GREENWING RESOURCES LTD — Interim / Quarterly Report 2009

Oct 22, 2008

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ABN 31 109 933 995
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23 October 2008

The Manager Companies Company Announcements Australian Stock Exchange 20 Bridge St Sydney NSW 2000

Dear Sir

SEPTEMBER 2008 QUARTERLY REPORT OF ACTIVITIES & CASHFLOW Highlights

• Record high grade ores sales of 18,311 wet metric tonnes generating margins over costs of $197 per tonne or 98% for the September Quarter.

• Operating revenue for the Quarter estimated to be $6.2 million and hedging gains of 0.6 million.

• Maiden $1.8 million profit result for 2008 Financial Year.

• As at 30[th] September:

• Working Capital position was $7.6 million; and

• Closing cash position was $4.3 million.

• Cash position supplemented by a further $3.1 million cash injection in early October from hedge close-out.

• New resource at Fossey – 830,000 tonnes at 9 % Zn, 5 % Pb, 120 g/t Ag & 2.5 g/t Au :

• increases HMP resource by 60% to 1.6 million tonnes at 8 % Zn, 4.4 % Pb, 104 g/t Ag & 1.9 g/t Au; and,

• entire Que/Hellyer resource now 2.3 million tonnes at 19 % Zn (eq).

• Strong drill results from Fossey Zone continue:

• 9.2 metres at 20.8 % Zn, 8.8 % Pb, 0.9 % Cu 290 g/t Ag & 3.0 g/t Au ;

• 20 metres 8.7 % Zn, 5.5 % Pb, 0.3 % Cu 44 g/t Ag & 1.1 g/t Au.

I am pleased to attach the September Quarter operating and cashflow report for Bass Metals Ltd (ASX:BSM).

The Company continues to perform well despite volatile and challenging market conditions due to its high grade mining operations and mineral assets, supported by prudent financial and risk management strategies. Bass Metals’ objective is to transform into a mid tier diversified mining and exploration company; primarily through the development of its robust high grade projects such as Que River, Hellyer Mine Project (HMP) and potentially high grade, polymetallic prospects such as Oonah, Magnet and Farrell, but also through acquisition and corporate transactions which together meet the key criteria of adding shareholder value.

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 Company’s Que River mine is high grade and generated strong operating margins in the September quarter. The recently upgraded Mineral Resource inventory also has high grade polymetallic endowment, which the company is evaluating to bring into production. Underpinning this robust asset base is a strong cash position of approximately $7 million at the date of this report.

The Board considers that based on current cash flow forecasts, work budgets and positive ore reconciliation trends that the Company is well positioned over the next 12 to 18 months to achieve its core objectives of advancing the HMP to a decision to mine, progressing its regional advanced high grade projects and continuing to follow-up on selected earlier stage targets with potential for a major mineral discovery whilst accumulating cash, subject of course to the outcome of feasibility studies and prevailing market conditions. While challenging, the current adverse equity and metal market conditions are generating new corporate and project opportunities and the Board continues to review these on both technical and financial merits and always with the key criterion of returns to shareholders.

Bass Metals has a strong cash position and robust mineral assets which should see it well positioned to benefit from any recovery in metals markets in the near to medium term. I look forward to providing further updates on our progress in these activities.

Yours sincerely

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Mike Rosenstreich Managing Director

Competent Person

The information within this report that relates to exploration results is based on information compiled by Mr Mike Rosenstreich who is a full time employee of the Company and is a Member of The Australasian Institute of Mining and Metallurgy. He 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 and consents to the inclusion of this information in the form and context in which it appears in this report.

Technical Detail

This Report aims to provide a high level summary of various technical aspects of the Company’s projects. For more details on the underlying technical parameters the reader is referred to the ASX Reports on the Bass Metals’ website, 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 www.bassmetals.com.au

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SEPTEMBER 2008 QUARTERLY ACTIVITIES REPORT

A. BASE METALS

A1.0 Mine Operations – Que River

A1.1 SAFETY & ENVIRONMENT

No lost time injuries have occurred during the Quarter or since the start of the project. There were several minor discharges of untreated run-off water from the settlement dam due to exceptionally heavy rainfall during the period.

