EVOLUTION MINING LIMITED — Interim / Quarterly Report 2003

Oct 28, 2003

29 October 2003

Company Announcements Platform Australian Stock Exchange Limited 20 Bond Street SYDNEY NSW 2000

QUARTERLY REPORT - 30 SEPTEMBER 2003

Please see attached Quarterly Report for the period ended 30 September 2003.

Yours sincerely

"John Hannaford"

JOHN HANNAFORD Company Secretary

QUARTERLY REPORT FOR THREE MONTHS ENDED 30 September 2003

HIGHLIGHTS

• Big Bell mill to be purchased.
• Bankable feasibility study ("BFS") to be completed in $\bullet$ December quarter.
• Stage One Deeps Initiative drilling returns encouraging $\bullet$ results.
• Further nickel intersections adjacent to the mine site nickel $\ddot{\bullet}$ discovery.
• Promising start to regional gold and nickel exploration. $\bullet$
• Additional drilling begins to test potential to deepen the $\bullet$ BFS pit.

WESTONIA GOLD PROJECT

BANKABLE FEASIBILITY STUDY

On 24 October, the Company announced that it had agreed in principle, subject to contract, with a subsidiary of Harmony Gold (Australia) Pty Ltd to purchase the Big Bell gold processing plant. Inclusive of some other equipment, sale price will be \$2.45M.

The plant is large, having treated 3Mtpa, and is in good condition. It operated until July 2003. With the addition of a secondary crusher, it will be able to treat at least 2.5Mtpa of hard-rock Westonia ore.

An earlier option to acquire the smaller Mt Pleasant mill, near Kalgoorlie, was not exercised when it became apparent that a larger throughput capacity would enhance the economics of a renewed gold mining and processing operation at Westonia.

With acquisition of the Big Bell plant, it will now be possible to finalise the bankable feasibility study.

During the quarter a final drilling program was completed which has enabled new estimates on the Westonia resource to be undertaken. The style of mineralisation at Westonia, and an inability to drill some key zones immediately under the old pit, have rendered the resource estimation processes more lengthy than had been anticipated.

The resource estimates will be used for the BFS pit design and ore reserve estimation. The BFS is expected to be completed during the December quarter, as all other technical work has been completed.

A Notice of Intent to recommence mining operations was submitted to the WA Government, and was recommended for approval. An objection has been lodged and is being assessed by the Department of Environmental Protection. The Company is confident of the outcome.

NEW DRILLING PROGRAM

While resources can be estimated to a depth of 300m, the present drill density is only sufficient to enable a BFS pit design to a maximum 180m depth.

In mid-October the Company committed to a new drilling program. Up to 44 RC and diamond holes will be drilled to infill between current drill holes. Drilling will cover the depth range between 200m and 320m. This program is not part of the BFS and will not delay its finalisation. It aims to assess the potential for a longer-life open pit operation than that considered for the BFS. However, if appropriate, the results may assist in the final BFS pit design.

PROJECT FINANCING

As the BFS has advanced, there has been continued dialogue with potential project financiers. This will be accelerated upon BFS completion.

THE DEEPS INITIATIVE

Stage One of the Deeps Initiative gold drilling program has been completed and the results were reported on 13 October. During July and August, five diamond holes (Figure 1) were completed for a total of 2,620 metres of drilling. This program was designed to:

• test for gold mineralisation within the target Edna May Gneiss ("EMG") between 600 700 metres depth;
• test the model that the historically productive gold reefs which near the surface occur east of the main Edna May Reef may at depth be located to its west;
• test relatively shallow EMG below the western section of the proposed open pit.

Assay results from the five drill holes are reported in Table 1 and holes are depicted in plan and on sections in Figures 2 and 3.

Diamond Drill Hole No.	From - To (metres downhole)	Final assay $(g/t \text{ gold})$
WDD 096	476 - 478.5	2m @ 3.9
	480 - 482	2m @ 6.8
	$526 - 528$	2m @ 5.5
	$538 - 540$	2m @ 3.2
	$546 - 548$	2m @ 3.3
	$588 - 602$	14m @ 2.61
includes	$588 - 590$	2m @ 7.6
includes	$600 - 602$	2m@4.3
	632.7 - 633.6	0.9m @ 51.4
	$649.5 - 652$	2.5m @ 21.1
WDD 097	189 - 193	4m @ $5.2^{#}$
	$532 - 534$	2m @ 3.1
	608.4 - 614.2	5.8m @ $21.6$
WDD 098	396.4 - 397.2	$0.8$ m @ $8.4$
WDD 099	281 - 282.5	1.5m @ 20.8
WDD 100	372 - 374	2m @ 3.8
	406 - 408	2m @ 7.4

Table 1: Deeps Initiative Diamond Drill Assay Results

Assay results based on a cut-off of 3.0 git gold over a 2.0m downhole length # hangingwall to EMG

DISCUSSION

The objectives for the Stage One drilling program were successfully met.

