right]$	A thin sheet-like intrusion into a fissure or crack, commonly bearing quartz Descriptive of racks originating from extrusive igneous activity
ESTA MARINA DA LA LA LA LA LA LA LA LA LA LA LA LA LA A MARIA A DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE EL CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA DE LA CALENDA	Rock formed of volcanic ejecta and fragments of volcanic rack. The group of processes that change the character and composition of rocks by decay

$\bigcirc$ . The contract of $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ , $\mathcal{E}$ ,

pullinger readhead $|u \cos$

COMMERCIAL LAWYERS

3 February 2006

The Board of Directors Chalice Gold Mines Limited level 2 1292 Hay Street WEST PERTH WA 6005

Dear Sirs.

SOLICITOR'S REPORT

Ť. INTRODUCTION

This Report is prepared for inclusion in a Prospectus to be issued by Chalice Gold Mines Limited ("Company") for the issue of up to 37,500,000 fully paid ordinary shares at \$0.20 each in the Company to raise up to \$7,500,000, to be dated on or about 3 February 2006 ("Prospectus").

This Report relates to Western Australian mining tenements and tenement applications ("Tenements"). An overview of the Tenements is contained in Schedule A which is attached to and forms part of this Report.

This Report also contains a summary of the material contracts which affect the Tenements, in Schedule B ("Material Contracts"). A summary of other material contracts is contained in section 10 of the Prospectus.

$\overline{2}$ SEARCHES

For the purpose of this Report, we have reviewed "Mining Tenement Register Searches" of the Tenements provided by the Western Australian Department of Industry and Resources ("DOIR"). The DOIR searches were conducted on 24 October 2005 and repeated prior to the issue of the Prospectus, on 17 January 2006.

We have obtained "Quick Appraisal" reports from the DOIR summarising information available in the "TENGRAPH" system maintained by the DOIR to determine if any native title claims were realstered over the area of the Tenements. These searches were conducted on 27 October 2005.

OPINION 3

As a result of the searches and enquiries, but subject to the assumptions and qualifications set out in this Report, we are satisfied that, as at the date of the relevant searches:

• the details of the Tenements included in this Report are accurate as to their status and- ${\alpha}$ the Company's interest; and
• $(b)$ where an application for a Tenement has been lodged, details included in this Report are accurate.

Level Two Fortescue House 50 Kings Park Road West Perth WA 6005 Australia

PO Box 630 West Perth WA 6872

T: (08) 9320 4999 F: (08) 9320 4900 E: info@prllawyers.com.au www.orllawvers.com.au

PRL Co. Pfy Limited ABN: 43 109 326 463 An incorporated legal practice

6 INDEPENDENT SOLICITOR'S REPORTED THE THEFT

4 ASSUMPTIONS AND QUALIFICATIONS AND ALL AND A SERVICE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTLE AND A LITTL in this Remarks and an international contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contr (a) we have assumed the accuracy and completeness of the "Mining Tenement Register Searches", "Registe Reports" and other information obtained from DOR, the contract of the contract of the contract of the contract of (b) we have assumed the accuracy and completeness of all the documentation and information which has been provided to us by Bullion Minerals Unitled ("Bullion"); i (c) lithe confinued holding of the Tenements is subject to compliance with the terms and conditions of the relevant legislation and any applicable agreements; (d) we have assumed the accuracy and completeness of any instructions, documents and information given by the Company or any of its officers, agents or representatives: with a state of the company of the (e) with respect to any application for the grant of a Tenement, we express no pointon as to whether such an application will be granted; www.wind (f) with respect to applications which are not capable of being leadily transferred, we have assumed a constructive trust as the means by which a beneficial interest is created in the application, when we have (g) where compliance with the requirements necessary to maintain a tenement in good standing is not disclosed on the searches obtained, we express no opinion on such compliance; with a strategy of the compliance of the compliance of the complete strategy of the complete strategy of the complete strategy of the complete strategy of (h) where plaints or objections have been lodged against the Tenements we make no comment on the ikelihood of success of such plaints or objections; (i) where a tenement has been granted we have assumed that the fulkire act provisions of the Native filte Act 1993 halve been complied with

• (i) references in Schedule A to any area of land are taken from details in the searches obtained. It is not possible to verify the accuracy of the land area without conducting a survey, and
• (k) where Ministerial consent to any agreement or decling in relation to a Tenement is being or will be sought, we express no opinion as to whether such consent will be granted or the consequences of being refused.

This Report only relates to the mining, native title and aboriginal heritage laws applicable to the Tenements as at the date of this Report. This Report is limited to the matters expressly contained within it. The matter containing

SUPPLIENT MENTS GENERALITY

At the date of this Report, the Company's not the registered holder of any of the Tenements.

The Company's interest in the Tenements atlses out of a Tenement Purchase Agreement dated 18 January 2006. ("Purchase Agreement"), summarised in the Material Contracts in Schedule & to this Report. The acquisition of the Company's interest in the Tenements depends upon fulfilment of certain conditions precedent, as set out in Schedule B. . . . . . . . . . . . . . . . . . .

Where the vendor under the Purchase Agreement, Bullion, is not the registered holder of any of the Tenements. as indicated in Schedule A, the results of our due diligence investigations show that subject to the Assumptions referred to in paragraph 4 of this Report, Bullian is entitled to become the registered holder of a legal inferest in line with its beneficial interest as indicated in Schedule 8, subject to the satistaction of requirements which are defialed in the Notes to Schedule A of in Schedule B.

6 LEGISLATION COMMISSION

The Tenements in Western Australia comprise granted exploration licences, prospecting licences and mining leases, and applications for exploration licences, prospecting licences and mining leases under the Wining Act 1978 (WA) ("Mining Act"). The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the

Amendments to the Mining Act were passed by Parliament on 26 October 2004 and are anticipated to be proclaimed to operate from 10 february 2006.

63 Prospecting Licence

A prospecting licence remains in force for four years from the date of grant. A prospecting licence may be converted into a mining lease and a holder has priority in applications for a mining lease over any area covered by the prospecting licence. A prospecting licence for which such an application has been lodged remains in force until the application is determined.

The Mining Amendment Act 2004 will change the conditions attaching to prospecting licences which are granted under the new legislation for example, a prospecting licence will have a term of 4 years with provision to extend for one further period of 4 years.

$6.2$ Exploration Licence

An exploration licence remains in force for a period of five years and may be extended by a further period or periods of one or two years on application. An exploration licence cannot be assigned or any legal or equitable interest dealt with during the first year of its term without the prior written consent of the Minister for State Development ("Minister").

At the end of the third year of the licence, half of the exploration licence must be relinquished or converted to a mining lease. At the end of the fourth year half of the remaining licence must again be relinquished or converted to a minina lease.

The holder of an exploration ficence may apply for a mining lease in relation to the same land (or part thereof). If the exploration licence expires prior to determination of the Mining Lease application, the rights and obligations of the licence apply as if it is current until the determination of the Minina Lease application.

The Mining Amendment Act 2004 will change the conditions attaching to exploration licences which are granted under the new legislation for example, such exploration licences will be larger in size, and capable of extension for an initial term of 5 years and by a further period or periods of 2 years.

$6.3$ Mining Lease

Holders of both prospecting and exploration licences can apply to convert their licences to a mining lease over the land the subject of the prospecting or exploration licence.

A mining lease remains in force for a period of 21 years and may be renewed for successive periods of 21 years. In the case of mining leases the period of 21 years commences from the date of notification by the Minister. A mining lease cannot be assigned or sublet without the prior written consent of the Minister.

Pursuant to the Mining Amendment Act 2004 a mining lease application may only be applied for when accompanied by a notice of intent to commence productive mining operations or a "mineralisation report". Applications made for mining leases made before the commencement of the act will not be subject to these new requirements.

Applications for Exploration Licences and Mining Leases 6. á

Applications for exploration licences and mining leases are not capable of being transferred. Where an exploration licence underlying an application for a mining lease is transferred, the transferee will be entitled to become the first registered holder of the mining lease when it is finally granted. It is possible for a beneficial interest in relation to an application to be held on trust.

Tenement Conditions 6.5

Tenements are granted subject to various conditions prescribed by the Mining Act. The conditions regulate the payment of rent and expenditure and also reporting requirements. Additional conditions thay also be imposed, such as those to address environmental issues.

6 INDEPENDENT SOLICITOR'S REPORTED THE CONDITIONS

7 LAND ACCESS AND ACCESS AND A RESIDENCE AND A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE OF A RESIDENCE

Access to much of the land in Australia for the burbose of conducting commercial activities, such as mining is governed by certain Commonwealth and State leaislation which outlines procedures that must be followed. to gain access to land and also steps that must be taken to ensure that Aboriginal sites are protected from any damage. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of th

The applicable leaislation is summarised below. The conditional control to the condition

7.1 Mative Title Legislation The Contract of Contract Contract Contract Contract Contract Contract Contract Co On 3 June 1992, the High Court of Australia held in Mabo v. Queensland (no, 2) that the common law of Australia recognises a form of native title. Generally, native fille rights to land will be recognised where:

(a) the claimants can establish that they have maintained a continuous connection with the land accordance with their traditional laws and customs; and

(b) the native title rights have not been lawfully extinguished.

The High Court held that native title rights can be lawfully extinguished by voluntary surrender to the Crown death of the last suivivor of a community entitled to halive title, abandonment of the land in question or cettain aovemment leaklation and crotons.

In arder for extinguishment to be lawful if must comply with obligations imposed by the Racial Discrimination Act 1975 (Cfr). The contract of the contract of the contract of the contract of the contract of the contract of the

The Commonwealth Parliament responded to the Mabo decision by passing the Native Title Act 1993 ("NTA") which came into operation on 1 January 1994. The NTA was extensively amended in 1998 by the Native Tille Amendment Act 1998. These amendments include the ability of a State Parliament to validate any titles which may have been invalidly granted over pastoral leases and certain other leasehold interests during the period 1 January 1994 to 23 December 1996. Other significant amendments include a revised threshold fest for the acceptance of native title claims, confirmation of extinguishment of native title by the grant of "exclusive possession" leasehold interests, provisions intended to deal with everlapping claims and provisions for a negotiation process between government, native title and non-native title parties in relation to certain future uses of native filte land.

7.2 Native Title Claim Process (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999 (1999) 1999

Persons claiming to hold native title may lodge an application for determination of native title with the Federal Court. The Court will then refer the application to the Native Title Registral of the National Native Title Tribunal ("WAT") for the redistration test at the Native Title Reaktrar is satisfied that the lodged claim meets the reaistration requirements set out in the NIA, it will be enfered on the Realister of Native Title Claims ("Realister") maintained by the NNTL. Registered Dialmants are given certain procedural rights in relation to "Future Acts" under the NTA including the "right to negotiate" procedure. The manufacturer and the manufacturer and the manufacturer and the

7.3 Future Act Procedures (1999) The Contract of Contract Contract Contract Contract of Contract Contract Contract O A Future Act is a proposed activity or development on land and/or waters that may affect native title, including the grant of mining or exploration tenements. Claimants' gain the right to negotiate in relation to the grant of those interests if their native title registered at the time the government issues a notice (known as a section 29) notice), stating it intends to do the act. (i.e. grant the tenement) or is registered within four months of that fime. H

Claims which do not meet the reaistration requirements are recorded on the Schedule of Applications Received. Such cidims may be entered on the Register at a later date if additional information is provided by the claimant that satisfies the Registration Test.

Right to Negatiate Procedure $(\circ)$

Under the right to negotiate procedures parties are required to negotiate in relation to the grant of the proposed future act, eg the grant of a mining tenement. Negotiations are initiated to obtain the agreement of the relevant native title parties to the carrying out of the proposed Future Act on the native title land. The right to negotiate procedure consists of a statutory six month period of negotiation between the relevant government party, the native title party and the grantee, during which time the parties must neaptiate in good faith.

Generally, the grantee party and the registered native title claim group come to an agreement in relation to the grant of the tenement. Where the tenement is an exploration or prospecting tenement the grantee party and the native title party generally reach an agreement in relation to heritage clearance and protection (see further below in relation to the expedited procedure). Agreements in relation to mining leases are generally more extensive and often, in addition to heritage protection, make provision for employment and training, environmental rehabilitation, cultural awareness issues and compensation.

If parties cannot reach agreement as to the terms of grant, a negotiation party may apply to the NNTT (as the arbitral body) to make a determination as to whether the grant may proceed (and if so, on what conditions). Subject to Federal Ministerial intervention the agreement of the parties, or the decision of the NNT, will determine whether the mining interest is granted.

As previously indicated, the right to negotiate procedures only apply to native title claimants whose claims have been accepted for registration at the relevant time.

In addition, the right to negotiate procedures do not have to be followed in cases where an Indigenous Land Use Agreement ("ILUA") is negotiated with the relevant Aboriginal people and registered with the NNIT. In such cases, the procedures prescribed by the ILUA must be followed to obtain the valid grant of the tenement.

