QUARTERLY ACTIVITIES REPORT

Transcription

1 QUARTERLY ACTIVITIES REPORT For the Quarter Ended 30 September 2008 HIGHLIGHTS OPERATIONS Svartliden, Sweden gold production for the quarter of 9,633 ounces at an average cash cost of US$659 per ounce. Plant utilisation continued to exceed expectations. The higher cash cost, which was anticipated, is the result of lower grade ore being treated during the summer vacation period in Sweden. Vammala, Finland gold production for the quarter of 8,122 ounces of gold. In August production of 3,312 ounces of gold at an average cash cost of US$519 per ounce (including smelting costs) followed in September by record monthly production of 3,678 ounces of gold at a record average cash cost of US$397 an ounce (including smelting costs). Minimal production in July due to three week vacation shutdown. DEVELOPMENT Results from diamond drilling at Sarvisuo, Finland continued to define new lode positions at and below the 420m level. In particular, a new high grade intercept of g/t gold from the 540m level indicates that at least one high grade shoot remains open with depth. As a result of the continued drilling success and confidence in the structure of the ore lodes, the board approved to extend the Sarvisuo development down to the 440m level. Diamond core drilling to improve confidence in the resource estimate and upgrade the resource categories in preparation for open pit mining at the Jokisivu Gold Project, Finland was completed. An update of the resource estimate will be completed before the end of the year. EXPLORATION Diamond drilling focused on the depth extensions at Svartliden in Sweden returned further high grade intercepts including g/t gold, g/t gold and g/t gold. These results continue to highlight the potential for high grade mineralisation below the openpit mine and could lead to establishing an underground mining operation. An independent update of the resource estimate will be completed before the end of the year. Data from the detailed 10,282 line kilometre airborne geophysical survey over the entire 300 square kilometre Svartliden Permit holding has been processed and the initial images highlight the overall prospective nature of the under explored region and provide a platform from which to accelerate regional exploration programs. A new zone of precious and base metal mineralisation has been identified from a regional rock chipsampling program at the Hanhimaa Gold Project, Finland. Results from analysis have returned significant values for gold, silver, lead, arsenic and antimony. Follow up drilling commenced in October. Further high grade intercepts were received from the Koka Gold Deposit in Eritrea (Dragon 20%) including 9.22 g/t gold, g/t gold, g/t gold and 9.40 g/t gold. CORPORATE As at 30 September 2008, Dragon held; o $6.5m in cash. o $6.5m in bullion and gold concentrate receivables; and o $3.8m of cash that is lodged with Swedish authorities as a rehabilitation bond at Svartliden. The average cash price received per ounce of gold sold from Svartliden was US$810. The average sales price received per ounce of gold sold from Vammala was US$821.

2 OPERATIONS SWEDEN Svartliden Table 1 Production Summary Ore Mined (t) Ore Milled (t) Head Grade (g/t) Recovery (%) Plant Utilisation (%) Total Gold Production (Ounces) Sept 2008 Quarter 91,785 72, ,633 Jun 2008 Quarter 73,557 75, ,748 The operation had no lost time injuries. Svartliden produced 9,633 ounces of gold from 72,911 tonnes of ore milled at a head grade of 4.4 g/t at a cash cost of US$659 per ounce. The higher cash cost, which was anticipated, is the result of lower grade ore being treated during the summer vacation period in Sweden. Ore mined was 91,785 tonnes at an average planned grade of 3.4 g/t and was sourced from the east pit, eastern extension and west pit. Though lower grades were expected, they were higher than planned in the eastern parts of the pit. Good grade control coverage for short term planning. The process plant performance continued to exceed expectations with utilisation of 96.5%. A planned maintenance stop was performed in August. The planned mining grade is expected to return to normal and be above 4.7 g/t gold. FINLAND Vammala Production Centre Table 2 Production Summary Ore Mined (t) Ore Milled (t) Head Grade (g/t) Recovery (%) Plant Utilisation (%) Total Gold Production (Ounces) Sept 2008 Quarter 44,401 38, ,122 Jun 2008 Quarter 59,254 45, ,253 No lost time injuries were reported. Vammala produced 8,122 ounces of gold from 38,119 tonnes of ore milled at a head grade of 7.7 g/t at a cash cost of US$585 per ounce (including smelting costs of US$84 per ounce). The cash cost per ounce for the quarter is a record for Vammala even though it was adversely affected by the three week shut down for the vacation period in July. In August 3,312 ounces of gold was produced at a cash cost of US$519 (including smelting costs) per ounce. This was followed in September by a record cash cost of US$397 (including smelting costs) from a record monthly production of 3,678 ounces. Mining of the Sarvisuo lodes continued with stopes mined between the 300m and 340m levels. A better understanding of the ore lodes and the expected higher ore grades are the main reasons for the higher production and lower cash costs. A small amount of mining was also conducted from the Kutema pillars at the 625m level. Mill feed included 1,851 tonnes from Kutema pillars, 16,753 tonnes of development ore and 19,515 tonnes of ore from Sarvisuo stopes. 2

