Mount Magnet South NL ABN 93 096 635 246

Quarterly Activit ies & Cashflow Report 30 September 2011

Summary • Upgraded Mineral Resource Estimate at Kirkalocka finalised increasing

Indicated category by 13% to 305,000 ounces Au, and overall JORC resource

to 413,000 ounces Au

• Stage 1 and Stage 2 of a three stage drilling program completed to the

areas north and south of the Curara Well open pit, comprising 33 holes for

5,264m RC and 664m DDH

• High grade intercepts returned from initial assays, with results pending for

+1,300 samples

• Successful completion of share placement and underwritten rights issue to

shareholders raising a total of $4.9m before costs

• Feasibility study program on track to complete by end November 2011

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Quarterly Activities & Cashflow Report June 2011

Kirkalocka Gold Project JORC Mineral Resource Estimate

The Company has released another upgrade to its Curara Well Mineral Resource Esti-mate as follows:

Category Tonnes (Mt) Grade (g/t au) Gold (ounces)

Indicated 8.0 1.2 305,000

Inferred 3.2 1.0 108,000

TOTAL 11.2 1.1 413,000

Following the generation of 3,907 metres in additional exploration data from 24 reverse circulation (RC) holes, the Company engaged Snowdens Mining Industry Consultants to estimate the resource. The total dataset comprises 176,032 metres of RC, air core and diamond drilling.

The mineral resource has been reported above cut-off grades of 0.3 grams per tonne gold for the laterite mineralisation, and 0.5 grams per tonne gold for the oxide and fresh mineralisation. The mineral resource is constrained within an optimisation shell that ex-tends to 290m below the surface, with cut-off grades based upon economic factors de-termined from the application of open pit mining methods and historical gold recoveries from the Kirkalocka treatment plant.

Feasibil ity Study Program The feasibility study program commenced in February 2011 is targeting a November 2011

completion.

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Quarterly Activities & Cashflow Report June 2011

Exploration Activity Staged Drilling Program

The Company has planned a 3 stage drilling program to the areas north and south of the Curara Well open pit, with the purpose of in-filling areas of known mineralisation in order to bring them into the current resource model, increase the confidence in the mineralisa-tion already in the resource model, and to thirdly extend the mineralisation to depth and along strike. Refer Figure 1 below.

Figure 1: The Company has planned a 3 Stage Dri l l ing Program to the mineralised areas north and south of the Curara Well open pit

Three diamond holes from Stage 1 drilling are yet to be assayed, pending the completion of geotechnical and metallurgical testwork on the core, which is currently in progress and nearing completion.

Stage 2 of the drilling program (Figure 2), focussed on targets south of the Curara Well open pit, commenced in July 2011 and was completed during the quarter. The program comprised 27 RC holes to depths ranging between 100m and 180m, for a total of 4,001m drilled.

Significant intersections reported to date are contained in Table 1 below, with Figure 3 showing intersections across the previously unidentified high-grade cross cutting ‘NE1’

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Quarterly Activities & Cashflow Report June 2011

structure. The NE1 structure remains open at depth and along strike, with the thickest in-tersection to date occurring in the southern most section. Results are pending for +1,300 samples still being assayed.

Table 1: Stage 2 - Significant Intersections July 2011 Curara Well RC Drilling

Hole Number

Grid Coordinates Hole Data Significant Intersections

MGA East-ing

MGA Northing

Azimuth (deg) Dip (deg) Total

Depth (m) From (m) To (m) Interval (m)

Grade Au (g/t)