$|0\rangle$ Expedited Procedure

Some Future Acts might have minimal impact on the native title rights and interests and many qualify for "fast tracking". This process is known as "expedited procedure" and applies to the grant of exploration and prospecting licences and mining leases in Western Australia.

If the proposed grant is advertised under the expedited procedure, native title parties can lodge an objection. An objection by a native title party is not an objection to the tenement being granted, but is an objection to the application being fast-tracked. If there is no objection lodged, the tenement can be aranted without delay.

If an objection is lodged to the grant of the tenement under the expedited procedure, the parties may either negotiate and reach agreement that the expedited procedure does apply, or apply to the NNTI for a determination.

The grant of tenements by agreement usually follows the entry into an agreement between the applicant for the tenement and the claimants or objectors, which relates to the protection of both Aboriginal heritage and Aboriginal sites during exploration.

It is now State Government policy that applicants for exploration licences and prospecting licenses will have to sign a Standard Heritage Agreement or prove they have an existing Alternative Heritage Agreement before the applications will be submitted to the expedited procedure. In the absence of such an agreement the applications will be processed under the NTA right-to-negatiate-regime.

If the parties do not reach an agreement that the expedited procedure applies, this issue is determined by the NNTT. If the NNTT determines that the expedited procedure does not apply, the process for the grant of the tenement must comply with the right to negotiate provisions in the NTA mentioned above.

e galanda

6 INDEPENDENT SOLICITOR'S REPORT

7.4 NATIVE TITLE STATUS OF THE TENEMENTS

Some of the Tenements relate to land which is currently the subject of one or more registered native title claims in addition some of the Tenements relate to land the subject of a native little determination. Those claims and the determination are identified in Schedule A. It is possible that additional claims may be made in the Juture.

Where the land the subject of a tenement application is the subject of more than one realstered native title claim the tenement applicant will need to reach agreement with each of the tegistered native litte claim groups pric to the terrement being granted.

Schedule A identifies any agreements reached with a relevant native title cidim aroup in relation to the arant of the tenement. Those agreements have been reviewed, are relatively standard in form and do not appea to impose any unusual or onerous obligations on the tenement holder. We note that a number of tenement applications presently do not have native title agreements in place and presume that the tenement holder is in the process of negotiating agreements in relation to their grant. The manuscript continuum and contact the con-

in relation to granted or live tenements we presume that the future and provision of the NIA have been complied with prior to grant and that all relevant agreements have been provided to us.

Where native fitle is tound to exist, the nature of the native title may be such that consent to the arant of a mining tenement may be required by the native title holders.

To the extent that native title has not been extinactined with respect to the underlying land. It is important to note that where it is proposed to convert from an exploration or prospecting ficence to a mining lease and native title claims are lodged and registered. If will be necessary to go through the right to negotiate process with any native little holiders or claimants whose claims are accepted for registration at the relevant time, unless the Company enters into agreement with the claimarts relating to conversion. The manufacturer and the manufacturer

We have not underlaken the considerable historical, anthropological and ethnographic work that would be required to determine the likelihood that existing claims may be successfut, or the possibility of any further native tille claims being made in the future, in addition, we have not undertaken any investigations that would determine the content of any individual rights claimed in a under any nalive title claim over the Tenements.

7.5 PROTECTION OF ABORIGINAL SITES AND ARREST AND LODGED AT A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE OF A STATE

Tenements in Western Australia are granted subject to an endorsement reminding the tenement holder of its obligation to comply with the requirements of the Abariginal Heritage Act 1972 (WA) ("Heritage Act").

The Heritage Act protects sites and greas of significance to Aboriginal people. The Minister's consent is required where any use of land is likely to result in the excavation of or damage to an Abotiainal site or any object on or under thol the manufacturers.

There is no reculiement or need for a site to be realistered in any public margret or be in any way ricknowledged as an Aboriginal site for it to quality as an Aboriginal site for the purposes of the Heritage Act. A realster of sites is maintained by the Aboriginal Affairs Department of Western Australia. The main community

.
We have not conducted a search of that realster for the purposes of this Report. The Heritage Act applies to all Abaiginal sites and objects, whether armot they are registered under the Heritage Act.

In respect of any Abdriginal sites that are ultimately identified on any of the Tenements, the Company will ne ensure that any interference with such sites is in strict conformity with the provisions of the Heritage Act.

The Commonwealth Aboriginal and Torres Strati islander Heritage Protection Act 1984 also attords some p R. Moodula al Mey

This Act applies to all of the Tenements and is almed at the preservation and protection from desecration of significant Aboriginal areas and significant Aboriginal objects. An area or object is found to be desecrated if it is used or treated in a manner inconsistent with Aboriginal tradition. The contract of the contract of the contract

We have not conducted any searches in this regard. The community of the

7 3 ABOREGINAL RESERVE LAND

The Mining Act provides that mining may not be carried out on reserve land without the written consent of the Minister for State Development. Before aranting the consent the Minister for State Development must consult the Minister for Indiaenous Affairs and obtain his/her recommendation as to whether mining or exploration should be allowed and whether an access permit may be issued to enter the reserve. The requirement for an entry permit is in addition to the approvals necessary under the Mining Act. In order to grant an entry permit, the Minister for Indigenous Affairs will consult the Aboriginal Lands Trust who in turn consult the Aboriginal communities that are either living on the land or responsible for the land affected.

MATERIAL CONTRACTS SUMMARY R.

We have examined the Material Contracts relevant to the Tenements, a summary of which is contained in Schedule B to this Report.

We have assumed:

• that the Material Contracts have been duly executed and have been, or are, in the course of being fal stamped and lodged in compliance with the relevant legislation;
• $(b)$ the authenticity of all seals and signatures;
• ${C}$ all of the Material Contracts are within the capacity and powers of, and have been validly authorised, executed and delivered by and are binding on each of the parties to them;
• the Material Contracts comprise the entire agreement of the parties with respect to the subject matter of ${d}$ the Material Contract: and
• $\Theta$ each party to the Material Contracts had, and has full corporate power and authority to observe and perform all of its obligations under the Material Contracts.

Ó. CONSENTS

This Report is provided solely for the benefit of the Company and the directors of the Company in connection with the issue of the Prospectus and is not to be relied on or disclosed to any other person or used for any other purpose or quoted or referred to in any public document without our prior written consent.

Pullinger Readhead Lucas consents to being named in this Prospectus as the authors of this Report.

Pullinger Readhead Lucas have given, and have not before the lodgement of this Prospectus, withdrawn their consent to the inclusion of this Report in the Prospectus.

$30$ DISCLOSURE OF INTEREST

Pullinger Readhead Lucas will be paid normal and usual professional fees for the preparation of this Report and related matters, as set out elsewhere in the Prospectus.

Yours faithfully PULLINGER READHEAD LUCAS

Tenement Number and Type	Registered Holder/ Applicant	Grant Date	Expiry Date	Status	Annual Minimum Expenditure Commitment	Encumbrances	Tenement Notes	Native Title Notes
Gnaweeda Project
E51/926	J A Bunting & Associates Piv.Ltd.	31/07/02	30/07/07	Live	\$35,700		42	10 and 21
E51/927	J A Bunting & Associates Piy Ltd	31/07/02	30/07/07	Live	\$35,700		26, 27 & 42	10 and 21
E51/1074	Bullion	29/06/05	28/06/10	Live	\$63,000			10 and 14
P51/2514	Bullion	06/09/05	05/09/09	Live	\$4,960			10 and 14
P51/2515	Bullion	06/09/05	05/09/09	Live	\$4,920			10 and 14
E51/1027	Benjay Pty Ltd	17/02/05	16/02/10	Live	\$26,100			10
Wilga Project
E39/1003	Bullion	23/09/05	22/09/10	Live	\$20,000			9 and 19
Chalice Project
E15/821	Bullion	15/04/05	14/04/10	Live	\$20,000		28 & 41	$5, 6, 7, 8$ and 11
E15/822	Bullion	17/11/04	16/11/09	Live	\$20,000		41	6,8 and 11
E63/873	Bullion	21/12/04	20/12/09	Live	\$20,000		41	6,8 and 11
P15/4594	Bullion	18/11/04	17/11/08	Live	\$8,000		41	5, 6, 8 and 11
P15/4595	Bullion	28/09/04	27/09/08	Live	\$7,960		41	6.8 and 11
P15/4596	Bullion	28/09/04	27/09/08	Live	\$7,880		18.41	6,8 and 11
P15/4597	Bullion	28/09/04	27/09/08	Live	\$7,880			6,8 and 11
P15/4598	Bullion	28/09/04	27/09/08	Live	\$7,960			6,8 and 11
P15/4599	Bullion	28/09/04	27/09/08	Live	\$8,000			6,8 and 11
P15/4600	Bullion	28/09/04	27/09/08	Live	\$7,960			6,8 and 11
P15/4601	Bullion	28/09/04	27/09/08	Live	\$7,600			6, 8 and 11
P15/4602	Bullion	28/09/04	27/09/08	Live	\$7,880		41	6,8 and 11
P15/4603	Bullion	28/09/04	27/09/08	Live	\$7,680			6,8 and 11
P15/4605	Bullion	28/09/04	27/09/08	Live	\$7,720		18.41	6,8 and 11
P15/4606	Bullion	28/09/04	27/09/08	Live	\$7,640		41	6,8 and 11
P15/4607	Bullion	28/09/04	27/09/08	Live	\$7,400		41	6,8 and 11
P15/4608	Bullion	28/09/04	27/09/08	Live	\$7,280		41	6,8 and 11
P15/4609	Bullion	28/09/04	27/09/08	Live	\$7,040		41	6,8 and 11
P15/4610	Bullion	28/09/04	27/09/08	Live	\$6,920			6, 8 and 11
P15/4611	Bullion	28/09/04	27/09/08	Live	\$7,560			6, 8 and 11
P15/4612	Bullion	28/09/04	27/09/08	Live	\$7,600		41	6,8 and 11
P15/4613	Bullion Bullion	28/09/04	27/09/08	Live	\$7,600		41	6, 8 and J-1; 6, 8 අතර 11
P15/4614	JT Morton	28/09/04	27/09/08	Live	\$7,480		41
P15/4619	and A 3 Sandercock	09/06/05	08/06/09	Live	\$2,000	Royalty		6 cmd 8
P15/4634	Bullion	28/09/04	27/09/08	Live	\$5,840		îд.	$6.8$ and $11$
P15/4635	Bullion	28/09/04	27/09/08	Live	\$8,000			$6.8$ and $\parallel$
P15/4636	Bullion	28/09/04	27/09/08	Live	\$7,800			8.8 and 11
P15/4671	Bullion	13/10/05	12/10/09	Live	\$4,280		41	第, 8 and 13
P63/1248 P63/1249	Bullion Bullion	09/07/04 09/07/04	08/07/08 08/07/08	Live Live	\$7,640 \$7,640			6, 8 and 1.1。 $6.6$ and $1\%$
P63/1250	ิ 8ย¶ion	09/07/04	08/07/08	Live	\$5,520		$\frac{1}{2}$	8 and 11

$\begin{array}{llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll$

$\circledS$

6 INDEPENDENT SOLICITOR'S REPORT

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$\left(\begin{matrix} \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \bullet & \$

INDEPENDENT SOLICITOR'S REPORT $\mathcal{L}_{\mathbf{S}}$

Tenement Number and Type	Registered Holder/ Applicant	Grant Date	Expiry Date	Status	Annual Minimum Expenditure Commitment	Encumbrances	Tenement Notes	Native Title Notes
Higginsville Project
P63/1273	Bullion	09/07/04	08/07/08	Live	\$7.920		1 and 41	8 and 11
P63/1274	Bullion	09/07/04	08/07/08	Live	\$7.760		1 and 41	8 and 11
P63/1275	Bullion	09/07/04	08/07/08	Live	\$8,000		and 41	8 and 11
P63/1276	Bullion.	09/07/04	08/07/08	Live	\$7.720		l and 41	.8 and 11
P15/4644	Bullion	28/09/04	27/09/08	Live	\$2,000		41	$6.8$ and 11
P15/4645	Bullion	28/09/04	27/09/08	Live	\$7.200		41	$6.8$ and 11
P15/4646	Bullion	28/09/04	27/09/08	Tive	\$2.320		41	$6.8$ and 11 $\,$
P15/4655	Bullion	28/09/04	27/09/08	Live	\$2,000			$6, 8$ and 11
F15/740	8tillion.	16/08/04	15/08/09	Tive	\$20.000		41	$6.8$ and 12
E15/860	Bullion	01/07/05	30/06/10	Live	\$15.000		39 and 41	$6.8$ and $13$
P15/4647	Bullion	N/A	N/A	Pendina	N/A		41	$6.8$ and 11 $\,$
P15/4648	Bullion	28/09/04	27/09/08	Live	\$2.000		41	$6.8$ and 11 $\,$

Key to Tenements Schedule

Bullion - Bullion Minerals Limited

EM -Farno-McMahon Pty Ltd

References to numbers in the "Tenement Notes" column refers to the notes set out below.

