EVOLUTION MINING LIMITED — Regulatory Filings 2004

Jan 27, 2004

WESTONIA MINES LIMITED

QUARTERLY REPORT

FOR THREE MONTHS ENDED

31 December 2003

HIGHLIGHTS

• Successful Big Pit Initiative drill programme resulted in a solidly increased resource base estimate, and there is anticipation of a similar increase in reserve estimates and project mine life.
• The Big Bell mill was purchased and throughput optimization studies near completion.
• Project economics optimization studies for the Bankable ٠ Feasibility Study ("BFS") also near completion.
• Regional nickel exploration indicates targets for drill and followup.
• A Share Purchase Plan raised over \$2.0M to replenish working capital.

Enquiries: Andrew Drummond, Managing Director

WESTONIA GOLD PROJECT

BANKABLE FEASIBILITY STUDY

The Company has made solid progress on the BFS. Its completion was deferred consequent upon the decision to commit to the Big Pit Initiative drilling programme and to seek additional reserves.

Milestones achieved during the quarter and during January 2004, include:

• Completion of the purchase of the Big Bell processing plant. Studies are in progress which aim to determine any changes which should be made to the mill so as to maximise the efficiency of treatment of Westonia ore; and to determine the economically optimal throughput rate.
• Completion of all other requisite technical studies.
• Dismissal of an appeal against the Company's Notice of Intent to resume mining. The Department of Industry and Resources has issued a draft set of conditions under which it would authorise the operation.
• Determination of a new resource estimate for the project consequent upon the Big Pit Initiative drilling. On 12^th January, the Company announced that resources to a depth of 300m, and at a 0.7 g/t cut-off, were estimated at:

	2004 Estimate	2003 Estimate	Percentage Increase (Decrease)
Indicated Resources
Tonnage	18.9 Mt	13.1	44
Grade	1.33 $g/t$	1.40	(5)
Ounces	810,000	590,000	37
Indicated Plus Inferred Resources
Tonnage	24.3 Mt	20.3	20
Grade	$1.33$ g/t	1.40	(5)
Ounces	1,040,000	910,000	14
(at a $0.7$ g/t cut-off)

The Company and the Shire of Westonia have reached agreement on the terms of an option to purchase from the latter the wheat paddock which is covered by M77/110. That paddock is required for establishment of the tailings storage facility and for waste dumps.

Other work in progress includes:

• Determination of a new optimized pit design and estimation of contained reserves.
• Project economics optimization.
• Project financing studies.

BIG PIT INITIATIVE DRILLING

During the Quarter, the Company undertook a 43 hole, 10,800m drilling programme using a combination of diamond and reverse circulation techniques.

It aimed to complete infill drilling below the Base Case pit which the Company was using for completion of its BFS, so as to determine potential for increased project longevity. At depth beyond that pit, the Company's drill database indicated a general continuity of mineralization which has been used previously to estimate resources, but the drill density was insufficient for estimation of mineable resources.

All drill results were released on 22^nd December. Best assay intersections are reproduced below. Figure 1 shows the hole numbers and the approximate positions of the middle intersection of the target Edna May Gneiss for each hole.

Hole No	From (m)	To $(m)$	Width (m)	Grade (g/t)
WDD 104	150	220	70	3.2
WDD 107	268	284	16	2.9
WDD 108	166	188	22	12.6
WDD 109	158	168	10	6.0
	182	242	60	2.9
WDD 111	186	202	16	6.4
	232	242	10	2.9
WDD 113	198	214	16	4.0
WDD 114	24	42	18	$2.7*$
WDD 117	148	156	8	5.5
WDD 123	174	186	12	2.7
WDD 128	304	312	8	8.9
WDD 131	162	172	10	7.4
WDD 132	174	210	36	3.0
WDD 133	162	228	66	4.1
WDD 136	74	86	12	3.6
WDD 137	90	114	24	3.5
WDD 141	116	148	32	2.1
WDD 143	228	238	10	2.0
	256	276	20	6.0

Notes:

• a) All assays are preliminary. Assaying is by a partial extraction technique and a small upwards correction of around 5% will generally be applied during resource estimation.
• b) No cutting has been employed.
• All holes are vertical or inclined towards grid southeast. C)
• True widths will vary between 70% and 90% of downhole width. d)
• The drill intersection denoted by an asterisk (*) is of supergene mineralization within the otherwise e) normally barren Hangingwall Ultramafics. The supergene mineralization appears to be significantly more widespread than had previously been identified and thus has the potential to add oxide ounces to the Company's mineable resource base. This area had previously reported as waste within the optimized pit designs.

