For personal use only

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1 Mount Magnet South NL ABN Quarterly Activities & Cashflow Report 30 September 2011 Summary Upgraded Mineral Resource Estimate at Kirkalocka finalised increasing Indicated category by 13% to 305,000 ounces Au, and overall JORC resource to 413,000 ounces Au Stage 1 and Stage 2 of a three stage drilling program completed to the areas north and south of the Curara Well open pit, comprising 33 holes for 5,264m RC and 664m DDH High grade intercepts returned from initial assays, with results pending for +1,300 samples Successful completion of share placement and underwritten rights issue to shareholders raising a total of $4.9m before costs Feasibility study program on track to complete by end November 2011

2 Kirkalocka Gold Project JORC Mineral Resource Estimate The Company has released another upgrade to its Curara Well Mineral Resource Estimate as follows: Category Tonnes (Mt) Grade (g/t au) Gold (ounces) Indicated ,000 Inferred ,000 TOTAL ,000 Following the generation of 3,907 metres in additional exploration data from 24 reverse circulation (RC) holes, the Company engaged Snowdens Mining Industry Consultants to estimate the resource. The total dataset comprises 176,032 metres of RC, air core and diamond drilling. The mineral resource has been reported above cut-off grades of 0.3 grams per tonne gold for the laterite mineralisation, and 0.5 grams per tonne gold for the oxide and fresh mineralisation. The mineral resource is constrained within an optimisation shell that extends to 290m below the surface, with cut-off grades based upon economic factors determined from the application of open pit mining methods and historical gold recoveries from the Kirkalocka treatment plant. Feasibility Study Program The feasibility study program commenced in February 2011 is targeting a November 2011 completion. Quarterly Activities & Cashflow Report June 2011

3 For personal use only Exploration Activity Staged Drilling Program The Company has planned a 3 stage drilling program to the areas north and south of the Curara Well open pit, with the purpose of in-filling areas of known mineralisation in order to bring them into the current resource model, increase the confidence in the mineralisation already in the resource model, and to thirdly extend the mineralisation to depth and along strike. Refer Figure 1 below. Figure 1: The Company has planned a 3 Stage Drilling Program to the mineralised areas north and south of the Curara Well open pit Three diamond holes from Stage 1 drilling are yet to be assayed, pending the completion of geotechnical and metallurgical testwork on the core, which is currently in progress and nearing completion. Stage 2 of the drilling program (Figure 2), focussed on targets south of the Curara Well open pit, commenced in July 2011 and was completed during the quarter. The program comprised 27 RC holes to depths ranging between 100m and 180m, for a total of 4,001m drilled. Significant intersections reported to date are contained in Table 1 below, with Figure 3 showing intersections across the previously unidentified high-grade cross cutting NE1 Quarterly Activities & Cashflow Report June 2011

4 structure. The NE1 structure remains open at depth and along strike, with the thickest intersection to date occurring in the southern most section. Results are pending for +1,300 samples still being assayed. Table 1: Stage 2 - Significant Intersections July 2011 Curara Well RC Drilling Grid Coordinates Hole Data Significant Intersections Hole Number MGA Easting MGA Northing Azimuth (deg) Dip (deg) Total Depth (m) From (m) To (m) Interval (m) Grade Au (g/t) 11CWRC CWRC CWRC CWRC CWRC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC CW4RC (i) Results are based on 40g fire assay (ii) Intersections are calculated from RC drilling (iii) Minimum sample interval of 1.0 metre (iv) Mean grades have been calculated on a 0.5g/t lower cut-off grade, with no upper cut-off grade applied, and maximum internal waste of 4.0 metres (v) Collar coordinates are based on GPS survey and downhole survey based up Eastman Multishot (vi) All intersections are downhole intervals Quarterly Activities & Cashflow Report June 2011

5 Figure 2: Stage 2 - Curara Well Southern mN Cross Section High Grade NE1 Cross Cutting Structure Figure 3: Stage 2 - Curara Well Southern mN Cross Section High Grade NE1 Cross Cutting Structure Quarterly Activities & Cashflow Report June 2011

6 Competent Person s Statements Resource Estimate The estimation, depletion and reporting was completed by Lynn Olssen MAusIMM (CP) who is a full-time employee of Snowden Mining Industry Consultants. Lynn Olssen has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves (JORC, 2004). Lynn Olssen consents to the inclusion in this report of the matters based on the information in the form and context that the information appears. The information including database compilation, geological interpretation and mineralisation wireframing were completed under the overall supervision and direction of Graham Howard, MAusIMM, who is a full time employee of Mount Magnet South NL. Graham Howard has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves (JORC, 2004). Graham Howard consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. Rounding, conforming to the JORC Code, may cause some computation discrepancies. Competent Person s Statements Exploration Results The information in this report that relates to exploration results is based on information compiled by Graham Howard, MAusIMM, who is a full time employee of Mount Magnet South NL. Graham Howard has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves (JORC, 2004). Graham Howard consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. Quarterly Activities & Cashflow Report June 2011