Tenement Notes

• Expenditure status is under expended for the year end preceding the date of this Report. Ŧ.
• $\overline{2}$ . Conversions 178684 and 178685 pursuant to section 67 of the Mining Act to convert to M47/560 and M47/561 recorded on 27 March 2003.
• $\mathbf{R}$ The prior written consent of the Minister must be obtained before commencing mining on Water Reserves 10550 and 12801.
• $\overline{4}$ . Consent to mine on Use and Benefit of Aborigines Reserve 31427 granted on 30 July 1999.
• 1. The prior written consent of the Minister must be obtained before commencing mining on Water Reserves 10635, 12258 and 12791.
• $\overline{A}$ . Conversions 220634, 220631 and 220633 pursuant to section 67 of the Mining Act to convert to M47/783, M47/784 and M46/785 recorded on 27 July 2005.
• $\mathbf{Z}$ The prior written consent of the Minister must be obtained before commencing mining on Water Reserve 12251.
• 1. The prior written consent of the Minister must be obtained before commencing mining on Watering Place for Travellers Reserve 1448.
• 1. The prior written consent of the Minister must be obtained before commencing mining on Water Reserves 11584 and 12247.
• Consent to mine on Use and Benefit of Aborigines Reserve 31427 granted on 14 March 2003. 10.
• The prior written consent of the Minister must be obtained before commencing mining on $11$ Water Reserve 12802.
• $12⁷$ Caveat 802H/034 forbidding dealing lodged by Bullion Minerals Ltd.registeres 22 April 2004.
• Conversion 214222 pursuant to Section 49 of the Mining Act, to convert to M47/638, recorded 13. 5 May 2005.

6 INDEPENDENT SOLICITOR'S REPORT

	14. Caveal 80314/034 forbidding dealing lodged by Bullion Minerals Ltd registered 22 April 2004
	15. Conversion 40482 pursuant to Section 49 of the Mining Act. to convert to M47/498, recorded 24 October 2000 16. Caveal 798H/034 forbidding dealing lodged by Bullian Minerals Ltd registered 22 April 2004.
	17. Bond PE9474 lodged on 20 January 2004 for \$5,000,00 (Security), recorded 20 January 2004.
$\mathcal{L}_{\text{Fermm}}$	Consent to mine on Water Reserve 10634 granted on 3 November 2004.
xw 23	Caveat 799H/034 forbidaing dealing lodged by Bullion Minerals Urdregistered 22 April 2004 Bond PE9476 for \$5,000.00 (Security), recorded 20 January 2004. The manufacturer of the Control of
sannannan	Caveal 800H/034 forbidding dealing lodged by 80lilon Minerals Ltd registered 22 April 2004.
22.000 $\mathcal{L}_{\text{V}}$	Bond PE9475 for \$5,000.00 (Security), recorded 20 January 2004. The prior written consent of the Minister must be obtained before commencing mining on Use & Benefit
	of Abdrigines reserve 31427 and Water Reserve 12792. [111] 24. Caveal 801/034 forbidding dealing fodged by Bullion Minerals Ltd registered 22 April 2004.
	25. Bond PE9473 lodged on 20 January 2004 for \$5,000.00 (Security), recorded 20 January 2004.
20	Amalgamation MET/045 lodged on 16 July 2004 (in respect to the portion of Prospecting Licence 51/2381 increased 25 July 2005
	27. The prior written consent of the Minister must be obtained before commencing mining on Reserve 1869%
	28. The orign written consent of the Minister must be obtained before commencing mining on Wate Research 1969
22	Caveal 992H/056 lodged by FM in respect to 100/100ths shares in the name of Bullon Minerals Ltd
TELEVISION	Caveat 150H/990 totaldding dealing loaged by Resolute Ltd in respect to 15/100ths shares in the name of Geographe Resources Ltd. registered 7 October 1999
	31. Agreement 64H/956 (Deed of Charge) between Resortie Samantha Lidiand Macquarie Bank registere i Savoj i Savoj de Sonomono
32.	Agreement 162H/956 between Resolute Samantha Ltd, Geographe Resources Ltd and Great Southern Mittes NL registered on 17 November 1995.
	33. Agreement \$8H/990 (Deed of Partial Release of Cross Change and Partial Release and Transfer of Mortgages between Resolute Ltd. Geographe Resources Ltd and Great Southern Mines NL, registered 27 April 2000.
	34. 8ond 206396 ladged on 23 November 2004 for \$159,000.00, recorded 23 November 2004. 35. The prior written consent of the Minister must be obtained before commencing mining on Wate
	REACTION COMMUNISTIC
	36. The prior written consent of the Minister must be obtained before commencing mining on Water Roserve 10654. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of
	37. The price written consent of the Minister must be obtained before commencing mining on Higginsville Townsite, Water Reserve 10654 and Recreation Reserve 10952. The manufacturer of the control of the control of
	38. The prior written consent of the Minister for State Development must be obtained before commencing mining ON CR 32552, PNR 0000104
	39. The prior written consent of the Minister must be obtained before commencing mining on Water Reserve 11692.
	40. Royalty in lavour of Farno-McMahon Ply Ltd pusuant to Farmin Agreement dated S August 2002.
	41. This tenement is the subject of the Cowan Nickel Joint Venture between Bullion, Equinox Resources Ltd. and option iductors must
	42. Area and minimum expenditure commitments will be reduced by 50% on 27 December 2005. [1] 43. Alluvial exploration rights are retained by the registered holders, by classe 3 of the Option Agreement i
	(Friendly Creek) dated it i March 2004.

Repegging and reduction in sub blocks to these tenements is planned in the first half of 2006 to maximise ZIC QUINNI the Company's tenement management position under the new legislation commencing in February 2006. 45. Caveal 993H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd.

1989 - James Maria Maria Maria Alemania (h. 1989).

INDEPENDENT SOLICITOR'S REPORT $\overline{\mathcal{L}}$

• Caveat 994H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd. 46.
• 1. Caveat 995H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd.
• 1. Caveat 996H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd.
• 1. Caveat 997H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd.
• $50.$ Caveat 998H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd.
• 1. Caveat 999H/056 lodged by FM in respect to 100/100ths shares in the name of Bullion Minerals Ltd.
• 1. Alluvial exploration rights are retained by FM, Farno Pty Ltd and Dorsch Resources Pty Ltd by clause 11 of the Farmin Aareement dated 8 August 2002

Native Title Notes

• $\mathbf{1}$ Crown Reserve for the Use and Benefit of Aboriaines.
• $\overline{2}$ Karivarra Native Title Claim WC9973.
• 1. Ngaluma Injibandi Native Title Determination WC99/14.
• Bullion Minerals Ltd and Yamatii Marpla Barna Baba Maaja Aboriginal Corporation as agent for the Kariyarra $\overline{4}$ . Claim Group undated
• $5.$ Widji Native Title Claim WC98/27.
• 1. Gubrun Native Title Claim WC95/27 (presently dereaistered).
• $\bar{Z}$ Central West Goldfields Native Title Claim WC99/29.
• R. Ngadju Native Title Claim WC99/2.
• 1. Wongatha Native Title Claim WC99/1.
• $10.$ Yugunga Nya Native Title Claim WC99/46.
• $11.$ Agreement for Heritage Protection over Exploration and Prospecting Tenure between Bullion Minerals Limited and the Goldfields Land and Sea Council on behalf of the Ngadju Native Title Claim Group dated 20 January 2004.
• Agreement for Heritage Protection over Exploration and Prospecting Tenure between Bullion Minerals $12.$ Limited and the Goldfields Land and Sea Council on behalf of the Naadiu Native Title Claim Group dated 4 March 2004.
• Agreement between Bullion Minerals Ltd and Yamatii Marpia Barna Baba Maaja Aboriginal Corporation as 13. agent for the Yugunga Nya Claim Group undated.
• Agreement for Heritage Protection over Exploration and Prospecting Tenure between Bullion Minerals $14$ Limited and the Goldfields Land and Sea Council on behalf of the Naadju Native Title Claim Group dated 29 September 2004.
• Kariyarra / Farno Deferred Heritage Agreement between Farno-McMahon Pty Ltd and the Kariyarra Native 1.5. Title Applicants dated 17 December 2002.
• 1. Kariyarra, Farno and Pilbara Aboriginal Land Council Exploration Agreement between Teddy Roberts and others, Farno-McMahon Pty Ltd and the Pilbara Aboriginal Land Council Aboriginal Corporation dated 22 April 1999.
• 1. Bullion Minerals Ltd and Yamatji Marpla Barna Baba Maaja Aboriginal Corporation as agent for the Kariyarra Claim Group dated 29 July 2005.
• Mugarinya, Farno and Aboriginal Lands Trust Agreement for Exploration on an Aboriginal Reserve between 18 Mugarinya Community Association Inc, Farno-McMahon Pty Ltd and the Aboriginal Lands Trust dated 7 October 1999.
• 1. Agreement for Heritage Protection over Exploration and Prospecting Tenure between Bullion Minerals Limited and the Goldfields Land and Sea Council on behalf of the Wongatha Native Title Claim Group dated 14 April 2005.
• 1. Native Title, Training, Employment, Compensation and Heritage Agreement (as amended) between Resolute Samantha Limited, Tim Champion and Gubrun Aboriginal Corporation dated 3 July 1996 (as amended) and Deed of Novation between Resolute Limited, Bullion Minerals Limited, Brian Champion and others and Gubrun Aboriginal Corporation undated, presently not fully executed.
• Yamatii Land and Sea Council Contract for Services between Yugunga-Nya People and Helix Resources $21$ Limited and JA Bunting and Associates Pty Ltd dated 12 July 2002.

e galantik

6 INDEPENDENT SOLICITOR'S REPORT THE THEFT

SOFFBULL BUTTON

Summary of Material Contracts affecting the tenements and all according to the control of the state of the control of the control of the control of the control of the control of the control of the control of the control of

I OVERVIEW

There are tive discrete projects in which the Company will acquire an interest subject to completion of the Purchase Agreement defined in paragraph 2 below. This summary covers the relevant agreements to which Bullion is a party, and demonstrates the extent of Bullion's interest, to be acquired by the Company subject to completion of the Purchase Aartsenent. The

2 TENEMENT PURCHASE A GREEMENT BETWEEN THE COMPANY AND BULLION MINERALS LIMITED ("BULLION")

On 18 January 2006, the Company and Bullion entered into an agreement pursuant to which Bullion agreed to transfer to the Company att at Bullian's legal and equitable interest in the tenements (excluding the nickel exploration rights the subject of the Letter Agreement and Deed of Consent summarised in paragraph 7) which are listed in Schedule A ("Tenements") ("Purchase Agreement"). The consideration paid is the issue of 34,999,998
fully paid ardinary shares in the Company at a deemed issue price of \$0.078 each comprising no less than reimburse Bullion for reasonable costs paid for Chailce's capital raising. The manufacture of the manufacture

Completion requires satisfaction of certain usual and appropriate conditions, including Chatice abtaining funding (1111) of not less than \$6 million on terms acceptable to Chalice, by 30 April 2006.

The Company is entitled to lodge a caveal to protect its rights under the Purchase Agreement. The manufacturer

Bullion has provided standard warranties (as at the execution date and the completion date) to the Company in respect of the Tenements in the Putchase Agreement. The contract of the contract of the Contract of the Contract of

Chalice has granted Bullion a non-exclusive assignable licence to use the technical Information relating to the Cowan Joint Venture. Butlion is also permitted to grant a sub-licence in relation to such information, to any entity that Bullian sells an proposes to sell assets to.

YANDEARRA PROJECT 3.

The Yandearra Project comprises tenements:-

• ${\alpha}$ which are 100% legally and beneficially owned by Bullion, pursuant to a Farmin Agreement dated 8 August 2002 with Farno-McMahon Pty Ltd, Farno Pty Ltd and Dorsch Resources Pty Ltd ("Holders") ("Farmin Agreement");
• $(b)$ which are the subject of an option to purchase pursuant to an option agreement dated 11 March 2004 between Bullion, Tim Pascoe, Louise Ponta and Robert Sirr ("Option Agreement"), which option has not yet been exercised: and
• ${C}$ which remain applications, in the name of Bullion.

3.1 Formin Agreement

Bullion has earned a 100% interest in the tenements in (a) mentioned above, subject to the royalties in favour of Farno-McMahon Pty Ltd if Bullion produces any gold or minerals as follows:

• Gold up to \$2.00 per tonne of ore mined and milled depending on recovered grade; specifically, ${\alpha}$
• fil \$1.00 per tonne up to 1.5a/t gold,
• $[1]$ \$1.50 per tonne up to 3.0g/t gold, and
• $(iii)$ \$2.00 per tonne at a grade greater than 3.0g/t gold.
• $(b)$ Other minerals - 2% from the net smelter return of any metal or mineral (other than gold) from which Bullion derives any income.

Alternatively, if Bullion produces gold from an underground operation in which the recovered grade exceeds 10g/t gold (over any given quarter), Farno-McMahon Pty Ltd is entitled to a 3% royalty on revenue received from gold sales, replacing the royalty mentioned above.