A1.2 MINING ACTIVITIES

Mined tonnages of ore in the September Quarter exceeded predictions from the Ore Body model by 283% ( refer Table 1 ). Actual mined grades for zinc, lead and copper exceeded predictions with silver and gold grades down marginally.

The project to date reconciliation of mined versus predicted tonnages is strongly positive with a greater ore contribution from the PQ pit. All metal grades are significantly higher than predicted.

Table 1: Production Comparison – Mined vs Predicted

	Tonnes**	Zn (%)	Pb (%)	Ag (g/t)	Au (g/t)	Cu (%)
September 08 Quarter
Predicted (OBM*)	4,963	18.8	10.3	295	6.0	0.3
Ore Mined	19,028	20.0	10.8	270	5.4	0.5
Variance to OBM	283%	6%	5%	-8%	-10%	58%
Project to Date
Predicted (OBM*)	40,033	11.1	5.0	118	2.2	0.4
Ore Mined	62,835	13.9	7.5	248	3.7	0.4
Variance to OBM	57%	26%	50%	64%	69%	-6%

(OBM=Ore Body Model used for the original budget; *Tonnes are wet metric tonnes (wmt))

A1.3 ORE SALES

Record quarterly ore sales were achieved during the period with a total of 18,311 wet metric tonnes (wmt) of ore sold to Oz Minerals’ Rosebery operations, consistent with Bass Metals’ target of 5,000 wmt per month ( refer Table 2 ). A significant inventory position has been maintained at 6,609 wmt as at the end of the Quarter.

– Table 2: Mining Summary September 2008 Quarter

	Tonnes (wmt)	Zn (%)	Pb (%)	Ag (g/t)	Au (g/t)	Cu (%)
Opening Stocks at QR	5,893	10.5	6.0	191	3.4	0.3
Ore mined*	19,028	20.0	10.8	270	5.4	0.5
OreDelivered to OZM	18,311	16.8	9.3	237	4.9	0.5
Remaining Stocks at QR	6,609	20.4	10.5	288	5.0	0.6

* "Remaining Stocks" and "Mined" are estimates from grade control

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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www.bassmetals.com.au

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A1.4 OPERATING PERFORMANCE

Revenues

Revenue for ore sold during the September Quarter is estimated to be $6.2 million. This amount does not include hedging gains associated with ore sold.

Cash flow receipts for the quarter were $3.6m.

After correcting for minor moisture content, ore tonnes sold were 17,876 dry metric tonnes (dmt) which yields gross revenue of $345/dmt sold. Revenue quoted above is based on actual tonnes delivered and invoiced. Revenue estimates and eventual cash flows are affected by the time lag between delivery of the sold ore and fixing the realised price ( the Quotational Period ); for zinc and lead this time lag is three months, for gold and silver one month and for copper six months.

Hedging gains associated with ore sold during the Quarter are estimated at $0.6 million resulting in a total estimated value of ore sold for the quarter of $6.8 million or $373/dmt.

Costs

A summary of operating costs for the Quarter is presented in Table 3 below. The cost calculation is based on all operating costs, including mining, treatment, haulage, royalties, depreciation and amortisation of mine properties but excludes capitalised mine development for the Quarter consistent with the Company’s accounting policies as detailed in the 30 June 2008 annual report. The difference between “sold” and “mined” unit cost reflects the closing inventory position.

Table 3: Unit Operating Costs

Unit Cost basis	Unit	Sept 08 Qtr	June 08 Qtr
Ore sold	$/dmt	236	238
OreMined	$/wmt	222	229

Total capital costs at Que River for the Quarter were $0.03 million, bringing the project to date expenditure to $0.63 million, which is in line with the Stage 1 Mine Plan.

Operating Margin

To monitor and manage the financial performance of the project; i.e. the margin between cash costs and revenues, the Company also prepares management reports to determine the net realisable value (NRV) and operating margin of ore mined. The reports include adjustments to the Company’s accounting policies for the following:

Revenue

• Adds the expected revenues from the stockpiles to those from ore already sold and delivered in the period.