THE DEEPS INITIATIVE

Further work on the Big Pit Initiative drill programme was deferred during the quarter. When pit optimization is completed, that drilled mineralization not captured by the pit will be assessed for its potential as underground ore.

NICKEL

Big Pit Initiative programme drilling near the original nickel sulphide intersection at the mine site did not intersect any further nickel occurrences.

In the Jilbadjie area (Figure 2, and Westonia Mines can earn 65%), maglag and conventional soil geochemistry surveys have continued. Discrete anomalous systems are being defined. To date, three anomalies have been identified, summarized as follows:

• 1. 1000m x 250m, peak value 640ppm Ni.
• 1. 500m x 200m, open in one direction, peak value 930ppm Ni.
• 1. 600m x 250m, open in one direction, peak value 3510ppm Ni.

The nickel-anomalous areas are associated with anomalous copper values and in places with anomalous PGE values, indicating potential for nickel sulphide mineralization. Infill geochemical sampling is in progress to further evaluate these anomalies and drilling follow-up will be required.

An extensive regional copper database has been received and is being assessed, in consideration with the aeromagnetic data, to generate nickel targets. An historic report of secondary nickel in ultramafics near Bodallin is being pursued.

REGIONAL GOLD EXPLORATION

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

SHARE PURCHASE PLAN

Subsequent to the end of the quarter, the Company raised \$2,005,000 in a Share Purchase Plan, which was underwritten to \$2.0M by Euroz Securities Limited.

At a share price of 40¢, 5,012,500 shares were issued. The purpose was to recover the majority of the cost of the Big Bell mill purchase so that the Company has adequate levels of working capital.

Andrew Drummond Managing Director

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.

Appendix 5B

Rule 5.3

Mining exploration entity quarterly report

Current quarter

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") 31 DECEMBER 2003

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 (b) development (c) production	(1,310)	(2,291)
	(d) administration	(110)	(353)
1.3	Dividends received
1.4	Interest and other items of a similar nature received	51	126
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, 369)	(2,518)
1.8	Cash flows related to investing activities Payment for purchases of:
	(a) prospects (b) equity investments
1.9	(c) other fixed assets Proceeds from sale of:	(2,820)	(2,939)
	(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)
	Net investing cash flows	(2,820)	(2,940)
1.13	Total operating and investing cash flows (carried forward)	(4, 189)	(5,458)

⁺ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows (brought forward)	(4,189)	(5,458)
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	44	66
	Net financing cash flows	44	-66
	Net increase (decrease) in cash held	(4,145)	(5,392)
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	5.402	6,649
1.22	Cash at end of quarter	1,257	1,257

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
1.24	Aggregate amount of loans to the parties included in item 1.10	$\overline{\phantom{a}}$

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

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

Estimated cash outflows for next quarter

		\$A'000
4.1	Exploration and evaluation	200
4.2	Development	300
	Total	500

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	436	(73)
5.2	Deposits at call	323
53	Bank overdraft
5.4	Other (provide details) Commercial Bills	498	5,475
	Total: cash at end of quarter (item 1.22)	1.257	5,402

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	None
6.2	Interests in mining tenements acquired or increased	None

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.

⁺ See chapter 19 for defined terms.

Appendix 5B Mining exploration entity quarterly report

		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
	(description)
7.2	Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases through returns of
	capital, buy-backs,
	redemptions
7.3	*Ordinary
	securities	96,181,352	96,181,352
7.4	Changes during
	quarter (a) Increases	219,058	219,058	20 cents	20 cents
	through issues
	(b) Decreases
	through returns of
	capital, buy-backs
7.5	*Convertible debt
7.6	securities Changes during
	quarter
	(a) Increases
	through issues
	(b) Decreases
	through securities
7.7	matured, converted 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
		27,448,001	27,448,001	\$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	219,058	219,058	\$0.20	20/8/06
	quarter
7.11	Debentures
7.12	(totals only) Unsecured notes
	(totals only)

⁺ See chapter 19 for defined terms.

Compliance statement

• 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.

"John Hannaford" Date: 28 January 2004 Sign here: Company Secretary

Print name: JOHN HANNAFORD

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.
• $\sqrt{2}$ 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.
• The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: 4 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.