Production and Costs

Gold production for the year was 76,248 ounces, 43% below the forecast. 549,699 ounces of silver were produced. While tonnes of ore milled were in line with budget, gold head grade of 1.08 grams per tonne was 33% less than anticipated. This was due to licensing delays in the C North pit. Silver head grade was as budgeted.

Total cash costs for the year were $US479 per ounce of gold ($US362 per ounce before Thai royalties). Average royalty per ounce paid to the Thai government was $US117. Total production costs, after depreciation and amortisation, were $US581 per ounce of gold produced.

This places Chatree in the lowest quartile for cash operating costs and second quartile for total production costs (Gold Fields Mineral Services 2011). This result is lower than last year, caused by the reduced production experienced.

Stockpiled ore at the end of June 2011 was 8.4 million tonnes at a grade of 0.7 g/t gold for 187,000 ounces.

Operational Performance

5.3 million tonnes of ore was mined during the year with a waste to ore strip ratio of 2.6:1. Production was adversely impacted by external restrictions on where we could mine. Nevertheless, ore mined was 2.1 times mill feed. This enabled us to blend feed and to increase stockpiles, which will be available when the additional processing capacity commences operation early in the second quarter of 2011.

Ore feed was sourced predominantly from the A and K West pits and mining of the K West Pit was completed in October 2010.

The stripping of the enlarged A Pit continued in three different areas: A Hill, A Stage 2 and A Stage 1 North. This approach is to ensure a sustained ore delivery to the mill.

In November and December 2010, preparation work for future mining was completed at the C North Stage 2 Pushback and at the Q pit.

The fl eet of the mining contractor, Lotus Hall, was increased by an additional Caterpillar D-9 dozer and by four Caterpillar 777 haulage trucks.

The new underpass under the highway between Chatree South and Chatree North was completed in June 2010, providing much more effi cient haulage of ore between the pits and the crusher.

The Tailings Storage Facility (“TSF”) #1 was raised by 4 metres during the year and has now reached its fi nal elevation. Harvesting of teak trees and clearing of topsoil for a second TSF #2 began in October 2010.

In the coming years, ore will also be sought from higher grade, small, near surface veins, to augment the primary lower grade feed and maintain low costs and gold production levels. Due to the rising gold price, lower grade ore can be mined economically and the potential exists for bulk mining to be introduced, utilising larger and hence more cost effective equipment while maintaining the waste-to-ore strip ratio.

During the fi nancial year, the processing plant ran at a throughput rate of 2.5 million tpa (“tonnes per annum”) as per budget. This is considerably above its rated capacity of 2.3 million tpa. The plant operating time for the year was 96.9% against a budget of 96.0%. During the year the plant had only 1 unplanned mechanical stoppage for 15 minutes.