CODEIFAI LIMITED — Interim / Quarterly Report 2005

Apr 28, 2005

ABN 68 108 649 421

OUARTERLY REPORT FOR THE THREE MONTHS ENDED 31 MARCH 2005

In accordance with the Australian Stock Exchange's ("ASX") Listing Rule 5.1 Australis Mining Corporation Limited (the "Company") provides its first quarterly report. After discussion with ASX it has been considered appropriate to include activities after 31 March 2005 to provide investors with an up to date view of the Company's activities.

Highlights

• The Company raised \$4 million through an Initial Public Offering ("IPO") that closed in February 2005.
• The Company was listed on the ASX on 7 March 2005.
• Mine infrastructure, including processing plant, dams and access roads, has been completed sufficiently to allow processing to commence at the end of April 2005.
• $\bullet$ Total capital expenditure of \$1.7 million has been incurred since June 2004 (\$957,000 March quarter).
• Planning and preparation for exploratory drilling of areas adjacent to the current proven reserves was undertaken during the quarter. Initial large diameter Calweld drilling and testing of geophysical exploration techniques subsequently was commenced.
• Processing of wash has commenced, however the start up was delayed in obtaining sufficient water supply at the processing site. As a result the Company's profit forecast contained in its Prospectus is unlikely to be met. A revised forecast after tax profit of \$1.8 million is now forecast for the year ending 30 June 2005, down \$0.7 million from the forecast contained in the Company's Prospectus released in December 2004.

Capital Expenditure

• Development expenditure of \$0.6 million has been incurred $\bullet$ since June 2004 (\$464,000 in the March quarter) for site preparation works. The development expenditure has included:
• $\triangleright$ Initial mine access road formation and internal haul road formation construction. The mine access road has been upgraded to all weather status using drained tailings from the previous operations.
• $\triangleright$ The first stage of the combined multi-stage tailings drainage dam and process water storage dam was constructed. Additional tailings drainage stages will be added as necessary to allow process tailings to be drained and dried for later haulage back to the mine as a component of the mine backfill.
• $\geq$ Construction of an underground 10.9 km 110mm diameter pipeline. The pipeline connects a proven 22.5 kilolitres/hour capacity water production bore to the process plant located on the Nardoo lease. The bore is located on land that is subject to an existing mining lease held by the Company. Installation and testing of this pipeline was completed on April 15.
• $\triangleright$ Operational stripping and stockpiling of topsoil and overburden commenced from the initial mining strip. The temporarily stockpiled overburden and topsoil will be used for later mine void backfilling and rehabilitation.
• Expenditure on plant and equipment of \$1.1 million has been incurred since June 2004 (\$528,000 in the March quarter).
• $\triangleright$ The rough sapphire concentration plant was erected on the prepared site and commissioned. The installation has included secondary and tertiary water jig stages, allowing the jig capacity to be upgraded to match the rotary trommel stage capacity which is conservatively estimated to be 250 loose cubic metres ("lcm") per hour. This compares to the primary jig stage alone restricting process capacity to approximately 200 lcm per hour. The forecast contained in the Company's Prospectus was based on achieving only the lower rate of processing.

Ouarterly Report to 31 March 2005

The mine overburden and wash haulage fleet was $\geq$ increased to 4 Caterpillar 777 rear dump trucks. $For$ road maintenance and mine rehabilitation operations, a used Caterpillar 16E was acquired. The mining fleet now comprises 4 Cat 777 haul trucks, a 180 tonne hydraulic excavator, a 70 tonne hydraulic excavator, an 85 tonne bulldozer, a Cat 16E grader and maintenance and support equipment.

Production & Sales

• Mining of 'wash' commenced on April 28 with the stockpiling of 5,000 lcm of sapphire bearing 'wash'.
• One shift operation of the processing plant has also commenced.
• Operation of a second shift is planed to commence by mid-May 2005.
• Sales of product are expected to commence during May 2005. Discussions with buyers have commenced and are continuing.

Exploration

• In parallel with the construction of mine production hardware and infrastructure, detailed planning and preparation for the exploration of the unexplored paleochannel extensions on the Company's leases and exploration licence application areas was completed and exploration commenced.
• $\bullet$ The initial stage of exploration activity is focussed on extending of the proven reserve within the Company's granted mining leases numbers 70004 and 70005.
• This initial program of work, which includes drilling with down $\bullet$ hole gamma logging and ground magnetics surveying for the purposes of defining the width and position of the sapphirebearing palaeochannel, commenced on April 10. A 0.75 meter diameter Calweld drill rig is being used to sample the 'wash' for definitive grade evaluation outside the currently known boundaries of the proven reserve. A pilot plant to process the large volumes of 'wash' samples produced from the Calweld drilling is being constructed. This plant will mirror the production plant flow sheet.

Ouarterly Report to 31 March 2005

• Exploration activities are planned to continue during May and June 2005.
• Year to date expenditure on exploration has been approximately \$35,000, all of which was incurred during April 2005.

Corporate

• To the end of March 2005, the IPO funds have been applied to retire debt of \$2.0 million, reduce payables by \$0.2 million, plant & development expenditure of \$1.0 million and IPO costs of \$0.1 million. The remainder is being utilised for working capital.
• The Company established new finance lease facilities of \$370,000 to assist in the purchase of plant and equipment.
• A new head office was established in North Sydney.

Profit Forecast Revision

• $\bullet$ The Company's Prospectus issued in December 2004 contained a forecast net profit after tax of \$2.488 million. This forecast result was based on processing commencing in March 2005, on a one-shift basis and at a throughput of 200 lcm per hour.
• As noted above, the Company experienced delays in finalizing $\bullet$ availability of water supply at the processing site. Availability of the water supply has now been resolved by the installation of a 10.9 kilometer under ground pipe line to a water bore.
• The upgrading of the processing plant's jigs section has $\bullet$ increased throughput capacity to an estimated 250 lcm per hour.
• During March and April the Directors' view was that the forecast after tax profit could still be achieved due to the additional throughput that had been added to the plant.
• However, the delay to production startup has reached a point whereby there is now insufficient time to achieve the Prospectus forecast by 30 June 2005. The Directors have revised the forecast net profit after tax downwards to \$1.8 million, a reduction of \$0.7 million.

Ouarterly Report to 31 March 2005

• $\bullet$ This revised forecast is based on conservative assumptions that will be tested during the next two weeks of initial processing. Once processing has settled down during this period, further assessment will be made based on actual throughput statistics.
• The planned commencement of processing operations on 2 shifts per day from mid-May 2005 is estimated will lift throughput to 5,000 lcm per day.

Corporate Information

Directors

CW Duchatel Ted Tzovaras Keith Tavlor Anthony Damianos Robert Coenraads

Chair Director Director Director & CEO Executive Director

Company Secretary

Warren Kember

Registered Office

Level 35, Suite 3504 100 Miller Street North Sydney NSW 2060

Telephone:	+612 89085988
Facsmilie:	+612 89085977
Email:	mail@australismining.com.au
Web site:	www.australismining.com.au

Mailing Address

Level 35, Suite 3504 100 Miller Street North Sydney NSW 2060

Contacts

Anthony Damianos CEO