WDD 099 and WDD 100 were designed to test the EMG in an area northwest of any previous deep drilling. The EMG intersected in both holes was not strongly mineralised, however a new area has been defined for follow-up drilling. The grade and distribution of the gold is similar to that found at shallower depths and in the proposed base case open pit. The drill intersections highlight the potential to delineate additional open pit resources below that base case pit in due course.

Drill holes WDD 096, WDD 097, WDD 098 and WDD 099 each intersected a reef at the contact between the EMG and the hangingwall units. That reef presents a new target which is well to the west of previous targets. It also occurs closer to surface than is usual as it is at the top (hangingwall) contact of the moderately dipping (average 45°) EMG, whereas most of the gold mineralisation is usually concentrated nearer to the deeper footwall contact.

It assayed 20.8g/t over 1.5m from 281m in WDD 099 and 2.4g/t over 1.5m from 294.3m in WDD 100.

WDD 098 was drilled to test the model that the South Reef system exists to the west of the Edna May Reef at depth. However, the hole passed into footwall rock units after about 20 metres of drilling, most likely as a result of a major fault system.

WDD 096 targeted the concept of depth extensions of the Middle and Consolidated Reef systems to the west of the Edna May Reef. It was found to be well mineralised over the 190 metre intersection of EMG, with the contact reef grading $2m$ @ 3.8 g/t gold. At shallower depths, the zone immediately west of the Edna May Reef is usually not well mineralised, so the strength of mineralisation in WDD 096 has highlighted a major new target for follow-up drilling and has considerably broadened the potential to delineate future mineable resources.

NICKEL

WEZ has previously reported the discovery of nickel sulphide mineralisation (Figure 4) adjacent to the planned gold open pit (WRC 994: 16m @ 1.8% nickel from 44 - 60m; WRC 999: 10m @ 1.6% nickel from 30 - 40m (oxidised)). Follow-up RC and diamond drilling was completed during the Quarter and announced on 6 August.

Three holes have been drilled (WRC 1006 - 1008) around WRC 994, and a previously drilled hole, WRC 992, has been assayed (Figure 5). The extent of the mineralization has been enhanced and confirmed as magmatic. The nickel assay results are as follows:

WRC 992: 13m @ 0.7% from 49 - 62m WRC 1006: 8m @ 0.6% from 36 - 44m WRC 1007: 8m @ 0.9% from 56 - 64m WRC 1008: 12m @ 0.7% from 36 - 48m

A diamond twin of WRC 994 has indicated that the sulphide mineralization is in a fault-bounded block. The sulphides are very fine and have not returned a geophysical response.

WRC 999 was followed up by WRC 1004 and WRC 1005. The holes are situated approximately 20 metres north and northwest of WRC 999, respectively. They returned oxidised nickel mineralization, now considered lateritic and not requiring further follow up, as follows:

WRC 1004: 4m @ 0.8% from 28 - 32m

WRC 1005: 12m @ 1.0% from 20 - 32m

All drilling of the ultramafic units at Westonia is now routinely assayed for nickel.

At West Westonia (Figure 5), soil geochemistry and ground electrical geophysics defined a target near the old Weston's Reward gold mine. Drilling found the anomalism was associated with gold, rather than nickel, mineralization.

At Jilbadjie, extensive soil sampling programs have thus far indicated three strongly anomalous Ni zones which will require follow-up.

REGIONAL GOLD EXPLORATION

WEZ has been compiling a GIS database from all available sources. Interpretation of it has also begun and targets for follow-up work are being successfully generated.

CORPORATE

The Company lodged its Annual Report with the ASX on 24 October.

The Company's Annual General Meeting will be held at 10:30am on Tuesday 25 November.

A presentation will be made to the Mining 2003 Resources Convention on October 30. A copy of the text will be posted on the Company's website on that date.

J

Andrew Drummond Managing Director

Competent Person Declaration

The information on mineralisation in this report accurately reflects information prepared by competent persons (as defined by the Australasian Code of Reporting of Identified Mineral Resources and Ore Reserves). It is compiled by A.J. Drummond, an employee of the Company who is a Fellow of The Australasian Institute of Mining and Metallurgy with more than requisite experience in the fields of activity in which he is reporting.

