The strategic focus of exploration at Challenger continues to be the evaluation of targets which have a high potential for development from existing and planned underground access.

During 2009, this strategy has involved three main programs – the Challenger Deeps surface drilling designed to evaluate the depth extensions of the M1, M2 and M3 Shoots, surface drilling to evaluate the Challenger West Shoot and underground exploration designed to evaluate other target shoots from underground access.

Challenger Deeps surface drilling

Specialised diamond core drilling equipment is used to intersect the target shoots at relatively shallow angles and at downhole depths of up to 1,500 metres. To maximize the cost effectiveness of this drilling, planning involves the drilling of a ‘parent’ hole from which a series of ‘daughter’ holes are drilled at selected positions above the target.

Four ‘Series’ of these deep diamond drill holes were completed during the year. They were designed to evaluate the depth extensions of the shoots over a 300 metre vertical interval between a vertical depth of 950 – 1,350 metres (250mRL – minus 150mRL).

Initially, the 82 Series drilling failed to intersect the shoots due to the effect of an interpreted fault structure which has offset the shoots. The 88 Series holes have confirmed the continuity of the shoot system, at least to the minus 150m RL (1,350metres vertical depth). Toghether with the 86 and 87 Series the Deeps drilling has confirmed continuity of the Challenger Shoot system for at least 500 metres along strike (compromising an additional 300 metres of vertical depth), beyond the '79 Fault' which offsets the shoot system by about 150 metres to the north-west. Gold analysis results returned from this drilling include a number of high grade intersections.

It is planned that further evaluation of this extension of the shoot system will be undertaken when drilling can be carried out from underground access.

Surface drilling to test the Challenger West Shoot

Three diamond core holes, drilled during the year, have demonstrated excellent continuity of high grade mineralisation within the Challenger West Shoot with intersections including 1.21 metres @ 251.9 g/t, 0.59 metres @ 76.0 g/t, 1.34 metres @ 29.1 g/t and 0.90 metres @ 310.9 g/t gold.

These results have underpinned an upgrade to the resources, as well as an initial reserve estimate, for this shoot. The upgrade is due both to a depth extension of about 100 metres and also to an increase in the contained gold, which increases from 187 ounces per vertical metre (ovm) to a vertical depth of 295 metres (900m RL), to an average of 378ovm from 295 metres to 395 metres (900m RL – 800m RL). The resource is contained within two adjacent structures, both of which are open at depth.

The next stage of evaluation at Challenger West will involve a detailed underground diamond drilling campaign from the 800m RL Exploration Drive. This will target the shoot from 825m RL to approximately 750m RL.

Underground evaluation of other near mine targets

The understanding of the Challenger gold system is still evolving. While the development of the M1 and M2 Shoots (and to alesser extent the M3 and SEZ Shoots) has facilitated a detailed interpretation of the geometry of the high grade mineralisation contained in those shoots, there are many other targets, where high grade mineralisation has been intersected,but there is insufficient data to interpret geometry and continuity.

Experience has demonstrated that the high grade structures at Challenger have excellent continuity. However, they are difficult to define without close spaced information which is most effectively gained from underground access.

The Lower M1 (Footwall) Target has been evaluated by a programme of diamond drilling using access provided by the 800m RL Exploration Drive. Results received to date have defined a narrow, high grade structure with intersections including 1.2 metres grading 23.8 g/t and 0.38 metres grading 39.4 g/t gold. This is currently interpreted as an M3 Shoot-style structure.
While further drilling is planned, there will also be an opportunity to extend the 800m RL exploration drive into and along this interpreted structure.

The 800m RL exploration drive will also be utilised to evaluate interpreted M2 Footwall Targets.

The M3 and SEZ Shoots

The intersections of the SEZ Shoot on the 1030m RL demonstate excellent continuity of this target and it is planned to extendan exploration drive into the structure on this level.

The access to carry out this drilling has been made possible because of the development of the M3 Shoot on this level. Theresults support the potential of this target which is outside the current resources.

Challenger Area Exploration

Due to the ongoing priorities of near mine exploration, there has been no recent company funded exploration to evaluate the potential for the discovery of 'Challenger style' economic gold mineralization within Dominion's extensive tenement holdings surrounding Challenger. To enable more resources to be focused on this regional potential the company entered into an agreement with Southern Gold Limited (SAU) in 2006 (see below). This agreement excludes the exploration tenement surrounding Challenger where historic exploration has identified several targets warranting follow up.

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