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Company History

Key Dates

IPO

In November 1985 the Company listed on the ASX, raising $2 million with the issue of 8 million shares at $0.25/share. The Company’s key asset was an exploration lease over the Central Deborah line of workings.

Initial exploration used the Central Deborah shaft to access historic workings on the Deborah line of reef. The shaft was dewatered and refurbished and exploration conducted around the old workings indicated a modest remnant resource.

WMC purchase

In October 1992, the opportunity to be the first company in history to amalgamate the leases over the goldfield presented itself when Western Mining sold its entire interest in the field. The tenements were purchased for $1.6 million, plus a gold royalty capped at $8 million, which when combined with the Company’s existing leases, gave complete coverage of the entire Bendigo Goldfield and surrounding region.

The acquisition included $28 million worth of data collected over 14 years by WMC. This included a large catalogue of historical production data, modern drilling data and infrastructure, including a bulk-sample mill at New Moon.

Sir James Goldsmith/Kerry Packer involvement

In October 1993, $11 million was raised from a placement of shares to the late Sir James Goldsmith and Kerry Packer, to fund further exploration.

Exploration remained focussed on shallow remnant mineralisation throughout the goldfield and underground on the Deborah line of reef which was again dewatered allowing access to kilometres of historical workings.

In September 1996, a resource of 300,000 oz gold was published (1996 BML annual report) which included an open pit at Williams United and underground remanent ore. Resources were estimated using the knowledge derived from detailed bulk sampling, drilling and historical records.

Birth of the ribbon-repeat model

In early 1997 information derived from geological mapping, both underground and on the surface, combined with the data from almost 40 man-years of work in cataloguing historic production, enabled the Company to confidently predict geology and structure across the field.

This ability to predict the geology of the field led, in early 1997, to the recognition that vast potential existed beneath the historical workings. The model predicts that gold mineralisation occurs in vertically stacked linear bands, or ribbons, along the lines of reef and that these ribbons repeat at depth at a very regular 200 m interval. In November 1997, a 5:2 rights issue at $0.10/share raised $35 million to undertake exploration and decline development to confirm this potential. The Swan decline commenced construction in October 1998.

Drill-testing the theory

By the middle of 2000 the decline had advanced to a depth of around 500 m where drilling of the targeted ribbons was able to commence. In the northern end of the field, drilling from surface to 1,600 m successfully tested for ribbon locations on the New Chum and Garden Gully lines of reef. This work confirmed the ribbon model within the Bendigo Goldfield.

In April 2000, a 1:6 renounceable rights issue at $0.10/share raised $8.3 million.

Harmony invests to test the theory by trial-mining

In September 2001, Harmony Gold Mining Company of South Africa invested $50 million via a placement at $1.70/share (adjusting for share consolidation) to earn a 31% interest in the Company. It was also granted a two-year option to invest a further A$108 million at A$3.00/share, to increase its interest to 50.1%.

These funds were used to extend the decline to 850 m below surface and enable trial-mining within the reefs.

The reefs were first accessed in September 2002 and over 1.2 km of on-reef development was completed to gather information on grade and grade distribution.

2004 Feasibility Study

In 2004 a feasibility study was completed which indicated the economic feasibility of re-commencing gold production from the southern end of the goldfield. To fund the initial development $115 million in equity was raised in July 2004 ($100M share placement at $0.72/share and $15M SPP).

Underground development recommenced in late 2004.

Mine development

In early 2005 the Company announced the development plan would consist of two stages, rather than three, with initial production of 120,000 oz/y gold planned by June 2006. Plant capital of around $53 million was expected to be invested for the 600,000 t/y operation.

Harmony exited the Company in April 2005 with the sale of its 29 m shares at $1.10/share.

Funding the project

In October 2005 the Company raised $140 million by way of a pro rata equity offer and placement. New shares were offered to existing holders on a 3 for 5 basis at $0.80 per share, raising $121 million, and to new investors via a $19 million placement. The offer was conducted by way of a RAPIDS issue and was managed and underwritten by Macquarie Equity Capital Markets Limited.

Together with the funds raised in 2004, the net proceeds of the 2005 raising increased cash in bank to around $200 million. These funds were planned to enable completion of the southern process plant and all south mine underground infrastructure, commence gold production by June 2006 and commence north mine under-ground infrastructure.

First gold production

The construction of the 600,000 t/y gold plant commenced in late May 2005 and was completed in October 2006 at a capital cost of $65M. Commissioning occured in the September quarter of 2006, with commercial production declared in the December 2006 quarter.

Shift in strategy to focus on building reserves in more productive areas of the goldfield

With the reconciliation of the December 2006 quarter production results, it became apparent that a general overestimate of the potential of the Sheepshead and Deborah Lines had been made. The significantly lower than expected production results warranted a major shift in strategy. This change resulted in the deferral of production and a focus on building reserves in more productive areas in the south of the goldfield. The goal is to deliver reliable production of 150-200,000 ounces a year from the Kangaroo Flat Mine.