An Update of Exploration at Gladstone and Union Hills, Waihi

Mineralisation was identified at Gladstone Hill as far back as the late 1870s-early 1880s, shortly after the initial discovery of mineralisation at what is now the Martha Mine. Indeed, early recovery problems associated with the Martha mineralisation led to the preferred development of ore bodies within what is now the Union Hill Joint Venture tenement; ore bodies such as Silverton, Amaranth, and Union to name a few. Gladstone Hill forms the basis of the Union Hill Joint Venture, a 50:50 joint venture managed by Au-Ag Resources Ltd (a fully owned subsidiary of Otter Gold Mines Ltd), and Welcome Gold Mines Ltd (a fully owned subsidiary of the Normandy Group). The joint venture participants also operate the adjacent Martha Mine. Mineralisation of Gladstone Hill, as with mineralisation at the adjacent Martha Mine, has been interpreted as a low sulphidation epithermal Ag-Au system hosted within hydrothermally altered andesites of the lower Coromandel Group. Drilling in recent years has successfully identified extensive mineralisation associated with a number of vein sets throughout the tenement including the Gladstone Vein set, the Moonlight Lode and more recently along a north-easterly trend towards the historic Favona workings. A wide range of vein styles is apparent, ranging in character from thin stock works to broader lode-style banded chalcedonic to cherty quartz and have been interpreted as representing multiple phases of emplacement. At shallower levels mineralisation is often hosted by vein clasts within vent breccias. Visible gold is rare, with mineralisation generally associated with very fine-grained pyrite, arsenopyrite and minor electrum. Percentage levels of combined sphalerite-galena-(+/- chalcopyrite) have been intersected at depth however these have been gold poor to date. The potential for the Gladstone Hill area remains to be clearly defined as drilling to date has yet to close off mineralisation both along strike and down dip. If further drilling is successful, the joint venture partners believe Gladstone Hill could contribute significantly to the economic future of current operations.