GREENWING RESOURCES LTD — Interim / Quarterly Report 2009

Jan 29, 2009

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ABN 31 109 933 995
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30 January 2009

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

Dear Sir

DECEMBER 2008 QUARTERLY REPORT OF ACTIVITIES & CASHFLOW

Highlights

• As at 31st December closing cash position was $7.8 million.

• Operating revenue for the Quarter estimated to be $6.1 million.

• High grade ores sales from Que River Mine of 18,061 tonnes generating margins over costs of $144 per tonne or 83% for the December Quarter.

• Positive ore reconciliation trends at Que River continue and a revised Ore Reserve estimate is expected in February 2009.

• Binding agreement to acquire the Hellyer Mill, Mine Lease and associated infrastructure from Intec Ltd for $4.0 million and a $2.5/t Processing Royalty capped at $5.0 million – underpins Fossey-Hellyer Mine development plans.

• Drilling completed at Fossey with further positive results such as 43.5 metres at 12.9% zinc, 7.7% lead, 0.4% copper, 207 g/t silver and 2.6 g/t gold.

• Hellyer-Fossey Mine study progressing well; NOI submitted in December and further positive metallurgical results emerging.

• Early stage exploration work continuing, albeit at low levels, with drilling on 3 regional early stage prospects and further new targets on several leases emerging.

I am pleased to attach the December 2008 Quarterly 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. The Que River operation is maintaining strong operating margins of 83% over costs despite generally lower metal prices during the Quarter. The Company continues to utilise short term commodity forward sales contracts to mitigate against the risk of volatile metal prices between the time provisional payments are made and final prices are fixed ( Quotational Period ), locking in positive margins over costs. Strongly positive ore reconciliations and results from recent extensional drilling near the high grade PQ pit provide a positive outlook for the revised Ore Reserve statement due in February 2009 and an increased mine life at Que. High grade ore sales to Oz Minerals underpinned the closing Quarterly cash position of $7.8 million, which is after payment of a refundable $0.5 million deposit for the Hellyer Mill acquisition.

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 acquisition agreement to acquire the Hellyer Mill is considered by the Board of Bass Metals to be a major step toward meeting its prime objective of generating shareholder wealth. The Hellyer Mill is especially suited to treat the very fine grained Hellyer style ore, and therefore can treat most other “simpler” polymetallic ore types such as occur at Fossey or Que River. It has always been an important aspect of Bass Metal’s development strategy. The value in the assets being acquired comprises the plant and “hard machinery” as well as the “operational footprint” which includes a permitted tails dam and supply corridors for power, water and vehicles.

This deal will provide a major boost in transforming the company from a small scale (and profitable) mining and exploration company, but reliant on third parties to treat or buy ore, into an independent, emerging mining company producing and marketing metals concentrates in accordance with its own development objectives, priorities and timetable. This acquisition enables the Company to review all of its resources and prospects against the backdrop of owning a sophisticated, large scale mineral processing facility which can be adapted to a variety of ore types and processing rates – located within close proximity to its own resources at Hellyer, Que River and Mt Charter.

Completion of the transaction is scheduled for late February 2009 subject to several conditions including Bass Metals shareholder’s approval, which will be decided at a General Meeting of Shareholders on the 19 February 2009.

During the Quarter, the Board welcomed Mr. Tony Treasure to the Board as a non-executive Director representing Metals Finance Corporation (ASX:MFC) which holds 19.9% of the issued capital in the Company.

The first 6 months of 2009 have the potential to be transformational for Bass Metals as it seeks to complete the Hellyer Mill acquisition and its feasibility study on mining the Fossey-Hellyer resources. I look forward to providing further updates on these events.

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

DECEMBER 2008 QUARTERLY ACTIVITIES REPORT

A. OPERATIONS

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A1.0 Que River

A1.1 SAFETY & ENVIRONMENT

No lost time injuries have occurred during the Quarter or since the start of the project.

A1.2 MINING ACTIVITIES

Mined tonnages of ore in the December Quarter exceeded predictions from the Ore Body model by 291% on a tonnage basis ( refer Table 1 ). Actual mined grades for zinc, lead and gold were marginally less than predicted by the ore body model for the quarter due to extra lower grade (but economic) ore also being excavated and sold.

