Following the release of NSW Government aeromagnetic survey data, Compass took a decision in 2004 to commence exploration in a remote area not previously explored for base and precious metals.

The concept followed was that potential for a new base and precious metals province with similarities to the Lower Palaeozoic Cobar Mineral Field may be present beneath a cover of younger sediments.

Geophysical modelling of magnetic anomalies suggested that modern exploration techniques could successfully identify drill targets in this region.

Compass completed 2 wildcat holes in 2006 to test separate targets. Both holes intersected sulphide bearing sedimentary rocks analogous to the Cobar sequence, at depths of around 70 metres below surface with the best section assaying 29m at 7.3g/t Ag. This information, together with anomalous assay results have enhanced our confidence in our original concepts.

Additional tenements have been applied for to cover extensions of the areas first defined plus applications over additional areas interpreted as having the level of prospectivity.

A large detailed low level aeromagnetic and radiometric survey over four separate areas (comprising 21630 line kilometres) was delivered early May 2007. The resolution of the new data will allow for detailed structural and alteration studies, and to determine depth to the numerous drill targets identified.

An additional area has been acquired covering discrete pinpoint magnetic anomalies considered to be prospective for diamonds (The Range Prospect).

Ground geophysics are planned to refine target definition at a number of prospects followed by a major drill programme to test these prospects.

Cuttaburra / Yancannia / Louth / Mulga Tank

Several of the areas applied for in late 2006, extending the Companies tenements over additional prospective areas, have now been granted as Exploration Licenses.

These applications were as a result of encouraging assays obtained from diamond drilling undertaken at the Cuttaburra 1 prospect, where significant pyrrhotite mineralisation was intersected throughout the drill core. These are zones with highly anomalous silver assays and elevated copper, zinc and tungsten values that are considered to be very encouraging.

The Cuttaburra A and B anomalies are shown below.

Above: Cuttaburra A, Reduced to pole magnetic intensity

Above: Cuttaburra B, Reduced to pole magnetic intensity

A drill rig capable of drilling both RC and diamond core holes has been contracted to undertake a substantial drill programme in these tenements with start of the drilling programme anticipated to be late May 2007.

Compass now holds a 100% interest in these areas having purchased Bohuon Resources Pty Ltd's 20% joint venture interest for a 3% NPI. In the event a minable resource is discovered and proceeds to development Compass may substitute a success fee of $3 million to Bohuon in lieu of the 3% NPI.