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Hargraves Project - 140% Increase in Indicated Resources

Hargraves Project 140% Increase in Indicated Resources 10 October 2011 ASX Code HEG, HEGO, HEGOA The Indicated Resources estimate for the Big Nugget Hill Deposit has increased by 140% to 143,000 ounces with a minor drop in the total Resource estimate Indicated Resources 1,262,000 tonnes at 3.5 g/t gold for 143,000 contained ounces Inferred Resources 944,000 tonnes at 2.6 g/t gold for 78,000 contained ounces Total Contained Ounces 221,000 ounces This significant upgrade of much of the Inferred Resource to Indicated Resource category results from an independently conducted due diligence and peer review of the geology and resource estimate within essentially the same portion of the Big Nugget Hill Deposit as used in the previous resource estimate. The estimate relates to an 800 metre portion of the 1,600 metre plus strike length of the Big Nugget Hill Deposit. Almost 90% of the Indicated Resource estimate occurs between surface and a depth of 150 metres. A prefeasibility study will be conducted to determine the potential ore reserves based on open pit mining. The Deposit remains open along strike and at depth below 150 metres. Managing Director Mr Philip Bruce said, This significant reestimate of resources at Hargraves follows the gold price increase and additional drilling on the Big Nugget Hill Deposit. The independently reviewed uplift in our Indicated Resource will lead to a prefeasibility study to assess the potential ore reserves at the Deposit and will reinforce our drive to advance our projects to development.

At the same time we plan further drilling to increase our resource base to over one million ounces. The whollyowned Hargraves Project is located approximately 30 kilometres south of Mudgee in central New South Wales and was the site of Australias first reef gold mining operation. The Project is on Exploration Licence 6996 which covers multiple parallel goldmineralised structures with historical gold production, in addition to the main Big Nugget Hill structure. A review and reestimate of the Big Nugget Hill resource has recently been completed. The reestimate involved an extensive due diligence exercise and peer review, which was conducted by an independent consultant and inhouse personnel. September 2011 Resource Estimate Big Nugget Hill Deposit (0.5g/t) This Indicated Resource is 140% larger that the previously estimated Indicated Resource of 60,300 ounces. The substantial increase in the Indicated Resource category reflects an increase in confidence of the continuity of the mineralisation and a better understanding of the geological controls of the mineralisation.

The new estimation criteria include a reduction in the influence of very high grade intersections, a top cut of 100g/t for larger search criteria and a reduction in the cut off grade to 0.5g/t. This increase is an important advance for the Hargraves Project, since under the JORC Code, Measured and Indicated Resources, in contrast to Inferred Resources, can be converted to Reserves based on project development criteria. Almost 90% of the Indicated Resource occurs from surface to a depth of 150m and an open pit prefeasibility study will be conducted to determine the potential ore reserves. Approximately 20% of the total contained ounces and much of the Inferred Resource is between 150 and 300m below surface, where relatively widelyspaced holes have partially intersected the deposit. The new resource estimate relates to only a portion of the Big Nugget Hill Deposit and estimation is restricted to a zone 800m long to an average total depth of about 200m. The Deposit remains open along trend and at depth beyond this zone.

Widelyspaced deep drill holes indicate that mineralisation continues to at least 400m depth. Further resource upgrades for the Big Nugget Hill Deposit are anticipated in the future as a result of the following activities An ongoing infill assaying program, which has identified a low grade halo, and some high grade material, adjacent to previously reported high grade results. Channel sampling and near surface infill drilling. Drilling along the strike of the deposit deeper than 150m below surface where drill hole spacing is currently widelyspaced. Drilling along strike to the north (approximately 350m) and to the south (approximately 350m) where widelyspaced drilling has indicated that the mineralisation continues. Substantial potential exists for increasing the resource by further exploration and drilling of the multiple geologically similar structures within the Hargraves Project area. A JORC checklist of the Big Nugget Hill Resource October 2011 estimate will be released on the Companys website