PERTH JUNIOR GOLD EXPLORER EMERGING AS AN AFRICAN PRODUCER...

PERTH JUNIOR GOLD EXPLORER EMERGING AS AN AFRICAN PRODUCER


Sydney - Friday - December 17: (RWE)
************************************

OVERVIEW
********

The global and independent monthly World Gold magazine produced
in London lobs on my desk each month.
It is invaluable in keeping track of what is happening in the
gold industry.
What caught Ferret's eye was a line on the front page of the
November issue proclaiming that Perth based junior, Gallery Gold (GGN)
was in transition from an explorer to a producer.
The company has just begun production at it gold mine called
Mupane in Botswana in Africa.
World Gold points out that the Mupane open pit is the first new
gold mine in Botswana for something like 20 years.
A write up in the "industry bible" couldn't be better for Gallery
Gold.
It gives the company real credibility in the eyes of its peers
and plays down the dangers of operating in areas which at times could
become political flashpoints.
Its stability has been reinforced by a loan facility of $US25.6
million from the Macquarie Bank and Investic Bank syndicate following the
positive feasibility study completed in May last year.
The Mupane open pit is expected to produce over 100,000 ounces
for five years at a cash operating cost of around $US210 which also
carries a 5 per cent royalty.
World Gold says the mine has been constructed at a cost of (net
value of 27,630 oz of gold contained in stockpiles) of $US28.6 million
inside the feasibility estimate of of $US28.4 million.
Earlier this month Gallery Gold updated its operations.
The company has made an encouraging start to production at Mupane
and trial work is beginning on the Map Nora underground project
Gallery Gold discloses continued exploration success at
Buckreef-Rwamagaza.
The company is now ramping up to full production at its Mupane
Gold Project.
Initial results are looking good with high recoveries, good head
grades and throughputs close to plan, despite preliminary production
issues with the water pipeline and delays to the installation of the ball
mill.
In the first three weeks of operation, the processing plant has
produced 2,149 oz of gold from 22,924 tonnes of ore at a head grade of
3.1 g/t (budget grade 2.7 g/t).
An overall recovery of 95.7 per cent was achieved against a
budget of 90.6 per cent.
Plant availability for the month was 38 per cent with downtime
attributed to a number of commissioning issues which were addressed
during the month.
Throughput is now averaging over 100 tph against a budget of 120
tph.
Modifications to the ball mill drive shaft were necessary to
accommodate variances between the drawings and the actual set up for this
second hand mill.
A new shaft is being manufactured in Johannesburg and will
shortly be shipped to site.
The company expects to have the ball mill in circuit within three
weeks to bring the operation to its design production capacity of 130 to
140 tph.
The ball mill is not required for the oxide ore that is currently
being processed.

SHARE PRICE MOVEMENTS
*********************
Shares of Gallery Gold yesterday edged up 2c to 42.5c. Rolling
high for the year has been 49c and low 22 cents.

Starting and operating practices with the water pipeline resulted
in leaks being experienced during the first week of operation.
These issues have now been resolved.
The balance of the construction program is on track for
completion in December, though phase 2 is not required until the plant
begins treating primary ore in mid 2005.
Construction contractor MDM expects to demobilise early in 2005.
The target for December is to increase the throughput rate to 150
tph with the introduction of the ball mill into the circuit.
Preliminary work on the proposed Map Nora -Tati belt underground
project will begin this month.
Engineering contractors will dewater the existing shaft to allow
for a detailed geological and structural review of the original workings.

Map Nora is expected to provide high grade supplementary feed for
the Mupane plant increasing the gold output without increasing
throughput.
Early next year, Gallery will produce a bulk sample for testing
at the Mupane plant, approximately 20 kilometres from Map Nora.
The company has developed a mining strategy based on historical
data supported by recent drilling and trenching information.
If the current work is successful, Gallery plans to commence
commercial production from Map Nora in the second half of 2005.
On the exploration front a drilling program at Tanzania is using
four rigs at Gallery's Buckreef-Rwamagaza project which has produced
encouraging results, building the potential for a substantial mining
operation.

BACKGROUND
**********

Gallery Gold was listed on the Australian Stock Exchange in July
1991.
For more than a decade the company has been exploring and
developing mineral deposits in the African republic of Botswana.
In 1994 the company purchased the then operating Monarch Gold
Mine on the outskirts of the city of Francistown.
The company conducted small scale mining operations at Monarch
and at the nearby Golden Eagle and Shashe leases until mid 1998.
In 1996 it was recognised that the surrounding greenstone belts
had good potential for the discovery of significant gold finds and the
company considerably increased it tenement holdings.
At this time, the greenstone belts that contain numerous historic
gold workings were mostly in open ground and the company was able to
secure its valuable land position at minimal cost.
It was also apparent that very little modern exploration had been
conducted on the belts.
In 1988, the company's extensive geochemical analysis of the Tati
greenstone belt near Francistown identified the Mupane deposit,
subsequently confirmed as the basis of a significant mining operation.
The Board of Gallery Gold resolved to go ahead with the project
after a bankable feasibility study completed in May 2003, confirmed the
potential for strong returns from a conventional mining operation.
In February 2003, Gallery Gold expanded the company horizon with
a proposal to merge with Spinifex Gold, a junior explorer operating in
Tanzania.
The merger, ratified in October, 2003, added substantial value to
Gallery's mineral exploration portfolio.
The Mupane development and Gallery-Spinifex merger have paved the
way for potential growth of the company into a significant African
mineral producer.
Gallery is evaluating the Signal Hill gold deposit about 15km
from Mupane which has a drillout gold resource of 201,000 ozsfor
additional mill feed.
It is exploring other target areas in Botswana at the Tati, Vumba
and Maitengwe greenstone belts and moving to feasibility study on the
Buckree-Rwwamagaza project, 30ks south of the Geita mine in Tanzania.