3 During the three week vacation shutdown of both the mine and process plant in July, a significant amount of maintenance was performed at the Vammala Production Centre including maintenance on the gyratory crusher, installation of new compressed air dryer, new drum feed casings and the mill and flotation cells were checked. The Vammala Production Centre continues to operate effectively and efficiently. DEVELOPMENT FINLAND Orivesi Gold Mine All results from the underground diamond core drilling program have been received. Assays continued to define the new lode positions at Sarvisuo on and below the 420m level, following on from results previously released. In particular, a new high grade intercept of g/t gold from the 540m level indicates that at least one high grade shoot remains open with depth. As a result of the continued drilling success and confidence in the structure of the ore lodes, the board approved to extend the Sarvisuo development down to the 440m level. Figure 1 Orivesi Gold Mine Development down to the 440m Level Including High Grade Gold Intercepts Below the 440m Level 3

4 Drilling at Sarvisuo will resume in November when it is proposed to trial drill, parallel or subparallel to the lode system from the 420m level, with the objective of obtaining better information pertaining to the geometry and grades of the lode system. Table 3 Significant Gold Intercepts from the 490m, 525m and 540m Levels at Sarvisuo Hole North East Azimuth Dip From Interval Au ( ) ( ) (m) (m) (g/t) 490m Level KU m Level KU KU KU KU KU KU KU KU including 23.2 g/t gold from m 540m Level KU including g/t gold from m Analysis of full or half core was completed at the ALS Chemex laboratory in Perth, Australia using procedure Au 50g FA AA finish, following sample preparation at the ALS Chemex facility in Outokumpu, Finland. Results reported at a cutoff grade of 1g/t gold. Given the success of drilling below the 440m level, further evaluation of extending the decline beyond the 440m level has commenced. The resources below the 720m level at Kutema Deeps continue to be considered for development with an internal feasibility study to review and assess the viability of mining this ore. The decision to mine the Kutema resource will be made in the first half of Jokisivu Gold Project Diamond core drilling to improve confidence in the resource estimate and upgrade resource categories in preparation for open pit mining of the Kujankallio gold deposit was completed. Since the commencement of the drilling program in March 2008, a total of 30 holes have been drilled for an advance of 4,400m including five sterilisation holes. Results have been received from 17 holes, returning a series of narrow highgrade intercepts including highlights of g/t gold, 7.91 g/t gold, 5.76 g/t gold, g/t gold, 6.39 g/t gold, 18.5 g/t gold, 7.50 g/t gold, g/t gold, 5.03 g/t gold and 7.52 g/t gold. Upon receipt of the remaining assays, work will begin on an update of the resource estimate for the Kujankallio deposit. It is expected that this study will be completed before the end of the year. 4

5 Table 4 Intercepts from Kujankallio Diamond Drilling Hole North East Azimuth Dip From Interval Au ( ) ( ) (m) (m) (g/t) Profile 3 HU/JS HU/JS HU/JS Profile 4 HU/JS HU/JS HU/JS Profile 5 HU/JS HU/JS HU/JS HU/JS