Costs

• Collation of all of the costs incurred during a period, with no accounting adjustments for depreciation and amortisation of mine properties or capitalising of mine development.

• Addition of expected costs to realise value from the stockpile inventory - namely haulage, treatment charges and royalties.

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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On this basis a summary of the Que River mine operating performance is presented in Table 4 below.

Table 4: Estimate of Operating Performance

		Actual	Actual
Unit Cost basis	Unit	Sept 08 Qtr	June 08 Qtr
Value oforemined	$/wmt	397	246
TotalCost oforemined	$/wmt	200	211
OperatingMargin	$/wmt	197	35
Marginas a % ofCost	%	98	16
Note estimated hedging settlements for the ore delivered during the quarter are not included above, and will add a further $28 per tonne to the operatingmargin.

The operating margin of the project has increased considerably during the quarter due to high grades mined from the PQ pit.

Figure 1. PQ Pit looking south into the northern drop cut.

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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 2: Tenement Location Plan – BSM tenement interests

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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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A2.0 Base Metal Exploration Activities

A2.1 ADVANCED PROJECTS

The Company has an exciting profile of advanced polymetallic prospects to underpin its growth prospects. A particularly attractive feature of all of the prospects is the high base and precious metal grades.

A2.1.1 Q ue River

There is significant exploration potential at Que River in the vicinity of the current shallow resources and also to the south and at depth. The Company has shallow, potentially open pitable resources at the QR32 and Nico lenses that it is seeking approval from Mineral Resources Tasmania (MRT) to mine and which have the potential to increase the mine life at Que River. Further drilling of targets is planned in the December Quarter 2008.

A2.1.2 Hellyer Mine Project (HMP)

The HMP was the core focus for the Company during the September Quarter. Completion of the Fossey resource estimate (refer Table 5) has increased the overall resource base to 1.6 million tonnes at HMP and the overall HMP-Que River JORC compliant resource to 2.3 million tonnes of high grade polymetallic mineralisation as summarised in Table 6. Fossey Zone is an exciting new high grade prospect immediately south of the Hellyer mine development, that is open at depth and to the south as shown in shown in Figure 3. (Reported to ASX 30 September 2008 and 26 October 2007)

The HMP (Fossey & Hellyer Resource) activity focus has been:

• Drill out and extend the Fossey Zone – a further 13 drill-holes were completed, with two in progress, for a total of 3,029.8 metres in the Quarter.

• Continuation of the Mining Study comprising, resource assessment, mining studies, environmental studies and metallurgical test work.

• Appointment of a full-time Hellyer Mine Project Study Manager.

Fossey Zone Resource

MacArthur Ore Deposit Assessments Pty Ltd (MODA) was commissioned by Bass Metals to undertake a mineral resource estimate for the mineralisation at the Fossey Zone, which is fully reported in accordance with the JORC Code in a report to ASX on 30 September 2008. The resource estimated at a 5% (Pb+Zn) assay cut-off is summarised in Table 5 below.

The resource model comprises three main mineralised domains; a base metal sulphide zone, massive barite zone and a footwall stringer vein zone. A minor zone of gold-rich siliceous pyritic mineralisation was also included on the western side of the barite lens.

In addition to the base metal mineralisation the large barite body holds significant gold and silver grades. Combined Mineral Resources based on a 1g/t gold cut-off were estimated to be 2.5 million tonnes at 1.9 g/t gold and 66 g/t silver, which suggests that there may be scope for a larger scale mining and processing scenario.

The methodology utilising a relatively high, 5% (Pb+Zn) cut-off, is regarded as conservative and ensures a focus on grade rather than tonnes and contained metals. The Indicated Mineral Resource has consistently higher grades than the Inferred Mineral Resources, which is a positive trend as significant BMS mineralisation has been intersected in current infill drilling.

