Ferret's Stock to Watch: CROESUS MINING NL09:15, Tuesday, 11...

Ferret's Stock to Watch: CROESUS MINING NL
09:15, Tuesday, 11 April 2006

A GOLD MINER LOOKING FOR THE GOLDEN TOUCH FROM MACQUARIE

Sydney - Tuesday - April 11: (RWE Aust Business News)
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OVERVIEW
********

Croesus Mining NL (CRS) is still suspended from stock exchange
trading until it can get its house in order so there is not a great deal
to watch in the market at the moment.

But it's important to draw investors attention to what has been
going on behind the scenes to give the company a good chance to survive
and hopefully become a profitable gold producer.

Gold is at an all-time high of better than $US600 oz and business
magician Macquarie Bank is directing its destiny, but so far Croesus has
still to get the runs on the board.

The company last week said it will immediately implement a
short-term mining, production and exploration plan to return the Norseman
gold business to a sound operational and financial footing.

A production forecast will also be prepared in due course which
will provide the basis for longer-term financial planning.

The board also reported that, after meeting with the company's
major hedging counter-party and secured creditor, Macquarie Bank, the
bank has, based on the information provided to it to date, given its
in-principle support for Croesus to finalise and implement a
comprehensive new operating and financial plan for the continuation of
Croesus's Norseman gold operations.

Trading in Croesus shares was suspended on March 16, pending
completion of a detailed review of all financial and operational aspects
of the business.

SUSPENSION SHOULD BE LIFTED SOON
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Croesus shares last traded at 27.5c. Rolling high for the year
was 45.07c and low 26c. The company has 362.3 million shares on issue
with a market cap of $82 million.

Included was an independent solvency review and consultation and
liaison with major stakeholders including creditors, directors, senior
management, employees, consultants and suppliers.

The company said support of these and other stakeholders (such as
the WA Government and Dundas Shire) is imperative to give Croesus time to
achieve its goals.

Chairman Michael Kiernan said the review concluded that poor
decisions over several years had left the company in a very difficult
financial and operational position with the key issue being insufficient
ore sources to maintain its processing plant at full capacity, and high
costs.

As a result, current production levels are insufficient to meet
Croesus's full hedging commitments.

He said the board has the in-principle support of Macquarie to
implement key production strategies, efficiencies and cost savings
required to increase production and reduce cash operating costs which had
been identified by underground mining consultant, Barry Cahill.

It is envisaged that Mr Cahill, in a senior operational position,
will lead a team of experienced mining engineers to spearhead this
program, which will be overseen by Mr Kiernan as executive chairman,
Allan Quadrio, who is to be appointed as the company's managing director,
and non-executive director David Macoboy, who was previously finance
director of Consolidated Minerals.

All three played key roles in the reconstruction of Consolidated
Minerals.

Further details of the new operations plan will be provided
shortly, however proposed components include:

* introduction of significant operational productivity and
efficiency gains in order to maximise monthly gold production;

* deferment of certain short-term financial obligations to enable
the operation to become cash positive;

* significant operating and corporate cost reductions at Norseman
and Kalgoorlie; and

* identification of additional reserves and development of a
third ore source in addition to the Bullen and Harlequin mines.

Mr Kiernan said the new management team would quickly focus on
short and medium-term strategies to return the Norseman gold business to
a sound operational and financial footing as the first step towards
rebuilding Croesus from the ground up.

BACKGROUND
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Croesus listed on the ASX in July 1986, raising $2.6m for
exploration under the management of Kalgoorlie-based Ron Manners, who
held 32 per cent of the company after its listing.

In 1987 Croesus acquired various assets of CRA subsidiary Forrest
Gold Pty Ltd for $20.3m. The Hannan South treatment plant and open pit
included in the purchase enabled Croesus to repay its financiers and pay
three cents in dividends in 1988.

After the completion of mining at Hannan South in late 1988 the
plant was upgraded to 260,000 tpa, but a low gold price in February 1989
forced the early cessation of the satellite Wombola ore body, leaving the
Hannan South treatment facility without an ore source.

Exploration in 1988 and 1989 resulted in the Jupiter (CRS 49pc)
and Mystery Mint discoveries.

The company acquired the Binduli tenements from Defiance Mining
in January 1993 for $405,000, securing short-term feed for the Hannan
South mill 19km to the southeast.

Previous operations at Binduli had concentrated on the Walsh &
Pitman line, whereas Croesus's subsequent success was based on a line of
discoveries further west incorporating the Ben Hur (panels 1-3),
Centurion, Navajo and Beaver deposits.

The capacity of the Hannan South treatment plant was increased to
600,000 tpa during May 1995 at a cost of $1.8m. Open pit production still
continues at Binduli and over 340,000 ounces has been produced to date.

In September 1995 Croesus announced the first discovery of
coherent, high grade primary mineralisation at Binduli, resulting in the
definition of the ECM zone beneath the Centurion pit. This led to the
decision to develop an onsite treatment facility at Binduli, however
these plans were put on hold in April 1997, when agreement with native
title claimants could not be reached.

The development of the Centurion deeps pit in 1998/99 allowed for
a record year with respect to gold production, cash costs and profit.
Retained cash grew through 1999 from $5 million to $22 million at June 30
1999, leaving Croesus debt free and in an excellent position to fund
acquisition and exploration programs.

In June 2000 Croesus purchased a 100pc interest in the Davyhurst
project from NM Rothschild & Sons.

Davyhurst had been previously mined by a series of operators and
the purchase price included a 1.3Mtpa CIP treatment facility. Croesus
discovered the Giles gold deposit in July 2000 and recommissioned the
plant and commenced production in April 2001.

Davyhurst produces approximately 100,000 ounces per annum and has
an ore reserve of 200,000 ounces from a total resource base of 600,000
ounces.

Underground operations recommenced at the Lights of Israel Mine
at Davyhurst in April 2002 under an arrangement with Barminco Pty Ltd.

In October 2001 the directors of Croesus Mining and Central
Norseman Gold Corporation announced that they had reached agreement on a
proposal to merge the two companies.

The merger provided Croesus with a third production centre.

The Norseman region has been in production continuously for more
than 100 years and Central Norseman Gold is now the longest continuous
gold producer in Australia with 70 years of production.

Croesus is convinced that the Croesus Norseman operations will
continue to produce for many years to come.

Funding for the merger was made available through a $20 million
facility provided by Macquarie Bank and $12.5 million raised through a
convertible debenture issue.

Croesus reported immediate exploration success at Norseman
discovering the Marlin Vein and Daisy South deposit in March 2002.

ENDS