Quarterly Report January – March 2011

Key Points

• Quarterly gold production of 9086 oz
• Henty resources doubled to 203,000 oz, significantly extending mine life
• New gold zone defined at Red Hills, Henty
• Cash in bank of $39 million

Summary

Rod Hanson, Managing Director & CEO comment “Gold production for the March quarter was 9086 ounces at a cash cost $1582/oz. The short-term transitional issues at Henty have been addressed, with April monthly production on track to achieve about 4500 oz at a cash operating cost of around $900/oz.

The Tyndall Zone at Henty is now producing ore at design rates. Access development for the Newton Zone is proceeding on schedule, with initial production planned to commence around mid-year. The high grade Newton Zone orebody offers strong potential for further resource additions. Newton and Tyndall are expected to underpin production at Henty for some years to come.

Exploration at Red Hills, just north of Henty has encountered a new gold zone associated with base metal mineralisation. This is somewhat similar to what was seen in the discovery phase of Henty, hence we will continue to aggressively explore this and other targets in the region” said Mr Hanson.

Production

• Total gold production of 9086 oz at a cash operating cost of $1582/oz (compared to 23 March 2011 guidance of 8400 oz gold at around $1700).
• Henty Gold Mine produced 5398 oz (5000 oz guidance) at a cash cost of $1583/oz which includes royalties of $107/oz, whilst the Kangaroo Flat Mine produced 3688 oz (3400 oz guidance) at a cost of $1581/oz.

Exploration

• As announced on 24 February 2011, Mineral Resources at Henty doubled to 203,000 oz, adding significantly to the mine life.
• Drilling continues to test extensions of the mineralisation at the Newton Zone, which remains open at depth. A new gold zone has been defined at Red Hills, 2km north of Henty. Near-mine exploration drilling is also underway at Zone 96, and regionally at Aurora and Henty South.
• A review of the exploration model for the Bendigo Goldfield has commenced, with the aim of developing a successful exploration strategy.
• GoldStone Resources announced that its inaugural drilling program in Ghana is planned to commence in the June Quarter. Soil sampling programs are also well advanced at Manso Amenfi in Ghana and at Sangola in Senegal.

Corporate

• Gold sales were $11.7 million during the quarter from the sale of 8506 oz gold at an average price of $1378/oz.
• Cash in bank was $38.9 million at 31 March 2011 ($49.9 million at 31 December 2010). In addition, $4.4 million is held in bonds to meet rehabilitation liabilities.