GREENWING RESOURCES LTD — Capital/Financing Update 2011

Jul 19, 2011

ABN 31 109 933 995

20 July 2011

The Manager Companies Company Announcements Australian Securities Exchange Exchange Centre 20 Bridge Street SYDNEY NSW 2000

Dear Sir

Introduction

Bass Metals Ltd (ASX:BSM) wishes to provide an update on the Company’s recent corporate and operational activities. This update provides an insight into what the Directors consider to be a sound business plan with strong growth prospects as well as commenting on the technical and financial issues that recently impacted the Company’s operations. It also outlines the measures being implemented by management to underpin the future of the business and concludes with some exciting recent exploration results.

Synopsis

The Bass Metals business is focussed on three key assets which are the main value drivers in the Company:

• The producing Hellyer Mine Project (HMP),

• • A major gold-silver resource,

• Highly prospective exploration acreage.

The strategy has always been for the HMP to generate the cash flow to ensure a high level of systematic exploration to deliver further discoveries, and adequate funding to complete the gold feasibility study.

Clearly, recent technical issues affecting the HMP have impacted this strategy and the Company is currently seeking additional funding to realign HMP cash inflows and outflows caused by production shortfalls and delays, and to provide the project with an adequate working capital buffer.

Management has completed a revised HMP plan and corporate cash flow which is summarised in Table 1 below.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Table 1: Cash Flow Forecasts*

Table 1: Cash Flow Forecasts*
	FY2012 $M	FY2013 $M	Total-2 years $M
HMP Receipts*	93.00	48.14	141.14
HMP Costs (all-other than debt principle)	(59.45)	(23.31)	(82.75)
Debt	(13.60)	-	(13.60)
Sub total	19.95	24.83	44.79
Corp. Costs	(4.14)	(4.14)	(8.28)
Exploration & Gold Feasibility Study	(6.45)	(6.00)	(12.45)
Fundraising	23.70	-	23.70
Net Movement	33.06	14.69	47.78

* Metal price assumptions are at “current levels”; zinc- US$2,293/t, lead – US$2,577/t, copper – US$9,031/t, silver US$37/oz and gold – US$1,538/oz with AUD:USD 1.06. Details on production assumptions are provided in the mining and processing sections

Key points to note in this estimate of cash flows include:

• The HMP is estimated to generate a $45 million operating surplus in 18 months, net of the $13.6 million primary debt.

• Technical and operating cost assumptions are considered to be conservative as they are based on actual performances achieved to date.

• Does not include any upside from Fossey East resources which conceptually could contribute a further $20 million in operating surplus; and

• Assumes new funding to a level of $23.7 million.

Management considers this to be a conservative plan with potential to deliver significant upside.

The HMP is now a significantly lower risk project on the basis that:

• The Fossey Mine is now largely developed, with mining planned to focus solely on the updated high-grade massive base metal sulphide zones.

• No lower grade incremental ore is included.

• Will benefit from the dewatering system upgrades in progress.

In addition, the Company’s other assets - such as exploration drilling around Fossey, Fossey East and the new McKay discovery, as well as the ongoing gold testwork results - have continued to deliver on their potential. Therefore, whilst there has clearly been a production set-back, that manifested very rapidly, the high-grade nature of its mineral resources coupled with the high prospectivity and the determination of the work force means that Bass Metals is well positioned to rebuild that lost value and realise its growth potential.

The Company is in advanced discussions with several parties seeking to raise $25 million (before costs) of new capital potentially through two tranches of Convertible Notes with the funds to be used to:

• Manage a short-term working capital deficit largely associated with the HMP ($8 million).

• Maintain a minimum working capital position of $9 million.

• Provide adequate funding of approximately $6.5 million over the next 12 months to sustain a large scale exploration and feasibility study program.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846

www.bassmetals.com.au

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The secured lender to the project, RMB Australian Holdings Ltd is supportive of the measures being undertaken by the Company and subject to the completion of the above financing has not requested advancing the scheduled repayments of the outstanding $13.6 million debt which is due to be repaid by 31[st] December 2012.

Given there is a need to restore investor confidence, it is important to reconcile the rapid change in the Company’s financial position with the underlying technical events. Until late May, the HMP was forecast to become cash flow positive in the June quarter 2011, and this forecast appeared reasonable until late May-early June when two adverse and unforseen technical issues arose; a persistent grade short fall from the mine and an extraordinarily high water inflow into the mine on intersecting a local fault structure. Since that time infill grade controlling drilling has been completed, the ore body model has been revised and the pumping capacity of the operation has been significantly upgraded. The impact of these events on the short term cash flow position has been to:

• Put mine development, which access the ore, further in arrears by 1 month.

