MALAWI - We have entered negotiations to sell thetenements and...

MALAWI - We have entered negotiations to sell the
tenements and retain a royalty over any future production.

India (Diamonds) 9% - We are hopeful that a final resolution as to the status of the
tenements will be rached in the December Quarter.


QUARTERLY REPORT
for the three months ending 30 September 2011

HIGHLIGHTS
SIHAYO PUNGKUT GOLD PROJECT, INDONESIA (75%)
? Definitive Feasibility Study (“DFS”) nears completion
? Final phase of Infill Drilling commences at Sihayo-Sambung Resources
? Exploration drilling re-commences at the highly prospectve Hutabargot Julu Epithermal Gold
Prospect
? First phase of exploration drilling at Tambang Tinggi Gold/Copper Prospect completed
? Encouraging exploration results continue at the Huta Pungkut Copper/Gold Skarn Prospect
? Community based agriculture programs are established in two villages and two further programs are
commenced
? Community group visits a newly commissioned gold mine in North Sulawesi, Indonesia as part of our
ongoing mining education program
CORPORATE
? Company ended the September Quarter with A$10.2 million in cash and is debt free.

REVIEW OF OPERATIONS
1. Definitive Feasibility Study (“DFS”)
Metallurgical Testwork
The final phase of the DFS work related to the overall metallurgical gold recoveries is progressing well. Over
4,500 additional cyanide leach tests are being completed (2,750 completed to date) across the multiple
mineralisation types that make up the Sihayo and Sambung Resources and the initial results suggest that some
improvement in overall process gold recoveries is achievable.
Optimal Plant Capacity
Ongoing assessment of the “optimal plant capacity” has confirmed that the project will be a 1.5Mtpa
operation.
Key DFS Parameters at the 1.5Mtpa level
The Capex and Opex components of an expansion to 1.5 Mtpa have been completed to DFS standard and the
key summary results are detailed in the table below. An additional scenario of improved recoveries over the
initial mine life has also been included in the table below, however, it needs to be emphasised that this is
merely for indicative purposes at this stage and any improvement in overall recoveries will be confirmed at the
conclusion of the current metallurgical testwork program.
The Sambung Resource has been included in the mining schedule of the expanded 1.5 Mtpa throughput case,
however, it must be noted that the Sambung Resource is currently in the Inferred Category and current infill
drilling program is aiming to bring the resource up to the required Indicated Category for its ultimate inclusion
in the DFS mining schedule.
Sihayo Pungkut Gold Project

As part of the ongoing DFS work, two major Cost Optimisation Programs are underway, the first focused on
project power supply and the second on a more efficient waste material movement process.
Cost Optimisation – Biomass Power
Currently in the DFS, power production is based on diesel generators and at a basis of US$100/bbl oil, the unit
cost of power is approximately US$0.25 kw/hr.
Our study of hydro power potential was unsuccessful due to the high Capex associated with the required
infrastructure.
However, we have entered detailed discussions with a number of industry leading biomass power companies,
including DP Cleantech, to determine the viability of an 8MW biomass power plant being the primary source of
power.
DP Cleantech have designed, constructed and successfully commissioned over 40 biomass power plants across
Asia and Europe with a combined installed capacity of 1,000MW.
The primary fuel source for the proposed power plant is Palm Kernel Shells (“PKS”) a waste product of the palm
oil production process.
The PKS market is well established in Sumatra, Indonesia and export volumes of PKS to North Asia and Europe
as a primary fuel for biomass power plants has been steadily increasing over the past five years.
Potential supply of PKS within trucking distance of the proposed power plant site exceeds 3 times the annual
required supply and is available across multiple independent suppliers. Additionly, new palm oil plantations
are being established within the area and will provide additional future supply of PKS.
From both an environmental and operating cost perspective, the potential to utilise proven biomass power
supply is very material.
Biomass power would provide an approximate 70% operating cash cost saving compared to diesel generated
power, excluding any carbon emission credits that maybe available.
DP Cleantech will provide DFS Capex and Opex estimates for the biomass power plant by the end of December
2011.
Cost Optimisation – Overland Conveyor for Waste Material
The current waste material movement process is via haul trucks. Given the topography surrounding the
proposed pits and waste dump areas, the required haulage distance from pits to waste dumps is up to 8km in
the early years of operation.
We have entered detailed discussions with some of Europe’s leading manufacturers of conveyors for the
mining industry, including Famur Group of Poland, for the installation of an overland conveyor to transport up
to 8Mtpa of waste material from nearby the mining pits to the waste dump site.
The proposed conveyor will be between 1.2km and 2.0km in length and because the entire length of the
conveyor will be downhill, the conveyor will generate excess power equivalent to approximately 10% of the
total power requirement of the entire project.
Famur Group will provide DFS Capex and Opex estimates for the overland conveyor by the end of December
2011.
2. Sihayo Pungkut Gold Project (“SPGP”)
Drilling activities at SPGP resumed in October with a focus on the final phase of infill drilling. An infill program
of approximately 3,000 meters is required to likely convert the limited amount of Inferred Resource contained
within the overall JORC Compliant Resource of 16.3Mt at 2.7 g/t Au for 1.425 Moz into the higher Indicated
Category. The program has begun with a single rig and a second rig shall arrive on site within 4 weeks. With two diamond drill rigs and the relatively shallow depth of the planned holes it is anticipated that the drilling will
be completed within two or three months.
Once the infill program is complete, ongoing exploration drilling shall target potential near-surface
mineralisation along strike from the existing JORC Resources, which could potentially be included in the early
years of the current proposed mine schedule as described within the DFS.
Figure 1 below shows the Sihayo and Sambung Resources and highlights the potential resource extensions to
the northwest and southeast of the Sihayo deposit and the infill drilling program.

