Abstract: A system for locating a horizontal bore below a ground surface includes a transmitting source that radiates from the bore a dipole magnetic field aligned with the bore. A receiver includes a first and a second coil, the axis of each coil being orthogonal to the axis of the other. A measurement device in communication with the coils is configured to measure the phase of signals induced in the coils by the magnetic field when the axis of the first coil is horizontally perpendicular to the axis of the magnetic field and the axis of the second coil is vertically perpendicular to the axis of the magnetic field. The measurement device determines the lateral position of the transmitting source relative to the coils responsively to the phase of the signals induced on the two coils.