• Delay the milling campaign schedule by 1 month which defers receipt of $8 to $10 million.

• Lower revenue by $2 to $4 million due to the reduced grades causing lower concentrate production.

• Increase costs, principally for dewatering and ground support by $2 to $3 million.

This resulted in a mismatch between timing of revenue and costs that rapidly led to an overall cash shortfall of $12 to $17 million in July as compared to the forecasts prepared in mid May.

Looking longer-term, the more conservative and updated mine plan has reduced the financial returns of the Fossey Mine compared to the original forecasts from approximately $75 million to $45 million, albeit at a lower risk profile and higher grade. A separate conceptual study evaluating mining and processing the Fossey East resource indicates a possible operating surplus of approximately $20 million (Refer Attachment 2 for concept parameters). Infill drilling within the high-grade portion of the Fossey East Resource is yielding positive, high-grade intercepts. The discovery of the new McKay Zone also demonstrates the potential for exploration of the Hellyer-Fossey trend to deliver additional discoveries.

The overall corporate strategy of the Company is to:

1. Deliver the forecast cash flows from the Fossey mine and bring Fossey East into the mining schedule as quickly as possible.

2. Increase exploration activities to increase mine life and underpin long-term cash flow.

3. Initial focus on the new McKay discovery and Fossey East Extensions.

4. Conversion of the existing Que River and Hellyer resources into reserves.

5. Systematic testing of new targets in wake of new discoveries in unexpected geological positions.

6. 1. Complete detailed study of the Gold Recovery Project to a bankable standard as quickly as possible.

The prime objective is to restore and grow shareholder value; the Company aims to make these activities self funding and reduce the need for further equity issues.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Technical Discussion

The board and management of Bass Metals consider that the Company has robust, strong production plans to support a series of very exciting growth opportunities. The remainder of this report comprises technical description and commentary on the issues raised above; namely the HMP operations and recent exploration success. Note this commentary is consistent with presentation material also being lodged on ASX which contains some additional maps and diagrams.

1. HELLYER MINE PROJECT

1.1 Mine Plan

An updated mine plan is currently being finalised which generates a strong cash return at good margins focussing only on the high-grade massive base metal sulphide portions of a revised geological model. It has additional expenditure allocated to ground support and dewatering services and assumes a less aggressive ore production rate.

Resource Model

The Fossey Mine development plan was based on an Ore Reserve defined by diamond drill holes at a nominal 25 metre spaced centres with the intention of infill drilling to 12.5 metre spaced centres from underground to provide the level of detail required for final stope designs. This is the same strategy employed at the adjacent Hellyer and Que River deposits, and was endorsed by Bass technical team and independent consultants.

In late May-early June several adverse and unforseen events occurred concurrently. The infill drilling program was completed and systematic interpretation of the data commenced. However, as reported previously, results from the first milling campaign to continuously process a large proportion of stoping ore were indicating that the planned head grade from blending several stopes was persistently underperforming. Over the ensuing weeks some improvements in the head grade were achieved by changing the ore production focus away from one “suspect” stope.

Since that time, the majority of the infill-drilling data has been interpreted and all assays received, resulting in a modified interpretation of the outline of the high-grade massive base metal sulphide portion of the Fossey Resource. This is illustrated in Figure 1 which depicts the new modified (red) resource shape at a (Pb+Zn)>5% compared to the original (orange outline). The original drilling density did not identify continuous internal zones of low grade baritic alteration through the resource; the hand specimen scale textures and drill data indicated irregular zones of barite overprinting the massive sulphide and these zones formed part of a larger tonnage and lower grade resource on which the Fossey ore reserve was based.

Therefore as stoping progressed from west to east without recognising this continuous barren to low grade interval, high-grade ore was blasted with the low-grade material resulting in mixing and the unexpectedly low head grade performance.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Figure 1: Fossey Resource Model – Cross section with old and new resource outlines.

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The new Mineral Resource estimate is presented in Table 2 and is reported in accordance with the JORC Code, together with a Competent Persons Statement below with details of the estimation technique provided in Attachment 1. The estimate includes virgin unmined resource, mined resource and remaining resource as at 30[th] June 2011.

