The subject report describes the results of drilling two fully cored rotary holes totalling 1161.10 m at the Chianti prospect, an unusually-shaped residual gravity anomaly located in Gunson Resources' EL 3264, 20 km north-east of the Mount Gunson mining camp. Part-funding of this project under the PACE Initiative Year 1 programme had been sought from PIRSA, and granted, in order to follow-up promising indications of iron oxide copper-gold type (IOCG) mineralising environments found in earlier company drillholes at this locality: however, the extraordinary unavailability of drilling equipment in 2004 meant that the PACE work was postponed until late 2005. After 5 diamond holes were drilled initially by Gunson Resources in the southern part of the licence area on the broadly defined, geophysically anomalous Elaine Zone during 2000-2001, which met with some low grade IOCG mineralisation suggesting that the main basement potential might lie at depths greater than 1000 m, the exploration focus was shifted to shallower targets, including Emmie Bluff style gravity anomalies which had been newly generated by infill gravity acquisition in the north of EL 2639/3264. The Chianti prospect residual gravity anomaly is one of these targets. In 2003 it was tested by Gunson Resources and its then joint venturer BHP Billiton, before the advent of PACE activity, by the drilling of 2 percussion open holes, MGP30 and MGP31. The latter drillhole penetrated a basement section which includes granites and mafic rocks plus grey haematite and also accessory microscopic bornite, although heavy contamination from uphole cuttings limited the ability to interpret the true basement rock sequence. On the strength of this find, made prior to the Carrapateena discovery, it was recognised that additional drilling would be required at this prospect in order to properly understand the nature of the basement. In March 2005 two lines of MIMDAS IP survey were run at Chianti prospect, passing through the above percussion drillhole sites. Only weak IP effects were observed, consistent with modelled polarisable material concentrations equal to the 0.2% magnetite and 3% haematite found in hole MGP31. The model suggested that higher concentrations (perhaps double) at slightly shallower depths could be expected in the basement 600 m west of MGP31. When a drill rig became available in early December 2005, Gunson Resources completed its PACE - subsidised drillholes MGD34 and MGD35 in the central portion of the Chianti anomaly, east of and adjacent to the projected Cattlegrid Fault trace. Both holes reached basement at differing depths, which when taken in a regional context indicates that the top of basement is deepening quite steeply in a west-northwest direction. Both holes encountered a basement section dominated by granite lithologies, as was expected from drillcore information previously gained in holes EC47 and MGP31. These granitoids are medium-grained with some aplitic intervals, and show variable haematite after chlorite-sericite alteration, plus also some local incipient brecciation. They are cut by extensively altered, aphanitic to medium-grained mafic dykes, identified from petrographic examination as quartz-bearing dolerites and a possible amygdaloidal volcanic unit. Assaying of the recovered drill cores revealed that MGD 34 contains a significant copper intersection, of 4 m @ 2.01% Cu + 0.10 g/t Au, below 548 m depth, in quartz-rich granitoid, yet the rocks surrounding this zone do not exhibit the expected IOCG geochemical signatures. The overall degree of alteration and brecciation is stronger in hole MGD35, which is unmineralised (maximum Cu value 30 ppm). The MGD34 mineral assemblage consists of chalcopyrite plus minor bornite, in association with pyrite (as up to 50% total visible sulphides over 0.5 m below 549 m depth). It is not yet clear whether either the mafic dyke intrusions or the heavily sulphidic mineralisation occurring at Chianti, or both, are features having density sufficient to explain the residual gravity anomaly. The combination of copper sulphides with white quartz veining in MGD34 constitutes an unexpected setting within an IOCG deposit-forming environment, and differs markedly from the Carrapateena deposit mineralisation occurring 25 km to the east, which is found in strongly haematitic matrix-supported breccias. Therefore it is presently considered that the Chianti prospect mineralisation may represent a late-stage remobilization or offshoot from a distant, more conventional IOCG orebody.