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 5: Fossey Zone Total Combined Mineral Resource*

*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **	*Table 5: Fossey Zone Total Combined Mineral Resource **
	Summary		of Classified Fossey Mineral Resources >5% Combined Pb + Zn Cut Off
Mineralisation Type		JORC Code Category		Tonnes (000's)	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Base Metal Sulphide Footwall style Barite / Minor Lenses		Indicated Indicated Indicated		410 0 0	9.7 0 0	4.7 0 0	0.4 0 0	140 0 0	2.8 0.0 0.0
TOTAL INDICATED				410	9.7	4.7	0.4	140	2.8
Base Metal Sulphide Footwall style Barite / Minor Lenses		Inferred Inferred Inferred		200 140 80	10.1 7.8 5.7	4.7 5.0 3.0	0.4 0.2 0.3	130 50 110	3.0 1.3 1.8
TOTAL INFERRED				420	8.5	4.5	0.3	99	2.2
TOTAL MINERAL RESOURCE				830	9.1	4.6	0.3	120	2.5
Base Metal Sulphide Footwall style Barite / Minor Lenses		Combined Combined Combined		610 140 80	9.8 7.8 5.7	4.7 5.0 3.0	0.4 0.2 0.3	140 50 110	2.9 1.3 1.8

*Note the above results have been rounded

Table 6: HMP-Que River Total Combined Mineral Resource Summary*

Summary of Classified Mineral Resources

>5% Combined Pb + Zn Cut Off

Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*	Table 6: HMP-Que River Total Combined Mineral Resource Summary*
Summary of Classified Mineral Resources >5% Combined Pb + Zn Cut Off
Mineralisation Type	JORC Code Category	Tonnes (000's)	Zn %	Pb %	Cu %	Ag g/t	Au g/t
Que River Hellyer Fossey	Measured Measured Measured	56 - -	2.1 - -	0.7 - -	1.7 - -	69.4 - -	0.3 - -
TOTAL MEASURED		56	2.1	0.7	1.7	69	0.3
Que River Hellyer Fossey	Indicated Indicated Indicated	458 641 410	6.0 6.8 9.7	3.0 4.0 4.7	1.2 0.4 0.4	88 83 140	1.0 1.3 2.8
TOTAL INDICATED		1,509	7.3	3.9	0.6	100	1.6
Que River Hellyer Fossey	Inferred Inferred Inferred	187 107 420	5.0 8.1 8.5	2.8 4.9 4.5	1.0 0.2 0.3	74 107 99	0.8 1.5 2.2
TOTAL INFERRED		714	7.5	4.1	0.5	94	1.7
TOTAL MINERAL RESOURCE		2,279	7.3	3.9	0.6	97	1.6
Que River Hellyer Fossey	Combined Combined Combined	701 748 830	5.4 7.0 9.1	2.7 4.1 4.6	1.2 0.4 0.4	83 86 120	0.9 1.3 2.5
TOTAL COMBINED		2,279	7.3	3.9	0.6	97	1.6

*Rounding errors may occur

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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Fossey Zone Exploration

Drilling at the Fossey Zone is targeting the along strike and down dip extensions of high grade massive sulphide intersected previously and has continued at an accelerated rate during the Quarter. The Phase One drilling program at 50 metre section spacing, designed to extend and define the mineralised zone was completed early in the Quarter and immediately followed-up with the Phase 2, infill drilling programme on 25 metre spaced sections; this work is ongoing.

A summary table of drill-hole locations, completed during the period is shown in Table 7 and a schematic long projection in Figure 4.

Figure 3: HMP Schematic Long Section

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Drilling results generally continue to be positive, confirming the interpretation of a large wedge of mineralised barite hosting several zones of massive high-grade base metal sulphide and an underlying BMS stringer envelope.

Highlights of assay results for the Quarter presented in Table 8 include:

• HLD970 - 13.4 metres at 4.6 g/t Au and 33 g/t Ag;

• HLD971 - 9.2 metres at 20.8 % Zn, 8.8 % Pb, 0.9 % Cu, 290 g/t Ag and 3.0 g/t Au;

• HLD972 - 8.15 metres at 2.0 g/t Au and 36 g/t Ag; and,

• HLD982 - 24.1 metres at 11.7 % Zn, 3.9 % Pb, 95 g/t Ag and 3.1 g/t Au.

