Reward

Operations

Gold production from the Hawkins Hill Reward deposit commenced in March 2008 and has steadily increased to approximately 1,000 ounces per month. The Hawkins Hill deposit alone produced over 400,000 ounces of gold at an average grade of about 10 ounces per tonne in the nineteenth century, and was approximately 400 metres long, 40 metres wide and 50 metres down dip. The Hawkins Hill Reward deposit which is within a 100 metre wide zone of the host stratigraphy is now known to extend over 1,500 metres along strike and to over 250 metres depth.

Surface and underground diamond drilling at Reward have confirmed the continuity of the Hawkins Hill high grade zone along strike to the north into the Reward area and a portion of Reward has been drilled to a JORC resource of 159,000 tonnes at 17g/t gold.

Underground mining has now opened up almost 1,000 metres of strike on the Amalgamated level by driving beneath the rich historical workings and establishing a new 230m deep shaft at Reward. Development by driving, cross cutting and rising, and limited production stoping, are testing portions of the Hawkins Hill - Reward deposit to determine the scale up size of the project.

The initial mining target was the Reward Paxtons vein set, which has now been opened on four levels in the Reward shaft. Sub-level drives on Paxtons were established at 12m vertical intervals and rising up the Paxtons, between the sub-levels, was done at 12m spacing along strike to provide sufficient access to assess the geological and mining features. The very high grade zones within Paxtons have been confirmed as continuous, repeating shoots, which are regular in shape and predictable in grade variation and similar features have been confirmed in the M2 vein set which has been mined along the Amalgamated level. This is important for confident resource estimation and mine planning.

The underground material mined from the Hawkins Hill Reward deposit is processed in a gravity gold plant, which was initially used to process batches of material as small as ten tonnes from individual rounds from specific underground sources. The gold produced in the plant from each such batch was correlated against underground sampling and geology to help establish the geological controls of the mineralisation. This has been very successful and the plant has been upgraded to operate on a continuous basis at up to 100 tonnes per day.

The processing plant is a simple gravity recovery plant using crushing and milling to reduce the rock to less than a millimetre and, with a 30 inch Knelson concentrating bowl and spirals, it recovers approximately 97% of the gold contained in the ore using no chemicals.

The successful initial mining of the Reward area is being expanded to encompass the entire Hawkins Hill Reward deposit and underground drilling and further development is targeting a potential scope of 500,000 tonnes at 10-20g/t. This would support an annual production rate of 40-50,000 ounces through a similar, expanded gravity plant.

Scandinavian

The Scandinavian workings are in the northern extension of the Reward mineralisation from immediately north of Reward for a further 500 metres. Previous mining was stopped by minor water inflow.

A diamond drilling program of 1,086 metres was completed in 2008 at the Scandinavian area in three drill holes, which were drilled from the streets of Hill End.

The drilling traversed the northern extension of the Hawkins Hill Reward mineralised sequence, down dip below historical workings, and intersected the Central zone veinsets. Visible gold was observed in the Paxtons and Mica veinsets at the approximate elevation of the Amalgamated level and further drilling is required.

Germantown

The geological setting at Germantown is interpreted to be a continuation of the Hawkins Hill Reward veinsets and drilling has intersected a large anomalous alteration zone coincident with a magnetic low and depletion of both sulphide and gold mineralisation was encountered. Further studies are underway to plan additional drill testing of the area.