Kalgoorlie Mining Company

The Board and Management of Kalgoorlie Mining Company Limited (ASX: KMC) is pleased to provide the following review of operations and activities of the Company over the 12 months, to 30 June 2011.

KEY ACHIEVEMENTS FOR FY 2010-2011

• Bullant gold project acquisition completed
• Bullant project mining operations progress
• Bullant exploration programs success
• Ore purchase agreement with Barrick 
• Bore mill acquired and successful relocation to Bullant project

BULLANT GOLD PROJECT ACQUISITION COMPLETED

The acquisition of the Bullant gold project from Argent Minerals Limited (Argent) (ASX: ARD) was formally completed on 31 March 2011.

Consideration for the acquisition was the issue of 44,000,000 fully paid ordinary KMC shares to Argent (and the cancellation of 19,500,000 Argent shares held by KMC). As a result of the Company’s acquisition of the Bullant project, it decided not to proceed with its previously announced proposed takeover offer for Argent. The agreement for KMC to acquire the Bullant project was unanimously supported by both the KMC and Argent boards.

On completing the Bullant acquisition, the project became the Company’s prime focus. KMC has embarked on a rapid process to commence mining operations at Bullant and implement exploration programs to expand the project’s resource base. To better reflect the Company’s gold focus, it formally changed its name from US Nickel Limited to Kalgoorlie Mining Company Limited, in May 2011.

BULLANT PROJECT MINING OPERATIONS PROGRESS

KMC has made significant progress with its mining and development plans for its flagship Bullant gold project. The Company reported that first ore was brought to the surface in May 2011 and by the end of the June quarter 7,754 dry tonnes, for 637 ounces of gold (Au), had been stockpiled on the ROM pad awaiting contract crushing and grading in preparations for sale.

Ore which meets the Company’s parameters for transportation 
and treatment will be sent to Barrick Limited’s (Barrick) nearby Kanowna Belle gold project for sale. Sub-grade ore will be stockpiled for treatment at the Company’s own future gold processing facility.
The Company has established a fleet of machinery and equipment, which comprises a mixture of Company-owned, hire purchase and hired machinery, required to undertake all planned mining activities at Bullant.

Stabilisation of the crown pillar, as per the government approved Project Management Plan (PMP) for the mine reopening, commenced in the June quarter, and is expected to be completed in the September quarter.

The number of personnel on-site at Bullant has increased since the acquisition of the project, as the Company ramped up its exploration and mining activities. At the time of writing, the Company was operating three eight hour shifts per day at the project. As at the end of the Annual Report period, KMC had 30 full/part-time operational staff working various shifts at the Bullant project and its Kalgoorlie regional offices. The Company anticipates further growth in its workforce numbers in the coming year, as project ramp up continues.

BULLANT EXPLORATION PROGRAMS SUCCESS

The Company undertook both underground and surface drilling programs at the Bullant project during the June quarter, and the drilling has been highly successful.

The underground drilling was designed to test the East Lode, and tested for strike and lateral extension as well as the continuity of the East Lode ore body. The results were released in May and showed that mineralisation was still present and that economic gold grades still exist in close proximity to each other. The East Lode is a sub-parallel Lode to Main Lode and remains relatively untested at depth. These gold intercepts highlighted that consistent grades and widths occur close to current mine development.

Surface exploration drilling commenced in May 2011 and concluded at the end of June 2011. Four exploration holes were drilled, for a total of 464 metres of Reverse Circulation (RC) pre collars and 952 metres of Diamond Drilling. The aim of this program was to infill and confirm confidence in areas subject to past historic drilling, and to also test possible depth and strike extensions in an area of the Main Lode situated outside the known interpretation of the Bullant Lodes.

Results from this program were received subsequent to the end of the Annual Report period, in July 2011, and have confirmed that ore grade mineralisation occurs to the south of the Bullant mine, well beyond current drill-tested area at Bullant. As a result KMC plans to continue drilling the southern region of the project area.

The intent of the Company’s exploration programs is to establish one million ounces of gold within its tenement package at Bullant.