6 HU/JS Section 6 HU/JS HU/JS HU/JS296A HU/JS296B Section 7 HU/JS HU/JS Section 8 HU/JS Section 9 HU/JS Section 10 HU/JS Horse Tail Structure HU/JS Analysis of half core was completed at the ALS Chemex laboratory in Rosia Montana, Romania using procedure AuAA25 and AuGRA22, following sample preparation at the ALS Chemex facility in Outokumpu, Finland. Results reported at a cutoff grade of 1g/t gold. Vammala NickelCopper Project Preparation of dewatering of the decline and mine workings of the Vammala nickelcopper mine in southern Finland has continued. It is expected that the dewatering process will be completed by early 2009 and enable an assessment of the condition of the decline and main production levels to determine the practicality of reopening the Vammala mine to access the remaining ore and to explore for additional resources. 6

7 EXPLORATION SWEDEN Svartliden Gold Mine Drilling programs focussed on the depth extensions were completed in August with a total of 4,460 metres drilled from 28 holes. Targeting panels of the North Lode east and west of the Central Fault, assays have now been received from 16 holes, yielding intercept highlights 4.65 g/t gold; g/t gold; 4.78 g/t gold; 8.81 g/t gold; 7.15 g/t gold; g/t gold; g/t gold; and g/t gold. Results still remain to be received for 4 holes west and 7 holes east of the Central Fault. One hole was abandoned during the program short of the target zone and was not sampled. Further results are expected in October. The new results continue to highlight the potential for highgrade mineralisation below planned limits to openpit mining and provide additional information that will assist with the evaluation of possibly establishing an underground mining operation at Svartliden. It is planned, that an independent update of the resource estimate for the Svartliden deposit will commence in midoctober, the study designed to better reflect the new status of this deposit. It is envisaged that results from this study will be available before the end of the year. Figure 2 Long projection of the North Lode at Svartliden. 7

8 Table 5 Drill results from depth extension drilling at Svartliden Hole North East Azimuth Dip From Interval Au ( ) ( ) (m) (m) (g/t) Profile 1450 SV SV including 66.9 g/t gold from 183.0m Profile 1475 SV Profile 1500 SV SV including 66.5 g/t gold from 122.0m Profile 1525 SV SV SV Profile 1550 SV SV Profile 1575 SV SV including g/t gold from 152.0m Profile 1600 SV Profile 1625 SV SV Profile 1850 SV Analysis of half core was completed at ALS Chemex Laboratories in Romania, using method AuAA25, following sample preparation at the ALS Chemex facility in Piteå, Sweden. Reporting cutoff grade 1.8g/t gold. In conjunction with the exploration activities in the immediate mine area, regional exploration activities continued with the completion of a detailed 10,282 line kilometre airborne geophysical survey over the entire Svartliden regional Exploration Permit holding. Data from the survey has been processed and the initial images highlight the overall prospective nature of the under explored Svartliden region and provide a platform from which to accelerate regional exploration programs in coming years with the identification/confirmation of numerous areas of interest that warrant followup activities. Geochemical surveys were completed across five target areas Svartliden E1, Svartliden E2, Svartliden West, Tallberget and Tallberget North in the immediate vicinity of the Svartliden Gold Mine. A total of 843 geochemical samples have been collected since the commencement of the program and dispatched for analysis by MMI methods. A total of 206 bedrock chip and base of till samples have also been collected from 1,137m of drilling and submitted for analysis for lowlevel gold and multielements. 8

9 Figure Svartliden Area Geochemical Survey To date MMI results have been received for portion of the samples collected from the Svartliden West area, the review of this new dataset gives indication that initial results are encouraging with a number of areas returning elevated gold, which will warrant further investigation. Results for the remaining MMI samples and all bedrock and base of till samples are expected to be available before the end of the year. Figure 4 Raw MMI Results (Gold) from the Svartliden West Area FINLAND Orivesi Gold Mine A bedrock chip and basal till sampling program commenced across several prospects. Sampling has been conducted along profiles spaced m at each prospect. By the end of September, a total of 182 chip samples and 121 basal till samples had been collected and a total of 1,297m were drilled at the Pärnävuori, Nevasuo, Hosionsuo, IsoTeerijärvi, Ruohosuo and Koukkujärvi prospects. In early October, a further 26 samples will be collected from 9