11CWRC001 574440 6827533 250 60 200 63 68 5 1.0

11CWRC001 574440 6827533 250 60 200 73 77 4 1.2

11CWRC001 574440 6827533 250 60 200 98 104 6 0.9

11CWRC002 574461 6827541 250 60 200 12 19 7 3.9

11CWRC002 574461 6827541 250 60 200 93 99 6 2.8

11CW4RC122 574555 6827441 55 305 150 3 6 3 2.6

11CW4RC126 574506 6827411 65 330 150 95 100 5 4.5

11CW4RC126 574506 6827411 65 330 150 108 125 17 0.8

11CW4RC130 574439 6827460 85 305 150 59 65 6 1.1

11CW4RC132 574491 6827395 65 305 150 110 118 8 3.0

11CW4RC134 574388 6827468 65 305 150 115 119 4 2.1

11CW4RC137 574483 6827367 65 305 150 81 90 9 2.1

11CW4RC140 574462 6827350 65 305 150 66 71 5 2.5

11CW4RC140 574462 6827350 65 305 150 116 122 6 2.4

11CW4RC142 574363 6827403 55 320 150 10 16 6 2.0

11CW4RC144 574424 6827348 55 305 150 37 72 35 2.2

11CW4RC144 574424 6827348 55 305 150 86 100 14 2.1 (i) Results are based on 40g fire assay (ii) Intersections are calculated from RC drilling (iii) Minimum sample interval of 1.0 metre (iv) Mean grades have been calculated on a 0.5g/t lower cut-off grade, with no upper cut-off grade applied, and maximum internal waste of 4.0 metres (v) Collar coordinates are based on GPS survey and downhole survey based up Eastman Multishot (vi) All intersections are downhole intervals

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Quarterly Activities & Cashflow Report June 2011

Figure 2: Stage 2 - Curara Well Southern 6828050mN Cross Section

High Grade ‘NE1’ Cross Cutting Structure

Figure 3: Stage 2 - Curara Well Southern 6828050mN Cross Section

High Grade ‘NE1’ Cross Cutting Structure

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Quarterly Activities & Cashflow Report June 2011

Competent Person’s Statements – Resource Est imate The estimation, depletion and reporting was completed by Lynn Olssen MAusIMM (CP) who is a full-time em-ployee of Snowden Mining Industry Consultants. Lynn Olssen has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration, Results, Mineral Resource and Ore Reserves (JORC, 2004). Lynn Olssen consents to the inclusion in this report of the matters based on the information in the form and context that the information appears. The information including database compilation, geological interpretation and mineralisation wireframing were completed under the overall supervision and direction of Graham Howard, MAusIMM, who is a full time employ-ee of Mount Magnet South NL. Graham Howard has sufficient experience that is relevant to the style of mineral-isation, type of deposit under consideration and to the activity being undertaken to qualify as a Competent Per-son as defined in the 2004 edition of the Australasian Code for Reporting of Exploration, Results, Mineral Re-source and Ore Reserves (JORC, 2004). Graham Howard consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. Rounding, conforming to the JORC Code, may cause some computation discrepancies. Competent Person’s Statements – Explorat ion Results The information in this report that relates to exploration results is based on information compiled by Graham Howard, MAusIMM, who is a full time employee of Mount Magnet South NL. Graham Howard has sufficient ex-perience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity be-ing undertaken to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves (JORC, 2004). Graham Howard consents to the inclusion in this report of the matters based on the information in the form and context in which it ap-pears.

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Quarterly Activities & Cashflow Report June 2011

Corporate Activity Entitlements Issue of Shares

During the quarter the Company completed a pro-rata entitlements issue of shares to

shareholders on a 1 for 5 basis priced at 5.5 cents, raising $2.9m before costs. On

closure, the Company issued 45,748,226 shares, which represented an 85% take-up of

rights by shareholders. The shortfall of 7,739,860 shares were subsequently applied for

and issued to the underwriter to the issue.

Placement of Shares

During the quarter the Company completed a placement of 28,571,428 shares at an issue

price of 7 cents per share, with one free attaching option exercisable at 7 cents for each 2

shares placed. The placement raised a total of $2m before costs.

Tenure

Project Area Tenements under administration

Area of granted tenements (hectares)

Mount Magnet 16 3,135

Kirkalocka 10 29,563

Paynes Find 2 3,026

TOTAL 28 41,719

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Appendix 5B

Mining exploration entity quarterly report

Name of entity

Mount Magnet South NL

ABN Quarter ended (“current quarter”)

93 096 635 246 30 September 2011

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter $A’000

Year to date (3 months)

$A’000 1.1 Receipts from product sales and related debtors - - 1.2 Payments for (a) exploration and evaluation (2,240) (2,240) (b) development - - (c) production - - (d) administration (272) (272) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature received 10 10 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 BAS (GST) Refunds 312 312 Net operating cash flows (2,190) (2,190) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects - - (b) equity investments - - (c) other fixed assets (306) (306) 1.9 Proceeds from sale of: (a) prospects - - (b) equity investments - - (c) other fixed assets - - 1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other - security deposit - - Net investing cash flows (306) (306) 1.13 Total operating and investing cash flows (carried

forward) (2,496) (2,496)

Quarterly Activities & Cashflow Report October 2011 Page 1 of 5

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1.13 Total operating and investing cash flows (broughtforward) (2,496) (2,496)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. 4,941 4,941 1.15 Proceeds from sale of forfeited shares - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other - share issue costs (296) (296)

