BUILDING A PROFITABLE
MID-TIER GOLD MINING BUSINESS

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QUARTERLY REPORT January – March 2009

QUARTERLY REPORT January – March 2009

Key Points

  • Production increases to 9884 oz gold
  • Gold sales of $12.5 million achieved
  • Net quarterly cashflow of $5 million
  • Cash balance increases to $50 million
  • Dunlop reef extended to 180 metres and remains open

Summary

Rod Hanson, Managing Director & CEO comment: "Production increased during the quarter as we processed higher tonnages of ore at strong gold grades. We have nine months of production data from current operations and this track record supports our plan for production of 30-40,000 oz of gold in calendar 2009 from the processing of 150,000 tonnes of ore.

"Operations are running at high levels of activity with mining taking place on a number of fronts. Mining is utilising a variety of methods including twin and single boom jumbo mechanised mining and we are preparing for hand-held mining of narrow ore zones. This flexible operating strategy will optimise production from the variety of reefs in the mine plan.

"Drill results from the Dunlop reef, which was discovered in the December 2008 quarter, continue to show good extensions of robust mineralisation with this reef firming up to as one of our next mining targets.

"The strong gold price and increased production generated net cashflow in the quarter of $5 million and increased our cash in bank to $50 million. This track record of performance is providing a solid base on which to grow the Company” said Mr Hanson.

Operations

  • Ore treated of 40,552 t at 8.2 g/t gold for production of 9884 oz gold.
  • The main ore source was Gill reef, with contributions from Dean and Garrard reefs.
  • Total ore mined increased by 10% on last quarter as the number of ore sources increased.
  • Tonnes treated increased by 27% on last quarter reflecting the planned increase in process plant throughput.
  • Drill testing of the shallow Dunlop reef on the Deborah line has increased the defined length of the reef to 180 metres and it remains open to the south. Visible gold in the drill core and assays such as 12.4 m at 11 g/t gold (screen fire assay) indicate good potential for economic mineralisation.

Corporate

  • Gold sales generated revenue of $12.5 million during the quarter from the sale of 9053 oz at an average price of A$1385/oz.
  • Cash in bank at 31 March 2009 was $50.0 million (cash as at 31 December 2008 was $44.9 million).