Butlion has a pre-emptive right in respect of the royalties mentioned above if Farno-McMahon assign or transfer the royalties.

The Holders retain the right to alluvial production from the tenements, defined as the top three metres. In the event that an area is delineated as a bedrock resource by drilling, any alluvial deposits above the bedrock resource are deemed to be the property of Bullion and the Holders' rights in relation to alluvial deposits cease to apply.

The Holders are, and remain, responsible for complying with all statutory requirements in relation to any alluvial mining undertaken. The Holders are responsible for the posting of any environmental bonds required for all ongoing rehabilitation.

Farno-McMahon Pty Ltd has aranted a power of attorney in favour of Bullion in relation to the current remaining tenement applications.

6 INDEPENDENT SOLICITOR'S REPORTHILLILLI

3.2 Option Agreement Communications and the contract of the contract of the contract of the contract of the co

Button has an obtion to acautic the tenements in 3 (b) mentioned above pursuant to the Option Agreement. which expires on 29 March 2007. During the option period Bullion is responsible for paying annual rents and rates and half of the minimum expenditure commitments on the relevant tenements. The parties granting the option ("the Syndicate") have warranted lead and beneficial title to the tenements fiee of encumbrances. The option is exercisable upon payment of \$125,000, in the community of the community of the community of the community of

4 CNAWFEDA PROJECT

4.11 Option to Purchase with Benjay Ply Ltd (1111)

Bullion has an option to purchase E51/1027 for 9 months from 25 January 2005 from Benjay Pty Ltd for \$5,000 and a 1% net snelter return of any metal and minerals produced. Bullion may extend the option by a further 9 month period upon payment of \$2,000, and Bullian is responsible for payment of all rents, rates and minimum expenditure commitments. Bullion may assign its interest provided the assignee agrees to be bound by the terms of the Objor Adreement (2008) (2008)

4.2 Option to Purchase with JA Bunting & Associates Pty Ltd ("Bunting")

By completing an initial exploration program at \$30,000 of exploration expenditure, Bullion has acquired an option to purchase E517926 and E517927 pursuant to an option agreement dated 8 July 2004 for 3 years expliring on 7 July 2007, exercisable by payment of \$100,000 in cash or Bullion fully paid ordinary shares. Bullion is responsible for the minimum expenditure commitment, and rehabilitation of its work. Bullion may assign its interest in the aption to a third party which Bullion has demonstrated has the linancial and technical resources necessary for underlake Bullion's obligations, and the third party entering into a Deed of Assumption agreeing to be bound by the terms of the option. Bunting has confirmed its consent to Bullion's assignment to Teck Comingo Australia Ply Ltd (pursuant to the Heads of Agreement summarised in paragraph 4.3 below), subject to a Deed of Assignment and Assumption being entered into. It Button exercises the option a 1% het smeller royally is payable in respect of metals and minerals produced from E\$1/926 and E51/927 and Bullion's interest in tenements within a 5km ractius from their boundaries excluding those which are the subject of the Heads of Agreement summarised in paragraph 4.3 below. William Marine Marshall

4.3 Heads of Agreement for a Farm-in and Joint Venture (1996)

Bullion entered Into a Heads of Agreement dated 10 January 2006 ("HOA") with TeckCominco Australia Ph Ltd ("Teck") whereby Teck may earn a fotal 70% interest in £51/926, E51/927, E51/1027, E51/1074, P51/2514 croci PSU/2SUS.

Teck is required to spend \$140,000 by 31 December 2006. Teck may earn a 51% interest by spending a total of " \$750,000 by 31 December 2008 on exploration or cash payments to Bullion. Unless Teck then elects to continue sole funding to earn a total 70% interest, or Sullion elects to convert its interest to a 0.5% net smelter returns royalty, a joint venture will then be formed between the parties as to Bullion 49%, and Teck 51%.

Teck is responsible for maintaining the tenements in good standing. Joint venture interest may be diluted in view of pro rata contributions to budgets and work plans. Dilutions to 10% automatically revert to a 0.6% net smeller royally, the company of the company of the company of the company of the company of the company of the

If Bullion proposes to raise equity financing at any stage, the principal purpose of which is to participate in the project, Teck has the right of first refusal in relation to taking up between 10% and 50% of any public offer, or 10% of any private placement.

There are mutual rights of first refusal for any disposal by a party of its interest, other than to affiliates, and a change in control of Teck is deemed to trigger these provisions. The tenement sale to Chalice, summarised in clause 1 above, is expressly permitted provided Chalice agrees to be bound by the terms of the HOA.

Bullion agrees to procure the amendment of the Option to Purchase with JA Bunting & Associates Pty Ltd summarised in clause 4.2 above, so that there is no royalty obligation on Bullion in relation to tenements acquired from third parties within a 5km radius of the tenements the subject of the Option to Purchase.

The parties have agreed to negotiate in good faith sales agreements appointing Teck as Bullion's sales agent for Butlion's joint venture share of base metal products.

An area of interest applies for 5km surrounding the tenements other than tenements held by third parties or the tenements the subject of the agreement with Benjay Pty Ltd summarised in clause 4.1 above. Any surface or water rights, or mineral properties must be offered to the joint venture.

5. CHALICE PROJECT

Sale of Interests Agreement ("Sale Agreement") 5.3

Butlion acquired M15/786 from Resolute Limited in addition to other assets. Resolute is solely responsible for, and must undertake at its own expense, all statutory rehabilitation obligations arising from any mining or exploration activity on the tenement at any time by Resolute, and indemnifies Bullion accordinaly,

6. CHALICE AND HIGGINSVILLE PROJECTS

6.1 Joint Venture Agreement with Equinox Resources Limited ("Equinox") and Equinox Minerals Limited ("Joint Venture Agreement")

With effect on 4 April 2004 Bullion formed an exploration joint venture for nickel on tenements including the Chalice and Higginsville tenements listed in Schedule A to this report ("Chalice and Higginsville Tenements"), with Equinox and Equinox Minerals Limited as guarantor, called the Cowan Nickel Joint Venture. The notes to the tenement schedule indicate which of the Chalice and Higginsville Tenements are currently subject to the Cowan Nickel Joint Venture, following the election by Equinox not to proceed with all the originally identified tenements. Equinox was required to spend \$1,200,000 by 4 April 2005 following which Equinox elected to proceed to earn a 50% interest in the Chalice and Higginsville Tenements by spending a total of \$5 million on exploration by 4 April 2007. On completion of that commitment, Bullion must elect whether to contribute in proportion to its interest, or dilute, and Equinox may elect to earn a turther 10% in the Chalice and Higginsville Tenements by spending a further \$5 million by 4 April 2009. If Equinox elects not to earn a further interest, contributions will be made in proportion to its interest, or its interest will dilute. Dilution to 5% automatically converts to a 1% net smelter returns royalty.

As at the date of this report Equinox has not yet completed its expenditure obligation and has not earned an interest in the Chalice and Higginsville Tenements.

6 INDEPENDENT SOLICITOR'S REPORT

The parties must during the term of the joint venture ofter to the loint venture any interests obtained by a party in any tenements contiguous to the joint venture tenements or within a 1km radius. The manuscription

The consent of Equinox to the assignment of Bullian's interest in the joint venture to Chalice is required, and has been obtained, referred to in paragraph 7 below, and Chalice will be required to enter into a deed of covenant agreeing to be bound by the terms of the Joint Venture Agreement. The contract of the contract of the contract

There is a pre-emptive right applicable where proposed assignees are independent third parties and their offers are cash only. Chalice fails outside these criteria and accordingly no pre-emptive right continues to exist in relation to the subject of the Tenement Purchase Agreement (1) (1) 1) The Charles Countries (1) (1) (1) (1) (1) (1) (1) (1) (1) (1)

6.2 Letter Agreement dated 23 September 2004 with A Sandercock and J Morton

.
By a Letter Agreement dated 23 September 2904 the realitered holders have aranted a three year option to Bullion to acquire P15/4619 for consideration which includes a 5% NPI royalty attaching to any economic production of ore minerals on the tenement (or its' successor tenement). The option has not been exercised to date.

7 LETTER AGREEMENT DATED 24 JANUARY 2006 BETWEEN BULLION MINERALS LIMITED AND EQUINOX MINERALS LIMITED, AND DEED OF GONSENT DATED 24 JANUARY 2006 BETWEEN BULLION

By a Letter Agreement and Deed of Consent both dated 24 January 2006, Equinox Minerals Limited as avaranter and Equinox Resources Limited consents to the sale of the tenements comprised in the Cowan Nickel Joint Venture, by Bullion to Chalice pursuant to the Tenement Purchase Agreement dated 18 January 2006, on the basis that the nicket mining rights for those tenements are reserved to Bullion and the sale does not affect the nickel mining rights of Equinox Minerals Limited. Equinox Resources Limited or Bullion oursugnt to the Cowan Nickel Joint Venture. In porticular Equinox Resources Limited waives any pre-emptive rights conterred upon if by the Cowan Nickel Joint Venture Agreement dated 19 November 2004, in relation to the disposal of these tenements W/ Builde to Challes

Chartered Accountants

3 February 2006

The Directors Chalice Gold Mines Limited Level 2, 1292 Hay Street WEST PERTH WA 6005

Dear Sirs

INDEPENDENT ACCOUNTANT'S REPORT

Infraduction

This independent accountant's report ("Report") has been prepared for inclusion in a prospectus to be dated on or about 3 February 2006 ("Prospectus") for the issue by Chalice Gold Mines Limited ("Chalice" or "Company") of up to 37,500,000 ordinary shares at an issue price of 20 cents each, to raise up to \$7,500,000 before the expenses of the issue.

The Company's Board has elected to accept a minimum subscription of \$6,000,000 and this Report has been prepared on this basis unless otherwise stated.

This Report has been included in the Prospectus to assist potential investors and their financial advisers to make an assessment of the financial position of the Company.

Structure of Report

This Report has been divided into the following sections:

• 1. Background information;
• 1. Scope of report;
• 1. Historical financial information;
• 1. Subsequent events;
• 1. Statements: and
• 1. Declaration.

BLB Marin Judd (WA Partnership) 15 Rheold Street West Perth 6005. PO Box 263 West Perth 6872 Western Australia. DX 238 (Perthy Telephone +61 (08) 9481 0977. Fax 361 8881 9481 3686. Ernall: hilo@mjwa.com.au. Website: www.hilo.com.au

Partners: Iam H Barsden. Terry M Blenkinsop. Lifsa Christophicu, Wayne M Clock, Lucio Di Gloßonardo. Colin D Emmott. Trevar G Hodgey Restricts Co. Nelly Per . « William Ward Hotel Product Market Market Market And Market Market Market Market Market Market Market Market
Market Market Market Market Market Market Market Market Market Market Market Market Market Market Market Marke

7 INDEPENDENT ACCOUNTANTI'S REPORT

I BACKGROUND INFORMATION

The Company was realistered on 13 October 2005 and has not traded since that date. The current activities of the Company are being tunded by its parent entity, Bullion Minerals Limited ("Bullion"). The Company entered Into a Tenement Purchase Agreement acted 16 January 2006 with Bullion to acquire certain mineral interests, the consideration for which is the issue of 34,999,998 fully ordinary shares in Chalice (valued at \$2,689,517).

HLB Mann Judd was appointed as the Company's auditors on 11 November 2005.

As at the date of this Respectus, the Issued share capital of the Company is 2 shares. These shares are owned by Bullion. The company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of

We understand that the funds raised by the issue of shares under the Prospectus will be applied as follows: will be applied as follows:

• Finance the pianned exploration and drilling program on the gold projects acquired from Bullion;
• Provide working capital for the Company to meet its general administration and operating costs, and
• Meet the expenses of the issue. The international content of the international content of the international

2 SCORE OF REPORT

You have requested HLB Mann Judd ("HLB") to prepare this Report presenting the following information:

• a) the Historical Financial Information, comprising the historical balance sheet as at 30 November 2005 and the historical income Statement, Statement of Changes in Equity and Cash Row Statement for the period from reaistration on 13 October 2005 to 30 November 2005 as set out in Appendix 1 to this Report; and
• b) the Proforma Financial Information comprising the proforma Balance Sheet as at 30 November 2005 and the protorma Statement of Changes in Equity and Cash Flow Statement for the period then ended.

The Directors have prepared and are responsible for the historical and proforma information. We disclaim any responsibility for any reliance on this report a on the financial information to which it relates for any purposes other. than that for which it was prepared. This report should be read in conjunction with the full prospectus.

