Bluestone Tin Ltd (BTX) – Becoming a Significant Listed Tin Producer

• Bluestone’s operations could be producing at 9,000tpa of tin in concentrate by December 2005 based on 5,400tpa of tin (Sn) from Renison in Tasmania (treating ore at 1.5%Sn, although 1.7% or more appears to be more likely) and 3,600tpa of tin in concentrates from Collingwood in Queensland. Production is capable of increasing by a further almost 6,000tpa of tin from Mt Bischoff at the end of 2006 and the approval of the Rentails project.
• Our current 7.5%NPV values BTX at A$0.73 per share. Bluestone is extremely sensitive to tin prices and the exchange rate, a US$1000/t higher price increases the NPV by 34% to A$0.98 per share, and premiums paid appear to be often >US$300/t.
• All of BTX’s properties, namely Renison, Mt Bischoff and Collingwood display characteristics inferring that higher grades (than the current JORC reserves or resources) could be achieved, with greater volumes (for longer life) and probably lower costs than we have used. Structural re-interpretations are currently underway on all 3 projects, with the high grade Mt Bischoff not mined since 1947, Collingwood apparently undersampled, and Renison previously limited by historical theories.
• A correlation has been made between Mt Bischoff and Collingwood, and although current grades are relatively low at ~1% to 1.2%Sn, 80% to 90% recoveries appear to be achievable just from gravity due to coarse cassiterite being present at both deposits, which should result in lower treatment costs and lower capex required.

Goldstar Resources NL (GDR) – Aiming to Start Trial Mining by April 2006

• With four gold companies having market caps greater than A$100m in Victoria as shown in Table 1 on page 4 of this report, and all of them expecting to be in production by June 2006, Victoria has become a “hot-spot” from a share market perspective.
• Walhalla was one of the richest of the Victorian goldfields, producing 1.5moz from 1.43mt (average of 33g/t) between 1864 and 1914, and Goldstar is aiming to start trial mining of its newly discovered Lomond Reef there by April 2006. Should the trial prove successful, Goldstar could attain a market cap of A$50m to A$100m based on production of 50,000ozpa to 100,000ozpa (especially when it is compared to other expected Victorian gold producers in Table 1).
• GDR’s Lomond Reef lies behind and adjacent to the renowned Cohen’s Reef of Walhalla, and so far GDR has delineated about 1.1mt of mineralisation based on dimensions of 550m long on strike by 120m high by an average of 6.5m thick (it in fact varies between 2m and 12.5m thick). A mineralised 1.1mt ore block at a grade of 7g/t or 12g/t could contain 250,000oz to 450,000oz (and possibly contain higher grade shoots up to ~25g/t based on historical mining by the Royal Mint Company).
• Current step-out drilling to the North has already extended the dimensions of the Lomond Reef by a further 100m on strike and 50m at depth (or a northern block 100m long by 170m high) for an additional 300,000t of mineralisation, and conceptually the potential resource could be extended to 2.2mt and still be open, north, south and at depth. Once the existing campaign to the north has been completed, step-out drilling to the south begins.
• In addition to the Lomond Reef, GDR is also focusing on the second main feature of the field – namely dyke bulges with drilling results from the Black Diamond dyke bulge – fissure lodes system on the West 1 Structure (immediately west of Cohen’s) expected in the second half of 2005.

Avoca Resources Limited (AVO) –Bringing Trident Into Production

• After acquiring Higginsville from Gold Fields in 2004, Avoca has discovered a new orebody called Trident, comprised of two steeply dipping mineralised zones immediately north of the old Poseidon South open-cut and underground workings (which contained near vertical and shallow dipping mineralised gold lodes of ore).
• The two near vertical zones designated Eastern and Western appear to each contain at least 3 significant (5g/t to 20g/t) gold veins, which may be amenable to a combination of bulk and narrow vein mining with treatment through a gravity plant due to the extremely high gravity recoveries averaging 86% (total recovery ~97%).
• In its latest announcement on 27 April 2005, Avoca reported its latest assay results indicating the presence of a very high grade shallow dipping vein with 7m @ 72g/t below the Western Zone, and possibly another steeply dipping vein in the hangingwall of the Eastern Zone with 1m @ 162g/t, plus infill in the centre of the Western Zone with 60m @ 7.6g/t, and 31m at 8.2g/t in the Eastern Zone.
• Currently part of a scoping study, the pit (which is dry except for the portal access in the north corner being a relatively shallow ~15m under water) could be dewatered and the old underground workings (which averaged 7.5g/t over 26,000oz from a vein) extended northwards on strike towards the Eastern Zone.
• Higginsville appears to be a relatively new goldfield (it was discovered by Samantha Gold in 1988) that was apparently abandoned when Resolute was distracted by its new African gold mines, and consequently contains a number of targets that can be followed up both from an open-cut & underground perspective. There also appears to be a number of similarities between Higginsville and St Ives.
• Avoca has a number of other prospective exploration targets being those in its own right such as most of Lake Way (south of Wiluna) which is prospective for uranium, gold and nickel and joint ventures, such as with Barrick and Teck.