Table 2: Fossey Mineral Resource Estimate (at a 5% Pb+ Zn cut-off) as at 30[th] June 2011

as at 30th June 2011
CATEGORY	'000 TONNES	Cu %	Pb %	Zn%	Ag g/t	Au g/t
Measured Resource	48	0.5	7.6	14.0	140	2.7
Indicated Resource	41	0.4	9.0	14.8	209	2.9
Inferred Resource	1	0.1	1.7	4.3	93	2.1
MINED Measured, Indicated and Inferred Resource	90	0.5	8.2	14.3	171	2.8
Total Measured Resource	286	0.6	7.4	14.2	137	2.9
Total Indicated Resource	108	0.4	6.8	11.0	120	1.8
Total Inferred Resource	66	0.3	4.7	8.4	94	2.1
REMAINING Measured, Indicated and Inferred Resource	460	0.5	6.9	12.6	127	2.5

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Measured Resource	335	0.6	7.5	14.2	137	2.9
Indicated Resource	150	0.4	7.4	12.0	145	2.1
Inferred Resource	65	0.3	4.7	8.4	94	2.1
VIRGIN Measured, Indicated and Inferred Resource	550	0.5	7.1	12.9	134	2.6
Original Fossey Resource estimate ASX release 18th Sept 2009 *	790	0.4	5.8	9.9	137	2.5
Change in Resource (%)	-30	24	23	30	-2	3
Change in contained Metal (%)		-14	-15	-9	-32	-29

Note: Small rounding errors may occur

*- 10kt of minor lenses not included in the new estimation have been removed to allow a direct comparison between the two estimates.

There are several fundamental changes that impact on the overall mine plan. The tonnage is down by 30% but the lead and zinc grades are up by 25% on a combined basis. The overall result is that the contained lead and zinc is reduced by 12% and precious metals are reduced by 30%, the latter reflecting relatively higher precious metal grades (and lower base metal grades) in the baritic material.

Reconciliation work based on the current mine voids to late June 2011 and ore processed to date indicates tonnages and grades of all metals to be within a range of 10%, which is considered to be a very close reconciliation supporting the updated resource model.

This creates a more robust mine plan with higher grades based on detailed data, albeit with a loss of contained metal. There is some upside with higher head grades having a positive impact on mill performance and the remaining potential to still extract some baritic mineralisation on an incremental ore basis – however this will be undertaken opportunistically and not included in an ore reserve.

Revised Ore Reserve

A revised Ore Reserve has been estimated and is summarised in Table 3 below. The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources used to produce the Ore Reserves. The Ore Reserve is reported in accordance with the JORC code together with a Competent Persons Statement below with details of the estimation technique provided in Attachment 1.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Table 3: Revised Fossey Ore Reserve estimate (at a 5% Pb+ Zn cut-off) as at 30 June 2011

Category	Tonnes	Copper	Lead	Zinc	Gold	Silver
	KT	%	%	%	g/t	g/t
Proven	269	0.5	6.7	12.9	2.6	123
Probable	170	0.2	3.4	5.6	1.5	71
Reserve	439	0.4	5.4	10.1	2.2	103
Underground Stock(Proven)	37	0.3	3.3	5.7	1.9	83
Surface Stockpiles (Proven)	8	0.3	5.1	9.1	2.3	137
Total Reserve	495	0.4	5.3	9.7	2.2	103

The updated mine plan takes into account that mine productivity to date has been adversely impacted by technical issues associated mainly with water inflow and hence all technical parameters assume that the water situation is not going to improve, will remain high and potentially inflow rates could increase further. On this basis the resultant mine budget that inputs to the corporate cash flow includes:

• An extra $2 million of capital to further upgrade the mine dewatering system and ancillary services with sufficient capacity and flexibility to also handle possible Fossey East dewatering requirements.

• Lower the ore production rate to a monthly average of approximately 30,000 tonnes (compared to the previous rate of 40,000 tonnes per month).

• Higher operating costs now assessed at $84/tonne of ore compared to $42/tonne previously. Approximately 60% of this increase is from additional costs, whilst the balance is a result of less tonnes over which to allocate the mine fixed costs, which comprise 60 to 70% of the total mine cost.

There is scope within this operating plan to improve on these assumptions, but management regards these as appropriately conservative and achievable.