3. Regional Exploration
Hutabargot Julu Epithermal Gold Prospect
Exploration drilling re-commenced in September at the highly prospective Hutabargot Julu Epithermal Gold
Prospect located 7km southeast, along strike, of the SPGP. Figure 2 below shows the location of the
Hutabargot Julu Prospect within the wider Contract of Work (“COW”) area.
Ongoing exploration at Hutabargot Julu has defined an intermediate sulphidation epithermal gold complex that
has a footprint of approximately 6km * 2km. Historic drilling yielded a best intercept of 5m @ 36.7 g/t Au and
198 g/t Ag from 47m within Quartz-Sulphide veining. The current drilling program will test multiple
Epithermal Veins (high grade gold/moderate tonnage potential) and Hydrothermal Breccias (lower grade
gold/high tonnage potential) and will consist of an initial 10,000m of drilling. Figure 3 is a surface plan of
Hutabargot Julu summarising exploration work to date, current drilling status and planned ongoing drilling.

In addition to the drilling program, additional soil and IP surveys have been commenced and both programs
extend the boundaries of the previous work area by moving to the north and the west. Refer Figure 3.

Huta Pungkut Gold and Copper Skarn
The prospect is located 5km northwest and along trend of Tambang Tinggi. Refer Figure 2.
The area was identified from the regional stream geochemistry survey and confirmed by the recent
aeromagnetic survey. The area comprises a broad zone (5.1 km strike length) of strong stream sediment gold
anomalism (>10 ppb Au in 30 mesh BLEG). The prospect area is the most geochemically anomalous region
within the COW with all drainages sampled along the trend returning anomalous values. The anomalous
stream sediments appear to have a close relationship to magnetic anomalies suggestive of skarn type
mineralisation.
The area presently has been divided into 3 prospects (Red Hill, Crown Hill and Blue Ridge) identified in
reconnaissance exploration associated with small scale mining activity and possible vegetation anomalies
similar to that at Tambang Tinggi.
Gold and copper skarn style mineralisation is hosted in limestones intruded by porphyry and the Mauri Sipongi
granite.
Current exploration work includes geological mapping and soil sampling. Rock chips collected from skarn
zones have yielded up to 44.6 g/t Au and up to 18% Cu. Soil sampling has delineated large areas
(approximately 3km * 1km) of Cu-Au anomalism adjacent to mapped skarn zones. Scheduled ongoing work is
an IP survey, further soil sampling, geological mapping and rock chip sampling. This work will be compiled and
analysed to generate drill targets that are expected to be tested in 2012. Figure 6 below summarises the
geology of the Huta Pungkut Prospect and Table 2 contains the best rock chip assay results received to date.
Figure 6: Huta Pungkut Prospect Surface Plan

Community, Government and other Stakeholder Meetings
As previously reported, on Sunday 29th May, a group of demonstrators, believed to be supported by the
representatives of illegal artisanal miners from the region, arrived and caused significant damage to Sihayo’s
exploration camp.
Over the past five months, our community relations team has conducted over sixty meetings with the key SPGP
stakeholders including; local community members, village heads, religious groups, NGO’s, local and provincial
Government representatives, local and provincial Police and Army commanders, the newly elected Bupati of
Mandailing Natal, North Sumatra and the Governor of North Sumatra.
The meetings have been focused on ensuring that the future activities of the Company are conducted in a safe
and secure environment without the risk of any further unlawful acts.
As with any mining project, our relationship with the local community is critical to our long term operational
success. As part of our ongoing community program we took 15 local representatives on a site visit to a newly
commissioned gold mine in North Sulawesi, Indonesia in mid-September, to show them first-hand the
operational, environmental and community aspects of a mine of similar size to our planned SPGP.
In addition, community agriculture based programs have been initiated in four of the villages surrounding the
SPGP and the aim is to establish similar programs in each of the 15 villages that are located in the project’s
primary area of influence.
The agriculture programs work very well in these communities where over 90% of the local population are
engaged in agriculture production as their primary source of income. The programs are built on the core
philosophy of “sustainability” and seek to improve the overall productivity of the local producers, add value to
their existing products and ultimately facilitate better marketing of their products.

The response from within the initial four villages has been extremely encouraging and bodes well for the
continued establishment of similar programs in the remaining 11 villages.
Figures 7 to 10 below show the agriculture programs in the establishment phase

2.0 Malawi (Uranium) 100%
No exploration activities were carried out during the Quarter. We have entered negotiations to sell the
tenements and retain a royalty over any future production.

3.0 India (Diamonds) 9%
Some progress was made during the Quarter in resolving the legal status of the diamond tenements in India,
however the matter is yet to be finalised. We are hopeful that a final resolution as to the status of the
tenements will be rached in the December Quarter.