Reserves as at 30 June 2010 were 421,650 ounces and resources totalled 950,220 ounces. These totals reflect a downgrade due to an unexpected decrease in the endowment of the M1 Shoot below the 500m RL. Recent development within the lower levels is, however, demonstrating an increase in the endowment of the adjacent M2 Shoot. Supported by the geological continuity of the combined shoots, there appears to be a trend of combined M1/M2 endowment that is more balanced than any changes within the individual shoots.

The location of the majority of these reserves and resources is illustrated in the following figure:

 Reserves within the Challenger M1 and M2 Shoots have been estimated down to a fault (the 79 Fault) that offsets the shoot system at a vertical depth of about 1,000 metres. Surface drilling carried out during 2009 had demonstrated the continuity of the shoot system below this fault, with Inferred Resources within these shoots, estimated to a vertical depth of about 1,400 metres, totalling 364,000 ounces.
Conversion of Inferred Resources to Reserves has historically been very high (+90% conversion rate) for both the M1 and M2 Shoots.

The shoots are offset laterally, but not vertically, by up to 150 metres. It is considered that the most effective way to further evaluate the shoots below the fault and facilitate the detailed mining studies needed to convert resources to reserves, is to undertake extensive drilling from underground. Because of the shallow plunge of the shoots this drilling can only be carried out from positions that are within about 150 – 200 vertical metres above the target depths.

These positions are due to be accessed by underground decline development during the September 2010 quarter. This will be the major focus of exploration activity over the next year.