ORE PURCHASE AGREEMENT WITH BARRICK

In June 2011, KMC entered into a non-binding ore purchase agreement with Barrick for the sale of the Company’s Bullant gold ore to Barrick, for treatment at Barrick’s nearby Kanowna Belle gold project. Subsequent to the end of the Annual Report period, in August, KMC and Barrick entered into a binding agreement, and later that month the first shipment of gold ore was delivered from the Bullant project to Barrick. Barrick owned and operated the Bullant mine between 2002 – 2009.

The first shipment was 10,507 dry tonnes of ore with recovered gold of 1,241 ounces. At the contracted sale price gross proceeds to the company will be approximately AUD$2.1 million (before haulage and processing costs).

The Company has the opportunity to road transport between 5,000-20,000 tonnes of Bullant ore to the Kanowna Belle facilities per month for sale and processing. This arrangement is expected to stay in place until KMC has established its own gold milling facility at the Bullant project, anticipated to commence in 2012.

In January 2011, the Company acquired a 700,000 tonnes per annum capacity gold ball mill (and associated drives and pumps). The ball mill was located in Leonora, in Western Australia’s goldfields region, and it was successfully relocated to the Bullant mine site, 75 kilometres north west of Kalgoorlie and Kalgoorlie engineering yards, in March 2011.

The gold ball mill will be a key component in the Company’s plans to construct a 700,000 tonnes per annum gold processing plant at the Bullant gold project. The purchase of the ball mill will have a positive impact on the total cost of the proposed milling facility at Bullant and will also greatly reduce the timeline to commissioning.

OTHER PROJECTS

Having completed the acquisition of the Bullant gold project, and commenced mining operations as well as undertaking ongoing exploration to expand the project, KMC has committed to the rapid development of the Bullant project as the Company’s core focus to deliver shareholder wealth. As such, it is actively seeking opportunities to divest its North American assets, the Snowbird project and the Mid-Continent project.

Mr Christopher Daws - Managing Director  MAICD, SA FIN

Mr Daws has a strong background in finance and economics having spent 10 years involved in Australian equities and has worked within some of the largest broking organisations in the world. Mr Daws is an Affiliate Member of the Securities Institute of Australia. Mr Daws held the role of CEO for four years for ASX-listed Niagara Mining Limited (renamed Poseiden Nickel Limited) including as a Director from November 2006 to July 2007. Mr Daws is currently a non-executive director of ASX Listed Spitfire Resources Limited.

Mr Jonathan Murray - Chairman

Mr Murray is a Partner of Steinepreis Paganin, an independent law firm based in Perth, Western Australia. Mr Murray specialises in equity capital raisings, all forms of acquisitions and divestments, governance and corporate compliance.

The appointment further enhances the Company’s strategic, corporate evaluation and governance processes.

Mr James Croser - Non Executive Director

Mr Croser is a qualified mining engineer with significant broad experience in the resources sector, particularly underground mining in hard rock. He was instrumental in the construction of the Frog’s Leg Gold Mine for La Mancha Resources & has held mine management positions for La Mancha Resources & Perilya Limited as well as operational roles in some of Australia’s largest underground contracting companies.

Mr Croser is currently consulting to the mining industry as Operations Manager of Rock Team Pty Ltd. He brings to US Nickel a sound practical & technical knowledge critical to the evaluation of company opportunities moving forward.

Mr Peter George - Non Executive Director

Mr George is a qualified Mining Engineer with fifteen years of Australian and international experience in managerial, technical and consulting roles within the mining industry. He holds a Bachelor of Mining Engineering, a Graduate Certificate in Minerals Economics, is a holder of a WA First Class Mine Managers Certificate and is a member of the Australian Institute of Mining and Metallurgy. Mr George has held prior senior operational positions with Boliden Limited (Sweden) and since 2001 has been involved in progressing numerous projects through the feasibility study to construction process in a Senior position for consulting firm Rapallo Pty Ltd. Mr George has most recently held the positions of Managing Director for Rapallo Pty Ltd and Director of Rock Team Pty Ltd.

Mr George brings to US Nickel a broad knowledge of progressing resource projects from evaluation and feasibility through to construction and operation.

Maurice Catina - Company Secretary

No info available.