1.2 Processing

The performance of the 1.5mtpa capacity Hellyer Mill has continued to improve with each campaign in terms of both availability and concentrate production. This performance is reflected in Figures 2 – 5 which are summaries of zinc, lead and copper concentrate production. These figures (for the June campaign) are now fully reconciled metallurgically following the depletion of all stock tanks and concentrate filtering. Previous figures reported as part of operational updates were estimates subject to this final reconciliation.

Operational assumptions in the production plan are based on actual performance to date in terms of throughput, costs and recoveries. As an example, refer to Table 4 below, which summarises actual recoveries achieved progressively to date. These are final figures based on the final metallurgical reconciliations. The “Recovery-Budget” column illustrates the assumed recoveries in the mine budget.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Figures 2 to 5: Graphical Summaries of Mill Performance per Campaign

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16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Table 4: Metallurgical Recoveries

Metal	Target Concentrate	Recovery-Actual	Recovery-Actual	Recovery-Actual	Recovery-Budget	Recovery-Budget
		June %	June Qtr %	PTD %	Jul- Dec2011 %	2012 %
Zn	Zn	76	73	65	70	75
Pb	Pb	74	61	50	65	75
Cu	Cu-Ag	44	47	39	43	56
Ag	all 3	69	72	66	70	70

Metallurgical performance is impacted by head grade, with lower recoveries generally associated with lower head grades. Therefore given the lower head grades in the 4th campaign the Hellyer Mill performed exceptionally well to achieve the resultant high recoveries. With this performance and grades expected to improve through successive campaigns there is clearly potential for further improvement above budgeted levels and previous achieved levels.

Milling costs have been factored up by 25% in the production budget, which reflects two issues; the campaign milling with fixed costs being allocated over lower tonnes but also some increased input costs such as labour, power and grinding media.

1.3 HMP Summary

Bass Metals has responded rapidly to a series of significant and unexpected technical events with a strong and conservative production plan for the Fossey Mine. The key production statistics are summarised in Table 5 below. While it is a reduction in scale from the original Fossey component of the HMP, it generates a significant cash surplus and when cash surplus forecasts from Fossey East (currently only at a Concept Study Stage) are included, puts the Company squarely back on track with a higher margin-lower risk project with the same excellent potential to grow further.

Table 5: HMP – Revised production estimates (Fossey Ore Reserve only)

		Revised	Actual	Original
Concentrate production
Zinc	Kt	72	10.2	106
Lead	Kt	34	4.4	54
Copper/silver	Kt	6	0.6	9
Mine Gate value	$/t ore	$249		$194
Cash Surplus	A$M	45		75

1.4 Current Status of Mining/Milling Operations

Underground mining operations are continuing on a normal basis. As at the 15th July there was approximately 36,800 tonnes on the ROM stockpile grading 8.1% Zn, 4.9% Pb, 0.3% Cu, 105 g/t Ag and 1.9 g/t Au. Mining, ore haulage and Mill maintenance is on track to commence a 52,000 tonne processing campaign on 1st August at similar grades to the current ROM stockpile grades.

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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2. EXPLORATION

Recent exploration activity has focussed on drilling in the Fossey East Resource area and along the Fossey Trend. Both these programs have been successful with a potential new discovery (McKay Prospect) along the Fossey trend and further high grade intercepts from Fossey East infill drilling.

2.1

McKay Prospect

On Friday 15 July Bass Metals intersected 5.9 metres of high grade massive base metal sulphide mineralisation and an additional 5 metres of barite and base metals mineralisation in diamond drill hole HLD1030 in a new target area between Fossey and Hellyer, referred to as McKay.

This intersection is similar to Fossey East both mineralogically and by being deeper in the stratigraphy and enclosed within the footwall alteration zone. The mineralisation appears from orientated core to be steep and strike grid north-south.

This drill hole was targeted at discovering potential offsets of the Fossey deposit along the Jack Fault. The McKay prospect is a new discovery with potential for extensions both to the south and down dip (Figure 6 & 7). Previous drilling in the area intersected narrow high grade base metal intersections to the north (for example, 1.9 metres 0.6% Cu, 8.4 % Pb, 16.9 % Zn, 141 g/t Ag and 3.0 g/t Au), and this intersection may be related to the same mineralised structure.

Figure 6: McKay Prospect, location of HLD1030 intercept and target potential.

