TALLERING PEAK

For the quarter ended, mining operations resumed as planned during the quarter and as detailed in December’s quarterly report, namely to minimise cash expenditure without compromising ore sales. Ore sales increased 43% compared with the previous quarter which represents record sales from Tallering Peak since the commencement of operations. Total material movement was 13% lower than the previous quarter whilst ore production was consistent with the previous quarter. Production for the quarter focused on T6A2 cutback with high grade ore being sourced from the T6A1. By the end of the quarter the T6A2 cutback was well advanced. Crusher throughput was increased 21% to match scheduled high grade ore deliveries to blending stockpiles at the Mullewa railhead. The 10 millionth tonne of Tallering Peak iron ore was delivered by rail to the Geraldton Port

Reported that mining operations were scaled back in the December quarter as a result of customers requesting iron ore shipment deferments or failing to collect iron ore cargoes in accordance with binding iron ore purchase agreements. Total material movement was reduced by 25% at Tallering Peak during the quarter compared with the previous quarter. To minimise cash expenditure during the next six months without compromising ore production, the T6A3 cutback has been divided into two staged cutbacks namely the T6A3a and T6A3b. Production for the quarter focused on pre-strip of the T6A3b cutback with high grade ore being sourced from the T6A1 and T6A2 cutbacks as required. Excess equipment engaged in the T6A3 cutback was demobilised resulting in a reduction of 40 employees across the site and mine operations were shut down for two weeks in December to minimise cash expenditure whilst drawing down on existing ore stockpiles at the mine and Ruvidini rail yard. Minor capital projects were suspended and this, combined with a reduction in physical activity on the site, reduced mine expenditure significantly. Crusher maintenance was performed during October and November whilst throughput requirements were reduced. Shipping rates in the first two months of the December 2008 quarter were down on the previous quarter however Tallering Peak shipped a record 6 shipments (.356Kt) from the Geraldton Port in December to existing and new customers. With shipping schedules in place for the remainder of the financial year, 1.7 million tonnes of iron ore stockpiled as at 31 December 2008. No new exploration or resource drilling was undertaken during the quarter

Mount Gibson reported it has deferred the T6B2 cut back at Tallering Peak until July 2009.