REVIEW OF RESULTS

The consolidated income statement for the year ended 31 December 2008 and the consolidated balance sheet at that date of this report. The Group reported a loss of $22.6million (2007: $14.3 million) for the financial year.

While it is not unusual for mineral resource companies to experience operational difficulties in ramping up production to targeted levels, it is disappointing that targeted production levels have not yet been achieved on a sustainable basis. The result for the year reflects the continued operational difficulties experienced in ramping up production at the Marropino mine. Operations at the Marropino mine have been impacted by a number of factors. During the first eight months of 2008, production was affected by unforeseen equipment outages in the wet processing plant, including the failure of certain OEM bridge screens that were not manufactured to specification. In addition, the variability of the quality of run-of-mine ore (i.e. lower grade and higher percent oversize material) and poor efficiencies within the wet processing plant (i.e. recovery rates) negatively impacted on production.

The Group's performance and finances have also been affected by the delays in the delivery of grid power to the Marropino mine. In the intervening period it has been necessary to produce power using ageing diesel generators which have significantly impacted on operations i.e. through the high cost of diesel and power outages resulting in the wet plant not being operated at optimal capacity and/or availability.

Despite significant progress having been made toward achieving key performance targets the Company has not achieved anticipated production levels that would allow it to produce sufficient saleable product to sustain on-going operational and capital expenditure. As a result, the Company has had to rely on the proceeds from various fund raising activities in 2008 to sustain operations.