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, other than the small contribution from copper are significantly higher than predicted.

Table 1: Production Comparison – Mined vs Predicted

	Tonnes**	Zn (%)	Pb (%)	Ag (g/t)	Au (g/t)	Cu (%)
December 08 Quarter
Predicted (OBM*)	4,649	20.6	11.1	262	7.4	0.3
Ore Mined	18,180	18.7	9.8	281	6.6	0.3
Variance to OBM	291%	-9%	-12%	8%	-10%	5%
Project to Date
Predicted (OBM*)	44,682	12.1	5.6	133	2.7	0.4
Ore Mined	81,015	15	8.0	214	4.3	0.4
Variance to OBM	81%	24%	42%	61%	60%	-7%

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

A1.3 ORE SALES

Ore sales to OZ Minerals’ (OZL) Rosebery operations comprised 18,061 wet metric tonnes (wmt) during the period, consistent with Bass Metals’ target of 5,000 wmt per month ( refer Table 2 ). A significant on-site ore inventory position has been maintained at 6,728 wmt as at the end of the Quarter.

Table 2: Mining Summary – December 2008 Quarter

	Tonnes (wmt)	Zn (%)	Pb (%)	Ag (g/t)	Au (g/t)	Cu (%)
Opening Stocks at QR	6,609	20.4	10.5	288	5.0	0.6
Oremined*	18,180	18.7	9.8	281	6.6	0.3
Ore Delivered to OZL	18,061	19.5	10.2	285	5.9	0.4
Remaining Stocks at QR	6,728	18.3	9.6	281	7.1	0.3

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

A1.4 OPERATING PERFORMANCE

Revenues

Estimates of the revenue accrued during the December Quarter from ore sales is $6.1 million. Actual cash flow receipts for the quarter were also, coincidently, $6.1m.

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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Ore tonnes sold was 17,791 dry metric tonnes (dmt) which yielded gross revenue estimated at $341/dmt sold. Revenue quoted above is based on actual tonnes delivered (corrected for minor moisture content) 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.

The ongoing viability of the Que River mine is subject to prevailing metal prices and realistically the financial position of OZL in completing the ore purchase arrangements. The Company continues to monitor the situation closely and notes that to date, OZL has met all of its payment obligations to Bass Metals within the prescribed payment terms.

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	Dec 08 Qtr	Sept 08 Qtr
Ore sold	$/dmt	241	236
OreMined	$/wmt	236	222

Total capital costs at Que River for the Quarter were $0.03 million, bringing the project to date expenditure to $0.66 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.

The operating margin of the project has decreased marginally from 98% to 83% due largely to a decrease in metal prices as presented in Table 4 below.

Table 4: Estimate of Operating Performance

		Actual	Actual
Unit Cost basis	Unit	Dec 08 Qtr	Sept 08 Qtr
Value oforemined	$/wmt	318	397
TotalCost oforemined	$/wmt	174	200
OperatingMargin	$/wmt	144	197
Marginas a % ofCost	%	83	98

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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A1.5 ORE RESERVE & RESOURCE EXTENSIONS

The Company is currently mining Ore Reserves from the PQ Pit based on the original Stage 1 Mine Plan (refer 2008 Annual Report). Given the strongly positive ore reconciliation trends and the apparent extension of the high grade zones beyond the boundaries of the current Stage 1 pit design, work has commenced to re-estimate the entire Ore Reserve inventory for the Que River mine and define the potential resource extensions by drilling.

A1.5.1 Ore Reserves

The review of the PQ, S-lens and shallow portions of the QR32 massive sulphide lenses to compile an updated Ore Reserve inventory for the Que River mine is in progress and expected to be complete in February.

A1.5.2 Extensional Drilling

Drilling commenced to test the high grade PQ Lens for extensions beneath and immediately to the north, of the currently planned Stage 1 Mine Plan PQ open pit. Completed and proposed hole locations, together with targeted mineralisation and drilling results are shown on Figure 1.

