GREENWING RESOURCES LTD — Capital/Financing Update 2012

Jan 24, 2012

ASX / Media Release

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25 January 2012

Operations Update and Outlook

Bass Metals Ltd ( ASX: BSM ) (“ Bass ” or “the Company ”) has completed an initial financial assessment of the Hellyer mining and processing operations. This assessment takes into account recently updated technical inputs involving mining dilution and metallurgical recovery which have emerged from the most recent milling campaign and revisions of the mine plan. The results of this financial assessment indicate a potentially significant deterioration in the financial performance of the operation to the point where it may become marginal in the current AUD metal price environment. The information reported below provides a background on the recent mining and processing outcomes and the new technical issues which have recently emerged, and also describes the Company’s initial conclusions and proposed steps in response to this information.

Mining – Fossey Underground Mine:

Ore production from the Fossey underground mine for the December quarter in terms of tonnage and grade is summarised in Table 1 below.

Table 1: Mine Ore Production

Mine parameter	Units	DecemberQuarter	DecemberQuarter	Variance %	FY2012- YTD
		Actual	Budget
Ore production	T	102,600	103,759	-1	200,479
Zinc grade	%	6.4	6.9	-7	8.0
Lead grade	%	3.7	3.9	-5	4.6
Silvergrade	g/t	98	87	12	104
Goldgrade~~1~~	g/t	1.45	1.98	-27	1.5
Copper grade	%	0.24	0.22	9	0.34

(1) Note Gold comprises approximately 5% of the overall revenue mix.

Further detailed infill drilling at Fossey and Fossey East was completed during the quarter with results being utilised to update the grade estimates in both areas. The grades of ore mined during the quarter have reconciled closely with the resource model but have been affected by higher dilution than originally anticipated from waste wall rock in certain stopes. The Company has a process of ongoing geotechnical monitoring and risk review monitoring of changing rock strengths as the mine voids are progressively enlarged, the data from which is incorporated in the production estimates.

The mining costs for the December quarter were $115/tonne mined, being 11% over budget expectations of $104/tonne, though costs for the year to date are on budget.

The Company is currently preparing a revised mine plan incorporating the Fossey East resource, updated infill grade-control drilling and updated geotechnical assumptions based on current observations with respect to mining dilution.

Processing – Hellyer Concentrator

The performance of the Hellyer flotation concentrator was mixed through the December quarter which involved campaigns 6 and 7. Campaign 6, ran during October and processed approximately 67,000 tonnes of ore, including a small proportion of spillage reclaim. This campaign produced above budget tonnages of zinc and lead concentrates but was under budget on production of copper-silver concentrate. Campaign 7, completed on 23 December 2011 saw significant improvements in the performance of the copper circuit but a downgrading in performance of the lead circuit with the zinc circuit being relatively stable as summarised in Table 2 below. Overall for the quarter, lead and zinc concentrate production was within 10% of budget.

Level 1, 91 Havelock Street WEST PERTH WA 6005 PO Box 1330 WEST PERTH WA 6872 Telephone (08) 6315 1300 Facsimile (08) 9481 2846 www.bassmetals.com.au

ASX / Media Release

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Table 2: Processing and concentrate production summary	Table 2: Processing and concentrate production summary	Table 2: Processing and concentrate production summary	Table 2: Processing and concentrate production summary	Table 2: Processing and concentrate production summary	Table 2: Processing and concentrate production summary
	Units	**December Quarter **		Variance %*	FY2012- YTD
		**Actual **	Budget
PROCESSING Ore Treated Concentrator Feed Grades zinc lead silver gold copper	t % % g/t g/t %	133,793 7.4 4.5 89 1.57 0.30	136,364 7.4 4.2 87 1.89 0.26	-2 0 5 3 -17 17	186,656 7.8 4.8 97 1.65 0.34
CONCENTRATE PRODUCED (T&G) Zinc concentrate zinc grade silver grade gold grade Lead concentrate lead grade silver grade gold grade Copper-Precious metals concentrate copper silver gold lead Metal Recoveries Zinc to zinc Conc. Lead to lead Conc. Copper to copper Conc. Silver overall Gold overall	t % g/t g/t t % g/t g/t t % g/t g/t % % % % % %	12,834 53 148 1.7 6,323 56 768 3.1 715 17 4,204 14.4 11 69 60 30 82 25	13,780 53 150 2.4 6,931 58 478 2.3 903 17 4,319 9.0 7 71.5 70 45 75 13	-7 1 -2 -27 -9 -3 61 33 -21 -1 -3 60 57	18,894 53 154 1.5 9,289 58 727 2.5 966 18 4,753 15.8 10

*Note rounding errors may occur.

