BUILDING A PROFITABLE
MID-TIER GOLD MINING BUSINESS

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QUARTERLY REPORT July – September 2007

QUARTERLY REPORT July – September 2007

Key Points

  • Discovery of high grade Gordon reef on Garden Gully
  • Cross-cut to Gill reef commenced
  • High grade drill intercept at southern end of New Chum

Summary

Rod Hanson, Managing Director & CEO comment: "Drill testing of known productive rock units at the southern end of the mine has produced very encouraging results. We have discovered another reef on Garden Gully, the Gordon reef, vertically above the Gill and Grenfell reefs. We have also received assays from the Gill reef which confirm our visual grade estimates of around 10 g/t gold. Our first phase of drilling into New Chum has highlighted significant targets which we are following up. Importantly all these results are near our existing mine infrastructure.

"With the results received from Gill reef, we have decided to commence a 350 metre cross-cut towards the reef to enable infill drilling. Close-spaced drilling will provide greater confidence in our methodology and support the estimation of resources. The North drive development will pause whilst this is underway, but as development is well ahead of plan there is two to three months of drilling to be completed before we run out of suitable drill sites on the North drive.

"We are now nine months into the new strategy and I'm very pleased with our progress in generating targets and discovering new reefs. Importantly, the results this quarter have potential to accelerate our rate of discovery. With each new discovery we get closer to making a decision on restarting production. I'm not yet in a position to make that announcement, but the cross-cut and infill drilling of the Gill reef is a natural pre-cursor to future production.”

Exploration & Development

  • Gordon reef discovered on Garden Gully, vertically above Gill and Grenfell reefs, increasing the number of reefs discovered in this line from four to five.
  • Initial drill results 460 metres south of Gill and Grenfell indicate good potential for extensions.
  • A 350 metre cross-cut to the Gill reef on Garden Gully is to be developed over next three months to enable infill drilling and future access.
  • First drill section on the southern end of New Chum discovers high grade mineralisation (3.6 metres at a visual estimate of >15 g/t gold, with a screen fire assay of 78 g/t gold).

Corporate

  • Cash in bank at 30 September 2007 was $62.6 million ($71.8 million last quarter). The reduction in cash includes a $4 million reduction in creditors. At current levels of activity, the planned rate of expenditure is approximately $6.5 million per quarter.
  • Roy Woodall to retire as a Non-executive Director at the conclusion of the Annual General Meeting on 23 November 2007.