Drilling to date at Fossey has confirmed a moderate southerly plunge to the system and the geological interpretation evolving remains consistent with that reported previously and shown in Figure 3. The infill drilling has confirmed the continuation of high grade mineralisation on the 10125mN and 10175mN drill cross sections.

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 7 Fossey Zone – Drill-hole Details

HOLE	TARGET	COLLAR NORTH	COLLAR EAST	COLLAR RL	AZ (grid)	DIP	EOH
HLD975*	Fossey	10320	5577.5	672.5	90	-65	200.7
HLD976*	Fossey	10100	5677.5	683.7	270	-70	323.8
HLD977	Fossey	10250	5545.0	674.3	270	-65	185.8
HLD978	Fossey	10050	5704.3	688.7	270	-66	359.7
HLD979	Fossey	10225	5615.9	674.3	270	-57	244.8
HLD980	Fossey	10225	5615.0	674.3	270	-51	239.7
HLD981	Fossey	10224.67	5616.35	674.3	270	-61.5	245.6
HLD982	Fossey	10125	5677.5	682.6	270	-62.5	305.7
HLD983	Fossey	10225	5617	674.3	270	-68	263.8
HLD984	Fossey	10125.7	5677.50	682.60	270	-58	302.4
HLD985	Fossey	10175.0	5612.50	675.20	270	-67	257.8
HLD986	Fossey	10125.7	5677.50	682.60	270	-67	In Progress 128m
HLD987	Fossey	10175.0	5610.50	675.20	270	-61	In Progress 68m

(*Commenced in June completed in July)

Table 8: Fossey Zone Assay Composites

From (m)	To (m)	Drilled Interval (m)	Zn (%)	Pb (%)	Cu (%)	Ag (g/t)	Au (g/t)
HLD966 (at a 5% (Pb+Zn) cutoff)
177.3	179	1.7	4.2	3.1	0.1	18	0.25
183	186.7	3.7	7.1	4.7	<0.1	27	0.23
HLD969 (at a 5% (Pb+Zn) cutoff)
174	194	20	8.7	5.5	0.3	44	1.05
HLD970 (at a 1g/t Au cutoff)
232.6	246	13.4	0.2	0.1	0.02	33	4.62
HLD971 (at a 5% (Pb+Zn) cutoff )
115.2	124.4	9.2	20.8	8.8	0.9	290	3.01
HLD972 no significant intercepts at a 5% (Pb+Zn) cutoff)
HLD976 (at a 5% (Pb+Zn) cutoff)
288.8	289.6	0.8	16.6	8.7	0.5	190	2.31
HLD977 (at a 1g/t Au cutoff)
144.3	147.37	3.07	0.3	0.08	0.02	48	1.6
161.8	163.26	2.26	0.5	0.2	0.04	77	2.0
HLD978 (at a 1g/t Au cutoff)
279.9	286	6.1	0.2	0.03	0.01	35	1.7
HLD980(at a 5% (Pb+Zn) cutoff)
201.4	202.6	1.2	5.2	2.3	0.2	168	1.7
HLD982 (at a 5% (Pb+Zn) cutoff)
233.4	241.25	7.85	8.7	4.8	0.3	198	3.56
252	276.1	24.1	11.7	3.9	0.7	95	3.14

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 4: Fossey schematic long section

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HMP Mining Study

The HMP Mining Study continued through the Quarter; key updates not already covered are summarised below:

• (i) Mining Assessment

• Mancala Pty Ltd and Bass Metals have agreed in principle to extend the current Que River Mining Alliance Agreement, in general terms to include the HMP. The Mancala executives have direct mining and operational experience at both the historic Que River and Hellyer Mine sites and contribute a significant technical legacy to the HMP study. With the recent completion of the initial Fossey Mineral Resource estimate Mancala has commenced assessment of the underground access and mining options.