To the end of the Quarter seven diamond drill holes for 592 metres were completed of a planned 15 hole program. Geological logging has confirmed intersections of high-grade polymetallic mineralisation present as expected; with all assays pending. Of note is the QRD1300 intersection, confirming the crown pillar is intact and almost double the expected thickness at the tested location, increasing the amount of mineralisation accessible from the current PQ pit design. Geologically the indications are encouraging for a significant extension of the PQ Mineral Resource to the north.

Figure 1. PQ South Long projection showing pit extension drill hole locations.

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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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B. DEVELOPMENT & EXPLORATION

B1.0 HELLYER MINE PROJECT (HMP) Fossey & Hellyer Resources

The most significant advance for the HMP during the Quarter was execution of a binding conditional agreement to purchase from Intec Ltd the Hellyer processing plant, associated infrastructure and the Hellyer Mining lease for $4.0 million to be paid on settlement (of which $0.5 million has been paid by a refundable deposit) plus a Processing Royalty of $2.50/tonne processed through the mill, capped at $5.0 million. (Refer ASX Report 11 December 2008)

The HMP Study is focussed on developing a mining and processing plan based on combined Mineral Resource base (Indicated and Inferred) of 830,000 tonnes grading 9.1% zinc, 4.6% lead, 0.3% copper, 120g/t silver and 2.5g/t gold at the Fossey Zone, an exciting high grade prospect immediately south of the Hellyer deposit and an initial combined Mineral Resource (Indicated and Inferred) of 748,000 tonnes grading 7.0% zinc, 4.1% lead, 0.3% copper, 87 g/t silver and 1.3 g/t gold around the now closed Hellyer Mine workings. (Refer September 2008 Quarterly Report).

B1.1 The Hellyer Mill & Associated Infrastructure (Under binding conditional offer)

B1.1.1 The Assets

The assets to be acquired include:

• The 1.5mtpa crushing, grinding, flotation concentrator plant currently on care and maintenance, including a 2MW SAG and Ball milling circuit and a sizable spares inventory.

• All associated supporting infrastructure including grid power, storage sheds, spares inventory, warehouses, water treatment facilities and railway line access.

• A 300kW, electric cutter suction dredge and spares recently utilised to reclaim tailings for the retreatment project.

• The remaining Hellyer tailings resource. In April 2008 Intec reported a “pre-mining” resource comprising Hellyer tailings of 11 million tonnes at 2.8% zinc, 3.0 % lead, 88 g/t silver and 2.6 g/t gold. Intec’s Hellyer zinc concentrate project processed approximately 2 million tonnes of this material through the Hellyer Mill, and Bass Metals will acquire the residual tailings.

• The Hellyer Mine Lease (CML103/1987), which Bass Metals already holds a sublease over giving it the mineral rights. Purchase of the Mining Lease transfers the environmental management responsibility to Bass Metals and it will be required to post a $0.99 million security deposit with Mineral Resources Tasmania.

Bass Metals’ 100% owned Hellyer and Fossey deposits total 1.6 million tonnes of moderate to high grade massive sulphide base metal resources, located within 1 km of the Hellyer processing plant as illustrated in Figure 3. The mine development concept for the HMP is to utilise the Hellyer Mill to process ore from Fossey and supplement it with ore from other sources such as the Hellyer or Que River Mineral Resources to the extent that grade and metallurgical characteristics allow.

B1.1.2 Care & Maintenance

BSM has assumed management of the Hellyer Mill and the current care and maintenance functions and is liable for site costs from the 19th of December 2008 until settlement of the acquisition. This will ensure continuity of management for this valuable asset and is fully refundable if settlement does not occur for any reason outside of BSM’s control.

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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BSM has commissioned Como Engineers Pty Ltd, to conduct on behalf of BSM a detailed review of the Care and Maintenance schedule in collaboration with the current local contractors Maintenance & Engineering Services Pty Ltd and examine the staged refurbishment of selected process modules and over time, to re-establish the original selective flotation flow sheet from that used as recently as September 2008 to produce a bulk concentrate from the re-processing of historic mine tailings.

