December 2014 Quarterly Report

Key Points

• Strong Group operating performance with quarterly gold production of 61,549 ounces at total cash cost of US$777/oz.
• Half year gold production was 115,106 ounces, well ahead of budget expectations, at total cash cost of US$837/ounce.
• Chatree produced 39,134 ounces of gold at US$643/ounce and Challenger produced 22,415 ounces of gold at US$1,009/ounce for the quarter.
• Exceptional drilling results continue at Nueva Esperanza, Chile, which are expected to significantly increase the gold resource at Chimberos West. Recent results include the following:
  • 100m @ 1.96g/t gold & 152g/t silver (4.5g/t AuEq60)
    from 92 metres, including
    34m @ 3.92g/t gold & 332g/t silver (9.5g/t AuEq60)
    from 126 metres in ECHR-55;
  • 48m @ 7.65g/t gold & 94g/t silver (9.2g/t AuEq60)
    from 142 metres in ECHR-47.
• Strong cash position at quarter end with cash increasing by
  around A$15.4 million to A$76.3 million after debt repayments of
  approximately A$12 million.
• Chatree was issued with a temporary suspension notice for up to
  30 days by the Thai Department of Primary Industry and Mining
  (DPIM). The notice was issued following unsubstantiated claims
  that slightly elevated levels of arsenic and manganese in some
  people in the local community, following regular health checks,
  were attributable to the mining operation at Chatree.
  Due to the uncertainty of the implications of the shutdown of the
  operation and the timing of the re-start, the Kingsgate Board
  requested voluntary suspension of trading in Kingsgate shares on
  the ASX. The Company is working with the authorities to facilitate
  the early resumption of mining and processing at Chatree.

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