• (ii) Metallurgy- Fossey Zone

• Initial impressions of the samples studied to date indicate enhanced metallurgical properties compared with the “average” adjacent Hellyer Mine ore, processed from 1987 to 2000:

• Galena (Pb sulphide) and sphalerite (Zn sulphide) are coarser

• chalcopyrite and tetrahedrite (Cu sulphides) are finer

• sphalerite/galena association is much finer with some fine sphalerite in galena

• sphalerite/pyrite association is much lower

• galena/pyrite association is much lower

• little arsenopyrite was observed.

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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Metallurgical test work on 12 samples of Fossey Zone material is currently carried out at the Burnie Research Laboratory (BRL) where members of staff have particular competence in the mineral processing of polymetallic ore from volcanogenic massive sulphide deposits.

BRL personnel have had a long involvement with flow sheet development and operation of the Hellyer concentrator up to 2000. The work is being supervised for Bass Metals by Peter Munro, principal consulting engineer of Mineralurgy Pty Ltd.

The preferred treatment route for this material is sequential flotation of copper (plus precious metals), lead and zinc with minimal production of bulk concentrate to maximise the realisable value.

Tests to date have given the following results:

• copper flotation gave 70-80% copper recovery with cleaning upgrading to a copper concentrate grade of 11.3% Cu at 60% recovery with high gold and silver values;

• lead roughing produced 25-40% Pb grades at 80-90% recovery which is a good lead performance compared with the former Hellyer operation. Cleaner flotation made a high grade concentrate of 59% Pb at 65% lead recovery; and,

• zinc roughing produced 35-40% Zn grades at 50-70% recovery with some zinc losses to the lead section due to the high lead:zinc head ratio. The best test made a 55% Zn concentrate at ~70% zinc recovery.

BRL’s work has focussed on rougher flotation to determine appropriate metallurgical domains. These results are regarded as very encouraging because the testwork involved:

• 50µm primary grind for rougher flotation;

• no regrinding of any contrite products;

• one stage of copper cleaning, 2 stages of lead cleaning, 2 x stages of zinc cleaning.

It must be pointed out that these results are preliminary only and are likely to understate what would be achievable in a production plant. The tests:

• do not include regrinding which can be expected to reduce the misplacement of values to other concentrates;

• are open circuit which usually lowers recovery;

• do not include producing a bulk zinc-lead concentrate which is an inferior product, but enables higher metal recoveries by collecting the finer grained Pb-Zn intergrowths; and

• confirmed MODA’s mineralogical observations and the likely enhanced processing attributes of the ore.

The Fossey Zone includes significant barite-gold-silver mineralisation. Several rougher flotation tests have been done on this auriferous barite material showing significant upgrading at high gold recoveries. The potential to create a gold concentrate for further processing by conventional means is also being investigated.

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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A2.4 REGIONAL BASE METALS EXPLORATION

Highlights of limited regional style exploration work carried our during the winter period includes

Magnet Mine - Waratah (EL64/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

The drill-program postponed earlier in 2008 due to drilling issues is scheduled to recommence in mid-October, 2008.

The program will test the near surface potential of the historic high-grade Magnet Lead-Silver (Zinc) mine. The program comprises 8 diamond drill holes for approximately 1,000 metres.

North Rosebery (EL54/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

The 375 sample (8.5 line km) North Rosebery partial digest soil survey was completed during the Quarter. The survey covers prospective stratigraphy north along strike from the Rosebery Mine sequence. Assays are pending.

Oonah (EL63/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

Work during the September Quarter was focussed on the historic Montana mining centre, namely planning and execution of the costean programme and the design of a first-pass reverse circulation drill programme to test for five parallel lodes structures reported of which four are unmined.

The Montana Mine is located approximately 5km northwest of the town of Zeehan and was mined in the late 1950’s. The main ore shoot comprised massive galena veining and was approximately 60 metres in strike-length and 7-8 metres at its widest point. Stoping of the lode reached a depth of 60 metres below surface and historical records of mine sampling indicate significant high grades of silver and lead mineralisation:

• 9.3 oz./t Ag, 13.5 % Pb & 1.0 % Zn

• 15.7 oz./t Ag, 7.4 % Pb & 1.2 % Zn, and

• 14.5 oz./t Ag, 10.4 % Pb & 1.7 % Zn.

