CODEIFAI LIMITED — Regulatory Filings 2005

Mar 3, 2005

Facsimile. Attn: Ewan Vickery Minter Ellison, Lawyers Fax: 08 82127518

Subject: AUSTRALIS MINING CORPORATION LTD ASIC ENQUIRY LETTER

Junior Mining Operations P/L provided sales figures for 5 years (1999-2003) covering all rough sapphire for all sizes, colours and grades (i.e encompassing the range of large, top quality genstenes through to the very lowly priced corundum). The average price was \$5.08/gram. The mean low average was \$4.76/gram and the Directors' preferred forecast price in the Prospectus is \$4.50/gram.

A. It is important to note that these sapphires were mined from the same placer deposit (palaeochannel) that Australis proposes to mine. Therefore, the sizes, colours and grades are likely to be almost identical.

B. Junior Mining Operations P/L purchased sapphires from Great Northern Mining P/L (from the same palaeochannel that Australis proposes to mine) and resold these sapphires through their overseas marketing organisation. I did not examine the purchase prices that Junior Mining Operations paid for these sapphires.

C. The fluctuation of average prices for sapphires is due to the fact that some grades of 'commercial' sapphire are eagerly sought by Thailand and other overseas buyers. Therefore if one considers just one large parcel of sapphire, say 4.16 million grams or one year's estimated production, Year 1 would show a very high average price because buyers are looking for 'commercial' stones that suit the jewellery trade. Year 2 would show a lesser average price because most of the 'commercial' stone will have been sold and only the highly priced stones, which require individual buyers that are looking for unique and expensive stones remain. The undesirable material (cracked stones and corundum) generally would be sold last of all (Year 3) due to the low price and the extra effort required to sell this material. Because of buyers' preferences and difficulties in selling the 'higher' and 'lower' ends of the parcel, I averaged the price over a 3 year period.

D. It is not possible to establish a reliable present day price for Queensland sapphires in Thailand, because production is now so low there are no readily available sales figures.

In light of the above I am still of the opinion of the reasonableness of the \$4.50/gram for rough sapphire based on an average of at least a three year sales period.

191.05 B.R. Senior (Dr.)