QUARTERLY REPORT April – June 2007

Key Points

• Two new reefs discovered
• Four important targets being tested
• Change in ASX guidance on Inferred Resource
• Cash position increased

Summary

Rod Hanson, Managing Director & CEO comment: “Exploration is progressing very well in many of the more prospective areas of the Garden Gully and New Chum lines. The good news is that our targeting is continuing to be successful with the discovery of two large reefs on Garden Gully. We are on the right track and I have confidence that our persistence will be rewarded.

“We have also announced that we will no longer report the 11 Moz Inferred Resource in accordance with new ASX guidance on interpretation of the 2004 JORC Code. Whilst we strongly believe that the field has multi-million ounce potential, we will now only use drill sample data to support the estimation process. We see this as a change in terminology, it doesn’t affect the prospectivity of the Bendigo Goldfield or our commitment to exploration.

“I’m also pleased to report that the cost reduction strategy which we introduced in January is delivering some great results. Our cash position of $72 million confirms we are in a much stronger financial position than we predicted only six months ago, so I’m confident we can support the exploration program for several years, if necessary.”

Exploration

• Exploration this quarter increased the number of discovered reefs on Garden Gully by two to four.
• The two new reefs (Grenfell East and Grainger reefs) appear low grade on the sections tested so far, but have large tonnage potential.
• Drilling on Garden Gully increased the length of the Gill reef, discovered in the March quarter, to over 200 metres. Importantly, drill results have lifted the estimated grade of the reef into the 6 – 10 g/t gold range.
• The first New Chum drill section commenced into the southern end of the line testing for the continuation of one of Bendigo’s largest historic reefs: the Shenandoah Consolidated reef.
• Exploration in the September quarter will focus on three target areas on Garden Gully and one target area at the southern end of the New Chum line.

Production

• Gold production of 5,561 oz was better than forecast. The Kangaroo Flat mine ceased production in May.

Corporate

• Cash in bank as at 30 June 2007 increased to $71.8 million ($68.8 million last quarter).
• Gold sales of 10,469 oz at an average price of A$807/oz were achieved.