Net financing cash flows 4,645 4,645 Net increase (decrease) in cash held 2,149 2,149 1.20 Cash at beginning of quarter/year to date 750 750 1.21 Exchange rate adjustments to item 1.20 - -

1.22 Cash at end of quarter 2,899 2,899

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

Current quarter$A’000

1.23 Aggregate amount of payments to the parties included in item 1.2 131

1.24 Aggregate amount of loans to the parties included in item 1.11 -

1.25 Explanation necessary for an understanding of the transactions Item 1.23 – Amounts paid to related parties include remuneration, directors’ fees, consulting

fees and reimbursement of expenses to directors.

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consoli-dated assets and liabilities but did not involve cash flows

Nil

2.2 Details of outlays made by other entities to establish or increase their share in projects in whichthe reporting entity has an interest

Nil

Financing facilities available

Amount available $A’000

Amount used $A’000

3.1 Loan facilities 0 0 3.2 Credit standby arrangements 0 0

Quarterly Activities & Cashflow Report October 2011 Page 2 of 5

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Estimated cash outflows for next quarter

$A’000 4.1 Exploration and evaluation (1,133) 4.2 Development - 4.3 Production - 4.4 Administration (292) Total (1,425) Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown inthe consolidated statement of cash flows) to the related itemsin the accounts is as follows.

Current quarter $A’000

Previous quarter$A’000

5.1 Cash on hand and at bank 2,899 750

5.2 Deposits at call - -

5.3 Bank overdraft - -

5.4 Other (rehabilitation bonding) - -

Total: cash at end of quarter (item 1.22) 2,899 750

At 30 September, the Company had $1.485 million held in a bank deposit which is subject to lien and is provided as collateral for a bank guarantee issued to the Department of Mines in relation to environmental rehabilitation provisions concerning the Company’s mineral permits. This deposit amount is not included in cash balances at the quarter end for the purposes of this cash flow statement. Changes in interests in mining tenements

Tenementreference

Nature of interest (note (2))

Interest at beginning of

quarter

Interest atend of quar-

ter6.1 Interests in mining tene-

ments relinquished, re-duced or lapsed

N/A

6.2 Interests in mining tene-ments acquired or in-creased

N/A

Quarterly Activities & Cashflow Report October 2011 Page 3 of 5

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Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number quoted

Issue priceper security(see note 3)

(cents)

Amount paid up per secu-rity (see note

3) (cents)7.1 Preference +securities (descrip-

tion) - - - -

7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

- - - -

7.3 +Ordinary securities (fully paid)

320,928,515 320,928,515 - -

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

100,000 100,000 11.9 N/A(non-cash issue)

28,571,428 28,571,428 7 7

53,488,086 53,488,086 5.5 5.5

- - - -

7.5 +Convertible debt securities (de-scription) 10m unsecured notes convertible to 10m shares, re-deemable by 27/11/2012, 5% coupon rate

10,000,000 - 10 10

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

- - - -

7.7 Options & Performance Rights (description and conversion fac-tor)

2,000,000‘D&E’ options

250,000 ‘C Note’ options

1,500,000‘CIP’ options

6,000,000Options

13,499,998 Performance

Rights

-

-

-

-

-

Exercise price10c, 15c &

20c

10c,15c,20c

6c

9c

-

Expiry date19 May 2012

19 May 2012

31 December 2012

31 October 2013

See table below

Quarterly Activities & Cashflow Report October 2011 Page 4 of 5

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7.7 Options & Performance Rights (description and conversion fac-tor)

14,285,714Placement

Options

- 7c 31 August 2014

7.8 Issued during the quarter 14,285,714 - 7c 31 August 2014

7.9 Exercised during quarter - - - -7.10 Expired during quarter - - - -7.11 Debentures (totals only) - -7.12 Unsecured notes (totals only) - -Each Performance Right can convert to one ordinary share upon satisfaction of specified performance conditions.

No. Performance Rights Expiry Date 5,999,998 30 November 2013 4,000,000 27 May 2014 1,500,000 13 June 2014 2,000,000 500,000 on 31 March 2012, 500,000 on 30 June 2012,

500,000 on 31 December 2012 and 500,000 on 31 Decem-ber 2013.

Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting

standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Sign here: (Company Secretary) Date: 31 October 2011 Print name: Susmit Shah Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities have

been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its per-centage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

Quarterly Activities & Cashflow Report October 2011 Page 5 of 5

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