Independence Group NL (IGO) –Lightning Nickel Providing the Driving Force towards IGO becoming a Mid-Tier Mining House

• IGO’s Long mine of Lightning Nickel appears to be settling down as a 9,000tpa Ni operation (5,760t Ni attributable at 64%) at the lowest cash cost per lb in Australia of payable metal at A$3.05/lb in MQ05. IGO’s aim is to find another stand-alone Ni orebody that can be accessed from Victor South or Long South, so that production could be increased to 12,000tpa to 15,000tpa Ni (attrib : 9,600tpa).
• The MQ05 production results from Gibb South have been spectacular, averaging 8.3%Ni milled for the current ‘04/05 year, with the March quarter itself averaging 10.3%Ni (according to ERA’s records, this is the highest achieved from any orebody by any mine in WA). Ni metal reconciliations at Gibb South are a very impressive 3.6 times compared to reserve. Now Victor South in the same channel is increasing production, with the potential for higher grades and greater reserves.
• IGO is making progress with its intention to have its own producing gold mine possibly at Frances Furness and/or at Dalwallinu. Frances Furness appears to have the potential to become a small ~15g/t underground operation, while Dalwallinu could become a newly discovered goldfield.
• There appears to be a market rating disparity between Independence (IGO) and Jubilee (JBM) in that IGO has higher reserves (+50%), twice the reserve life, ~10% lower cash costs in MQ05, and half the attributable production, yet JBM’s market cap even after adjusting for net cash is more than 4 times IGO’s.
• As part of its aim to become a mid-tier mining house, IGO is evaluating its acquisition of almost 20% of Matrix (MRX) for possible copper production and is making progress in its other areas of exploration in gold and nickel.

Exploration Advances into the 3rd Dimension

The use of 3 Dimensional IP by Kingsgate at its Chatree gold mine in Thailand represents a quantum leap in exploration techniques. The recent intersection announced on 7 July 2005 by Kingsgate of 12m at 30g/t gold (~1oz/t Au) and 318g/t silver (~10oz/t Ag) was in mineralisation that was parallel to and 200m further east from its existing A East (AE) orebody in Chatree North and was a direct result of the new technology.

Kingsgate Consolidated Limited (KCN)– Targeting up to 5mtpa and >300,000ozpa gold by 2007

• Kingsgate have found that there is a significant correlation between three-dimensional IP (a discovery technique) and their mineralisation, such that they have been able to determine that the main orebody that they have been mining to date (from pits C and H), appears to lie on the south-western edge of a “Mega-Pit”, possibly >2km long by ~650m wide that could average at grades ~2.2g/t to 2.3g/t.
• KIngsgate announced a resource upgrade for Chatree North of 640,000oz on 23 June 2005 (based on exploration in the past 5 months), to result in resources (for A, AE, Q, KE and KW) of 31.2mt @ 1.9g/t for almost 2moz of gold and 18moz of silver. Together with Chatree, KCN’s resources now extend beyond 3moz, and a further US$9m has been budgeted for exploration in the coming year to June 2006 at a discovery cost of ~US$7/oz.
• Production is already building up from 1.8mtpa to 2.3mtpa by January 2006 using scats recycling, which should increase production from the current ~125,000ozpa up to 150,000ozpa at cash costs of ~US$200/oz. Kingsgate are reviewing the possibility of installing a duplicate plant to more than double production up to ~5mtpa and produce >300,000ozpa, which does appear to be achievable.
• KCN only quotes its gold production, crediting silver against its gold cash costs. However, silver grades increase significantly northwards at Chatree, especially in the vicinity of A and AE where the gold/silver ratio increases to >24 to 1. Using our modelling at 20g/t silver infers that Chatree could also be producing >1.6mozpa of silver, yet alone applying the implied grades of 50g/t that equate to a 24 to 1 ratio.
• KCN’s Chatree appears to be located at the centre of a major volcanic complex with possibly 9 historic volcanoes, major North, NW/SE and SW/NE sutures, faults and/or structures and >29 drill ready targets covering a range of gold mineralisation styles including visible gold, all identified within its tenements.

Independence Group NL (IGO) –Lightning Nickel Continues to Provide the Driving Force behind the Independence Group

• IGO’s Long mine of Lightning Nickel appears to be settling down as a relatively low cash cost, 9,000tpaNi operation (5,760tpaNi attributable at ~64%). IGO’s aim is to find another stand-alone Ni orebody within the Long mine, so that production could be increased to 12,000tpaNi to 15,000tpaNi (attributable : 7,700-9,600tpaNi).
• The recent discovery of the McLeay deposit south of Victor South could evolve into a stand alone orebody, being open in all directions and with a number of surfaces. Drilling is expected to establish an initial resource by September 2005.
• The Gibb-Victor lava channel is establishing a record as one of the highest grade lava channels at Kambalda, with Gibb South averaging 8.0%Ni (largely due to occasional 18% to 20% Ni zones), and Victor South averaging 4.6% to date. Both Victor South and the new McLeay deposit lie within this lava channel. Depending on the dilution at Victor South in the coming year, IGO could produce between 8,500t and 9,500t Ni based on average grades for the mine of 3.5% to 4.0% Ni .
• The lava channels shown to date are simplified schematic representations of what the orebodies within them broadly follow. The recent drillhole intersections by IGO outside of these lava channels and beyond perceived boundaries within the channel (such as the 3.4m @ 4.5%Ni below 12 Level at Long) and the spectacular 4.4m @ 16.2%Ni show that there appears to be the capability to add material resources to Long and Victor, and extend Lightning Nickel’s life.
• IGO continues to mine significant ore outside of its reserves, averaging up to 46% more nickel since IGO started in October 2002 (at 8% lower on grade), which also infers further extensions to Lightning Nickel’s life (usually based on reserves).