ferret's stock to watch: leviathan resources

Ferret's Stock to Watch: LEVIATHAN RESOURCES LIMITED
07:41, Friday, 28 January 2005


OLD GOLD MINER AIMING TO FORGE NEW IDENTITY AS PRODUCER


Sydney - Friday - January 28: (RWE)
***********************************

OVERVIEW
********

Mr Kevin Wilson, managing director of Leviathan Resources says
the company is determined to forge an identity and destiny as a focused
Australian gold producer.

He told shareholders this week in the company's first quarterly
review of operating activities for the quarter ended December 31, 2004.

Leviathan Resources was only listed on the Australian Stock
Exchange on December 21.

It is the gold business that was de-merged from MPI Mines in late
2004.

MPI Mines was taken over by Lion Ore Mining International in 2004
and is no longer listed on the ASX.

Mr Wilson says Leviathan has an experienced board and management
team, established mining operations and prospective exploration
territory.

"This in our view are 'the right resources' for success, the
managing director declares.

The December quarter saw the culmination of a number of months
work with the listing of Leviathan on the Australian Stock Exchange on
December 21.

"The listing followed our de-merger from MPI Mines and an Initial
Public Offer (IPO) which raised $30 million.

The IPO was heavily oversubscribed, which was an encouraging sign
of investor confidence in Leviathan's potential.

"I also report that our operations continued their focus on safe
and efficient production and both the Stawell Gold Mine and CGJV recorded
good operating performance.

"The turnaround plan at Stawell continues.

"In 2005 we are expecting gold production of 125,000 ounces, Mr
Wilson declared.

This included an updated reserve/resource statement for Stawell
Gold Mine in this review.

Resource definition drill results continue to be positive and the
ore reserve has increased by 24% to 304,000 ounces as at December 2004,
after allowing for mining depletion of 70,000 ounces over the six month
period since June 2004.

The ore reserve grade has increased from 5.5 to 6.1g Au/t. By
December 2005 and the company was targeting an ore reserve at Stawell to
450,000 ounces.

The Golden Gift was established as the primary ore source during
the quarter with 80% of gold production coming from this area.
The remainder of the feed was Magdala ore, sourced mainly from lower
grade remnants in the upper levels of the mine.

As expected, mining from Golden Gift delivered strong grade and
better recovery, with both at record levels for
Stawell.

This enabled a record quarterly gold production despite the mill
operating at slightly below capacity.

Capital development to access Golden Gift lodes and to complete
the new 728mRL Ventilation Decline continued during the quarter.

Fans were installed to increase the ventilation airflow, making
use of existing shafts to surface.

These projects are expected to reduce production volatility by
allowing additional mining fronts to be developed during 2005.

A mine control system has been commissioned, allowing enhanced
management of all underground activities.

At Coolgardie, plans are in place to work toward closure during
the second quarter of 2005 when current ore reserves are depleted.
Leviathan and joint venture partner Herald Resources have offered their
respective interests in the joint venture for sale.

Ore production of 350,972 tonnes from both open pit and
underground sources was 30 per cent higher than the previous
quarter.

SHARE PRICE MOVEMENTS
*********************

Shares of Leviathan yesterday traded at $1.13 down 2c.
Rolling high has been $1.20 and the low 90 cents.

Leviathan has a policy of hedging up to 50% of ore reserves for a
period not exceeding three years.

The spot gold price averaged $574/oz for the quarter, and with
hedged commitments, gold was delivered at an
average price of $576/oz.

At December 31, Leviathan had 95,580 oz of margin free forward
sales at a net present value of $566/oz and an estimated net realisable
price of $589/oz.

All gold production during the quarter was delivered into
existing hedges or sold at spot prices.

The gold price at December 31, was A$561/oz and the markto-
market value of Leviathan’s gold hedge book was positive A$0.8 million.


BACKGROUND
**********

Leviathan Resources is an Australian gold mining and exploration
company, formed through the de-merger of MPI Mines' gold business in
October 2004.

The company's main asset is the Stawell Gold Mine, which has been
operating continuously for over 20 years.

Leviathan also holds exploration tenements running northwest and
south of Stawell, known as the Stawell Corridor, and a 50 per cent
interest in the Coolgardie Gold joint Venture.

It owns and operates the Stawell Gold Mine, located 2km from the
Stawell township, which is about 250km west of Melbourne, Victoria.

At June 2004 the Stawell Gold Mine had a mineral resource of 1.16
million ounces and an ore reserve of 246,000 ounces gold.

In April 2004 the company committed to a mine plan based on
increasing production from 100,000 ounces to a sustainable 130,000 ounces
gold per annum by 2006, with mining transitioning from the Magdala
orebody to the higher grade Golden Gift orebody.

Resource definition drilling of Golden Gift will be an initial
focus and, based on the history of conversion of resource to ore reserve,
is expected to increase Stawell's reserves to 450,000 ounces by December
2005.

Exploration success in the prospective Golden Gift South target
area and in the Stawell Corridor is expected to further enhance the
resource base.

History
*******

Gold was discovered at Stawell in 1853, and production from
alluvial sources and high-grade quartz reefs totalled an estimated 2.67
million ounces (including 0.77 million ounces alluvial) in the 73 years
until the last historic mine closed in 1926.

Mining recommenced in 1982 when the Stawell Gold Mine was
reopened and mining of the Wonga open cut commenced.

In the subsequent nine years the mine produced 336,000 ounces of
gold.

Total historical production, together with the estimated ore
reserve and mineral resource at June 2004, gives the gold deposits at
Stawell a total endowment of over 5 million ounces gold.

The Stawell Gold Mine occurs within a major northwest trending
structural corridor along the western margin of the Lachlan Fold Belt

The gold orebodies at Stawell are associated with the Magdala
Dome comprising a doubly plunging 1km wide unit of basalt enveloped by
sulphide and iron enriched sedimentary rocks (termed volcanogenics) that
host the majority of the ore-grade mineralization.

Ore formation was associated with hydrothermal fluid flow along
major reverse faults mostly localised on the western flank of the Magdala
Dome.

ENDS

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I don't hold LVR