We have performed a review of the historical financial intermation and the proforma information of the Company as at 30 November 2005 in order to ensure consistency in the application of applicable Accounting Standards. and other mandatory professional reporting requirements. Our review has been conducted in accordance with Austration Auditing Standards applicable to review engagements. The contractor

Our review of the historical incractal information and the proforma information of the Company was carried aut in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports" and Included such enquiries and procedures which we considered necessary for the purposes of this Report. The review procedures undertaken by HLB in our role as independent Accountants were substantially less in scope than that of an audit. examination conducted in accordance with generally accepted auditing standards. Our review was limited in t primarily to an examination of the historical financial intermation and the proforma information, analytical review procedures and discussions with senior management. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the Historical Financial Information and Protorna Financial Information Included in this Report or elsewhere in the Prospectus.

in relation to the information presented in this Report: The Community of Contract Library and

i) support by another person, corporation or an unrelated entity has not been assumed:

ii) the amounts shown in respect of assets do not purport to be the amounts that would have been realised it the assets were said at the date of this Report; and

$\mathbb{R}^3$ in the going concern basis of accounting has been adopted. The contract of the concern concern to the contract of $\mathbb{R}^3$

11 Experti frantzialia 6 Emm

HISTORICAL FINANCIAL INFORMATION $\mathbb{R}^+$

Set out in Appendix 1 (attached) are:

• ij The Balance Sheet of the Company as at 30 November 2005, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the period then ended; and
• iĭ} The proforma Balance Sheet of the Company as at 30 November 2005 and proforma Statement of Changes in Equity and Cash Flow Statement for the period then ended as they would appear after incorporating the following significant events and proposed transactions by the Company subsequent to 30 November 2005:
• the issue by the Company pursuant to this Prospectus of 30,000,000 ordinary shares at an issue price $\alpha$ of 20 cents each, raising \$6,000,000 (minimum subscription);
• $b$ the transfer of prepaid share issue expenses of \$71,610 to Contributed Equity;
• C) the acquisition of various tenements via the issue of 34,999,998 ordinary shares (consideration of \$2,689,517} pursuant to the acquisition agreement with Bullion;
• the settlement of the inter-company loan account with Bullion as at 30 November 2005 (\$43,213): d}
• the payment of statutory charges of approximately \$210,000 in relation to the acquisition of e) tenements: and
• the payment and write off to the contributed equity account of further prospectus costs, $\mathfrak{f}}$ not already paid or previously provided, of an estimated \$447,799 (net of GST) as follows:

	Costs to 30/11/05	Further costs	Total
	\$	ь	\$
Independent Accountant's Fees	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ۰	7,500	7.500
Printing & Associated Offer Costs	24.742	28.356	53.098
ASIC Lodgement Fees		2.010.	2.010
ASX Listing Fees		34.801	34.801
Legal	8.903	13.097	22.000
Brokerage commissions		240.000	240.000
Corporate Advisory		110.000	110.000
Consultants	37.965	12.035	50.000
	71.610	447.799	519.409

Notes to the historical financial information. 冊

SUBSEQUENT EVENTS $\mathbb{A}^+$

In our opinion, there have been no material items, transactions or events subsequent to 30 November 2005 not ofherwise disclosed in the Prospectus that have come to our aftention during the course of our review that would require comment in, or adjustment to, the content of this Report or which would cause such information includedin this Report to be misleading.

ោ

7 INDEPENDENT ACCOUNTANTIS REPORT

SUPPLIES TANK HAAR IS TA THE TIME TO BE Based on our review, which was not an audit, we have not become aware of any matter that causes us to believe that: www.www.www.www.www.www.www.www.www.ww

• 1) the Historical Financial Information of Chalice Gold Mines Limited as at 30 November 2005 as set out in Appendix I of this Report, does not present failty the thancial position of the Company as at that date in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatary reporting requirements in the community Aestralia and its performance as represented by its results of its operations and its cash flows for the period from registration to 30 November 2005; and the contract of the contract of the contract of the contract of the
• III the Proforma Financial information of Chalice Gold Mines Limited as at 30 November 2005 as set out in Appendix 1 of this Report, does not present failly the financial position of the Company as all that date in in accardance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia and its performance as represented by its results of its operations and its cash flows for the period from registration to 30 November, as if the transactions referred to in Section 3 (ii) of this Report had occurred during that period. The contract of the contract of the contract of the contract of the

6. DECLARATION AND CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CON

• . Hits will be paid its usual professional fees based on time involvement, for the preparation of this Report and review of the financial information, at our normal professional rates (expected to be \$7,500). Hills has received no amounts shaenegistiation.
• Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report, The Theory
• Neither HLB, nor any of its employees at associated persons have any interest in Chalice Gold Mines Umited at the promotion of the Company.
• . Unless specifically relened to in this Report, or elsewhere in the Prospectus. HLB was not involved in the preparation of any after part of the Prospectus and did not cause the issue of any other part of the Prospectus. Accordingly, HLB makes no representations or warranties as to the completeness or accuracy of the information contained in any other part of the Prospectus.
• HLB has consented to the inclusion of this report in the Prospectus in the form and context in which it appears. The inclusion of this report should not be taken as an endorsement of the Company or a recommendation by HLB of any participation in the Company by an intending subscriber.

Yours talikitish was a state of the contract of the contract of the contract of the contract of the contract of HER MANN HIDD. A 1990 CONTROL CONTROL CONTROL INTO A 1990 CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTR

LIBIGATIONARDO

Commercial Commercial Commercial Commercial

- APPENDIX 1 -

CHALICE GOLD MINES LIMITED BALANCE SHEET AS AT 30 NOVEMBER 2005

	Notes	Reviewed	Proforma
		\$	\$
CURRENT ASSETS
Cash assets	$\overline{2}$	$\overline{2}$	5,298,990
Prepaid share issue expenses		71,610
TOTAL CURRENT ASSETS		71.612	5.298.990
NON-CURRENT ASSETS
Exploration and tenement acquisition expenditure	з	7.393	2.906.910
TOTAL NON-CURRENT ASSETS		7.393	2,906,910
TOTAL ASSETS		79,005	8,205,900
CURRENT LIABILITIES
Payables	4	80,213	37,000
TOTAL CURRENT LIABILITIES		80.213	37.000
TOTAL LIABILITIES		80,213	37.000
NET ASSETS		(1,208)	8.168.900
EQUITY
Contributed equity	5	2	8,170,110
Accumulated losses		(1, 210)	(1, 210)
TOTAL EQUITY		(1,208)	8,168,900

This balance sheet should be read in conjunction with the accompanying notes.

CHALICE GOLD MINES LIMITED INCOME STATEMENT FOR THE PERIOD 13 OCTOBER 2005 TO 30 NOVEMBER 2005

Revenue from ordinary activities
Formation expenses written off	/1.210)
Other expenses from ordinary activities
Loss from ordinary activities before income tax	1.2101
Income tax expense relating to ordinary activities
Loss from ordinary activities after income tax expense

This statement should be read in conjunction with the accompanying notes.

7 INDEPENDENT ACCOUNTANTIS REPORT

AUTOS ACTOR DE ALES DE CASHIFLOW STATEMENT EXECUT THE PERIOD 13 OCTOBER 2015 BLOCKBAC	Camaras	REAL
Cash Flows From Operating Activities
Payments to suppliers and employees Interest received [[[[[[[[[[[[[[[[[[[[[[[[]]]]]]]]] NS Crimites in Operating Asiwites	Allendon Hillingining saikain	ww.41102.1103.111 BATTA REAL PROPERTY
Cash Rows From Investing Activities Exploration expenditure, tenement acquisition and reimbursements No Cesa Movieco By Awashie Advises	www.an	tuarikoa:
Cash Flows From financing Activities CONTROCCOGN Philosophilages Proceeds trom bonowings Represented bottowings Prospectus analisticite issue cost Net Cash Provised BV Indicates Astwites	ských: 6373101 wsor	ensurmane KISZEIG $\mathbb{C}^{1 C}$ and $\mathbb{C}^{n}$ WES 302 STAND
Not from the 1st Colorabile Cath at the beginning of the tinancial period
Cash Affine Bid Of the financial Period This statement should be read in conjunction with the accompanying		$-1.11$
CHALICE GOLD MINES LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 13 OCTOBER 2005 TO 30 NOVEMBER 2005
ozhijnu z 1401 issue of shares at iddle of registration (in the minimum toss to the period communication and As sh30 Neversier 2005 issue of shares pursuant to prospectibly isse of states to acquie tenements Carrier Shore stop existenses EXPORIO Refering total as at 20 November 2005	Antarikasi Principalit MUNICIPALITY na. (OCXI) ander 1822	KAZILLENS MAR (Mari 4.000.000 2.482.517 -{519.469} SHARR	mmmus

As set out in Note 5(ii) to the Financial Statements, the Company proposes to issue 6,075,000 unisted options to existing Directors and employees on completion of the after of shares pursuant to the Prospectus ("Offer"). The Company's accounting policy in relation to Share Based Payment Transactions requires if to determine a fair value of the options at the date on which the options are granted and to recognise an expense for this value in the income Sictement, together with a corresponding increase in equity (Employee Equity Benefits Reserve) over the period from the date the options are granted to the vesting date. The manufacturer of the control of the control of The Company has obtained an independent valuation of the options, which determines a theoretical value of the options to be 8 cents per option. The independent valuer has utilised the Binomial Model in valuing the options and has made the following assumptions in arriving at this value:

Value of underlying share (IPO issue price)	20 cents
Exercise price of options	25 cents
Expiry date of options	5 years from date of issue
Expected life of options	3 years
Risk-free interest rate	5.3%
Expected volatility	80%

In relation to the 6,075,000 options to be issued to existing Directors and employees, on the above basis an expense of \$486,000 would need to be recognised in the Income Statement, together with a corresponding increase in the Employee Equity Benefits Reserve, over the period from the date the options are granted to the vesting date.

The Company has also advised in this Prospectus of the potential for it to issue 3,925,000 options to future Directors and employees if required in the current employment market to secure and retain high quality personnel. In relation to these options and on the above basis, an expense of \$314,000 would need to be recognised over the period from the date the options are granted to the vesting date. This value is arrived at using the assumptions mentioned above, however will need to be updated to take into account conditions which will exist when the options are issued.

This statement should be read in conjunction with the accompanying notes.

CHALICE GOLD MINES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 13 OCTOBER TO 30 NOVEMBER 2005

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies which have been adopted in the preparation of the historical and proforma financial information reported under Australian Equivalents to International Financial Reporting Standards ("AIFRS") are shown below:

Basis of Accountina

The financial statements have been prepared in accordance with the measurement requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia using the accrual basis of accounting, including the historical cost convention.

Statement of Compliance

The financial information complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards ("AIFRS"). Compliance with AIFRS ensures that the financial information, comprising the financial statements and notes thereto, comply with International Financial Reporting Standards.

Cash

Cash on hand and in banks and short-term deposits are stated at nominal value.

For the purposes of the Cash Flow Statement, cash includes cash on hand and in benks and money market investments readily convertible to cash within 2 working days, net of outstanding bank overdrafts,

Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

7 INDEPENDENT ACCOUNTANTIS REPORTIFIELD

Goods and Services Tax ("GSTN [11]

Revenues, expenses and assets are recognised net of the amount of GST except where the amount of GST incurre is not recoverable from the Australian Taxation Office ("ATO"). In these circumstances the GST is recogn part of the cost of acquisition of the asset of as part of the expense item as applicable.

Receivables and pavables are stated with the amount of GST included. The net amount of GST recoverable from or payable to the ATO is included as a current asset or liability in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising trom investing and financing activities, which are recoverable from or payable to the ATO are classified as operating cash it was made a

haome Tax

Deterred income fax is provided for on all temporary differences at balance date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. No deterred income tax will be recognised from the Initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deterred fax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Income Statement except where it relates to items that may be credited directly to equity, in which case the deterred tax is adjusted directly against equity,

Deferred income tax assets are recognised to the extent that it is probable that Juture tax profits will be available against which deductible temporary differences can be utilised. The manufacturer and a manufacturer of

The amount of benefits brought to account or which may be realised in the tuture is based on the assumption that no adverse change will accur in income taxation legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. The carrying amount of deferred fax assets is reviewed at each balance date and only recognised to the extent that sufficient tuture assessable income is expected to be obtained.

Recoverable Ambunt Marian Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria Maria

At each reporting date) the Company assesses whether there is any indication that an asset may be impaired Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. The contract of the contract of the contract of the contract of the contract of

Recoverable amount is the areater of fair value less costs to sell and value in use. Value in use is the present value of the future cash flows expected to be derived from the asset or cash generating unit. In estimating value in use, arpre-tax discount rate is used which reflects current market assessments of the time value of money and the risks specific to the asset. The manufacturer and contact the contact of the contact of the contact of the contact of

Exploration, Evaluation, Development and Tenement Acquisition Costs

Exploration, evaluation, development and tenement acquisition costs in relation to separate areas of interest for which rights of tenure are current, are capitalised in the period in which they are incurred and are carried at cost less accumulated impairment losses. The cost of acquisition of an area of Interest and exploration expenditure relating to that area of interest is carried forward as an asset in the Balance Sheet so long as the following conditions are satisfied: with a construction of the condition of the conditions are satisfied: with the conditions of the conditions of the conditions of the conditions of the conditions of the conditions of the condition

Exploration, Evaluation, Development and Tenement Acquisition Costs

• the rights to tenure of the area of interest are current; and ${ii}$
• at least one of the following conditions is also met: $f_{\rm H}$
• the exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or
• exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation expenditure is assessed for impairment when facts and circumstances suggest that their carrying amount exceeds their recoverable amount and where this is the case an impairment loss is recognised. Should a project or an area of interest be abandoned, the expenditure will be written off in the period in which the decision is made. Where a decision is made to proceed with development, accumulated expenditure will be amortised over the life of the reserves associated with the area of interest once mining operations have commenced.

