EVOLUTION MINING LIMITED — Regulatory Filings 2004

Oct 17, 2004

WESTONIA MINES LIMITED

QUARTERLY REPORT FOR THREE MONTHS ENDED 30 SEPTEMBER 2004

RESERVES AND RESOURCES

In the June Quarterly Report, the Company announced increases in the estimates of resources and reserves used in its Bankable Feasibility Study ("BFS"). Those improvements were due to a recognition that earlier assaying methods had under-estimated the gold grades.

In consequence of that higher grade, it was announced on August 19 that Westonia's independent mining consultants had optimized and designed a new pit. The Probable Reserve estimate within that pit, using the cost structures in the BFS, was increased to:

15.6 Mt @ 1.37 g/t for a contained 687,000 ounces.

Compared to BFS estimates of reserves, tonnes were up 22%, grade up 5% and contained ounces up 30%.

The new pit also contained an Inferred Resource of an additional

1.4 Mt $@$ 1.42 g/t for 64,000 ounces

The Company will immediately drill out these Inferred Resource positions when the old open cut is dewatered. The aim will be to upgrade them to reserves within the new pit design thus increasing recovered gold and lowering the unit costs of production.

Conversion of Inferred Resources to ore and/or a future gold price rise could allow design of a larger pit and improvements in project economics.

The Company also has previously announced that it anticipates recovering a further 42,000 ounces from treatment of existing low grade oxide dumps.

Westonia Mines Limited: ABN 074-084-559-036
9. Havelock Street, West Perth, WA 6000, Telephone: +61-8-9221-9088; Facsimile: +61-8-9321-8804
4. SX Code: Market Overstonianines.com.av. Web.sto...nov.westonianines.com.av. Canaging City

COST ESTIMATES

In the August $19^th$ announcement, the Company gave the following cost estimates:

Average cash costs, years 1-6: Capital costs, construction and contingency Pre-production mining and working capital

420 AUD/oz \$35.3M \$8.0M

Costs were estimated using indicative tender pricings from contractors and input from the Company's consultants.

During the Quarter, tender documents were issued for the mining, processing plant and power contracts. In general, the initial tenders have indicated higher costs than those submitted by the same contractors earlier this year for the BFS. It is apparent that increases in steel and oil prices, higher labour costs due to a shortage of skilled workers, increased risk aversion and higher contractor profit margins have all contributed.

The Company is critically reviewing the tenders received, and in light of the altered cost structure, is examining potential for re-optimising the pit design and mill construction together with other initiatives to enhance project economics. It is too early in this review to give an accurate quantification of the outcomes.

PROJECT FINANCING

Negotiations on debt finance continued and the bank's consultants have been reviewing all aspects of the Project's technical database, the mine planning and the financial modelling. The process has been taking longer than anticipated due to the present heavy workload on the consulting industry.

Once the new cost structures have been estimated and debt capacity established, the Company will be in a position to announce details of its plans for project financing. Such financing will of course be subject to the Board's determination of an appropriate return on investment at the then AUD gold price.

Maria Santana (

REGIONAL EXPLORATION

The Company has maintained a low-key level of exploration for both gold and nickel during the Quarter while it concentrated its efforts on the Westonia Gold Project. Nonetheless, the Quarter's results are encouraging and numerous areas have been defined for follow-up.

Andrew Drummond Managing Director

18th October 2004

Competent Person Declaration

The information on mineralization 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.

William Constitution

Appendix 5B

$Rule 5.3$

Mining exploration entity quarterly report

$\sqrt{ }$

Current quarter

Name of entity

WESTONIA MINES LIMITED

ABN

74 084 669 036

Quarter ended ("current quarter") 30 SEPTEMBER 2004

Year to date

Consolidated statement of cash flows

Cash flows related to operating activities		\$A'000	\$A'000 (3 months)
1.1	Receipts from product sales and related debtors
1.2	Payments for (a) exploration and evaluation (b) development	(496)	(496)
	(c) production
	(d) administration Dividends received	(285)	(285)
1.3 1.4	Interest and other items of a similar nature
	received	20	20
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (GST refunds received)	27	27
	Net Operating Cash Flows	(734)	(734)
1.8	Cash flows related to investing activities Payment for purchases of:
	(a) prospects	(10)	(10)
	(b) equity investments
	(c) other fixed assets	(21)	(21)
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
	Net investing cash flows	(31)	(31)
1.13	Total operating and investing cash flows (carried forward)	(765)	(765)

1.13	Total operating and investing cash flows (brought forward)	(765)	(765)
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 Costs of capital raisings	1,000	1,000
	Net financing cash flows	1,000	1,000
	Net increase (decrease) in cash held	235	235
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	1.464	1.464
1.22	Cash at end of quarter	1,699	1,699

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	42
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions

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

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated 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.

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

		Amount available \$A'000	Amount used \$A'000
-3, 1	Loan facilities	AM.	Mark
3.2	Credit standby arrangements		Mars

Estimated cash outflows for next quarter

		\$A'000
4.1	Exploration and evaluation	160
4.2	Development	800
	Total	960

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 SA'000	Previous quarter \$A'000
5.1	Cash on hand and at bank	504	718
5.2	Deposits at call
5.3	Bank overdraft
5.4	Other (Commercial Bills)	1,195	746.
	Total: cash at end of quarter (item 1.22)	1,699	1,464

Changes in interests in mining tenements

		Tenement reference	Nature of interest (note(2))	Interest at beginning of quarter	Interest at end of quarter
-6.1	Interests in mining tenements relinquished, reduced or lapsed	P77/3300	Option to acquire	$100\%$	Nil
6.2	Interests in mining tenements acquired or increased

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	Issue price per	Amount paid up per
			quoted	security (see note 3)	security (see note 3)
				(cents)	(cents)
7.1	Preference
	securities
	(description)
$7.2\,$	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through returns of
	capital, buy-backs,
	redemptions
7.3	Ordinary
	securities	105,193,852	105, 193, 852
7.4	Changes during
	quarter
	(a) Increases
	through issues	4,000,000	4,000,000	25 cents	25 cents
	(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	31/5/05
	conversion factor)	700,000		\$0.40	31/5/06
		120,000		\$0.36	17/7/06
		120,000		\$0.43	17/7/06
		120,000		\$0.50	17/7/06
		27,448,001	27,448,001	\$0.20	20/8/06
		105,000		\$0.36	27/4/07
		105,000		\$0.42	27/4/07
	Total on Issue	29,558,001	27,448,001
7.8	Issued during
	quarter	$\tilde{\phantom{a}}$
7.9	Exercised during
	quarter
7.10	Expired during
	quarter	500,000		\$0.30	14/9/04
7.11	Debentures
	(totals only)
7.12	Unsecured notes
	(totals only)

Compliance statement

• $\mathbf{I}$ 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* give a true and fair view of the matters disclosed.

"Mark Churchward" Date: 18 October 2004 Sign here: Company Secretary

MARK CHURCHWARD Print name:

Notes

• $\mathbf{1}$ 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.
• $\overline{2}$ 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.
• 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.