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Beaconsfield Gold

Beaconsfield Gold - Ramping up Gold Production and return to profits

The Beaconsfield Gold Mine has returned to full production, exploration has accelerated, and the share register and balance sheet have been strengthened by the introduction of Malaysia Smelting Corporation Berhad (“MSC”) as a cornerstone investor.

The company has returned to production the higher grade Western Zone of the Beaconsfield Mine. After some delays, the mine is now at full production and generating positive cash flow.  Production during the September 2008 quarter was equivalent to an annualised rate of more than 80,000 ounces, and plans for 2009 are to mine 300,000 tonnes of ore yielding around 90,000 ounces of gold.

Extending mine life

With the introduction of the new mining method complete, the mine is now moving to the optimisation of both the mining method and the overall cost structure.  As present ore reserves at the Beaconsfield Mine are the equivalent of around three years’ production, the Company needs to prove up additional reserves. A deep drilling program from

underground commenced during the September 2008 quarter aimed at extending resources and reserves for the Tasmania Reef to a level 300 metres below current resources.

Intersections from the first few holes give strong encouragement for the continuation of the Tasmania Reef. This program, which will continue well into 2009, is targeting resources to add three to four years to current mine life.

2009 Program

Beaconsfield Gold is aiming to significantly extend the life of the mine by deeper drilling of the Tasmania Reef.  Secondly, Beaconsfield Gold is testing the 11km-long corridor of prospective host rocks around the Beaconsfield Mine for repeats of the Tasmania Reef system.  This is being tested by by drilling from both surface and underground.  This corridor has seen surprisingly little modern exploration, given it hosts one of Australia’s best gold deposits.  Thirdly, Beaconsfield Gold aims to explore north-east Tasmania with the aim of delineating incremental feed to utilise spare capacity at the Beaconsfield processing plant.

New projects at the Lefroy and Mathinna goldfields were acquired during the year, covering the sources of most of historical Tasmania gold production outside of the Tasmania Reef. Drilling has commenced and will be accelerated during 2009.

In the next year, the mine plans to produce around 90,000 ounces at a cash cost significantly below the current gold price. The potential to double the mine life as a result of the current deep drilling program is also excellent.

Balance Sheet and Hedge Book

The Company was able to strengthen its balance sheet in several ways during the past year. The close-out of the Company’s gold hedge book in November 2007, means that all production from the Beaconsfield Mine is now delivered at the high spot gold price, which is presently around A$1,100. Bank debt was further reduced during the year, leaving the Company with a very lowly geared balance sheet. Full exposure to the spot gold price and low gearing is desirable in the current environment.  MSC, which now holds a 22.5% interest in Beaconsfield Gold.

Summary

Beaconsfield Gold owns a high grade profitable gold mine. As an established mid-tier gold producer, the Company has few peers in the Australian gold mining industry, as many have been taken over. The high-grade nature of the mine underpins good potential for a very profitable production for the next several years, given continuation of the strong A$ gold price.  The capacity to fund future growth from internally generated funds distinguishes Beaconsfield Gold from most companies in the minerals business at a time when funding is difficult to obtain externally.

The Chairman of Beaconsfield Gold, Dr Denis Clarke said, the company "is now well positioned, given continuation of strong gold prices, to return to the status of a profitable, dividend-paying company."