Quarterly Activities Report and Appendix 5B

Tag : Powder Metallurgy

The Twin Hills Silver Mine continues to progress towards increasedsilver production.

A second crusher is now installed and operating. This contractcrushing circuit is additional to the
previously announced upgrade of Macmin's existing crushing circuit.At present this contract
crusher is crushing 100,000t medium grade ore which is onstockpile, to a size grade of 100% minus
20mm. When the upgraded Macmin crushing circuit is completed thisproduct will be fed into the
upgraded circuit, with the minus 4mm material being directlyscreened out and placed on the heaps
and the remaining product will be further crushed to 100% minus 4mmand then placed on the
heaps.

The Macmin crusher upgrade is proceeding, but as previouslyannounced this will not be completed
until the end of June and it is unlikely that full capacity will bereached until late July or early August.

The Macmin crushing circuit is presently crushing in excess of20,000t/month to the required minus
4mm. Planning is proceeding to move to extended crushing hours,probably two eight hour shifts,
but is still restricted by difficulty in hiring suitable personnel.

The initial batch of silver powder has been upgraded by removingimpurities and is presently being
converted to silver dore bars. Further batches of silver powderwill be upgraded on a regular/semi
continuous basis.

Heap Leach Pad One is now effectively completed with approximately220,000 tonnes of ore
stacked to an average height of 8 metres. This pad is approximately55% under cyanide irrigation
and is expected to progress to 100% under irrigation over the nextfew weeks. This should result in
a substantial increase in silver leaching and subsequent silverpowder production. Although this pad
has been under construction for more than 12 months and has beenpartially leached of silver,
irrigation and leaching, for various reasons, has not beencontinuous. To achieve continuous and
complete irrigation of Pad One is a significant milestone.

Heap Leach Pad Two is approximately four weeks behind schedule andis presently being covered
with a protective layer of fine material and a coarse drainagelayer. Stacking of crushed ore will
commence in the near future. This pad has a capacity to an 8 metreheight of approximately
440,000 tonnes of ore. Irrigation and leaching of this pad cannotcommence until a significant part of
the pad has been built to the 8 meter height which may take twomonths.

The Merrill Crowe plant is presently being commissioned andinitially will produce approximately one
tonne of silver as a commissioning exercise to determine qualityand characteristics of the product.

Bob McNeil Chairman and CEO commented:

"Firstly I would like to welcome Ian Gibson to the position ofChief Operating Officer. I am sure that
Ian, together with other dedicated staff including John Magnussen,Warren Beynon, Mark Morrison
and all the supervisors and employees at the Twin Hills site aremaking every effort to increase silver
production at the mine. I thank them for their efforts anddedication.

We have had numerous requests by phone and email for details of theTwin Hills progress.
Although these have been reported before we have described allaspects of the progress at the mine
and the process including problems that have developed duringcommissioning, below. Firstly a brief
description of heap leaching is probably appropriate.