$\vec{a}$ E
Si $MAM -$ Fax: 9246 3202 $-$ Tel: 9246 3242 Resources

Appendix 5B

Rule 5.3

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

WESTONIA MINES LIMITED

$ABN$

74 084 669 036

Quarter ended ("current quarter") 30 SEPTEMBER 2003

Current quarter

Year to date

Consolidated statement of cash flows

Cash flows related to operating activities

Cash flows related to operating activities		\$A'000	\$A'000
1.1	Receipts from product sales and related debtors
1.2	Payments for (a) exploration and evaluation	(981)	(981)
	(b) development
	(c) production (d) administration	(243)	(243)
1.3	Dividends received
1.4	Interest and other items of a similar nature
	received	75	75
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(1, 149)	(1,149)
	Cash flows related to investing activities
1.8	Payment for purchases of:
	(a) prospects
	(b) equity investments
	(c) other fixed assets	(119)	(119)
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 (provide details if material)	(1)	(1)
	Net investing cash flows	(120)	(120)
1.13	Total operating and investing cash flows (carried forward)	(1,269)	(1,269)

$\div$ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought forward)	(1,269)	(1,269)
1.14 1.15 1.16 1.17 1.18 1.19	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other - Costs associated with share issue	22	22
	Net financing cash flows	22	22
	Net increase (decrease) in cash held	(1, 247)	(1,247)
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	6.649	6,649
1.22	Cash at end of quarter	5,402	5,402

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	63
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions

Payments to director controlled entities for the provision of consultancy services and directors fees on commercial terms.

Non-cash financing and investing activities

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

None

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

None.

⁺ See chapter 19 for defined terms.

Financing facilities available
Add notes as necessary for an understanding of the position.

		' Amount available \$A'000	Amount used \$A'000
$-31$	Loan facilities		-
3.2	Credit standby arrangements		$\overline{\phantom{a}}$

Estimated cash outflows for next quarter

		\$A'000
-4.1	Exploration and evaluation	800
4.2	Development	2,450
	Total	3,250

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current quarter \$A'000	Previous quarter \$A'000
5.1	Cash on hand and at bank	(73)	662
5.2	Deposits at call		10
5.3	Bank overdraft
5.4	Other (provide details) Commercial Bills	5,475	5.977
	Total: cash at end of quarter (item 1.22)	5,402	6.649

Changes in interests in mining tenements

		Tenement	Nature of	Interest at	Interest at
		reference	interest	beginning	end of
			(note (2))	of quarter	quarter
6.1	Interests in mining tenements	P77/2777	Option to	Option to	Níl
	relinquished, reduced or lapsed	M77/718	$\frac{1}{2}$ acquire	acquire?	Níl
		M77/842	$3100\%$	${100\%$	Níl
6.2	Interests in mining tenements acquired or increased	None

$\div$ See chapter 19 for defined terms.

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 price per	Amount paid up
				security (see	per security (see
				note 3) (cents)	note 3) (cents)
7.1	Preference
	*securities
7.2	(description) Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns of
	capital, buy-backs,
	redemptions
7.3	Ordinary securities
		95,962,294	95,962,294
7.4	Changes during
	quarter
	(a) Increases	108,509	108,509	20 cents	20 cents
	through issues
	(b) Decreases
	through returns of capital, buy-backs
7.5	Convertible debt
	securities
7.6	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through securities matured, converted
7.7	Options			Exercise price	Expiry date
	(description and	800,000		\$0.30	31/6/05
	conversion factor)	700,000		\$0.40	31/5/06
		500,000		\$0.30	30/9/04
		27,667,059	27,667,059	\$0.20	20/8/06
		120,000 120,000		\$0.36 \$0.43	17/7/06 17/7/06
		120,000		\$0.50	17/7/06
7.8	Issued during	120,000		\$0.36	17/7/06
	quarter	120,000		\$0.43	17/7/06
		120,000		\$0.50	17/7/06
7.9	Exercised during
7.10	quarter Expired during	108,509	108,509	\$0.20	20/8/06
	quarter
7.11	Debentures
	(totals only)
7.12	Unsecured notes
	(totals only)

$\div$ See chapter 19 for defined terms.

Compliance statement

• $\mathbf{1}$ 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).
• $\overline{2}$ This statement does /does not^* (delete one) give a true and fair view of the matters disclosed.

Sign here:	"John Hannaford"	Date: 28 October 2003
	Company Secretary

Print name: JOHN HANNAFORD

Notes

• Í 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.
• $\overline{2}$ 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 percentage 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 $6.2$ .
• $\overline{3}$ 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.
• $\overline{4}$ 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.

⁺ See chapter 19 for defined terms.