10 the Yläinen Silmäke prospect, which is the last target in this sampling program. Results from analysis are expected by the end of the year. Kaapelinkulma Gold Project Shallow percussion drilling of new trenches (M2EXT, M6M9) examining the northern extensions of known mineralization at Kaapelinkulma has been completed, returning a best intercept of 5.88 g/t gold from trench M2EXT. Some intercepts exceeding 2 g/t gold were also received from Trenches M6, M8 and M9. Trench M9 is the northern most of the new trenches and is located approximately 250m north of the Kaapelinkulma North area. Tammijärvi Gold Project Trenching and shallow percussion drilling were completed at Tammijärvi testing mineralisation earlier explored by the Finland Geological Survey (GTK). The best intercept obtained was from trench M6 with an intercept of 5.8 g/t gold from 9.00m. Historical drill holes R318, R319 and R320, located in the area of new trenches M4M7 were also relogged and sampled. Results for analysis remain pending. A total of 14 till samples for geochemical and heavy mineral studies were collected in the Lepola claim area. The sampling pits are located to the north and northwest of the mineralised boulders found in the area, including two historical boulders that contain 6 g/t gold and 2 g/t gold. Results are pending. Hanhimaa Gold Project Following a positive outcome from the 2007 MMI sampling trial at Kellolaki and Kiimalaki, further geochemical sampling has been conducted with profiles at Hanhimaa encompassing variable environments such as commercial forest areas and bogs. A total of 448 samples were collected during the course of the program, results have been received for the majority of samples submitted for analysis by Ionic Leach and MMI methods. The interpretation of these results is now in progress. A bedrock chip sampling program planned to target areas displaying indications of shearing, hydrothermally altered rocks and/or contain anomalous concentrations of gold or pathfinder elements was completed in early July. A total of 397 samples were collected from 14 sampling profiles totalling 3,787m of drilling. Results from analysis yielded numerous samples with indications of anomalous gold, silver and mercury and included the identification of a new area of precious and base metal mineralisation at Kiiamakuusikko, where five trench samples returned significant values for gold, silver, lead, arsenic and antimony. Table 6 Analytical results from rock chip samples collected from Kiimakuusikko Prospect Sample Number Rock Type Gold Silver Copper Lead Zinc Arsenic Antimony (ppb) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) Quartz vein 3,820 >100 3,590 80,900 4,220 1,380 19, Quartz vein , ,480 7, Quartz vein 1, , , Albitecarbonate rock , Albitecarbonate rock , Analysis were completed at Labtium Laboratory in Rovaniemi, Finland, using aqua regia leach at 90 o C (510), lead fire assay preconcentration, 50g subsample (705), multielement analysis by ICPAES (+510P) and determination of Au, Pt and Pd with ICPAES technique (+705P). The Kiimakuusikko area is located approximately four kilometres south of the KiimalakiKellolaki prospects and is the third significant zone of mineralisation to have been identified along the 20 kilometre long Hanhimaa Shear Zone. The area has been subject to very little exploration in the past and the new zone of mineralisation will be drill tested during October and November. 10

11 Figure 5 Anomalous Gold Results of Regional Bedrock Sampling at Hanhimaa The other trenches excavated at Hanhimaa were sampled by shallow percussion drilling. A total of 541 samples were collected and results remain pending. 11

