Key Points:Production overall in line with expectations, Golden...

Key Points:

Production overall in line with expectations, Golden Grove (lower zinc and copper production) being the exception.

Operations:

Sepon Gold

* Production: 19.1koz Au (GSJBW: 20.3koz Au)

* Cash costs: US$888/oz (GSJBW: US$766/oz)

* FY08 production forecast to be lower at: 85-95koz (GSJBW: 85koz)

Sepon Copper

* Production: 13.2kt Cu (GSJBW: 16.1kt Cu) - Lower as a result of a major planned shut down in April and the fire sustained in the plant's electro-winning tank house.

* Cash costs: US$0.83/lb (GSJBW: US$0.94/lb) - The company notes upward pressure on costs will continue in the 2H due to input costs for fuel, acid and lime.

* FY08 production guidance: 60-65kt (GSJBW: 65kt)

Golden Grove

* Production: 37.7kt Zn, 3.8kt Pb and 1.7kt Cu (GSJBW: 40.9kt Zn, 3.8kt Pb and 5.8kt Cu)

* Cash costs: US$0.49/lb (GSJBW: US$0.28/lb) - Higher than expected costs a function of lower copper production

* FY08 zinc production guidance revised downwards: 130-135kt (GSJBW: 141.3kt)

* FY08 copper production guidance unchanged: 20-25kt (GSJBW: 25.5kt)

Century

* Production: 130.8kt Zn (GSJBW: 121.1kt Zn) - Higher than expectations due to better grade and higher throughput

Rosebery

* Production: 21.1kt Zn (GSJBW: 20.9kt Zn) - Higher than expectations due to better grade being realised.

Avebery

* First nickel concentrate was produced mid-July with sales now expected in August.

Prominent Hill

* Construction on schedule and on budget, with SAG mill on site and now being installed.

* FY08 production guidance unchanged: 10kt Cu (GSJBW: 8.3kt Cu)

* FY09 production guidance unchanged: 110-120kt Cu (GSJBW: 111kt Cu)

Martabe

*
Final Indonesian Government approvals for the Martabe project were received

GSJBW Initial Thoughts:

Overall production was in line with expectations with the exception of Golden Grove. We note cost pressures remain high across all operations due mainly to inputs such as fuel and acid.

The key catalyst remains the delivery of Prominent Hill on time and within budget.

We maintain our BUY recommendation.

12 Month Target Price: $3.50
Recommendation: Buy
Share price: $2.08