june quartly

June 2006 Quarterly Report
Highlights for the Quarter
· Geophysical Results from Many Peaks Copper
The company has completed a full review of the geology of the Many Peaks projects and
assessed the geological model as a volcanogenic massive sulphide (VMS) type deposit.
During the quarter an electrical conductivity survey was undertaken to confirm continuity
of mineralisation between drill holes. These holes intercepted broad zones averaging
around 10 metres with of massive sulphide and copper mineralisation from January’s
drilling programme (with a localised intercept of over 50m grading +1% Cu). The
upcoming drilling programmes planned for the quarter is aimed to provide sufficient infill
drill hole data to enable a resource calculation to be made.
· 90%+ Gold Recoveries from Norton
Mining at the Norton Gold mine has achieved consistent recoveries in excess of 90%
over the past 2 months. Gold production during this period has totalled 560 oz gold, at
an average head grade of 7.2 g/t and a recovery of 92.5%. (Income from June
processing outstanding). The company took a cautious approach whilst proving gold
recoveries through the Gympie plant were achievable in line with test work results of
greater than 90%. Further development work was required during the period to pre-strip
waste from over the second open cut pit at Norton.
CORPORATE
Review of Operations and Results
Company operations for the period was centred on gold mining at Norton and copper
exploration at Many Peaks (30 km to the south of Norton).
Minor levels of field work was undertaken on the company’s other prospects to meet the
minimum levels of expenditure required to meet the company’s commitments for the
projects.
Norton Gold Mine
Activities during the month for the Norton Gold Mine comprised:
· Mining and transportation to Gympie of 2,613 tonnes at an average head grade of
7.2 g/t
· Processing of 1,717 tonnes grading 6.9 g/t gold with a recovery of 93.2%. A further
896 tonnes grading 7.9 g/t remained in stockpile at Gympie and was subsequently
processed with a recovery of 91.2%.
· Overall gold produced of 560 oz with 353 oz sold at an average gold price of $A788
per oz.
· Acquisition of the company’s own mining equipment and changeover from hired
equipment.
· Pre-stripping of the Frampton Open Cut ore body as development for the project’s
second open pit excavation.
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· Recruitment of site operators.
The primary aim for the operation was to reproduce the high processing recoveries
achieved with the metallurgical test work into similar recoveries through the Gympie
carbon in pulp processing plant. The recovery achieved for the mix of both oxidised and
primary ore was in line with test work expectations of in excess of 90%.
Mining output was below forecast and it is now the focus of the company to increase
mining tonnages up to expectations. Delays were experienced during the quarter with
the late arrival of the drill / blast contractor, the move from less-than optimal hired
equipment to company owned equipment and the need to undertake a 20,000 BCM prestrip
of the Frampton open cut to bring this open cut pit into production. The predicted
head grade of the ore of 8 g/t is now being achieved and with the pre-strip largely
completed, the company anticipates the project will build gold production to achieve a
sustainable income for the company.
Many Peaks Copper
Work at Many Peaks during the three months comprised further mapping and surveying
of the site area, planning for the next phase of drilling and undertaking a geophysical
survey of the mineralised zones to test continuity of mineralisation.
A geophysical survey was conducted, utilising electrodes previously placed in the drill
holes from the January 2006 programme. Quadrant Geophysics carried out a “Mise-a-la-
Masse” survey, which energises electrodes in one hole and measures the transmitted
voltage to another hole some distance away. Anomalous responses indicate the degree
of conductivity, and hence the continuity of mineralisation, between holes. The field
results were distinctly anomalous, indicating that there is continuity along strike, and
supporting the “stratiform horizon” model of mass sulphide mineralisation as opposed to
the previous concept of isolated pipe styles of mineralisation. Such continuity will
significantly add to the resource potential of the project
Brief reconnaissance mapping was undertaken, to establish the “ground truth” of
previous mapping, to inspect exposures in new road and drill-pad cuttings, and to
determine the context of the new stratiform model of sulphide mineralisation data from
previous and current intersections were collated on plan and sectional views.
Proposals have been now drawn up for a July-August drilling programme to demonstrate
an inferred resource on the 500m long principal zone of known mineralisation around
and along strike of the old workings. A multi-purpose rig capable of reverse circulation
drilling to 120m and thence diamond drilling to greater depths has been contracted to be
on site in late July. The programme comprises the drilling eight holes to provide the
necessary infill drill hole data to enable an initial resource calculation to be made and a
further four holes to determine continuity of mineralisation along strike to the south and
north of the current target zone. The programme should be completed in mid August and
results available in September

FINANCE AND ADMINISTRATION
Total income for the quarter was $305,000 which included revenue of $277,000 from the
sale of gold.
The expenditure was incurred for the exploration of the company’s prospects and the
development of mining operations at Norton totalling $304,000 and an administration cost
for the company of $269,000.
The company completed various reconnaissance and geophysical programmes at Norton
and Many Peaks incurring a total expenditure of $50,000, which is included in the
$304,000 total mining and exploration expenditure.
The company also purchased certain items of earthmoving equipment for the Norton Gold
Mine, comprising an excavator, two haul trucks and a front end loader and a utility vehicle
on a chattel mortgage for $633,000.
PLANNED ACTIVITIES FOR THE COMING QUARTER
The company has a drilling programme contracted to commence in late July and
anticipates results to be announced in September. Field work and low impact exploration
will continue on the company’s other tenements.
Mining will continue at the Norton Gold Mine with toll treatment of ore through the Gympie
CIP gold processing plant. With most of the earlier issues affecting the operation now
largely resolved, the company will focus on increasing ore tonnage and improving cash
flow from the operation.