Ann: Quarterly Activities Report 31 March 2012 , page-2

re: Ann: Quarterly Activities Report 31 March... Summary of positive points I took away:

- Commenced drilling at its Castle Hill gold project as part of a 50,000 metre programme planned for 2012.
- Focus initially on increasing the resource base at the
Castle Hill and Broads Dam Projects.
- Exploration targets are being tested which focus on identifying new discoveries principally within the Ora Banda – Grants Patch and Kunanalling gold camps.
- Large samplingprogramme was completed on the historical surface stockpiles to assess the viability of treatment of the orethrough third party mills during the year.
- Following application in 2011, statutory mining approvals were received during the March Quarter and, subject to lodgement of environmental bonds, the mine can now be developed.
- Pending the outcome of these discussions, a development decision is intended to be made in the June Quarter and will comprise either a staged right to mine agreement with a thirdparty or contract mining under Phoenix management and toll treatment or ore purchase with a third party mill.
- Blue Funnel....includes ore that can be extracted within the existing pit shell with limited capital cost. Development options will then be assessed in line with Catherwood.
- Phoenix’s aim is to develop these opportunities, including surface stockpile treatment, and use the cash generated to increase the drilling campaign targeting a resource base of + 2.5 million ounces of gold.
- $6.6M cash.