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16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846

www.bassmetals.com.au

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Figure 7: McKay Prospect, Schematic Cross section

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2.2 Fossey East

The Fossey East drilling program is designed to infill drill the existing resource outline to 25 metres spaced centres. To date a total of 2,118 metres have been drilled in a total of 11 diamond core drill holes (FUD66 – FUD76). The program is approximately 95% complete. Assays results have been received for holes FUD66-70 and FUD72 (Table 6 and Figure 7) results for FUD 71, and FUD 73-76 remain pending.

Results received are highly encouraging and confirm the high-grade nature of the Fossey East mineralisation and the higher copper grades compared to the Fossey zone, such as:

• 4.2 metres grading 2.2% Cu, 8.8% Pb, 16.6% Zn, 71 g/t Ag and 0.9 g/t Au (FUD72)

• • 2.3 metres grading 0.6% Cu, 8 % Pb, 17.7% Zn, 235 g/t Ag and 4.3 g/t Au (FUD69) • 5.6 metres grading 0.7%Cu, 5.4%Pb, 14.8% Zn, 109 g/t Ag and 2.1 g/t Au (FUD66)

A schematic long section is presented in Figure 8 and cross section showing FUD72 intercept in Figure 9 (note the FUD66 intercept was reported previously 5 July 2011).

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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It is planned to fast track Fossey East towards mining as quickly as possible by competing the infill drilling and updating the resource estimates for incorporation into a mining feasibility study. Follow-up drilling will focus on testing for extensions using the improved geological understanding gained from the infill program.

Table 6: Fossey Drill Intercept Summary

From (m)	To (m)	Drilled Interval (m)	True Thickness	Zn (%)	Pb (%)	Cu (%)	Ag (g/t)	Au (g/t)
FUD0066(at > 5% (Pb+Zn) cut-off)
113.4	119	5.6	4.9	14.7	5.4	0.7	109	2.1
Within a zone(defined by barite alteration)
113.4	135.4	22	19.5	4.7	1.7	0.2	45	0.9
FUD0067(at > 5% (Pb+Zn) cut-off)no intercepts Within a zone(defined by barite alteration)
119	130	11	9.0	0.7	0.3	0	19.5	0.7
FUD0068(at > 5% (Pb+Zn) cut-off)no intercepts Within a zone(defined by barite alteration)
120	134	14	13.5	1.1	0.3	0	39	1.5
FUD0069(at > 5% (Pb+Zn) cut-off)
114.6	116.4	1.75	1.7	8	3.3	0.4	38	2.4
134.2	136.5	2.3	2.3	17.7	8.0	0.6	235	4.3
Within a zone(defined by barite alteration)
111.6	136.5	24.9	24.0	3.1	1.2	0.1	49	1.9
FUD0070(at > 5% (Pb+Zn) cut-off)
103	106	3	3.0	9.6	3.0	0.3	39	1.9
Within a zone(defined by barite alteration)
102	128.9	26.9	26.0	2.1	0.8	0.1	40	1.0
FUD0072(at > 5% (Pb+Zn) cut-off)
120.2	124.4	4.2	3.0	16.6	8.8	2.2	71	0.9

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Figure 8: Fossey East Long Section showing all drill intersections with intersections greater than 5% Pb + Zn identified. The FUD0072 intersection is located 15m East of FUD0019.

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16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846 www.bassmetals.com.au

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Figure 9: Section 10137.5mN showing new intersection FUD0072.

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COMPETENT PERSONS STATEMENTS

EXPLORATION RESULTS

The information within this report that relates to exploration results is based on information compiled by Mr Kim Denwer who is a full time employee of the Company. Mr Denwer is a Member of the Australian Institute of Geoscientists. Mr Denwer has sufficient experience relevant to the styles of mineralisation and types of deposits under consideration and to the activities currently being undertaken to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)” and he consents to the inclusion of this information in the form and context in which it appears in this report.

MINERAL RESOURCES

The information in this report that relates to the Fossey Mineral Resource estimate is based on information compiled by Mr Steve Richardson who is a fulltime employee of the company and a Member of the Australasian Institute of Mining and Metallurgy. Mr Richardson has sufficient experience which is relevant to the style of mineralisation and type of deposit and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)”. Mr Richardson consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

ORE RESERVES

The information in this report that relates to the Fossey Ore Reserve estimate is based on information compiled by Mr Victor Rajasooriar who is a full time employee of the Company and a Member of the Australian Institute of Mining and Metallurgy. Mr Rajasooriar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they have undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Reserves (the JORC Code)”. Mr Rajasooriar consents to the inclusion in this report of the matters based in the form and context in which it appears.

www.bassmetals.com.au

16 Thelma Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 9322 8044 Facsimile (08) 9481 2846

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Attachment 1: Checklist of Assessment and Reporting Criteria- Fossey Resource and Reserve Estimate.