A site water management plan is currently being developed in conjunction with a Hellyer tailings storage facility protocol that employs similar acid mine drainage management innovations successfully implemented at the Company’s Que River operations.

Figure 3: Hellyer – Que River Location Plan

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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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B1.2 Fossey Zone Resource Delineation

The second phase of the Fossey Zone drilling program, consisting of infill drilling on nominal 25 metre spaced sections, was completed during the Quarter. This closer spaced drilling will provide greater confidence in the geological interpretation and resources estimated using the initial 50m spaced drilling of Phase 1. Drilling focussed on ore body margins and the results of the program were largely as expected and provide resolution for initial stoping block designs. A summary table of drill-hole locations, completed during the Quarter, is shown in Table 5 and a schematic long projection in Figure 4.

Table 5 Fossey Zone – Drill-hole Collar Details

HOLE	COLLAR NORTH	COLLAR EAST	COLLAR RL	AZ (grid)	DIP	EOH
HLD986*	10125.7	5675.5	682.6	270	-67	311.1m
HLD987*	10175.0	5610.5	675.2	270	-61	230.7m
HLD988	10125.7	5675.7	682.6	270	-53	283.3m
HLD989	10175.0	5683.3	679.2	270	-57	294.4m
HLD990	10175.0	5683.3	679.2	270	-60	311.4m
HLD991	10225.0	5620.0	674.0	270	-70	261.8m

(*Commenced in September completed in October)

Assay results received during the Quarter generally confirm the continuity of high grade mineralisation on sections 10125mN, 10175mN and 10225mN. A summary of assays results is presented in Table 6 and schematically in Figure 4.

Table 6: Fossey Zone Assay Composites

From (m)	To (m)	Drilled Interval (m)	Zn (%)	Pb (%)	Cu (%)	Ag (g/t)	Au (g/t)
HLD979 (at a 5% (Pb+Zn) cutoff)
202.55	212.50	9.95	7.4	4.7	0.4	56	1.5
HLD981– no significant intercepts at 5% (Pb+Zn) cutoff
HLD983 (at a 5% (Pb+Zn) cutoff)
206.8	217.7	10.90	8.9	5.4	0.3	99	1.5
HLD984 (at a 5% (Pb+Zn) cutoff)
261.45	262.90	1.45	22.3	10.1	0.7	172	2.3
HLD985 (at a 5% (Pb+Zn) cutoff )
187.10	230.6	43.50	12.9	7.7	0.4	207	2.6
Including
202.8	211.2	8.4	17.9	9.0	0.6	311	3.1
217.1	229.7	12.60	22.4	13.5	0.5	367	4.2
HLD986 (at a 5% (Pb+Zn) cutoff)
258.00	262.35	4.35	10.2	6.3	0.3	218	2.6
269.30	277.00	7.70	12.3	5.5	0.4	187	2.7

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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B1.3 Mining Study

The conceptual mine plan currently under consideration assumes that the Fossey Mineral Resource forms the “base load” for a mining and milling operation of approximately 250,000 – 300,000tpa. Additional ore may also be sourced from the Hellyer and Que River inventory to supplement production as part of a staged evaluation and development process.

The mining study is well advanced with a mine access evaluation completed that examined four different access strategies to reach the Fossey resource. Options include a new 1.0km decline into the base of the mineralisation and a strategy utilising the existing mine development at Hellyer for primary access.

Figure 4: Fossey Zone Schematic Long Projection for Holes Reported this Quarter

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B1.4 Metallurgy

Samples of Fossey Zone material were sent to McArthur Ore Deposit Assessments Pty Ltd (MODA) for mineralogical evaluation. Quantitative mineralogy assessment undertaken on 17 drill hole composites has characterised the various mineralisation types and compared them with historical Hellyer plant feed.

The results of this study are regarded as positive as generally Fossey samples exhibited enhanced properties compared to the “typical” Hellyer ore type. This is important because whilst the Hellyer ore type was metallurgically challenging, 16 million tonnes of it was mined and processed successfully through the existing Hellyer Mill.

