PROJECTS

CHAKOLA GOLD & BASE METALS PROJECT

EL 5697 COOMA-BREDBO AREA NSW

Licence Granted: 9 March 2000

Location: 15 kilometres north of Cooma
Area: 66.4 square km (24 units)
Target: Massive sulphide and disseminated gold & base metal deposits in Silurian volcanics
Commodities Sought: Gold, silver, copper, lead, zinc, molybdenum, antimony.

Exploration Philosophy:
In EL5697 Capital is searching for polymetallic ores of high unit value in volcanogenic (VMS) deposits with distinct lithological, geochemical and geophysical signatures. Targets include near surface oxide gold and supergene enriched copper deposits and deeper massive and disseminated sulphide deposits.

Project Status - July 2007:
Historic data assessed; geological mapping of main horizon completed; 2,353 m of drilling in 45 RC & 2 diamond holes completed at Harnett prospect; resources estimated; mineralogical studies completed; Stage 1 metallurgical testing of drill core samples completed; conceptual mine plan drawn up; Mining Lease application lodged; preliminary work on E.I.S. commenced; evaluation of Gamma-Delta prospect in progress; detailed contour surveys completed; stage 3 drill programme laid our for commencement in September quarter 2007.

Achievements to Date:
Eight-kilometre horizon of high exploration potential identified; total in situ resources over 720m strike segment at Harnett Central prospect established at spot metal prices January '07 of 3.1mt @ 0.4 g/t Au, 0.3% Cu, 0.6% Zn, 0.3% Pb, 5.6 g/t Ag at an overall grade of 3.0 g/t gold equivalent, containing 44,000 ozs gold, 19,500 tonnes of Zinc and 8,500 tonnes copper; mineralization is open at depth and along strike sub-grade envelope; 90% of copper and 80% of gold shown to be recoverable in bulk sulphide flotation concentrate along with lead and zinc; potential market for product identified.

Objectives of Proposed Exploration Programme:
Capital is working to convert resources at Harnett Central prospect to proven ore reserves by further drilling; outline additional resources at Harnett South, Stonehenge and Gamma Delta prospects; prepare mine plan and E.I.S. to support Mining Lease application; outline drill targets along other VMS horizons in the tenement.