12 Sukseton CopperGold Project Dragon Mining Limited September 2008 Quarterly Report A total of 46 geochemical samples were collected from two profiles for Ionic Leach analysis. All results have been received and will be interpreted. One of the historic trenches that remained open was sampled in order to confirm the 1.9 g/t gold value obtained by Outokumpu. Sampling was conducted by hand picking rocks considered representative for each respective sample interval. The intervals varied from 0.75 to 2.20m in length, depending on the rock type. Results are pending. Two new trenches were excavated in the Sukseton area. The first trench is a replication of a historic trench that returned results up to 7.3 g/t gold in one percussion drill sample. The second trench is located between the M12/83 trench and drill hole SUK30, on top of an old unnamed and covered pit. Assay results for 65 samples collected from shallow percussion drilling of these trenches remain pending. ValeInco Nickel Alliance (50% Interest) A ground magnetic survey in the Ruossakero area was completed. The 40 line kilometre survey covers an area of 2km² near previously released drill hole ENO/RUO14 that returned results of 0.255% nickel and 0.29% nickel. Processing of the data has shown that magnetic anomalies are narrow and sharp, whilst magnetic and slingram anomalies appear to form a foldlike structure. Geological mapping was conducted in the area southwest to northwest of the Kalkkoaivi hill, in the Ropi area and the Tsaibma area. Komatiite outcrops were located mainly in the Ropi and Tsaibma areas. Boulder hunting was undertaken in the Ruossakero area near drill hole ENO/RUO14. A total of 108 samples have been sent to the laboratory for analysis. Results are pending. Geochemical sampling was conducted in the Ruossakero, Kalkkoaivi and Ylimmäinen Vuontisjärvi areas. A total of 568 samples had been collected and submitted for Ionic Leach analysis. Results remain pending. Kuhmo Nickel Joint Venture (5% Free Carried Interest) Joint Venture partner, ASX listed Vulcan Resources Limited have yet to advise Dragon of activities undertaken during the September quarter. RUSSIA OAO Kivijarvi (84.98% Interest) No exploration was undertaken. ERITREA Zara Joint Venture (20% Interest) Joint Venture partner Sub Sahara Resources NL advised Dragon that further intercepts were received from the Koka Prospect. Results of five diamond drill holes (ZARD120 ZARD124) totalling 1,117m have returned significant high grade gold intercepts including highlights 9.22 g/t gold, g/t gold, g/t gold and 9.40 g/t gold. These results are part of a planned seven diamond drill hole set, designed to assist in the interpretation of the structural controls on mineralisation within the known orebody. All seven drill holes were collared in the hanging wall and drilled to the northwest, whilst previous drilling was completed east to west or west to east, perpendicular to the strike of mineralisation. The results from two diamond drill holes in this program remain outstanding and on receipt of these results, the structural setting of the Koka deposit will be reviewed. 12

13 Table 7 New Intercepts from Koka. Hole North East Azimuth Dip From Interval Au ( ) ( ) (m) (m) (g/t) ZARD ZARD ZARD ZARD ZARD All samples are prepared at the Africa Horn Laboratory in Asmara, Eritrea and then analysed by Genalysis Laboratories in Perth, Western Australia. AUSTRALIA Weld Range Joint Ventures (Various Interests) Joint Venture partner Minara Resources Limited advised Dragon that during the quarter rehabilitation of historic drill sites was completed. Planning and costing of infill drilling on the nickel laterite deposit was also completed. The infill drill program is proposed to be conducted at an appropriate time within the next 18 months. CORPORATE Cash Balances and Movements As at 30 September 2008, Dragon held; $6.5m in cash. Refer to Appendix 5B for principal movements in cash. $6.5m in gold concentrate receivables; and $3.8m of cash that is lodged with Swedish authorities as a rehabilitation bond at Svartliden. Hedging Dragon had 6,250 ounces of gold hedging remaining at a forward price of US$413. Using the 30 September 2008 spot gold price of US$869.90, the mark to market of the hedge book was a negative amount of US$2.9m. The Company will continue to deliver 500 ounces per month from Svartliden production into the gold forward book. 13

14 Gold Sales Production from Svartliden was sold at an average cash price of US$810 per ounce. 1,500 ounces of gold was delivered into the hedge book and the remaining production into the spot market. Gold concentrate from the Vammala Production Centre was sold at an average price of US$821 (gross of refining costs). Borrowings Dragon has a total of 23,645,289, A$1.05 convertible notes on issue with an associated liability of $24.9m. No convertible notes were converted to ordinary shares. As there is generally a six week delay between when shipment of gold concentrate and payment, the Company has established a receivables factoring facility with Nordea Bank in Finland where Dragon can finance 75% of its gold concentrate. At month end $1.6m had been financed. Note 1: The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Neale Edwards BSc (Hons), a Member of the Australian Institute of Geoscientists and Mr Urpo Kuronen MSc (Geology), a Member of the Australian Institute of Mining and Metallurgy, who are full time employees of the company and have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the Australasian Code of Reporting for Exploration Results, Mineral Resources and Ore Reserves. Mr Neale Edwards and Mr Urpo Kuronen consent to the inclusion in the report of the matters based on their information in the form and context in which it appears. Note 2: All statements in this report, other than statements of historical facts that address future timings, activities, events and developments that the Company expects, are forward looking statements. Although Dragon Mining Limited, its subsidiaries, officers and consultants believe the expectations expressed in such forward looking statements are based on reasonable expectations, investors are cautioned that such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements. Factors that could cause actual results to differ materially from forward looking statements include, amongst other things commodity prices, continued availability of capital and financing, timing and receipt of environmental and other regulatory approvals, and general economic, market or business conditions. 14