Pavables

Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. Amounts are unsecured and are usually paid within 30 days of recognition.

Share Based Payment Transactions

The Company currently provides benefits to employees (including Directors and senior executives) of the Company in the form of share-based payment transactions under the Employee Share Options Plan. The cost of these equity-settled transactions (options) with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined using the Binomial Model.

The cost of equity-settled transactions (options) is recognised (in the majority of cases as an expense in the Income Statement), together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award of the options ("vesting date").

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired and the number of awards of options that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

Contributed Equity

Issued capital is recognised at the fair value of the consideration received by the Company.

Transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

Proforma Transactions

The proforma Balance Sheef, Statement of Chanaes in Eaulty and Cash Flow Statement have been derived from the historical financial information as at 30 November 2005 adjusted to give effect, to the following significant events and transactions by the Company subsequent to 30 November 2005;

7 INDEPENDENT ACCOUNTANTIES REPORT

Profoting Transdotions the issue by the Company pursuant to this Prospectus of 30,000,000 ordinary shares, raising \$6,000,000 88 terminum at scriptorij. In the matter
the transfer of prepaid share issue expenses of \$71,610 to Contributed Equity: 8
the acquisition of various tenements via the issue of 34,999,998 ordinary shares (consideration of OF HUMANITIAN \$2,689.517) parsuant to the acquisition agreement with Ballian:
the settlement of the inter-company loan account with Bullion (\$43.213): Œ
e) the payment of statutory charges of approximately \$210,000 in relation to the acquisition of tenements anco
t) in the payment and write off to the contributed equity account of further prospectus costs, not alread paid or previously provided, of an estimated \$447,799 (net of GST). The real production of the production of the
The proforma financial information has been prepared on the basis that the minimum subscription is received. I the full subscription is received (additional 7,500,000 shares raising on additional amount of \$1,500,000), the cash balance will initially increase by \$1.500,000 with a corresponding increase in contributed equity, arganya sebunungungung additional prospectus casts of \$83,298 will be incurred
2. 6233. Reviewers
stalastica as as sublevening 23th million Repowrent of loan to Ballion Minerals united ing usung Payment of statutory charges in relation to temernerst acquisition SOLUTION Shares issued pursuant to prospectus 800.0000
Arang Kabupaten ETHERES
3. EXPLORATION AND TENEMENT ACQUISITION EXPENDITURE Professor Reviewed
200000000000000000000000000000000000000
Balance as at 30 November 2005 a a component a construction of the construction of the construction of the construction of the construction o Payment of statutory charges in retalion to tenement acquisition
issue of shares persuant to tenement acquisition agreement.

$\begin{array}{cccccccccccccc} \mathcal{L} & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & &$

jar
1

$\overline{4}$ PAYABLES

	Reviewed	Protorma
Sundry creditors and accruais	37.000	37.000
Loan – Bullion Minerals Limited .		-

5. CONTRIBUTED EQUITY

俳 Issued and paid up share capital
Shares issued:
2 fully paid shares issued at \$1 each
34,999,998 fully paid shares issued as consideration for tenement acaustitions		2.689.517
30,000,000 shares issued pursuant to this Prospectus		6.000.000
Share issue costs		(519,409)
Balance at end of period - 2 ordinary shares (Pro-forma: 65,000,000 fully paid)		8.170.110
Movements in number of fully paid ordinary shares since registration:
Detaik	Number
Ralance as at 30 November 2005 (subscriber shares)

Balance as at 30 November 2005 (subscriber shares)
Issue of shares pursuant to tenement acquisition agreement	34.999.998	2.689.517
Shares to be issued pursuant to the Prospectus	30.000.000	6.000.000
Proforma balance (excludes share issue costs)	65.000.000	8.689.519

ii) Share Options

As set out in Sections 1.6, 10.3.5 and 10.7 of the Prospectus, the Company has established an Employee Share Options Plan ("Plan"). Under this Plan, the Company proposes to issue 6,075,000 unlisted options to existing Directors and employees on completion of the offer of shares pursuant to the Prospectus ("Offer") and has advised of the potential to have to issue 3,925,000 unlisted options to future Directors and employees if required in the current employment market to secure and retain high quality personnel. The first allocation of options outlined above will be exercisable at 25 cents (and it is assumed that this will also apply for the second allocation outlined above), on or before the date being five years from the date of issue of the options, but will not vest until the date being one year from the date of issue.

$(109)$

7 INDEPENDENT ACCOUNTANTIS REPORT

6. CONTINGENCIES AND COMMITMENTS

Details of planned expendibite commitments are outlined in Section 1.5 of the Prospectus and the Independent Geological Report included in the Prospectus. The Directors are not aware of any other contingencies. The manufacturer of

7. RELATED PARTY TRANSACTIONS AND CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONT

The names of persons who were Directors of Challice Gold Mines Limited at any lime during the financial period are Mr Tim Goyder, Mr Andrew Banfock, Mr John McIntyre and Mr Bryan Alexander. The Community of the Community Details of Directors' interests in the Company's issued capital and transactions with the Company are included in Sections 10.4, 10.5 and 10.6 of the Prospectus. The contract of the contract of the contract of the contract of

CORPORATE GOVERNANCE 8

The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. To the extent they are applicable, the Company has adopted the Ten Essential Corporate Governance Principles and Best Practice Recommendations ("Recommendations") as published by ASX Corporate Governance Council.

Further information about the Company's corporate governance practices is set out on the Company's website at www.chalicegold.com. In accordance with the recommendations of the ASX, information published on the Company's website includes charters (for the board and its sub-committees), codes of conduct and other policies and procedures relating to the board and its responsibilities.

As the Company's activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance structures will be given further consideration.

The Board sets out below its "if not, why not" report in relation to those matters of corporate governance where the Company's practices depart from the Recommendations.

COUNCIL RECOMMENDATION 2.2

The chairperson should be an independent director.

The Company's Chairman, Mr Andrew Bantock, is considered by the Board not to be independent in terms of the ASX Corporate Governance Council's definition of independent director. However the Board believes that the Chairman is able and does brina auality and independent judament to all relevant issues failing within the scope of the role of a Chairman.

The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of the appointment of an independent Non-executive Chairman.

PRINCIPLE 2 RECOMMENDATION 2.4

There is no nomination committee.

The Board considers those matters and issues arising that would usually fall to a nomination committee. The Board considers that no efficiencies or other benefits would be gained by establishing a separate nomination committee.

COUNCE RECOMMENDATION 4.2

The board should establish an audit committee.

The Board considers that the Company is not of a size, nor are its financial affairs of such complexity to justify the formation of an audit committee. The Board as a whole undertakes the selection and proper application of accounting policies, the identification and management of risk and the review of the operation of the internal control systems.

The Board acknowledges this does not comply with recommendation 4.2 of the ASX Corporate Governance Guidelines. If the Company's activities increase in size, scope and nature, the appointment of an audit committee will be reviewed by the Board and implemented if appropriate.

8 CORPORATE GOVERNANCE

12 11 21 12 21 22 23 24 25 27 28 29 29 20 21 22

PRINCIPLE 8 RECOMMENDATION 8.1 | | | | | | | | | | | | | | | | | | | During the Reporting Period there was no performance evaluation of the Board, its committees and individual directors. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the cont The current Board has only been in place since 18 October 2005 and did not conduct a performance evaluation during the Reporting Period, it is proposed the Chairman will conduct a review in the 2007 financial year. PRINCIPLE 9 RECOMMENDATION 9.2 [11] [11] [11] [11] There is no separate remuneration committee. The contract of the contract of the contract of the contract of the Due to the small size and structure of the 80ard ra separate remuneration committee is not considered to add any efficiency to the process of determining the levels of remuneration for the directors and key Executives. The Board considers that it is more appropriate to set aside time at Board meetings each year to specifically address matters that would ordinarily fall to a remuneration committee. The control of the control of the control of the in addition, all matters of remuneration will continue to be determined in accordance with Corporations Act.

requirements, especially in respect of related party transactions. That is, no directors participate in any deliberations regarding his or her own remuneration or related issues, with a manufacturer

RISK FACTORS Ç.

The Shares offered under this Prospectus should be considered speculative because of the nature of the business activities of the Company. Whilst the Directors commend the Offer, potential investors should consider whether the Shares offered are a suitable investment having regard to their own personal investment objectives and financial circumstances and the risk factors set out below. This list is not exhaustive and potential investors should read this Prospectus in its entirety and if in any doubt consult their professional adviser before deciding whether to participate in the Offer.

9.1 ECONOMIC RISKS

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company's exploration, development and future production activities, as well as on its ability to fund those activities.

9.2 MARKET CONDITIONS

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities and in particular, resources stocks. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

9.3 SECURITY INVESTMENTS

Applicants should be aware that there are risks associated with any securities investment. Securities listed on the stock market, and in particular securities of mining and exploration companies have experienced extreme price and volume fluctuations that have often been unrelated to the operating performances of such companies. These factors may materially affect the market price of the securities regardless of the Company's performance.

Mineral exploration and mining are speculative operations that may be hampered by circumstances beyond the control of the Company. Profitability depends on successful exploration and/or acquisition of reserves, design and construction of efficient processing facilities, competent operation and management and proficient financial management.

Exploration in itself is a speculative endeavour, while mining operations can be hampered by force majeure circumstances and cost overruns for unforseen events.

9.4 EXPLORATION SUCCESS

The mineral tenements of the Company as described in the Prospectus are at various stages of exploration and potential investors should understand that mineral explorations and development are high risk undertakings.

There can be no assurance that exploration of the tenements, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

The exploration costs of the Company described in this prospectus and in the Independent Geologist's Report are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and accordinaly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurances can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company's viability.

9 RISK FACTOR'S CONSTITUTION OF REAL PROPERTY.

9.5 RESOURCE DEVELOPMENT RISKS

The success of the Company depends on the delineation of economically minable reserves and resources. access to required development capital, movement in the price of commodities, securing and mainfaining filte to the Company's exploration and mining tenements and obtaining all consents and approvals necessary for the conduct of its exploration adilytics. The

Exploration on the Company's existing exploration and mining tenements may be unsuccessful, resulting in c reduction of the value of those tenements, diminution in the cash reserves of the Company and possible relinquishment of the exploration and mining tenements. The contract of the contract of the contract of the contract of

Each of the development factors outlined above are subject to inherent uncertainty that may expose the Company to unforeseen development delays or may render the proposed development to be uneconomic.

9.6 COMMODITY PRICE AND EXCHANGE RATE RISKS

To the extent the Company's involved in mineral production the revenue derived through the sale of commodifies may expose the potential income of the Company to commodity price and exchange raterrisks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such tactors include supply and demand fluctuations for precious and base metals, technological advancements, forward selling activities and other macro-economic tactors. The contract of the contract of the contract of

Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and voiafility of the rate of excitange between the United States dollar and the Australian doilar as determined in international markets. The manufacturer and the manufacturer and the manufacturer

9.7 ENVIRONMENTAL RISKS

The operations and proposed activities of the Company are subject to State and Federal laws and tegulation concerning the environment. As with most exploration projects and mining operations, the Company's activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. The Company's attempts to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws. The manufacture of the manufacture of the

9.8 NATIVE TITLE AND TITLE RISKS

interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose filte to or its interest in tenements if licence conditions are not met or if insufficient funds are available. to meet expenditure commitments.

If is also possible that, in relation to tenements which the Company has an interest in or will in the future acquire such an interest, there may be areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the Company to gain access to tenements (through obtaining minimum consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of oberations may be affected. The contract of the contract of the contract of the contract of the contract of

The Directors closely monitor the potential effect of native fille claims involving tenements in which the Company has of may have an therest.

RISK FACTORS Ç.

JOINT VENTURE PARTIES. AGENTS AND CONTRACTORS $9.9 -$

The Directors are unable to predict the risk of financial failure or default by a participant in any joint venture to which the Company is or may become a party or the insolvency or managerial failure by any of the contractors used by the Company in any of its activities or the insolvency or other managerial failure by any of the other service providers used by the Company for any activity.

9.10 FUTURE CAPITAL REQUIREMENTS

The Company's activities will require substantial expenditures. There can be no guarantees that the funds raised through the Offer will be sufficient to successfully achieve all the objectives of the Company's overall business strategy. If the Company is unable to use debt or equity to fund expansion after the substantial exhaustion of the net proceeds of the Offer there can be no assurances that the Company will have sufficient capital resources for that purpose, or other purposes, or that if will be able to obtain additional resources on terms acceptable to the Company or at all. Any additional equity financing may be dilutive to shareholders and any debt financing if available may involve restrictive covenants, which fimit the Company's operations and business strategy.