Criteria	Comments
Geological Setting	Fossey is a Volcanic Hosted Massive Sulphide deposit comprising a stratiform zone of dominantly baritic mineralisation, associated with areas of high-grade Base Metal Sulphide (BMS) and underlain by minor stringer and disseminated mineralisation.
Tenement and land status	Fossey occurs within Hellyer Mining Lease CML103M/87 and is wholly owned by Bass Metals Ltd.
Drilling	The 2009 resource estimate was based on 25m spaced drilling from surface (27 Bass and 14 historic holes in mineralisation). The current resource estimate includes an additional 42 intersections from infill underground drilling and 16 sets of continuous chip samples from underground cross-cuts through mineralisation. All Bass Metals Ltd holes were diamond-drilled and NTW, NQ or LTK60-sized core recovered (diameters of 56mm, 47.6mm or 45.2mm respectively). Historic holes were also diamond- drilled and are of NQ or BQ core size (47.6mm or 36.4mm diameter respectively). >90% core recovery, averaged over the entire hole, was achieved during Bass Metals drilling with close to 100% recovery in the ore zones. Similar high recoveries were achieved by historic drilling. The bulk of the Fossey resource is now drilled out on nominal 12.5m spacing – north of 10225N remains to be completed. Surface drilling is on E-W sections and underground holes are drilled as skewed fans from three underground sites.
Logging	All drill holes have been geologically logged using standard Que-Hellyer logging codes. Wet and dry digital photographs of all Bass Metals core were taken and RQD measurements were recorded at per drill-run intervals (average of 3.0m). For historic holes RQD was also measured and core photographs on slide film were taken.
Sampling	For both Bass and historic drilling half-core samples were collected at nominal 1.0m intervals or at lithological boundaries. Sampling extended into barren host rocks or sub-grade mineralisation in both the hangingwall and footwall.
Assaying	Half core samples were submitted for assay, with SG determination conducted by the laboratory on each assay sample. For the current infill drilling program, samples were submitted to ALS Laboratories in Burnie, Tasmania. Samples were analysed for Cu, Pb, Zn, As, Fe, Ba, S and Si (glass fusion XRF), Ag (AAS), Au (fire assay). For the 2007-2009 surface drilling programs samples were assayed for Cu, Pb, Zn, Ag, As and Fe, using a modified aqua regia digest followed by ICP, at Amdel laboratories in Adelaide, South Australia. Au and Ba were assayed at Ammtec (now ALS) laboratories in Burnie, using fire assay and pressed powder XRF respectively. QA-QC involved standards, blanks and duplicates (one of each every 25 samples). Historic assays were carried out on half core at Aberfoyle’s company laboratory (now the ALS Burnie lab) using pressed powder XRF for Cu, Pb, Zn; AAS for Ag and As and Au byfire assay. Internal laboratoryblanks and standards were the only QA-QC for historic holes.
Surveying	Historic drill-hole collar locations were measured by the Hellyer Mine surveyor, Bass surface drill-holes bya contract surveyor and Fosseyunderground holes bythe FosseyMine surveyor.
Database integrity	The drill-hole database used comprises Bass Metals drilling data recorded on Excel spreadsheet and historical data in ASCII format, both imported into Datamine software. New assay results together with standard and blank results were checked to ensure these were within acceptable limits.
Geological Interpretation	The Fossey deposit strikes grid NNW and has the broad cross sectional form of a folded downward tapering wedge. The deposit comprises three major zones: • _Massive Barite Zone -_The bulk of the deposit comprises massive barite, which is dominant in the stratigraphically upper areas. • _BMS Zone -_Underlying the massive barite zone is banded to massive BMS. The boundary of the footwall of the BMS is a sharp contact. The internal boundary between the BMS and Barite zones is usually a sharp mappable contact but occasionally is a gradational grade boundary. • _Footwall Zone -_Commonly underlying the BMS is low to moderate grade base metal mineralisation as disseminations to stringer veins upto several 10’s of centimeters thick.
Estimation and modelling techniques	Elements were estimated using ordinary kriging, restricted to mineralisation domain boundaries. Variography of all elements was studied and grade continuity modelled.
Cut-off parameters.	The outer boundary of the Fossey barite and BMS zones is based on sharp geological contacts. The internal boundary between the two zones can be gradational and a boundary of 5%(Pb+Zn) was chosen as the best grade which provided good continuity between holes and from section to section. Immediately underlying the BMS zone holes usually contain stringer vein and / or disseminated to semi- massive mineralisation. This domain was wireframed at a cutoff of 5%(Pb+Zn.
Previous Mining	Mining of the Fossey deposit began in December 2010 with development ore being sourced from the 465 level. Longhole open stoping production commenced in March 2011. To the 30 thJune 2011 a total of 158KT of ore has been hauled to the Hellyer Mill ROM grading 0.2% Cu, 3.6% Pb, 6.6% Zn, 1.7g/t Au and 95g/t Ag.
Mining factors / assumptions.	Some dilution (<5.0% Pb+Zn) is internal to the ore body and falls within the coherent stope shapes; this is classified as planned dilution. This material is predominantly found between the two main zones of BMS lenses. A portion of planned dilution is also from outside of the Fossey BMS and Stringer Zones where in the lower levels of the mine, stope geometries require some dilution to commence stope blasting. Planned dilution amounts to some 40K tonnes, or some 8% of the total reserve tonnage. In general, the unplanned dilution has been included where pillar widths between the two high grade BMS lenses, between the 445 and 495 levels , are too narrow to retain or are required to be extracted to allow for upper level ore extraction. The averagegrade of this material has been calculated usingthe

