Quarterly Report October – December 2013

Key Points

• HENTY:
  • Quarterly production of 7227 oz gold at a cash cost of $1498/oz
  • Exploration drilling continued to extend Darwin South Zone; results include 2.05 m at 23.6 g/t and 0.9 m at 20.0 g/t gold
  • Drilling within the envelope of the Read Zone continues to yield high grade intercepts; results include 1.4 m at 45.7 g/t, located 100 m below current Read resource
• DARGUES:
  • Development on hold pending the completion of technical studies and funding
  • Combined Capex and Opex savings of $30M targeted over the project’s initial 5-year life
  • Drilling program completed at Dargues, with a best result of 13.0 m at 7.4 g/t gold
• $9.7M cash at bank, with an additional $11.2M cash-backing performance bonds

Summary

Andrew McIlwain, Managing Director & CEO comment “Henty delivered a lower production result last quarter, caused principally by a significant stope  failure in the Newton Zone where 75% of the tonnes and approximately 60% of the ounces were scheduled to be extracted from. The resultant loss of tonnage impacted  on October production and also had a heavy impact on subsequent months as we were required to develop a new drive (in waste) to bypass the affected area.  This bypass was recently completed and will result in tonnages picking up significantly from February onwards.

We now have multiple production sources available in the high grade Read Zone, which is currently delivering pleasingly high grade (+10g/t Au) albeit at modest tonnages. We have also seen further exploration success along strike at Read with exploration drilling significantly expanding the mineralised envelope to the south.

“It is worth noting that there has also been significant progress with respect to reducing costs at Henty. However the $1.6M operating cost savings delivered during the quarter from this first phase of initiatives was more than offset by the shortfall in revenue in the quarter. As production returns to budgeted levels in future quarters, we expect to see the benefits of these cost reductions reflected in our reported production costs per ounce. We remain on track to deliver a fullyear production result  within our 40-50,000 ounce guidance range.

“As announced in November, development of the Dargues Project has been put on hold pending the completion of technical studies and funding. The technical studies are targeting savings of $30M combined capex and opex over the project’s initial 5-year life and are expected to significantly enhance the project economics ” said Mr McIlwain.

Production

• Henty Gold Mine produced 7227 oz at a cash cost $1498/oz including royalties, with all-in sustaining cost (AISC) of $1835/oz, (11,607 oz gold at AISC of $1335/oz in Sept 2013 quarter).

Development

• Dargues boxcut, ROM pad and access road are all completed. Site currently on care & maintenance.

Exploration

• Drilling at Henty continues to focus on identifying extensions to the mineralisation at Read and Darwin South.
• A short exploration drilling campaign at Dargues was completed, with a best result of 13 m at 7.4 g/t gold.

Corporate

• Gold sales were $12.5 million during the quarter from the sale of 9052 oz gold at an average price of $1378/oz
• Cash at bank was $9.7 million at 31 December 2013 ($19.7 million at 30 September 2013).