annual report out any comments, page-4

Some key grabs from the annual report.

Substantial progress has been made during the year
with the development of the Reward Gold Mine to the
south of the town of Hill End. Initial sampling of high
grade material from the development was processed
and the first gold pour took place on 11 April 2008.
An increase in mining and plant processing has continued
since that time and by the close of the year, the
Reward Exhibition shaft raise boring was completed
and steelwork fabrication was well underway.

The Reward Gold Mine development is targeting the
initial resources outlined by surface drilling in 2007 of
124,400 tonnes at 19g/t gold, which are indicated to
be conservative based on the development and processing
results to date. Recent underground diamond
drilling has further extended the known high grade
gold mineralisation in the Hawkins Hill–Reward area
beyond the current resource blocks.

Increase gold production from the Hill End Project
with targeted resource potential of 4–5 million
ounces.

The Reward underground development has advanced more than 1,000 metres beneath the old near surface workings
of Hawkins Hill and Reward and has connected with the new 230 metre Reward Shaft. This shaft now has ten levels
which will provide mining access to the resources above the Amalgamated level, particularly the Paxton’s veinset
which has an initial drill delineated resource of 23,000 tonnes at 48g/t gold within the current provisional Reward
resource estimate of 159,000 tonnes at 17g/t gold.

Hargraves and Windeyer. Together these goldfields have
produced over two million ounces and large individual
pieces of gold from shallow workings such as the
Holtermann’s Nugget at 3,100 ounces from Hawkins
Hill, the Kerr’s Hundredweight at 1,546 ounces from
the BNH deposit and in the nearby Louisa, Daly and
Meroo Creeks many large nuggets were found, with
the ‘King of Waterworn Nuggets’ being the largest at
2,680 ounces of gold.

During the year a total of $11.4 million was raised
through the conversion of 65.4m HEGO 15c options
into HEG fully paid ordinary shares and the issue of
54.2m HEGOB 25c options at 3c each.

Plant
The gravity gold process plant was originally designed
for batch sampling small parcels of Reward development
material and is now operating on two shifts per day and
processing about 50 tonnes per day. Stope development
and initial stoping of the M2 and Paxton’s veinsets is
expected to continue to demonstrate the profitability of
the very high grade zones and the plant will be improved
to optimise throughput and gold recovery. The removal
of bottlenecks in the plant has improved production,
and as the underground opens up, the target production
rate is about 100 tonnes per day.

The plant gold grade has been 2–3 times higher than
the grade estimate of the 2007 Reward drill delineated
resource blocks which have been mined to date in the
Paxton’s and M2 veinsets. The average plant feed grade
for 1,683 tonnes mined and processed from these blocks
is 22.7g/t gold compared to the drill estimated resource
block grade of 10.0g/t gold.

As the M2 and Paxton’s high grade areas are opened up
for stoping, the Amalgamated process plant feed grades
may be up to two ounces per tonne, which would
indicate an annualised production rate of about 50,000
ounces, at reasonable plant availability and continuous
operation.