Mining activities at Montana, as with other mines of this era such as Magnet (Waratah EL) and Farrell (Tullah EL) avoided the zinc rich mineralisation as it was considered a contaminant to lead smelting operations. As such, the zinc potential of the area is unrealised and no drilling has occurred in the vicinity of the mine.

Recent work by Bass Metals has included:

• Four costeans – to intersect near surface lodes for a total length of 180 metres.

• One costean (Number 3), intersected approximately 5 metres of visible (and interpreted as high grade) lead-zinc and copper sulphide mineralisation. Another interval, 1 metre wide of visible mineralisation was also logged at the northern end of this costean, approximately 15 metres from the interval above.

• Channel sampling is in progress and assays are pending.

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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Wilmot (EL51/2004)

(Bass Metals Ltd 75% & Clancy Exploration Limited 25%)

A grid was established for a ground EM survey to follow-up on anomalies generated by the airbourne VTEM survey reported previously. The ground EM programme is planned to be completed in the December 2008 Quarter.

A2.4.1 Oz Minerals Hellyer Exploration Alliance (HEA)

(Oz Minerals earning 70%)

Oz Minerals (formerly Zinifex Australia Limited) has 4 Special Project Joint Venture (SPJV) areas, mainly on the Hellyer Mine Lease. They cover prospective portions of the Hellyer-Que River stratigraphy and include the promising early stage Switchback prospect where strong alteration and anomalous base metal sulphides were intersected during the initial phase of exploration drilling in 2007.

During the September Quarter Oz Minerals drilled a second hole (MS-2) at the Highpoint prospect to a depth of 1,156 metres. The hole was designed to test for a Hellyer-Que River style deposit. No significant mineralisation was intersected, downgrading the exploration potential of the High Point SPJVA, though Downhole-EM is scheduled to be conducted on this drill-hole in November, 2008.

B. GOLD

The Company continued low level work on its Mt Charter gold Mineral Resource and the Sterling Valley gold project. Further drilling and evaluation work is planned.

C. NICKEL & OTHER METALS

C.1 Heazlewood (EL31/2003) (Ni-Cu-PGM potential)

(Bass Metals Ltd 70% & Pioneer Nickel Limited 30%)

The work programmes planned for the Heazlewood nickel prospects have been delayed due to the requirement to complete certain floral studies to facilitate the permit process. Those permits have now been granted and drilling work is now scheduled for early next year. Further ground based geophysical surveys on other target areas will be undertaken in the December Quarter.

C.2 Venture Minerals Iron-Tin-Tungsten Joint Venture

Bass Metals and Venture Minerals Limited (VMS) executed a binding Heads of Agreement that set out the terms under which VMS has the right to earn up to 70% of any Fe, Sn or W projects that VMS generates on BSM’s Heazlewood and Whyte River tenements.

VMS considers the Heazlewood (EL31/2003) and Whyte River (EL36/2003) exploration licences are prospective for magnetite skarn type mineralisation. Bass Metals’ work on these licences, particularly the Heazlewood licence has focussed on nickel and gold, consistent with its strategy of exploring and developing high grade base and precious metals deposits. The Heazlewood licence hosts several promising nickel targets which BSM plans to drill test which are not part of this Joint Venture. The Whyte River tenement has a known iron-magnetite occurrence with re-assaying of a historic drill-hole providing results of 44.1% iron over 5.6 metres.

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 Company is very pleased to farm-out the Fe, Sn and W rights on these tenements to a group clearly focussed on these commodities in this region.