7 Corporate Activity Entitlements Issue of Shares During the quarter the Company completed a pro-rata entitlements issue of shares to shareholders on a 1 for 5 basis priced at 5.5 cents, raising $2.9m before costs. On closure, the Company issued 45,748,226 shares, which represented an 85% take-up of rights by shareholders. The shortfall of 7,739,860 shares were subsequently applied for and issued to the underwriter to the issue. Placement of Shares During the quarter the Company completed a placement of 28,571,428 shares at an issue price of 7 cents per share, with one free attaching option exercisable at 7 cents for each 2 shares placed. The placement raised a total of $2m before costs. Tenure Project Area Tenements under Area of granted tenements administration (hectares) Mount Magnet 16 3,135 Kirkalocka 10 29,563 Paynes Find 2 3,026 TOTAL 28 41,719 Quarterly Activities & Cashflow Report June 2011

8 Appendix 5B Mining exploration entity quarterly report Name of entity Mount Magnet South NL ABN Quarter ended ( current quarter ) September 2011 Consolidated statement of cash flows Cash flows related to operating activities Current quarter Year to date (3 months) 1.1 Receipts from product sales and related debtors Payments for (a) exploration and evaluation (2,240) (2,240) (b) development - - (c) production - - (d) administration (272) (272) 1.3 Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid BAS (GST) Refunds Net operating cash flows (2,190) (2,190) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects - - (b) equity investments - - (c) other fixed assets (306) (306) 1.9 Proceeds from sale of: (a) prospects - - (b) equity investments - - (c) other fixed assets Loans to other entities Loans repaid by other entities Other - security deposit - - Net investing cash flows (306) (306) 1.13 Total operating and investing cash flows (carried forward) (2,496) (2,496) Quarterly Activities & Cashflow Report October 2011 Page 1 of 5

9 1.13 Total operating and investing cash flows (brought forward) Cash flows related to financing activities (2,496) (2,496) 1.14 Proceeds from issues of shares, options, etc. 4,941 4, Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other - share issue costs (296) (296) Net financing cash flows 4,645 4,645 Net increase (decrease) in cash held 2,149 2, Cash at beginning of quarter/year to date Exchange rate adjustments to item Cash at end of quarter 2,899 2,899 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 1.23 Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item Explanation necessary for an understanding of the transactions Item 1.23 Amounts paid to related parties include remuneration, directors fees, consulting fees and reimbursement of expenses to directors. Non-cash 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 Financing facilities available Amount available Amount used 3.1 Loan facilities Credit standby arrangements 0 0 Quarterly Activities & Cashflow Report October 2011 Page 2 of 5

10 Estimated cash outflows for next quarter 4.1 Exploration and evaluation (1,133) 4.2 Development Production Administration (292) Total (1,425) 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 Previous quarter 5.1 Cash on hand and at bank 2, Deposits at call Bank overdraft Other (rehabilitation bonding) - - Total: cash at end of quarter (item 1.22) 2, At 30 September, the Company had $1.485 million held in a bank deposit which is subject to lien and is provided as collateral for a bank guarantee issued to the Department of Mines in relation to environmental rehabilitation provisions concerning the Company s mineral permits. This deposit amount is not included in cash balances at the quarter end for the purposes of this cash flow statement. Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased Tenement reference N/A N/A Nature of interest (note (2)) Interest at beginning of quarter Interest at end of quarter Quarterly Activities & Cashflow Report October 2011 Page 3 of 5

11 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, buy-backs, redemptions Ordinary securities (fully paid) 7.4 Changes during quarter (a) Increases through issues Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) ,928, ,928, , , N/A (non-cash issue) 28,571,428 28,571, ,488,086 53,488, (b) Decreases through returns of capital, buy-backs Convertible debt securities (description) 10m unsecured notes convertible to 10m shares, redeemable by 27/11/2012, 5% coupon rate 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options & Performance Rights (description and conversion factor) ,000, ,000,000 D&E options Exercise price 10c, 15c & 20c Expiry date 19 May ,000 C Note options - 10c,15c,20c 19 May ,500,000 CIP options - 6c 31 December ,000,000 Options - 9c 31 October ,499,998 Performance Rights - - See table below Quarterly Activities & Cashflow Report October 2011 Page 4 of 5

12 7.7 Options & Performance Rights (description and conversion factor) 14,285,714 Placement Options - 7c 31 August Issued during the quarter 14,285,714-7c 31 August Exercised during quarter Expired during quarter Debentures (totals only) Unsecured notes (totals only) - - Each Performance Right can convert to one ordinary share upon satisfaction of specified performance conditions. No. Performance Rights Expiry Date 5,999, November ,000, May ,500, June ,000, ,000 on 31 March 2012, 500,000 on 30 June 2012, 500,000 on 31 December 2012 and 500,000 on 31 December 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: (Company Secretary) Date: 31 October 2011 Print name: Susmit Shah 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. Quarterly Activities & Cashflow Report October 2011 Page 5 of 5