QUARTERLY REPORT July – September 2008

Key Points

• Gill reef production of 4653 oz at a grade of 6.6 g/t gold
• Ore block grades of 14.5 g/t and 11.6 g/t gold
• Continuing strong cash balance of $42.7 million

Summary

Rod Hanson, Managing Director & CEO comment: Rod Hanson, Managing Director & CEO comment: “I’m pleased to report that Gill reef trial mining has  produced high grade bulk samples during the September quarter. The head grades of 14.5 g/t and 11.6 g/t gold from two of the mining blocks demonstrate the high grade potential of the goldfield and the variable nature of mineralisation at Bendigo.

“The average grade of all mining blocks from Gill reef is 6.6 g/t gold, which is a good result considering the early stage of trial mining combined with the strong A$ gold price. Next quarter trial mining will begin producing data from the lower section of Gill reef, an area where drilling indicates thinner but higher grade ore zones.

“We have a strong balance sheet with $43 million in cash and significant value in plant and equipment, which is extremely important in the current economic environment. The trial operations produced gold worth just under $5 million in the September quarter, so we are covering our direct operating costs and hope
to build value through higher levels of production in future quarters.” said Mr Hanson.

Operations

• Underground development accessed Gill reef at three locations.
• The first full quarter of trial production from Gill reef achieved 4653 oz from the processing of 25,591 tonnes at an average grade of 6.6 g/t gold. Including low grade stocks, production was 4741 oz at an average grade of 6.2 g/t gold.
• Bulk samples (ore blocks) MB6 and MB9A achieved head grades of 11.6 g/t and 14.5 g/t gold respectively.
• Exploration drilling this quarter increased the length of Gill reef by 130 metres (18% increase) to 850 metres.
• Exploration to focus on defining mineable reefs close to existing workings.

Corporate

• Gold sales generated cash of $2.5 million during the quarter from the sale of 2533 oz at an average price of A$979/oz.
• Cash in bank at 30 September 2008 was $42.7 million, which does not include $2.5 million of gold dore which was sold but not settled at month end (cash as at 30 June 2008 was $48.6 million).
• The strong A$ gold price resulted in gold sales in early October at over $1100/oz.