Ann: Quarterly Activities Report , page-2

The short term concern here is that the FY guidance of 75k ounces is gilding the lily, and if so it will be a first dent in management credibility. We had the November guidance of 90-100k cut now to 75k, my concern would be that this is also cut over the next quarter.

To reach the 75k target the next two quarters needs to average a little over 24k ounces which seems problematic to me on the basis of the below comments.

"The re-optimisation of the sinking of the Saga Shaft to Level 8 will mean that the high rate of
development will continue until this shaft is completed, continuing the high percentage of
development ore in the mill feed. Once the Saga Shaft is completed with an estimated haulage
capacity to 1,500 tonnes per day, then it will be possible to increase the amount of stope ore
that is hauled and processed.
It is estimated that the Saga Shaft will be completed and hauling from Level 8 commenced
during the December quarter 2012"

On this basis the mill will continue to be fed with lower grade development ore over the next two quarters.

I am not at all concerned by this in the long term apart from potential loss of credibility affecting expectations of the longer term production forecasts.

On the positive I note the cash balance remained unchanged, even with only 10k oz sold during the quarter.

I expect the market will punish the SP short term.