Managing Director’s ReviewProfitIn the 12 months to June 2003 we...

Managing Director’s Review

Profit

In the 12 months to June 2003 we recorded our first net profit as a public company and were considerably cash positive. The company made a profit of $153,000 for the year. This was a pleasing result following the loss for the previous year of $2.1 million. The result could have been substantially better had the Christian Kruck mining lease been granted during the year. This would have allowed the smooth transition from one small open cut operation to another. The profit outlook for 2003/2004 is strong. The Hadleigh Castle underground mine is performing steadily. The new Far Fanning underground mine is now producing and is expected to produce about 15,000 oz over the next 18 months. A small pod of open cut ore will be mined before the end of the second quarter and low-grade mill feed is being sourced from both Far Fanning and Joe’s Delight. The Christian Kruck mining lease is not expected to be granted by the end of December.

Cash Flow

The company’s revenues increased to $16 million during 2002/2003 from $12.4 million in 2001/2002. Also, cash flows from operating activities increased from $2 million in the last reporting year to $2.63 million this year.

Gold Price

Contrary to the predictions of many “experts” the US dollar gold price has markedly improved over the last 12 months and has well and truly crashed through the $US300 per ounce barrier. For the last 6 months of the reporting period the average price was $US349.46 per ounce having touched a high of $US382.10 in February 2003. We remain confident that the price will remain solid, if not improve, and that investors will return their focus to gold mining companies. SMC is completely unhedged and stands to capitalise on these expected market increases in the US dollar gold price.