announcemt out

COYOTE GOLD PROJECT UPDATE
The Directors are pleased to provide the following update on the Coyote Gold Project.
Coyote Treatment Plant
• Treatment Plant
Performance of the treatment plant has improved markedly and the Project is currently achieving +90%
gold recovery from the treatment of low grade stockpiles. This improvement follows termination of the
services of BeMeX Corporation Pty Ltd in late December 2006 and subsequent successful progress
rectifying design and construction problems associated with the plant.
The plant has now been converted to a conventional carbon-in-pulp (CIP) plant, and the vat leach circuit
removed. Performance of the Knelson concentrator (gravity circuit) has been optimised with only one
concentrator required for operation. The Acacia reactor has been re-commissioned and operator training
has been completed. The gravity circuit optimisation and closed circuit milling has resulted in a gravity
gold recovery of around 75% since early February 2007. Consequently, only low grade feed is currently
going into the leach adsorption circuit. Improvements have been made to the leach tanks and the current
limited leach capacity of this circuit (which is planned to be increased with the installation of more
tankage) has not caused problems with the lower grade ore being treated.
Tanami Gold NL 2
The Project commenced 24-hour operations on 5 February 2007 following the recruitment of a full
operating crew. Consistent operation of the plant has occurred since that time, other than during two
major routine planned stoppages, resulting in the treatment of 11,946 tonnes (approx grade of 1.2 to 1.5
g/t gold) at a throughput rate of 22.3tph. Throughput rates are expected to increase during March 2007
as the ball charge in the mill is brought up to maximum level following the mill reline.
Although only low grade stockpiled ore is currently being treated on a reduced throughput basis, the
modifications completed to date should allow high gold recoveries from higher grade ore following
recommencement of mining.
• Project Review
The detailed review of the Project undertaken by the Tanami Gold operations team and various expert
consultants over recent months is nearing completion. As detailed above, the treatment plant
modifications have progressed very well and the high recovery levels currently being experienced are
expected to continue for the remaining open pit and underground ore.
Visible gold in Coyote core
Following a review of the Project's underground resources/reserves and planned mining method by
mining consultants AMC Consultants Pty Ltd (AMC), the Company has decided to alter the underground
mining method for the Stage 1 mine plan from a long hole stoping method to cut and fill. This method is
considered to be a lower risk option as it will provide improved control over mining dilution and greater
flexibility to recover the multiple narrow high grade veins included in the existing mine plan.
Importantly, the more flexible amended mining method will enable recovery of additional identified high
grade veins that are considered likely to be converted to reserves by underground drilling. There remain
significant underground resources which are not included in the Stage 1 mine plan which will be subject
to underground drilling aimed at converting existing resources to reserves and delineating new
resources/reserves.
Although AMC are satisfied with the classification of the majority of the Gonzales and Buggsy lodes as
indicated underground resources, they have recommended that a number of diamond holes be drilled into
the Mutley lode of the underground resource to achieve a higher level of confidence in the tonnes and
grade of that lode. The Company plans to undertake this drill program before the decline development
commences. A revised ore reserve statement will be compiled after this drilling has been completed and
the resources and reserves have been re-estimated.
As a result of the review, Stage 1 will now cover the next three years of the Project with a base case
production level of approximately 50,000 ounces per annum with the possibility of increasing the
production level as more resources are converted to reserves and additional resources/reserves are
delineated.
Tanami Gold NL 3
The Company will continue the treatment of stockpiles until higher grade open pit ore is available
following the planned recommencement of mining within the next four to six weeks. Based upon the
AMC review, Stage 1 of the Project will include shallower open pits with the decline development
planned to commence in the September 2007 quarter. Importantly, the planned open pit mining will
enable a full reconciliation of grade and tonnes now that the treatment plant is modified to a CIP and is
performing well. As the pit deepens, more continuous higher grade ore blocks will be mined compared
to the ore blocks mined to date from the heavily weathered top benches of the open pit.
In summary, the planned staged development of the Project over the next four to six months will enable
the Company to mine parcels of ore from the open pits which will assist in tonnes and grade
reconciliation and in achieving a much higher level of confidence in the geological and structural
controls on mineralisation. This increased knowledge will be important in finalising the design of the
underground plan to ensure optimal access to the high grade underground ore (+12g/t Au) which is the
key to the success of the Project.
Although the Coyote Gold Project has had a number of start up difficulties, the Board considers that the
Project still holds significant potential to develop into a profitable and expanding operation which can
fund further exploration at and around Coyote together with exploration of the Company's extensive
exploration portfolio located in the Tanami-Arunta Province of Central Australia. The Company remains
debt free and has no gold hedging in place.
Yours faithfully
Tanami Gold NL
Denis Waddell
Executive Chairman