QUARTERLY REPORT January – March 2008

Key Points

• Underground development intersects Gill reef as planned
• Several reefs upgraded by drilling
• Trial gold production on track for September quarter
• New phase of regional exploration to commence

Summary

Rod Hanson, Managing Director & CEO comment: “The initial access into Gill reef, the first new reef on the Garden Gully line, was successfully completed on schedule during the quarter. The Gill reef looks impressive and backed by assays from face sampling we are confident that this is a high grade continuous reef. Activity  is currently focussed on infill drilling prior to the commencement of trial gold production in the September quarter of this year.

“In addition to Gill reef, we are receiving some encouraging exploration results from several reefs that we left unmined in 2006. We are either finding more tonnage, more predictable mineralisation, improved economics due to the higher gold price, or a combination of all three, which gives us confidence that we can include them  for trial mining.

“Our exploration effort is also broadening to a field-wide approach. Whilst we have undertaken intensive work around the Kangaroo Flat mine, the field as a whole is virtually untouched by modern exploration.

“It’s a very exciting time being on the verge of new production and about to begin testing some excellent targets across the goldfield. To support the restart of trial production, we have commenced the recruitment of an additional 30 employees for our underground mine and to operate the process plant.  Following this  recruitment, our workforce will total about 110 people.

“We remain fully funded to support the move to trial production and to maintain our intensive exploration effort.”

Exploration & Development

• Gill reef intersected as planned. Face sampling returns assays up to 0.8 metres at 699 g/t gold from the east leg of the reef.
• Ongoing infill drilling of Gill reef continues to confirm excellent continuity.
• Preparation underway for trial production to commence in the September quarter.
• Further exploration of the Dale, Dean and Upper McDermott reefs has increased their potential to supply ore for trial production.
• Drilling has potentially doubled the defined length of the Upper McDermott reef to over 800 metres.
• Regional exploration planned to commence late next quarter.

Corporate

• Cash in bank at 31 March 2008 was $53.0 million ($58.1 million last quarter). The rate of expenditure continues to be less than forecast.
• Commenced review of external opportunities.