The Company's failure to raise capital if and when needed could delay or suspend the Company's business strategy and could have a material adverse effect on the Company's activities.

9.11 POTENTIAL ACQUISITIONS

As part of its business strateay, the Company may make acaussitions of or sianificant investments in companies, products, technologies or resource projects. Any such future transactions would be accompanied by the risks commonly encountered in making acquisitions of companies, products, technologies or resource projects.

9.12 RESOURCE ESTIMATIONS

Resource estimates are expressions of judgment based on knowledge, experience and resource modelling. As such, resource estimates are inherently imprecise and rely to some extent on interpretations made. Despite employing qualified professionals to prepare resource estimates, such estimates may nevertheless prove to be inaccurate, Furthermore, resource estimates may change over time as new information becomes available. Should the company encounter mineralisation or geological formations different from those predicted by past drilling, sampling and interpretations, resource estimates may need to be altered in a way that could adversely affect the Company's operations.

9.13 RELIANCE ON KEY PERSONNEL

The Company's success depends largely on the core competencies of its directors and management, and their familiarisation with, and ability to operate, in the metals and mining industry and the Company's ability to retain its key Executives.

10 ADDITIONAL INFORMATION

10.1 INCORPORATION COMMUNIST CONTRACTOR The Company was incorporated on 16 October 2005 as a limited company. 10.2 RIGHTS ATTACHING TO SHARES AND THE CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTROL CONTRO $Generat$ The Shares to be issued pursuant to this Prospectus are ordinary shares and will as from their allotment rank equals in altrespects with all ordinary fully paid shares in the Company. The rights attaching to the Shares arise from a combination of the Company's Constitution, the Corporations Act, the ASX Listing Rutes and general law. A copy of the Company's Constitution is available for inspection during business hours at its registered office. The manufacturer and a manufacturer and a manufacturer and A surfiniary of the more significant rights is set out below. This summary is not exhaustive nor does it constitute a definitive statement of the rights and fiabilities of the Company's Shareholders. To obtain such a statement, persons should seek independent legal advice. The contract of Völkgirtidir Subject to the Constitution of the Company and any rights or restrictions at the time being attached to a class of shares, at a general meeting of the Company every Shareholder present in person, or by proxy, aftorney or representative has one vote on a show of hands, and upon a poll, one vote for each Stare held by the Shareholder and for each partly paid share held, a fraction phone vote equal to the proportion which the amount paid up bears to the amounts paid or payable on that share. In the case of an equality of votes, the chaliperson has a casting vote. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra Dividende Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions affactied to a class of shares the Company may pay dividends as the Directors resolve but only out of profits of the Company. The Directors may determine the method and time for payment of the dividend.

Winding up in the manufacturer

Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares. on a winding up of the Company any surplus must be divided among the Shareholders of the Company in proportion which the amount paid on the shares bears to the total amount paid and payable on the shares of all Shareholders of the Company.

Immage of Shares

Generally, shares are freely transferable, subject to satisfying the requirements of the ASX Issing Rules, ASTC Rules, the ACH Clearing Rules and the Corporations Act. The Directors may decline to register any transfer of Shares but only where permitted to do so by the Corporations Act, the ASX Listing Rules, the ASTC Rules, the ACH Clearing Rules or under the Company's Constitution. The contract of the contract of the contract of the contract of the

Bleedors and the many

The Constitution and the ASX Listing Rules contain provisions relating to the rotation and election of Directors,

Calls on Shares

Subject to the Corporations Act and the terms of issue of a share, the Company may, at any time, make calls on the Shareholders of a share for all, or any part of, the amount unpaid on the share. If a Shareholder fails to pay a call or instalment of a call, the Company may, subject to the Corporations Act and ASX Listing Rules, commence legal action for all, or part of the amount due, enforce a lien on the share in respect of which the call was made or forfelt the share in respect of which the call was made.

Further Increases in Capital

Subject to the Corporations Act, the ASX Listing Rules, the ASTC Rules and the ACH Clearing Rules and any rights attached to a class of shares, the Company (under the control of the Directors) may allof and issue shares and grant options over shares, on any terms, at any time and for any consideration, as the Directors resolve.

Variation of Rights Affaching to Shares

Subject to the Corporations Act, the ASX Listing Rules, the ASTC Rules and the ACH Clearing Rules and the terms of issue of shares in a particular class, the Company may vary or cancel rights attached to shares in that class by either special resolution passed at a general meeting of the holders of the shares in that class, or with the written consent of the holders of at least 75% of the votes in that class.

General Meeting

Each Shareholder will be entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive notices, accounts and other documents required to be furnished to Shareholders under the Company's Constitution, the Corporations Act and the ASX Listing Rules.

10.3 MATERIAL CONTRACTS

10.3.1 Corporate Adviser Agreement

The Company has entered into an agreement with Venture Group whereby Venture Group has been appointed Corporate Adviser of the Offer.

Under the terms of the appointment, Venture Group will be paid a monthly management fee of \$5,000 per month from January 2006, for an initial 2 month period which is subject to confinuation by mutual agreement thereafter. Venture Group will also receive a capitatraising fee of 1.5% on funds raised by the Company. Venture Group has the right to nominate that these fees be satisfied by the issue of Chalice Gold Mines Limited shares, at the market price at the time of nomination and at no less than \$0.20 per share. Venture Group is also entitled to be reimbursed out of pocket expenses.

10 ADDITIONAL INFORMATIION

10.3.2 Director & Officer Protection Deeds

The Company has entered into Director and Officer Protection Deeds ("Deed") with each Director and the Company Secretary ("Officers"). Under the Deed, the Company Indemnities the relevant Officer to the maximum extent permitted by law against lead proceedings, damage, loss sability cost, charge, exchange, outgoing or payment suffered, paid or incurred by the officer in connection with the Officer being an officer of the Company, the employment of the Officer with the Company or a breach by the Company of its obligations sincel the Deele.

Subject to the Company isting on ASX, the Company is required to insure the Officers goainst liability arising from any claim against the Officers in their capacity as officers of the Company. The Company will pay insurance with with premiums in respect of the above insurance. The contract of the contract of the contract of the contract of the

10.3.3 Corporate Service Agreement Martin Martin Martin Har

The Company has negotiated the terms of a corporate service apreement with Button Minerals Limited in order to share certain comparate overhead expenses and thereby minimise costs. Pursuant to the agreement, Bullion Minerals Limited will pay the Company a service and rental fee of \$15,000 per month for carporate, personnel and intrastructure overheads. The amount charged to Bullion Minerals Limited will be reviewed in June 2006 and amoally thereafter. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra

10.3.4 Independent Solicitor's Report (1999) 10.3.4 Inches 1999 10.3.4 Inches

Material contracts affecting the tenements (including the Tenement Furchase Agreements with Bullian) are minimum referred to and summarised in the Independent Solicitor's Report contained in Section 6 of this Prospectus.

10.3.5 Employee Share Option Plan Andrew Martin Martin Company

Under the ferms of the Company's employee share aption plan ("Plan"), the Board may offer tree options to persons ("Eligible Persons") who are contract the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract

• full-time a part-time employees (including a person engaged by the Company under a consultancy agreement); or substitution of the contract of the contract of the contract of the contract of the contract of
• · Directors (both executive and non-executive)

of the Company or any subsidiary based on a number of criteria including contribution to the Company, period of employment, potential contribution to the Company in the tuture and other factors the Board considers relevant Upon receipt of such an offer, the Eligible Person may nominate an associate to be issued with the options.

Number of options and a state of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract

The maximum number of options issued under the Plan at any one time is 15% of the total number of Shares an issue in the Company provided that the Board may increase this percentage, subject to the Corporations Act and the Listing Rules. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the con

Details of the intended issue of options to employees and Directors under the Plan is set out in Se 10742316W. ...................................

Terms of options and all and the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of t

Each option eatitles the holder, on exercise, to one ordinary fully paid share in the Company

There is no issue price for the options. The exercise price for the options will be such price as determined by the Board (in its discretion) on or before the date of issue provided that in no event shall the exercise price be less that [100]. the weighted average sale price of Shares said lan ASX during the five Basiness Days prior to the date of issue or such other period as determined by the Board (In Its discretion). The contribution of the contribution of

Shares issued on exercise of options will rank equally with other ordinary shares of the Company, and a company

ADDITIONAL INFORMATION $\uparrow$ $\uparrow$

Options may not be transferred other than to an associate of the holder. Quotation of options on ASX will not be sought. However, the Company will apply to ASX for official quotation of Shares issued on the exercise of options.

An option may only be exercised after that option has vested and any other conditions imposed by the Board on exercise satisfied. The Board may determine the vesting period (if any). An option will lapse upon the first to occur of the expiry date, the holder acting fraudulently or dishonestly in relation to the Company, within 3 months of the employee ceasing to be employed by the Company or on certain conditions associated with a party acquiring a 90% interest in the Shares of the Company.

If, in the opinion of the Board any of the following has occurred or is likely to occur, the Company entering into a scheme of arrangement, the commencement of a takeover bid for the Company's Shares, or a party acquiring a sufficient interest in the Company to enable them to replace the Board, the Board may declare an option to be free of any conditions of exercise. Options which are so declared may, subject to the lapsing conditions set out above, be exercised at any time on or before their expiry date and in any number.

Future Issues of Shares

New Issues

There are no participating rights or entitlements inherent in the options and optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the options. However, the Company will ensure that the record date for determining entitlements to any such issue will be at least 6 Business Days after the issue is announced. Optionholders shall be afforded the opportunity to exercise all options which they are entitled to exercise pursuant to the Plan prior to the date for determining entitlements to participate in any such issue.

Bonus Issues

If the Company makes an issue of Shares to Shareholders by way of capitalisation of profits or reserves ("Bonus Issue"), each optionholder holding any options which have not expired at the time of the record date for determining entitiements to the Bonus issue shall be entitled to have issued to him upon exercise of any of those options the number of Shares which would have been issued under the Bonus Issue ("Bonus Shares") to a person registered as holding the same number of Shares as that number of Shares to which the optionholder may subscribe pursuant to the exercise of those options immediately before the record date determining entitlements under the Bonus Issue (in addition to the Shares which he or she is otherwise entitled to have issued to him or her upon such exercise). The Bonus Shares will be paid by the Company out of profits or reserves (as the case may be) in the same manner as was applied in relation to the Bonus Issue and upon issue rank pari passu in all respects with the other Shares issued upon exercise of the options.

Reconstruction of Capital

In the event of any reconstruction (including a consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry of any options, the number of options to which each optionholder is entitled or the exercise price of his or her options or both or any other terms will be reconstructed in a manner determined by the Board which complies with the provisions of the Listing Rules.

Taxation

Under current taxation laws any taxation flability in relation to the options, or the Shares issued on exercise: of the options, will fall on the participants. The Company will not be liable to fringe benefits tax in relation to options or Shares issued under the Plan.

10 ADD ITIONAL INFORMATION

Participation by Directors and Constitution of the Constitution of the Constitution of the Constitution of the Constitution of the Constitution of the Constitution of the Constitution of the Constitution of the Constituti Although Directors are eligible to be offered aptions under the Plan subsequent to the listing of the Company's securities on the ASX. This will first requires specific Shareholder approval due to the requirements of the ASX Listing Rules and the Corporations Act. The contract of the contract of the contract of the contract of the contract of Section 10.7 below sets out details on the proposed issue of aptions to Directors of the Company

10.4 Interests of Directors (2001) 2012 12:20:20 Other than as set out below or elsewhere in this Prospectus, no Director holds, or held at any time during the 2 years before ladgement of this Prospectus with the ASIC, any interest in:

• (a) the formation or promotion of the Company: The Company of the Company of the Company of the Company of the
• (b) property applized or to be acquired by the Company in connection with:
• $\theta$ is termation or promotion, or all and all $\theta$ is a set of $\theta$ is the matrix of $\theta$ 6) the Offer of the community of the community of the City of the City of the City of the City of the City of the City of the City of the City of the City of the City of the City of the City of the City of the City of the

ic) the Offer, and the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contrac

• (d) is a amounts, whether cash or shares or otherwise, have been paid or agreed to be paid, and no benefits have been given or agreed to be given. The manufacturer and containing the contact of the
• (ii) to any Director either to induce them to become, or to quality as, a Director of the Company; and
• (ii) for services provided by a Director in connection with the connection of the connection of the connection of the connection with the connection of the connection of the connection of the connection of the connection o
  • the formation of promotion of the Company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the compan
  • $\bullet$ the Offer and the contract of the City $\sim$

10.5 Remuneration of Directors

In accordance with the Constitution, the existing Shareholders of the Company as at the date of this Prospectus have determined in general meeting the maximum Non-executive Director remuneration to be 3150,000 per annum. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra

Each Non-executive Director is entitled to receive a maximum fee of \$50,000 per annum (inclusive of superannuation). Payments of Director's feles will be in addition to any payments to directors in any employment capacity, A Non-executive Director may also be paid fees or other amounts if a Non-executive Director performs special duffes or otherwise performs services putside the scope of the ardinary duffes of a Non-executive Director. A Non-executive Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duffes, the contribution of the contribution of the contribution of the contribution of the contribution of the contribution of the contribution of the contribution of the contribution of the contribution of

The remuneration of Executive Directors will be determined from fime to time by the Board having regard to the nature and extent of their responsibilities. Subject to the Company listing, the Executive Chairman of Directors, Mr Andrew Bantock, will enter into an Employment Contract initially totalling \$125,000 per annum (inclusive of superanuation). This amount is subject to a scheduled review by the Board in May 2006. Mr John McIntyre as an Executive Director, will enter into an Employment Contract initially totalling \$200,000 per annum (inclusive of superanuation). Remuneration under each of these employment contracts will be reviewed, an an ongoing basis with at least annually against market. The community of the community of the community of the community of the community

Directors are also entitled to share options under the Employee Share Option Plan discussed in Section 10.3.5.

