Ann: FML March Quarterly Report and 5B , page-14

Hello KT and all,

This is a mixed bag indeed and I have been on the phone talking to the company on a few fronts to make more sense of this. In summary Coolgardie a poor result and Laverton an excellent result - what about moving forward?

The glass is half empty issue is the cash costs at Coolgardie which were very disappointing and totally unexpected by myself. Going back a quarter I remember December being a much better month (6koz) and that the March quarter was expected to improve. This did not happen and this IS the major source of the high cash cost, let me explain...

Put simply the mining had to cover the 5,000oz twice as additional production from open pits had to make up for Tindals under performance. They effectively had stripping and development underground running much higher and normal production tonnage as well to meet their target. Mining next 6-8 months will little development in Tindals which has run a long way past their original time frame - with planning to come after more work to see where to move there next.

The pits are an ongoing glass half full effect, fantastic and now Greenfields with a 4:1 strip ratio and 1.7g/t next to the mill - literally so the mining fleet delivers this ore straight to the ROM pad. Next is Alicia, sister pit to Empress just over the ridge.

A major point not made in this quarterly was how the open pits have de-risked Coolgardie - all proven in this last quarter as this Tindals result would have been a disaster before the pit operations began. Apollo has done the same at Laverton and more to come.

I await a further discussion this afternoon about costs and some of the other financial issues.

My report will cover all this and the plan going forward as two sets of key personnel stamp their impact on the company - all for the better. Gerry Fahey is now working with Jeff Ion, Phung Nguyen and Dean Goodwin on exploration - a formidable combination. We also have further benefits coming from Mark Hine COO - look at what he did with Laverton now the star of the show with the pits at Coolgardie.

I have been supportive on this project and acquisition (on operational basis) all the way. Paul Fromson - great report - will also be looking at optimization of production from the cost perspactive and Peter Ganza on technical services is an ex-Barrick professional in this area and has recently joined the team - already making some worthwhile improvements in his area. Simon Bruce is the new manager at The Mount - already moving in the right direction in the month of March as mentioned.

Sorry back to work have to run.
CW