15 Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity Dragon Mining Limited ABN Quarter ended ( current quarter ) September 2008 Consolidated statement of cash flows Current quarter Year to date Cash flows related to operating activities (9 months) $A 000 $A Receipts from product sales and related debtors 13,234 44, Payments for (a) exploration and evaluation (b) development (c) production (d) administration (1,795) (183) (11,131) (674) (5,610) (746) (37,236) (2,025) 1.3 Dividends received 1.4 Interest and other items of a similar nature received Interest and other costs of finance paid (642) (1,887) 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows (970) (2,276) Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets (266) Loans to other entities (911) 8 Net investing cash flows (259) (903) 1.13 Total operating and investing cash flows (carried forward) (1,229) (3,179) 15

16 1.13 Total operating and investing cash flows (brought forward) (1,229) (3,179) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings (6) (18) 1.18 Dividends paid 1.19 Factoring of gold concentrate receivables 1,508 1,508 Net financing cash flows 1,502 1,490 Net increase (decrease) in cash held 273 (1,689) 1.20 Cash at beginning of quarter/year to date 6,165 8, Exchange rate adjustments to item (15) 1.22 Cash at end of quarter 6,475 6,475 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item 1.10 Nil 1.25 Explanation necessary for an understanding of the transactions Payment to directors of salaries, fees, superannuation and consulting fees. Noncash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows Nil 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Nil 16

17 Financing facilities available Amount available $A 000 Amount used $A Loan facilities (convertible notes) 24,828 24, Credit standby arrangements (factoring gold concentrate) 4,840 1,600 Estimated cash outflows for next quarter $A Exploration and evaluation 2, Development 730 Total 3,080 Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter $A 000 Previous quarter $A Cash on hand and at bank 6,475 6, Deposits at call 5.3 Bank overdraft 5.4 Other Total: cash at end of quarter (item 1.22) 6,475 6,165 17

18 Changes in interests in mining tenements Dragon Mining Limited September 2008 Quarterly Report 6.1 Interests in mining tenements relinquished, reduced or lapsed Sweden Järvsjo nr 1 Tenement reference Nature of interest (note (2) Interest at beginning of quarter 100% Interest at end of quarter 0% Finland Hormuoja Hormuoja Hormuoja 3 100% 100% 100% 0% 0% 0% 6.2 Interests in mining tenements acquired or increased Finland '7629/1 Kangerjärvi '7629/2 Kangerjärvi 2 '7629/3 Kangerjärvi 3 '7629/4 Kangerjärvi 4 '7629/5 Kangerjärvi 5 '7629/6 Kangerjärvi 6 0% 0% 0% 0% 0% 0% 5% 5% 5% 5% 5% 5% 18

19 Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities Total number Number quoted Issue price per security (see note 3) (cents) 737,345, ,345,151 Amount paid up per security (see note 3) (cents) 7.4 Changes during quarter (a) Increases through issues (b) Decreases through expired partly paid shares Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Lapsed during quarter 23,645,289 23,645,289 $1.05 $1.05 1,500,000 1,000,000 6,000,000 75,000 5,550,000 Exercise price 17.5 c 14 c 21 c 21 c 17.5 c Expiry date N/A N/A N/A 21 Dec June

20 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: Print name: (Managing Director) PETER CORDIN 21 October 2008 Notes 1 The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == == == == == 20