30.6 Directors' Holdings

Under the Constitution, the Directors are not reautred to hold any Shares in the Company.

Bullion is obtaining shareholder approval to distribute, on a pro rata basis, all of the 35 million Company's shares to be acquired under the Tenement Purchase Agreement between the Company and Bullion to its Shareholders at a record date set 5 business days after shareholder approval has been obtained.

As a result of the completion of the pro-rata distribution, the Directors of the Company (who are also Bullion Shareholders) are anticipated to hold the following number of shares in the Company upon listing on ASX:

Director	Shares*	Employee Share Options
Mr Tim Goyder	6.277.890	-2.000.000
Mr Andrew Bantock	1.610.730.	-2.000.000
Mr John McIntyre	42.105	1.000.000
Mr Bryan Alexander	227.839	500.000

Mote:

•The number of shares held by Directors of the Company is an estimate only, and does not take into account movement in shareholdings in Bullion between the date of this Prospectus and the record date for the entitlement to the in-specie distribution.

Details on the Employee Share Options are set out in Sections 10.3.5 above and 10.7 below.

The Directors may apply for further shares under the Bullion Priority offer (to the extent they hold Bullion shares) and under the Public Offer.

10.7 Issue of Options to Directors and Employees

The Company proposes to issue up to 6,075,000 options to existing Directors and employees under the Employee Share Option Plan summarised in Section 10.3.5 above. The options will vest 12 months after issue and are exercisable at 25 cents after vesting and within 5 years of the date of issue.

In order to attract future staff and employees, the Directors have determined to reserve a further 3,925,000 options under the Employee Share Option Plan and subject to assesment and identification of appropriate staff and employees issue these options subsequent to listing to attract and retain high quality personnel in a competitve employment market environment. These options will be on the same terms as the options to be issued to Directors and employees above.

10.8 Consents

Each of the parties referred to in this section:

• (a) does not make, or purport to make any statement in this Prospectus other than those referred to in this section; and
• to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this (b) Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Pullinger Readhead Lucas has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as solicitor to the Offer in the form and context in which it is named and has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as the Independent Solicitor reporting on tenements in the form and context in which it is named and to the molusion of the Independent Solicitor's Report included in Section 6 of this Prospectus in the form and context in which it is included.

Venture Group has given and has not, before lodgement of this Prospectus, withdrawnits consent to beligginamed as the Corporate Adviser of the Company.

SECTION 2: COMPANY OVERVIEW

Northwind Resources PIV Limited has diven and has not before lodgement of this Prospectus, withdrawn its consent to being named as the independent Geologist reparting on tenements in the form and context in which it is named and to the inclusion of the independent Geologists Report included in Section 5 of this Prospectus in the form and context in which it is included. The form and context in which it is included.

HLB Mann Judd has given and has not, before lodgement of this Prospectus, withdrawn its consent to being named as the Independent Accountant and Auditor of the Company in the form and context in which it is named, to the inclusion of the independent Accountant's Report included in Section 7 of this Prospectus in the form and context in which it is included and to references to the November 2005 reviewed financial statements in the form and context in which they appear.[11111]

Computershare investor Services have not been involved in the preparation of this Prospectus and references to Computershare investor Services appears for information purposes only. The computers of the computer

10.9 Interasts of Parties Allemany

Other than as set our below or elsewhere in this Prospection. The contract of the contract of

• (a) no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus, any promoter of the Company or Lead Manager to the Offer, holds, or held all any time during the 2 years before fodgement of this Prospectes with the ASIC, any interest in: The ASIC and interest
• the formation or promotion of the Company. The company of the company of the company of the company of the company
• · property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the Offer, or and a state of the connection of the connection of the connection of
• · the Offenward Hill Hill Hill Hill Hill Hill
• (b) no amount have been paid or agreed to be paid, and no benefits have been given or agreed to be given to any of those persons in connection with the formation or promotion of the Company or the Offer

Pullinger Readhead Lucas has acted as solicitor to the Offer and provided advice and assistance in relation to certain aspects of this Prospectus, the Company's due diligence regime and enquiries and in relation to its application and admission to ASX, in respect of these services. Fullinger Readhead Lucas will be paid \$15,000. CREWER.

Pullinger Readhead Lucas has acted as the independent Solicitor reporting on tenements and has prepared the 11 Independent Solicitor's Report included in Section 6 of this Prospectus. Pullinger Recidinead Lucas will be paid \$7,000 (plus GST) in respect of these services. The contract of the contract of the contract of the contract of

Venture Group has acted as Corporate Adviser to the Offer, in respect of these services, Venture Group will be poid to to \$122,500 (plus GST).

Northwind Resources Pty Limited has acted as the independent Geologist and has prepared the independent Geologist's Report included in Section 6 of this Prospectus, Northwind Resources Pty Limited will be paid \$30,000. (plus GST) in respect of these services.

ADDITIONAL INFORMATION $1 \Omega$

HLB Mann Judd has acted as the Independent Accountant to the Offer and prepared the Independent Accountant's Report included in Section 7 of this Prospectus. HLB Mann Judd will be paid up to \$7,500 (plus GST) in respect of these services. HLB Mann Judd has agreed to act as Auditor to the Company and will receive fees for rendering these services in accordance with its normal time based charges.

10.10 Lification

Legal proceedings may arise from time to time in the course of the Company's business. As at the date of this Prospectus, litigation searches confirm that the Company is not involved in any legal proceedings, nor so far as the Directors are aware, are any legal proceedings pending or threatened against the Company the outcome of which will have a material adverse effect on the business or financial position of the Company,

10.11 Expenses of the Offer

The total expenses connected with the Offer are estimated to be a maximum of approximately \$604,000. These expenses will be borne by the Company.

10.12 Restricted Securities

ASX may classify certain existing Shares on issue in the Company (as opposed to those to be issued under this Prospectus) as being subject to the restricted securities provisions of the Listing Rules. If so classified, such Shares would be required to be held in escrow for a period determined by ASX and would not be able to be sold, mortgaged, pledged, assigned or transferred for that period without the prior approval of ASX.

ASX has granted Bullion a ruling with respect to the treatment of Shares in the Company issued to Bullion Shareholders as a consequence of the intended pro rata distribution in-specie of the 35 million Shares to Bullion Shareholders. The ruling is to the effect that to the extent the recipients of the Shares are not directors or promoters of either Bullion or the Company (or related or associated with those parties). Shares in the Company received under the distribution in-specie will not be subject to the restricted security provisions of ASX. These shares will be distributed in the manner set out in Section 1.7 of this Prospectus.

10.13 CHESS

The Company will apply to participate in the Clearing House Electronic Sub-register System ("CHESS").

CHESS is operated by ASX Settlement and Transfer Corporation Pty Limited ("ASTC"), a wholly owned subsidiary of ASX, in accordance with the ASX Listing Rules and the ASTC Settlement Rules.

Under CHESS, the Company will not issue certificates to Shareholders. Instead, Shareholders will receive a statement of their holdings in the Company. If an investor is broker sponsored, ASTC will send a CHESS statement.

10.14Tax Consideration

Investors should seek and rely on their own professional taxation advice in relation to an investment in the Company.

10 ADDITIONAL INFORMATIION

10.15 Distribution of Prospectus and Contract Contract in the Contract of Prospectus Contract of Prospectus

The Prospectus has been prepared by the Company in preparing the Prospectus, the Company has taken reasonable steps to ensure that the information in the Prospectus is not false or misleading. In doing so, the Company has had regard to the prospectius requirements of the Corporations Act.

Prospective investors should read the full text of the Prospectus as the information contained in individual sections is not intended to and does not provide a compretiensive review of the business and financial affairs of the Company nor the securities offered pursuant to the Prospectus.

.
No person is authorised to aive any internation in relation to an to make any representation in connection with the Offer described in the Prospectus that is not contained in the Prospectus. Any such information or representation may not be relied upon as having been authorised by the Company in connection with the Offer.

The Prospectus provides information to assist investors in deciding whether they wish to invest in the Company and should be read in its entirety. If you have any questions about lis contents or investing in the Company you should contact your stockbroker, accountant or other linancial adviser. The manufacturer and contact the contact of

10.16 Non-Resident Investors Constitution Constitution

The Prospectus does not constitute an offer in any country or place in which, or to any person to whom, if would not be lawful to make such an offer. The distribution of the Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons who come into possession of the Prospectus should seek advice on and TTTTTT abserve any of these restrictions. Failure to comply with these restrictions may violate securities law, Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed to enable them to subscribe for Shares. The trans-

The Prospectus does not constitute an offerin any place in which, or to any person to whom, if would not be lawful to make such as offer a common common contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the contractor of the cont

Intending investors resident outside Australia should first consult their professional advisers as to whether at not governmental or other consents are required, or whether formalities need to be observed to enable them to invest. Intending non-resident investors should also seek advice in respect of the taxation effect of an investment In the Company and dividends that the Company may distribute in the future.

The return of a duly completed Application form will be taken to constitute a representation and warranty that will will there has been no breach of such laws and that all necessary approvals and consents have been obtained.

No action has been taken to realster or qualify the Shares or the Offer, or otherwise to permit a public offering of the Shares in any jurisdiction outside Australia. The contract of the contract of the contract of the contract of

TO. I.P. Privacy Administration

The Application Form accompanying this Prospectus requires you to provide information that may be personal information for the purposes of the Privacy Act 1988 (Cth) (as amended). The Company (and its share registry on behalf of the Company) may collect, hold and use that person information in order to assess your Application. service your needs as a Shareholder and provide facilities and tervices that you request and to administer the Company, and the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of

Access to information may also be provided to the Company's agents and tervice providers on the basis that they deal with such information in accordance with the Company's privacy policy,

If you do not provide the information requested of you in the Application Form, the Company's share registry may not be able to process your Application or administer your holding of Shares appropriately. Under the Privacy Act 1988 (Cth) (as amended), you may request access to your personal information held by (or on behalf of) the Company, You can request access to your personal information by telephoning or writing to the Company to the aftention of the Privacy Officer. The contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract

II DIRECTOR'S STATEMENTS

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC and has not withdrawn that consent.

Dated: 3 February 2006

Wantour

Andrew R Bantock Director For and on behalf of

Chalice Gold Mines Limited

		----- -----------
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The following defined terms apply throughout this Prospectus unless the context requires otherwise: [[[[[[[[[
'\$" means Australian dollars untess otherwise specified; www.william
ACH Clearing Rules" means the operating rules of Australian Clearing House Ply Limited (ACN 001 314 503:)
Applicant" means a person who completes and lodges an Application Form;
Application" means an application for Stares pursuant to this Prospectus."
Application form" means the application form attached to this Prospectos:
ASIC" means the Australian Securities & Investments Commission;
ASTC Rules" means the settlement rules of Australian Settlement and Transfer Corporation Pfy Limited: The Corporation of the
ASX" means Australian Stock Exchange Limited (ACN 008 624 691); [11] [11] [11] [11] [11] [11] [11] [11
"ASX Listing Rules" means the Listing Rules of ASX as amended from time to firret
Bullion" means Bullion Minerals Limited (ABN 74 009 799 553).
Closing Date" means the last date on which Application Forms may be submitted;
Company" or "Chalice Gold Mines" means Chalice Gold Mines Limited (ABN 47-116-648-956);
Constitution" means the Constitution of the Company;
'Corporations Act' means the Carporations Act 2001 (Cth), ____
Directors" or "Board" means the directors of the Company as at the date of this Prospectus,
Exposure Period" means the period of 7 days after the date of lodgement of this Prospectus with the ASIC, which beriod may be extended by the ASIC by not more than 7 days pursuant to Section 727(3) of the Corporations Act
'Issue " means the issue of up to 37,500,000 Shares under this Prospectus,
Offer in neans the offer of Shares pursuant to this Prospectus. The contract of the contract of the contract of
Official List " means the official list of ASX Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Co
Opening Date" means the fist date on which Application Forms can be received
Prospectus" means this prospectus dated 3 February 2006.
Shares" means fully paid ardinary shares in the capital of the Company;
Shareholder" means a holder of a Share(s); [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[
Share Registry" means Computershare Investor Services Pty Limited, and
WST integris Western Sterndord Prite, and all

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