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	data from the geological block model. For the primary and secondary stopes, unplanned dilution is estimated to average 10%, where dilution is defined as: Dilution (%) = (volume of unplanned dilution) x 100/(volume of resource tonnage in stope envelope) Dilution grade has been assigned a zero grade across all stopes, both primary and secondary. Initial CMS surveys of the 465 level stopes indicate no dilution is occurring. Most dilution is anticipated form the eastern and western contacts in the primary stopes driven by orebody contact structures and rock type changes. Secondary stope dilution will be waste rock or CAF. The total unplanned waste rock dilution which is contained within the stope reserve amounts to approximately 40K tonnes at 0.04% Cu, 0.49% Pb, 0.99% Zn, 9.2g/t Ag and 0.41g/t Au at an average density of 3.0. In addition to dilution from stoping activities, development within the resource model has been estimated to attract 5% dilution and a recovery of 95% of the diluted resource volumes. Estimated dilution parameters at Fossey are consistent with the long term averages from Hellyer, where similar stope geometries were adopted and where similar CAF strength was used. Ore body recovery is estimated to be 90% of the diluted resource volumes as both the primary and secondary stopes are expected to be stable. The net result is an overall dilution (stope, pillars and development) of approximately 10% waste for an estimated recovery of 90%. The resource base underpinning the reserve estimate contains some 6.4% by mass (43k tonnes), material categorised as Inferred. This material is largely constrained to the periphery of the resource limits. This material has been included in the mine production schedule as a Mining Inventory, but is excluded from the Mineral Reserve Estimate (Table 1).
Metallurgical factors	No assumptions have been made about metallurgical treatment.
Bulk density	Where no bulk density measurement was available (414 of 3386 assay samples in the mineralised zones, mostly continuous chip samples) regression equations were developed to estimate bulk density from assayvalues. Bulk densitywas interpolated for each block.
Classification	Classification of resources and reserves was undertaken by taking into account data integrity, grade continuity,estimation variance, geological confidence and drill hole spacing.
Audits or reviews	Resource estimatewasreviewed byresource consultant specialists, SnowdenGroup.

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Attachment 2: Conceptual Mining Study-Fossey East

Fossey East Mining Concept Study Parameters

• The Fossey East concept study treats the new ore body as an extension of the Fossey ore body. To access the FE ore body the study assumes extending the current Fossey decline (post the exploration drive) and hence the capital development required to open up the Fossey East resource is minimal. Mining costs have been reduced by 20% compared to the current Fossey costs, due to Fossey East h av ng a sma i ll er oo pr n requ r ng ess eve opmen an f t i t i i l d l t d th e ma or j it y o f th e m n ng n ras ruc ure i i i f t t already being in place. Milling costs and concentrate sales terms are a mirror of the existing Fossey ore terms.

• Metal prices:

• Zinc – US$2 , 293/t

• – Lead – US$2,577/t

• – Copper – US$9,031/t

• Silver – US$37/oz

• G o ld – US$1 , 538/ oz

• FX = AUD:USD 1.06

• Other Assumptions used:

• The NSR values both cases is based on current Fossey terms.