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 is being undertaken at the Burnie Research Laboratory where members of staff have particular competence in the mineral processing of polymetallic ore from volcanogenic massive sulphide deposits. Personnel have had a long involvement with flow sheet development and operation of the Hellyer concentrator and the results to date support the predictions from MODA’s mineralogical observations that the preferred treatment option is sequential flotation of copper, lead and zinc with minimal production of bulk concentrate.

Results to date suggest that -

• Fossey Zone preliminary grind at 80% passing 50 microns is coarser than that required for Hellyer (80% passing 40 - 45 microns).

• Lead metallurgy is better than Hellyer.

• Zinc metallurgy is better than Hellyer which only achieved +70% recovery to zinc concentrate after running for approximately 5 years.

• Copper metallurgy is at least as good as or better than Hellyer, which made a low grade concentrate at modest recovery.

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 and the results are from open circuit tests which usually lowers recovery.

The results of the metallurgical test work done to date confirms an earlier prediction based on the quantitative mineralogy that the Fossey Zone mineralisation would at least equal and most probably surpass the metallurgical performance of Hellyer ore if treated with the same flow sheet.

B1.5 Regulatory Approvals / Permitting

A Notice of Intent for a mining and processing operation at Hellyer was lodged on 23rd December 2008 with the Board of Environmental Management and Pollution Control - Tasmanian Environment Protection Authority.

B2.0 REGIONAL EXPLORATION

Highlights of limited regional style exploration work carried our during the December Quarter are summarised in the following section

B2.1 Magnet Mine - Waratah (EL64/2004)

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

During the Quarter 4 diamond drill holes comprising 468.8 metres were drilled along a 200 metre strike extent of the historic Magnet Mine to explore for remnant hangingwall mineralisation and parallel lodes which may be amenable to open-cut mining. The program was scaled down from the planned 8 holes to 4 due to the observation of gossan (indicating deep weathering) development down to 40 metres below surface. This adversely impacts on the open-cut potential of the area. The drilling intersected minor sphalerite-rich vein/breccia zones but these do not warrant any follow-up. Assay results were received for the first two holes (Table 7 & 8), and visual results for the remaining holes indicate only low grade mineralisation also.

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: Drill parameters Magnet Project

HOLE	COLLAR NORTH (AMG66)	COLLAR EAST (AMG66)	COLLAR RL	AZ (GRID)	DIP	EOH	Comment
MGD002	5410770	370043	564	115	-45	132.8m	Lowgrade.Assays received.
MGD003	5410770	370043	564	115	-58	123m	Lowgrade.Assays received.
MGD004	5410694	370004	572	125	-45	122m	Lowgrade.Assayspending.
MGD005	5410854	370066	564	105	-55	137.3m	Sub-grade.Assayspending

Table 8: Drill Results – Magnet Project

From (m)	To (m)	Width m)	Zn (%)	Pb (%)	Cu (%)	Ag (g/t)	Au (g/t)
MGD002(at a 1%(Pb+Zn) cutoff)
88.3	94.8	6.5	1.8	0.9	0.01	72	NA
109.8	113.3	3.5	3.3	0.5	0.01	71	NA
Incl. (at a 5%(Pb+Zn) cutoff)
112.75	113.3	0.55	5.5	1.1	0.01	120	NA
115.3	120.0	1.7	4.8	0.7	0.01	63	NA
Incl. (at a 5%(Pb+Zn) cutoff)
115.3	116.2	0.9	6.9	1.0	0.01	96	NA
MGD003(at a 1%(Pb+Zn) cutoff )
107.4	119.2	11.8	3.1	1.4	0.01	189	NA
Incl. (at a 5%(Pb+Zn) cutoff)
107.4	110.4	3.0	4.1	3.4	0.02	348	NA

B2.2 North Rosebery (EL54/2004)

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

Interpretation of assay results from the partial digest soil geochemistry survey completed in the September 2008 Quarter suggests several anomalies indicative of extensions of the Rosebery mineralising system to the south have been identified. Field checking will be undertaken to determine their true relationship to the Rosebery Fault, as an anomaly in the hangingwall of the fault will be more significant (reflective of buried mineralisation) than an anomaly located on the fault.