The reduced metallurgical performance of the lead circuit is recent and unexpected as routine, daily estimates of lead and zinc concentrate production indicated that the respective metal recoveries were according to plan. A metallurgical balance was completed late last week based on receipt of the final Burnie Port weigh bridge results for all Campaign 6 and 7 concentrate truck deliveries up to 17 January, having emptied the Hellyer concentrate shed completely. This highlighted that lead recovery for the quarter was actually 60% rather than the higher values estimated during the campaign. (refer Table 2 above and Figure 1 on page 4).

Significant operational improvements were implemented around the copper circuit during Campaign 7 resulting in a lift of copper recovery from 25 % to 39% as explained above. The reduced performance of the lead circuit was not detected during the campaign, however site management considers there are further options available to improve the lead recoveries and this will be a key focus for Campaign 8, scheduled to commence on 30 January 2012.

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ASX / Media Release

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The cost per tonne of ore milled for the quarter was $28/tonne of ore processed, 20% below the budgeted cost of $35/tonne; and includes all of the fixed costs incurred during the non-milling period.

Company Response to New Information

The operations team is currently reviewing and updating the project mining and processing schedules and budget. The interim findings indicate that without short to medium term improvement or alternative higher grade ore sources the operation maybe marginal at current projected metal prices.

The updated operating plan incorporates the recent operational outcomes and commodity price data, such as:

• Mining - modified mining shapes based on the latest geotechnical assessments incorporating higher levels of planned mining dilution, reducing the ore grades.

• Processing – adjusting downward the metallurgical recoveries to reflect recent “averaged” production performance resulting in lower payable metal content;

• Metal prices – for long-term planning incorporating metal prices at current projected levels.

The initial financial assessment and modelling work completed to date indicates that the three factors above in combination, for a sustained period of the project life are likely to have a significant adverse impact on the longer term financial performance of the project, compared to the original estimates.

Depending on the severity of such an adverse impact, there is a risk that the Company will not be able to meet its current secured debt repayments schedule. The secured creditor has requested further information from the Company, including modified mine plans, and is undertaking an evaluation process (in consultation with the Company) on the Company's ability to meet the debt repayment schedule and the options available to ensure debt repayment.

Work on the updated operating plan will proceed in tandem with discussions with the secured financier. The Company is currently aiming to complete the updated operating plan and to reach agreement with the secured financier in relation to any changes to the existing debt repayment schedule by 10 February 2012.

Pending the finalisation of a modified operating plan and completion of discussions with the secured financier, the Company considers that the uncertainty in the Company's overall financial position is such that the Company’s shares should remain suspended from trading. Until those matters are resolved, the Company is not in a position to provide sufficient information to properly quantify the adverse impact on the Company. The Company will, however, provide the market with regular updates on developments in relation to these matters.

Until these issues are resolved, the Company has scaled down mining activities and plans to treat all stockpiled and possibly readily accessible ore, whilst reviewing longer term mining options. Expenditure on all non-essential activities including exploration has been curtailed to preserve cash flow and stabilise the business in the short term.

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ASX / Media Release

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Figure 1: Processing and concentrate production summary over Life of Mine.

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Processed Tonnes and Grade (Pb+Zn) Zinc concentrate produced
80,000 16% 9,000 60%
70,000 14% 8,000 58%
60,000 12% 7,000 56%54%
6,000
50,000 10% 5,000 52%
40,000 50%
8% 4,000
30,000 48%
6% 3,000 46%
20,000
2,000 44%
10,000 4% 1,000 42%
0 2% 0 40%
Ore Treated Pb+Zn Grade Zinc concentrate zinc grade
Lead concentrate produced Copper concentrate produced
4,500 62% 400 20%
4,000 60% 350
3,500 58% 300 18%
3,000 56%
250 16%
2,500 54%
200
2,000 52%
1,500 50% 150 14%
1,000 48% 100 12%
500 46% 50
0 44% 0 10%
Campaign Campaign Campaign Campaign Campaign Campaign Campaign
#1 #2 #3 #4 #5 (Aug) #6 (Oct) #7 (Dec)
Lead concentrate lead grade Copper-Precious metals concentrate copper grade
Tonnes
Conc. Grade
Tonnes
Conc. Grade Conc. Grade
Tonnes
Conc. Grade
Tonnes
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ASX / Media Release

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COMPETENT PERSONS STATEMENTS

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.

Contact

Mike Rosenstreich Managing Director - Bass Metals Limited T: +61 (0)8 6315 1300

Media

David Brook Professional Public Relations Mob : +61 0 415 096 804

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