Fourth Quarter Activities Report/Media Release

Document date:  Thu 19 Jul 2001
Published:  Thu 19 Jul 2001 12:05:30
Document No:  198974
Document part:  B
Market Flag:  Y
Classification:  Fourth Quarter Activities Report 

SONS OF GWALIA LIMITED                        2001-07-19  ASX-SIGNAL-G

HOMEX - Perth                                                         

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EXECUTIVE CHAIRMAN'S COMMENTS

OVERVIEW

The strong result for the June quarter completes what has been an
excellent year for the Company and provides the base for another
increase in profits for the 30 June 2001 year.

GOLD

Gold production for the full year was 438,166 ounces. Significantly,
the cash margin per ounce for all gold delivered during the year was
$295 per ounce, underpinning a significant cash flow contribution
from the gold division. The Southern Cross rationalisation strategy
is targeting a long-term improvement in the mine life and associated
cost structures - the full benefit of the rationalisation strategy
will be realised later in the 2002 financial year. As a consequence
of the closure of the Bullfinch and Yilgarn Star processing
facilities, gold production in the 2002 financial year will be lower
than 2001.

SOUTHERN CROSS REGION

The rationalisation of the Southern Cross region is proceeding to
plan with all major construction work at the Marvel Loch Mill
completed during the quarter. Commissioning of the larger items of
plant will continue in the September quarter.

The Bullfinch Mine and the Yilgarn Star Mill were both closed during
the quarter and, in future, all ore from the Southern Cross belt will
be treated at the larger Marvel Loch treatment plant.

LEONORA/ LAVERTON REGION

The pre-feasibility study for the Gwalia Deeps project was completed
and is currently being audited by independent experts.

The Company is also moving closer to a decision as to whether to
re-establish operations in the Laverton area. During the quarter,
drilling at Safari Bore located additional high grade near surface
mineralisation and there were early stage discoveries nearby at
Serengeti and Deep South. The Company's objective in the Laverton
region is to establish a gold operation producing approximately
100,000 ounces a year, subject to a minimum mine life of five years
being defined before commencement.

ADVANCED MINERALS

Tantalum production and sales for the quarter were again a record.
Sales for the quarter were approximately 50% higher than previous
quarter sales with record sales for the financial year of 1.6 million
lbs. Tantalum production at Greenbushes and Wodgina increased 35% and
64% respectively in the 2001 financial year.

The Company has long term, take or pay contracts for estimated
production until the end of 2005. 

The expansions at the Greenbushes and Wodgina Mines are on budget and
on schedule with completion expected during the March 2002 quarter.

The Company continues to increase its mineral sands inventory in the
Murray Basin where resources of 15.4 million tonnes of heavy minerals
have now been established.

During the quarter, the first mineral sands shipment from the Murray
Basin Joint Venture was dispatched to overseas customers.

PERSONNEL

During the quarter, Mr Malcolm Hillbeck, the Company's Executive
Director of Operations retired after 12 years of service with the
Company.

GOLD OVERVIEW

PRODUCTION

Gold production for the June quarter totalled 98,449 fine ounces.
Gold was produced at an average cash cost of $369 per ounce and sold
at $646 per ounce. This returned a cash margin of $277 per ounce. For
the financial year, the Company produced 438,166 ounces of gold at an
average cash margin of $295 per ounce.

SONS OF GWALIA EQUITY GOLD PRODUCTION - JUNE 2001 QUARTER

OPERATION    TONNES   HEAD GRADE   PRODUCTION   CASH COST  TOTAL COST
             MILLED     (G/T)        OUNCES     PER OUNCE  PER OUNCE 

LEONORA REGION

Underground  82,969      4.25        10,409

Red October  15,082      6.79         3,135

Kailis      119,988      7.04        25,649

Other 
sources     225,193      1.33         8,573

Leonora     443,232      3.62        47,766         313         422
Region

SOUTHERN CROSS REGION

Marvel Loch 
Open Pit    154,671      1.84         8,340

Yilgarn Star 
Underground  97,877      4.54        13,134

Golden Pig   69,317      6.15        12,522

Great Victoria 
Underground  53,079      2.74         4,282

Other 
sources      86,294      1.33         3,487

Southern Cross
Region      461,238      3.07        41,765         429       579

Yilgarn Star 
Remnant       3,159      2.19         1,034         655       910

Bullfinch   145,232      1.66         7,885         356       388

Total Gold
Production
          1,052,861      3.11        98,449         369       491


NOTE:

(a) "Cash operating costs" are defined to include all expenditures
directly incurred on mining, crushing and processing operations plus
site overheads and ongoing rehabilitation, net of movements in
defered mining expenditures and stockpiles.

(b) "Total costs" include all site related depreciation and
amortisation expenses and royalties. Average total costs are weighted
by production. 

LEONORA REGION

SONS OF GWALIA MINE

At the Sons of Gwalia Mine, production for the quarter was 47,766
fine ounces at a cash cost of $313 per ounce. Annual production from
the Leonora region was 195,875 fine ounces (FY'01: 132,046) at a cash
cost of $269 per ounce.

Extraction of ore from the Sons of Gwalia underground operation
increased to an annualised rate of 340,000tpa. The primary feed was
the South Gwalia Series block, with extraction from Main Lode
re-established during the quarter. However, late in the quarter,
production in the remnant zones was slowed by some delamination of
the hanging wall. A drilling technique has been identified to deal
with this issue and this will assist with achieving improved
production rates going forward. Grade reconciliations were positive
and consistent with plan projections.

Mining from the Kailis satellite pit continued with gold production
exceeding forecasts due to positive grade reconciliation in the
supergene zone. Mining was completed in the first week of July. 
Treatment of Kailis stockpiles will be completed in the September 2001
quarter.

Milling of Red October open pit ore was completed in June.

In the 2002 fiscal year, the proportion of underground feed at the 
Sons of Gwalia operation will rise to approximately 30%. The balance 
of the ore mix will be made up of smaller satellite open pit feed and
lower grade stockpiles.

SOUTHERN CROSS REGION

Gold production from the Southern Cross region for the quarter was 
41,765 fine ounces at a cash cost of $429 per ounce. Production for 
the year from the Southern Cross region (including Yilgarn Star) was 
202,209 fine ounces at a cash cost of $422 per ounce. Results were 
affected by the rationalisation programme and the closure of both the 
Star and Bullfinch treatment plants.

MARVEL LOCH

All major construction work for the upgrade of the Marvel Loch mill
has been completed with final small project work to be completed in
July. During the quarter, milling was interrupted by the need to
integrate the new sections of the plant. It is anticipated that the
full rationalisation benefits will be realised in the second half of
fiscal 2002, following the planned plant optimisation programme.

Mining in the Marvel Loch open pit proceeded as expected. Movement of
the east pit wall above the saddle between the north and central pits
has been closely monitored. Production activities in the central pit
will be accelerated during the September and December quarters to 
ensure that ore production is not affected should this section of the 
pit wall become unstable.

BULLFINCH MILL

The Bullfinch mill was closed during the quarter. Final gold 
production was 7,885 fine ounces at a cash cost of $356 per ounce. 
During the year, Bullfinch produced a total of 39,048 fine ounces at a
cash cost of $387 per ounce.

MORE TO FOLLOW