Westonia Mines Tenement Locations

The Company beneficially owns the granted Mining Leases covering the old Westonia mining field. The leases are Mining Lease 77/88, 77/110 and 77/124. The Mining Leases cover a total area of approximately 774 hectares. The Company also beneficially owns Miscellaneous Licence L77/18. Leases M77/88 and M77/110 and Licence L77/18 were acquired from ACM in 1994. An obligation to pay J.E. Read and his family members a 2% gross royalty from almost all of the area of 77/88 was part of the consideration for this acquisition. M77/124 was separately acquired from the ACM / Delta Gold Limited Joint Venture in 1996 and is also subject to a 2% gross royalty.

As each of the tenements was granted prior to January 1994, any future compensation payable in relation to the effect of grant of any of these tenements upon native title rights will be payable by the State of Western Australia.

The Westonia Gold Mine - Geology

Gold mineralisation at Westonia is centred on the Edna May Gneiss and its faulted extensions to the West (Greenfinch) and the East (Golden Point).

The Edna May Gneiss is a brittle granitic rock mass which was intruded into the mafic/ultramafics greenstone contact at Westonia.  The brittle Edna May Gneiss was subsequently shattered during regional faulting, which created the dilational zones for the introduction and deposition of gold bearing fluids.

The Edna May Gneiss contains a substantial endowment of gold mineralisation, grading from dimensionally small, but high grade reefs to more broadly mineralised but lower grade zones.  The high grade reefs represent 3-5% of the Edna May Gneiss volume, but in the range of 30-50% of the economically extractable gold.

The level of gold mineral endowment at higher cut-off grades necessary for underground mining is approximately 2,000 ozs per vertical metre, but this is 5,000-7,000 ozs per vertical metre for the lower open pit cut-off grades.

Underground Mining

Underground mining commenced at Westonia in 1911, shortly after the discovery of gold in the area.  The initial phase of underground mining lasted through until 1922, when high pumping costs and barren intrusives interrupting the Edna May reef forced mine closure.

During this initial phase of underground mining centred on the high grade reefs within the Edna May Gneiss, the Edna May reef was mined to some 240 metres depth and other less robust reefs mined to around 130 metres depth.  The Edna May mine was regarded as one of the richest gold mines in Western Australia, with production often exceeding 30 g/t Au.

A second stage of underground mining commenced in 1935 and continued through the Second World War until 1947.  Tonnage extraction from underground during the second stage was smaller than the initial phase and the six high grade reefs other than the Edna May reef were mined to a maximum depth of 180 metres.  Tungsten minerals, which are known to exist with the high grade gold mineralisation were also extracted from underground ore and the re-treatment of tailings.

A total of 575,000 tonnes of gold bearing ore was extracted from the high grade reefs within the Edna May Gneiss at an average recovered grade of 19.5 g/t Au.  Allowing for recovery effects, the grade of ore presented to the milling facilities would have exceeded 20 g/t.  Underground metal production during the two stages of underground mining in the early and mid 1900’s was 360,000 ozs.

During the late 1980’s, the company operating the shallow, oxide open pit mine also committed to the development of a production sized underground decline.  The portal for this asset is at approximately 60 metres below surface and is developed mostly in the footwall until the lower levels where development occurred within the Edna May Gneiss to around 260 metres depth. Although a significant amount of diamond drilling was conducted underground, the drilling did not concentrate on the part of the gneiss closest to the footwall where the high grade reefs originate as footwall splays.  Management regards the 1980’s decline as a significant asset, which will provide the company with a substantial cost and time saving in its efforts to re-establish underground mining.

Section 11575mE

The company’s drill hole database includes some 200 diamond drill holes which have intersected the Edna May Gneiss below the proposed new 200 metre deep open pit mine.  This data set, which includes drill intercepts to 700 metres depth contains numerous examples of narrow, high grade gold reefs of similar dimensions and grade tenor to those mined by historical underground miners.  Section 11575mE is a typical section showing deeper drill intercepts.

Management’s preliminary studies indicate that a future underground mine could be established by refurbishing the 1980’s decline and re-installing services to produce 150,000 to 300,000 tonnes of ore per annum at expected grades of between 10 and 15 grams per tonne.  The studies indicate that the $15-20 million capital costs could be repaid within one year and that unit cash operating costs of approximately $400-500/oz could be expected to produce an additional 60,000 to 70,000 ozs of gold per annum.

Open Pit Mining

The Westonia orebody was mined as a shallow open pit during the late 1980’s to an average depth of 60-70 metres.  This phase of open pit mining treated predominantly oxide material as the processing plant was designed for soft ore feed only.

During the 1980’s phase of open pit mining, a total of 4.9 million tonnes of ore was processed at a grade of 1.9 g/t Au to produce 270,000 ozs of gold.

The proposed new open pit development involves a substantial widening and deepening of the Westonia open pit mine to over 200 metres depth.  The Mining Reserve for this proposed, larger pit is 14 million tonnes at a grade of 1.2 g/t Au to produce 500,000 ozs over an approximate 7 year mine life.  It is this enlarged Westonia open pit, centred on the Edna May Gneiss, which is the main basis for project development.

Since May 2006, the Company has been drilling the Greenfinch prospect, which is immediately West of the Edna May open pit and adjacent to the proposed mill site.  An interim JORC compliant Resource calculated in February 2007 is as follows:

The Company strongly believes that the Greenfinch Resource will continue to grow with more drilling and the open pit mine life will subsequently be extended.

Westonia announced the appointment of its preferred mining contractor in March 2007.  A formal open pit mining contract between Westonia and Minepower is expected to be executed following the completion of project funding and mining is expected to commence in the December 2007 quarter.