Under the terms of the new Joint Venture, VMS has the right to earn 70% of the Fe, Sn and W rights only for EL31/2003 and EL36/2003 from BSM under the following terms:

• VMS to pay $50,000 cash to BSM upon signing the Heads of Agreement;

• VMS to spend $650,000 on exploration within 3 years to earn 70% of the Fe, Sn and W;

• • a minimum exploration spend of $155,000 before VMS is entitled to withdraw from the Joint Venture;

• VMS is solely responsible for maintaining the licences in good standing with the State Government;

• upon VMS earning 70% of the Fe-Sn-W rights, BSM may elect to either contribute or dilute further to 10% free carried interest up to the commencement of mining operations; and,

• Pioneer Nickel Limited through a previous joint venture agreement with BSM has consented to this transaction and retains a 2% Net Smelter Royalty interest in both tenements.

D. CORPORATE ACTIVITIES

D.1 Financial Position

The Company’s closing cash position at the end of the September Quarter was $4.34 million a $0.09 million reduction from the end of the June Quarter balance of $4.43 million.

The main cash flow components comprised:

Ore sales (provisional payments) $3.58 million Hedge settlements $0.59 million Exploration ($1.07) million Que River Mine development & operating costs ($3.14) million Capital Costs ($0.04) million Corporate administration costs ($0.44) million

The Company’s Working Capital position at the end of the Quarter is $7.58 million, not including the positive value in the easily liquidated hedge position. Subsequent to the end of the period the Company closed out its lead and zinc Put options to realise a cash gain of $3.14 million which is not included in the cash or working capital figures presented above.

Apart from minor leasing and bond commitments, Bass Metals has no debt.

D.2 Hedging

During the September Quarter the Company received $0.59 million in hedge settlements from the monthly close out of Put options covering 463 tonnes of zinc and 258 tonnes of lead. Please refer to ASX announcement on 13 October 2008 detailing close out of commodity put options worth $3.14 million.

D.3 Capital Structure

There were no changes to Company’s capital structure during the September Quarter.

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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Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

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	Name of entity	Quarter ended (“current quarter”) 30 September 2008	Quarter ended (“current quarter”) 30 September 2008
	Bass Metals Ltd
	ABN 31 109 933 995 Consolidated statement of cash flows
			30 September 2008
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other – Receipt for Research & Development offset Net Operating Cash Flows		Current quarter $A’000		Year to date (3 months) $A’000
		3,584 (1,073) (1,268) (1,868) (437) - 87 (1) - 344		3,584 (1,073) (1,268) (1,868) (437) - 87 (1) - 344
		(632)		(632)
Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets 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 – Options purchased/settlements Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		- - (42) - - - - 593		- - (42) - - - - 593
		551		551
		551		551

• See chapter 19 for defined terms.

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1.13 Total operating and investing cash flows (brought forward)	551	551
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Costs of share issues Net financing cash flows	- - - (5) - -	- - - (5) - -
	(5)	(5)
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(86) 4,430 -	(86) 4,430 -
	4,344	4,344

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		36
1.25	Explanation necessaryfor an understandingof the transactions
	All transactions with directors and their related parties are on normal commercial terms

Non-cash financing and investing activities

2.1 2.2	Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	Nil	Nil
	Nil	Nil

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development	$A’000
	1,060
	1,200
Total	2,260

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as	Current quarter		Previous quarter
shown in the consolidated statement of cash flows) to	$A’000		$A’000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank		919		104
5.2 Deposits at call		3,425		4,326
5.3 Bank overdraft
5.4 Other (provide details)
Total: cash at end of quarter(item 1.22)		4,344		4,430

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

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 security (see note 3) (cents)	Amount paid up per security (see 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 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs (c) Other – End of escrow period	103,573,803	103,573,803
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
	-	-	-	-
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter	4,176,939 1,600,000 400,000 125,000 665,000	4,176,939 - - - -	Exercise price 40 cents 27.5 cents 37.5 cents 37.5 cents 51 cents	Expiry date 30.04.10 22.12.11 31.12.11 02.11.11 31.12.12

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

7.10 Expired during quarter – (Lapsed pursuant to terms and conditions of the options)			Exercise price	Expiry date
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

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).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: Managing Director.................................... Date: 23 October 2008 Print name: Mike Rosenstreich

Notes

• 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.

• 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 .

• 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.

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