B2.3 Oonah (EL63/2004)

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

A significant work programme was undertaken at the Oonah prospect during the quarter; key elements included (refer Figure 5):

• Chanel sampling along the line of lode at the historic Montana Mine with a best result of 7 metres at 4.4 % zinc, 2.8 % lead and 650g/t silver Ag.

• Detailed mapping of the Montana workings to understand the orientation of the mineralised structure intersected during the trenching program.

• A reverse circulation (RC) drilling program comprising 10 drill holes for 500 metres testing for shallow, potentially open pitable mineralisation.

• Drill holes MO3 and MO1 intersected the most significant mineralisation. A Niton XRF analysis on these intersections indicated:

• Drill hole MO3 intersecting 5 metres at 4.3% lead 0.9% zinc and 650 g/t silver; and,

• - Drill hole MO1 intersecting 6m at 1.6% lead, 0.44% zinc and 10 g/t silver.

• A total of 154 samples have been sent to the Burnie Laboratory for analysis results are expected late January.

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 drilling and mapping indicated the structure controlling the alteration and mineralisation was a moderately dipping shear zone that can be mapped at surface. However, with historic workings extending to surface there is limited potential to define an open pitable resource at this prospect.

B2.4 Loyetea (EL52/2004)

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

The Peak Hill Prospect was generated by the airborne VTEM survey completed earlier in 2008 with further modelling of the magnetic data resulting in an interpreted conductive anomaly (highlighted in the VTEM data) situated below a magnetic body (likely to be semi-massive magnetite as found at nearby prospects). This interpretation is consistent with the zonation of skarn systems whereby alteration proximal to the mineralising granite comprises diopsidegarnet assemblages and progresses to sulphide-rich and magnetite-hematite alteration more distant from the granite. The magnetic-conductive target is considered to be prospective for skarn-style precious and base metal mineralisation. Some further surface work is planned and subject to results the Company plans to test the anomalous zone by drilling later this year.

B2.5 Wilmot (EL51/2004)

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

A Ground EM survey was completed over the VTEM anomaly reported previously. The results from this survey indicates that the anomalism detected with the VTEM system was likely due to clays and/or gravels at the base of a tertiary basalt flow. As a result no further work is planned and the tenement will be relinquished.

B2.6 Bonds Range (EL28/2002)

(Bass Metals Ltd 70% & Adamus Resources Limited 30%)

At the Lea Creek prospect an IP (Induced Polarisation) survey to detect disseminated sulphides was conducted covering a co-incident EM/magnetic anomaly situated on the regional Kauri Fault. The survey resulted in identification of a chargeable anomaly within approximately 100 metres of the interpreted Kauri Fault position. Further assessment of this anomaly is warranted because other deposits in the area such as Frontier Resources Ltd’s Narrawa Au-Ag-(Zn+Pb) and Stormont Au-Bi deposits appear to have similar spatial relationship to faults such as the Kauri Fault and the Dolcoath Granite

B2.7 Farrell Line Project (EL47/2003) (Bass Metals Ltd 100%)

A consulting geologist is undertaking a review of the historical exploration and mining completed over the Farrell Line Project with the aim to delineate drilling targets. The Company is targeting potential extensions of known lodes or discovery of new lode positions. The small scale of the high-grade mineralised targets makes targeting drill holes problematical.

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 5: Summary Plan of Montana Prospect at Oonah

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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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B2.8 Heazlewood (EL31/2003)

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

This is a high priority early stage prospect, distinct from, and more prospective than the Jones Creek prospect because of the strong ground EM anomaly generated recently as part of the follow-up to the airborne VTEM survey completed in early 2008. This confirmed the presence and location of a conductive anomaly with characteristics considered consistent with a sulphide conductor. Geological mapping and soil sampling of the area is underway with the view to drill test the EM target in the next quarter. Logistical constraints precluded drilling this anomaly first, ahead of the Jones Creek prospect.

At the Jones Creek prospect a single 296.5 metre diamond drillhole (Table 9) was completed at to test the co-incident geophysical (VTEM) and soil (0.3%Ni with occasional 0.5%Ni peaks) anomaly in the Heazlewood Ultramafic complex. No significant sulphide nickel mineralisation was observed and Niton XRF analyses of the drill-core confirmed the lack of nickel mineralisation. The source of the surface soil geochemical and geophysical anomalies has not been explained and downhole geophysics will be undertaken in mid-2009.