• The mining costs are lower for Fossey East (opex) as the foot print for the mine is smaller than for Fossey, and back fill requirements (CAF fill reduced).

• Capital costs decline, FAR and RAR are based on costs we are incurring currently

• Fossey East capital includes $1M for dewatering Hellyer

• The models give a Net return of $17.5M and $24.5M for the 2 options considered.

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Attachment 2: Conceptual Mining Study-Fossey East (Scenario 1 of 2)

Resource 5% (Pb+Zn)	t	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Fossey East	250,000	9.10%	4.40%	0.40%	73	1.80
Mining Inventory Conversion
Dilution (10%)	275,000	8.3%	4.0%	0.36%	66	1.6
Recovery (90%)	247,500	8.3%	4.0%	0.36%	66	1.6
Esitmated Mining Plan	t	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Fosse east	247 500	8 27%	4 00%	0 36%	66	1 6
y	,	.	.	.		.
	Gross smelter	Smelter Costs			Net smelter
	Revenue	Treatment	Handling	Total	Revenue
Element	A$	A$	A$	A$	A$
Z n	24 327 723 , , 16,279,581 4,198,387 19,933,051 2,924,363	7 448 870 861 422 8 310 292 , , , , , 3,309,938 395,544 3,705,483 605,556 809,099 1,414,655 235,566 235,566 9,659 9,659			16 017 431 , , 12,574,098 2,783,732 19,697,485 2,914,703
Pb
Cu
Ag
Au
Total	67,663,104	11,609,589 2,066,065 13,675,655			53,987,450
Capital requirement	m	$/m	Total Cost
Decline (420 to 360m)	280	10,500	2,940,000 $
RAR and FAR	80	7,000	560,000 $
Hellyer Dewater			1,000,000 $
Total Capital			4,500,000 $
d l Cost Mo e
Tas Ops Capital ($/t)	18
Mining ($/t)	66
Processing ($/t)	44
Admin ($/t)	4
State Royalty ($/t)	11
Intec Royalty ($/t)	2.5
Total Costs ($/t)	146		36,155,250 $	<<‐‐Total Project cost
Revenue (NSR $/t)	218.13		53,987,450 $	<<‐‐Total Revenue
Net Return	72		17,832,200 $	<<‐‐Net Return

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Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion	Attachment 2: Conceptual Mining Study-Fossey East (Scenario 2 of 2) Resource 5% (Pb+Zn) t Zn % Pb % Cu % Ag g/t Au g/t Fossey East 325,000 9.10% 4.40% 0.40% 73 1.80 Mining Inventory Conversion
Resource 5% (Pb+Zn)	t	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Fossey East	325,000	9.10%	4.40%	0.40%	73	1.80
Mining Inventory Conversion
Dilution (10%)	357,500	8.3%	4.0%	0.36%	66	1.6
Recovery (90%)	321,750	8.3%	4.0%	0.36%	66	1.6
Esitmated Mining Plan	t	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Fossey east	321,750	8.27%	4.00%	0.36%	66	1.6
	Gross smelter	Smelter Costs			Net smelter
	Revenue	Treatment	Handling	Total	Revenue
Element	A$	A$	A$	A$	A$
Zn	31,626,039 21,163,455	9,683,531 1,119,849 4,302,920 514,208		10,803,380 4,817,128	20,822,660 16,346,328
Pb
Cu	5,457,903 25,912,966 3,801,671	787,223 1,051,829 306,236 12,557		1,839,052 306,236 12,557	3,618,852 25,606,731 3,789,114
Ag
Au
Total	87,962,036	15,092,466 2,685,885		17,778,351	70,183,684
Capital requirement	m	$/m	Total Cost
Decline (420 to 360m)	280	10,500	2,940,000 $
RAR and FAR	80	7,000	560,000 $
Hellyer Dewater			1,000,000 $
Total Capital			4,500,000 $
Cost Model
Tas Ops Capital ($/t)	14
Mining ($/t)	66
Processing ($/t)	44
Admin ($/t)	4
State Royalty ($/t)	11
Intec Royalty ($/t)	2.5
Total Costs ($/t)	142
			45,651,825 $	<<‐‐Total Project cost
Revenue (NSR $/t)	218.13		70,183,684 $	<<‐‐Total Revenue
Net Return	76		24,531,859 $	<<‐‐Net Return

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