Director selling in Sept.NEW WORLD ALLOYS LIMITEDREVIEW OF...

Director selling in Sept.

NEW WORLD ALLOYS LIMITED
REVIEW OF OPERATIONS

REVIEW OF OPERATIONS
During this financial year, the Company suffered some severe setbacks from its copper smelting activities in the Democratic Republic of Congo. After the successful operations during 2006, the supply of ore became erratic and with prices rising for ore, coke and transport the economics changed dramatically.

The Company had a change of management in December and the new Board placed the furnaces on care and maintenance until new arrangements for funding and furnace management were initiated.
As a result of negotiations, the Company procured a deal with Sino-Asia Mining & Resources Plc, a London based group, to take over the operations and provide finances to re-start the Nova operations and to manage the project. Shareholder approval for that transaction was given on 14 August 2007. Sino Asia held a shareholder meeting on 20 August 2007 to enable it to complete the transaction.

New World Alloys Ltd will transfer its holding in Nova to Sino-Asia Mining & Resources Plc for the equivalent of A$8m in shares. Sino-Asia will change its name to Congo Copper, raise some GBP2.2m and seek a listing on the AIM market in London. Sino-Asia will also provide management services from some very highly qualified personnel with established mining qualifications and experience with major mining houses.
Congo Copper will remain a subsidiary of New World Alloys but be run and financed from London.
The Board believes that with proper management and financing, the operations will return to profitability within a short period of time. Further, New World Alloys will retain a contributing 30% interest in 4 mining concessions in DRC.

Nova Mining Sprl
NWA is the sole owner of Nova Mining Sprl (“Nova”), a copper resource and smelting facility located in Lubumbashi, the capital city of Katanga Province in the Democratic Republic of Congo (“DRC”). The Nova copper project was established on a 25,000 m² industrial site in Lubumbashi during 2003/2004 with two blast furnaces and associated plant, extensive warehouse and administrative facilities to operate the smelter.
During the financial year ended 30 June 2006, Nova emerged as the largest independent copper smelter in Katanga province, producing 3,191 tons of 95% grade copper metal for the year. Consistent improvements to the smelter performance compensated for the diminishing copper ore grades that resulted from international demand for unprocessed copper ore. The high LME copper prices that evolved were a bonus to Nova revenues, but created an unrealistic demand for unprocessed ore that deprived Nova from benefiting from increased margins at the smelter.

The development strategy of the Nova project has focussed on (a) the acquisition of JV mineral resource properties to supply smelter operations, (b) the introduction of ore concentrators to enhance quality of furnace feedstock, (c) the increase of furnace smelting capacity. The 2006 financial year ended with Nova directors signing options to JV on 4 mineral resource properties, ordering the first ore concentrator due for delivery in October and construction of 2 new furnaces. In addition, Nova purchased more trucks and mining equipment to strengthen the operation by diminishing it’s reliance on contractors.

Nova commissioned Furnace #3 in August, boosting output capacity to 450 tonnes per month of blister copper. The performance of Nova’s blast furnaces is directly related to feedstock grade, where the monthly average dropped from 33% in September 2005 to 23% in September 2006. This grade slump resulted in production de-rating of each furnace from 200 to 150 tonnes of blister copper per month. Commissioning of Nova’s first concentrator which was due in November 2006 was intended to correct feedstock quality back above 30% and enhance the Company’s ability to access greater quantities of lower grade material at more realistic prices.

However, due to somewhat unforeseen circumstances, the concentrator did not materialise, the grade and supply of ore deteriorated and the costs escalated. All the Company’s cash reserves were depleted by the end of 2006, production ceased and the plant was put on care and maintenance whilst the Board sought alternative financing and management opportunities.
During that latter part of the financial year, Nova leased out one of its furnaces for a net return of US$100,000 per month as a temporary measure pending the re-establishment of its own operations.

Smelting Technologies (“Smeltech”)
NWA is the sole owner of Smeltech, a Johannesburg based engineering and manufacturing business, which provides both key logistical support and engineered equipment (including furnaces), to the Company’s Nova operations and others in the mining industry.
Batchelor Joint Venture – Northern Territory, Australia
By way of an Agreement with Ausmet Resources Limited (“Ausmet”) dated 20 February 2004, the Company formed a Joint Venture to explore the area known as the Batchelor Tenements in the Northern Territory.
Ausmet was to earn a 60% interest in the tenements, by sole funding $600,000 of exploration costs within a 4 year period. During the 2006 year, Ausmet assigned this interest to Korab Resources Limited, which listed on the Australian Stock Exchange (“ASX”).
By an agreement signed after the end of the financial year, the Company agreed to sell its interest in these tenements to Korab and a new company Uranium Australia, which is intended to be floated onto ASX later in 2007. The consideration is $900,000 in cash plus a 5% net smelter return interest in the tenements. Korab also took over responsibility for rehabilitation.

Other Activities
During the year, $3,756,645 was raised through equity issues. The funds raised have primarily been used to fund the running costs at Nova during the year and the operations of the Company’s head office in Perth.
The Managing Director resigned in December 2006 and Mr Zytkow stepped up as executive director to fill that role. Mr Lindsay Colless joined the Board in December and has been appointed Chairman.
It is intended that Mr Zytkow and Mr Cornelius will both join the Board of Congo Copper to represent New World Alloys, with Mr Zytkow taking on an executive role and Mr Cornelius a non-executive role.

Future Prospects and Goals
The company’s goals for the forthcoming year are to re-establish Nova Mining to profitable operations, to ensure the South African operations are managed efficiently and to continue to seek out further economic opportunities in Australia and overseas.
The Board is considering a change of name to Austral Africa Resources Ltd and will present a resolution to the annual meeting for shareholder approval.