Table 9: Summary details of Heazlewood Drillholes

HOLE	COLLAR NORTH (AMG66)	COLLAR EAST (AMG66)	COLLAR RL	AZ (GRID)	DIP	EOH	Comment
HJD001	5413450	360940	336	135	-60	296.5m	No visible mineralisation.

B 2.9 Oz Minerals Hellyer Exploration Alliance (HEA)

(Oz Minerals earning 70%)

No ground work was completed on the alliance joint venture areas during the Quarter. Assay results were received from the Highpoint Joint Venture drilling (Diamond drill hole MS-2) with a peak assay of 0.15m at 0.7% Pb and 0.53% Zn from 777.8 – 777.95 metres. Down-hole geophysics surveys of MS-2 were negative with no in-hole or off-hole electrical conductors detected.

B2.10 Venture Minerals Iron-Tin-Tungsten Joint Venture

Bass Metals and Venture Minerals Limited (VMS) have formed a joint venture 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. During the Quarter VMS received all of the exploration data for the tenements and Bass Metals understands that VMS have selected certain areas with magnetic Sn-W-Fe skarn targets for further geological mapping, stream sediment and rock chip sampling work in the next 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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C. CORPORATE ACTIVITIES

C1 Financial Position

The Company’s closing cash position at the end of the December Quarter was $7.78 million a $3.44 million increase from the end of the September Quarter balance of $4.34 million. The main cash flow components comprised:

Ore sales (provisional payments) $6.10 million Hedge settlements $3.46 million Exploration ($1.25) million Que River Mine development & operating costs ($3.68) million Capital Costs ( including refundable deposit for the Hellyer Mill purchase ) ($0.61) million Corporate administration costs ($0.61) million

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

C2 Hedging

During the December Quarter the Company received $3.46 million in hedge settlements. Included in this amount was $3.14 million received from the close out of commodity put options (re ASX announcement on 13 October). The balance relates to settlement of commodity puts pre the above and to forward sales contracts which matured during the quarter.

Bass Metals maintains a Quotational Period hedging programme to mitigate the risk of significant price movements between receipt of provisional payments and the month in which the lead and zinc prices are fixed (Quotational Period). This generally comprises short term forward sales contracts for lead and zinc in AUD terms.

C3 Capital Structure

There were no changes to Company’s issued capital during the December Quarter.

C4 Other Corporate Matters

During the Quarter, the Board welcomed Mr. Tony Treasure to the Board as a non-executive Director representing Metals Finance Corporation (ASX:MFC) which holds 19.9% of the issued capital in the Company.

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

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”) 31 December 2008	Quarter ended (“current quarter”) 31 December 2008
	Bass Metals Ltd
	ABN 31 109 933 995 Consolidated statement of cash flows
			31 December 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 – Bank guarantee deposits/receipt for Research & Development offset Net Operating Cash Flows		Current quarter $A’000		Year to date (6 months) $A’000
		6,103 (1,251) (1,311) (2,370) (610) - 86 (1) - (52)		9,687 (2,324) (2,579) (4,238) (1,047) - 173 (2) - 292
		594		(38)
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)		- - (608)* - - - - 3,456		- - (650) - - - - 4,049
		2,848		3,399
		3,442		3,361

• includes $500 000 deposit for the Hellyer mining lease and operating infrastructure.

• See chapter 19 for defined terms.

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Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	3,442	3,361
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) - -	- - - (10) - -
	(5)	(10)
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	3,437 4,344 -	3,351 4,430 -
	7,781	7,781

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
		42
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.

Appendix 5B Page 2

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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
	1,010
	1,200
Total	2,210

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		184		919
5.2 Deposits at call		7,597		3,425
5.3 Bank overdraft
5.4 Other (provide details)
Total: cash at end of quarter(item 1.22)		7,781		4,344

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.

Appendix 5B Page 3

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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: 30 January 2009 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.

Appendix 5B Page 5

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