Placing and Admission to AIM

July 2004

Nomad Property Broker

DURLACHER

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt about the contents of this document, you should consult an independent professional adviser authorised under the Financial Services and Markets Act 2000 (the "FSMA") who specialises in advising on the acquisition of shares and other securities

Eurogold Limited
Registered in Western Australia with Australian Company Number 009 070 384

Placing of 48 million New Shares at a price of 5p per Share to raise gross proceeds of £2.4 million

and Admission to trading on the Alternative Investment Market

Nominated Adviser RFC Corporate Finance Ltd

Broker Durlacher Ltd

Issued Share Capital immediately following the Placing:

204,165,208 issued Shares (no par value)

IMPORTANT NOTICES

Application has been made for the Ordinary Shares to be admitted to trading on the Alternative Investment Market of the London Stock Exchange plc ("AIM"). AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM Securities are not admitted to the Official List of the United Kingdom Listing Authority.

A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser.

London Stock Exchange pic has not itself examined or approved the contents of this Admission Document.

This document is an Admission Document drawn up in accordance with the AIM Rules and has been issued in connection with the application for Admission. A copy of this Admission Document which comprises a prospectus drawn up in accordance with the Public Offers of Securities Regulations 1995 (as amended) (the POS Regulations) has been delivered to the Registrar of Companies in England and Wales in accordance with Regulation 4(2) of the POS Regulations.

It is expected that Admission will become effective and dealings in the Ordinary Shares will commence on AIM on or about 20 July 2004.

The Directors of Eurogold Limited, whose names appear on page 5 of this Admission Document, accept responsibility for the information contained in this Admission Document, including individual and collective responsibility for compliance with the AIM Rules. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Admission Document is in accordance with the facts and does not omit anything likely to affect the import of such information.

RFC Corporate Finance Ltd (RFC) is the Company's nominated adviser for the purpose of the AIM Rules. Its responsibilities as the Company's nominated adviser under the AIM Rules are owed solely to the London Stock Exchange plc and are not owed to the Company or to any Director or any other person. RFC will not be responsible to such persons for providing protections afforded to customers of RFC nor for advising them in relation to the arrangements described in this Admission Document. No representation or warranty, express or implied, is made by RFC or Durlacher as to any of the contents of this Admission Document (without limiting the statutory rights of any person to whom this Admission Document is issued).

Durlacher Ltd (Durlacher) is the Company's broker and is regulated by the Financial Services Authority. It is acting for the Company and no one else in connection with the proposed arrangements described in this Admission Document. It will not regard any other person as its customer nor be responsible to any other person for providing protections afforded to the clients of Durlacher nor for providing advice to any other person in connection with the arrangements described in this Admission Document. Durlacher will not be responsible to such persons for providing protections afforded to customers of Durlacher nor for advising them in relation to the arrangements described in this Admission Document. No representation or warranty, express or implied, is made by Durlacher as to the content of this Admission Document (without limiting the statutory rights of any person to whom this Admission Document is issued).

This Admission Document does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to The distribution of this Admission Document in jurisdictions other than the United Kingdom may be make such an offer. restricted by law, and therefore persons into whose possession this Admission Document comes should inform themselves about and observe any such restrictions.

Eurogold's Shares are listed on the Australian Stock Exchange Limited (ASX) and Eurogold is required to lodge a copy of this Admission Document with ASX. This document does not however constitute a prospectus pursuant to the Australian Corporations Act 2001.

The whole of this document should be read and your attention is drawn to the "Risk Factors" Section in Part 5.

			Page
Investment Summary			3
		The Placing, Admission Statistics and Expected Timetable	4
Corporate Directory			5
		Definitions and Glossary of Technical Terms	6.
Part 1		Information on the Group	8
	1.	Introduction
	2.	Description of the Company's Activities
	3.	Corporate History
	4.	Legal Claims Against the Group
	5.	Summary Capital Structure
	6.	Summary Financial Information
	7.	Prospects, Future Strategy and Objectives
	8.	Dividend Policy
	9.	Reasons for the AIM Listing
	10.	Directors and Senior Management
	11.	Corporate Governance
	12.	Admission, Settlement (CREST) and Dealings
	13.	Further Information
Part 2		Taxation Implications for UK Residents of Investing in Eurogold	17
Part 3		Competent Person's Report	19
Part 4		Accounting Information on the Group	68
	$\mathbf{1}$ .	Independent Accountant's Report
	2.	Pro-forma Statement of Consolidated Net Assets
	3.	December 2003 Half Year Report and Review
Part 5		Risk Factors	108
Part 6		Additional Information	112

The following information should be read in conjunction with the full text of this Admission Document from which it is derived.

Eurogold Limited is a gold producer and explorer with assets in the Transcarpathia region of northern Romania and south west Ukraine.

Romanian Assets

Eurogold holds a 50% interest in Transgold, which owns and operates a CIL processing plant located in Baia Mare in Romania, with the capacity to treat up to 2.5 million tonnes per annum of gold and silver bearing ore and other feedstock material.
The CIL plant was built in 1998 at a cost of US\$28m and is now in its fifth year of production.
The plant was initially constructed to reprocess two old tailings dams in Baia Mare. Reprocessing of the first tailings dam has been completed with a 98% reconciliation to the initial resource estimate. Reprocessing of the second tailings dam is expected to commence in mid 2005.
Transgold also treats slurried ore from the state owned mining company on a toll treatment basis at the plant. as well as hard rock ore, concentrates and tailings from other sources within Romania.

Ukrainian Assets

Eurogold has acquired an effective 75% of the Saulyak Gold Project in south west Ukraine which is located within 60kms of the Baia Mare CIL plant.
As reported by RSG Global in its Competent Persons Report (in Part 3), the Saulyak deposit has an estimated "resource" of 578,000 ounces of gold (2.1 million tonnes at 8.4g/t) in the Soviet system C1 and C2 categories. A further 1.3 million ounces has been estimated under the broader P1 and P2 categories.
Over 9km of underground development work has been completed at the Saulyak deposit for exploration purposes, reducing the up front capital cost for developing the deposit into a mining operation.
A rail link within 1km of the Saulyak deposit which runs to Baia Mare provides the opportunity, subject to gaining various approvals, to process the Saulyak ore at Transgold's CIL plant.
Preliminary metallurgical testwork has indicated that a gold recovery of over 90% is likely from the CIL processing of the Saulyak ore, with relatively low cyanide and lime consumption rates.

The Directors believe there is significant exploration potential in the region, which is relatively under-explored using modern techniques. The Group intends to carry out ongoing systematic and cost effective exploration on its tenements in the region, which cover over 400km². The Directors also intend to pursue other gold mining opportunities in the region that complement and leverage off its existing assets.

The Group's board and management team have substantial experience in mine development and operation, finance and exploration.

Following the Placing, Eurogold will have a market capitalisation of approximately £10.2 million at the Placing Price (assuming exercise of the Put and Call Agreement). The Company proposes to use the funds from the Placing to complete a feasibility study for the development of the Saulyak Gold Project, satisfy acquisition payment obligations in relation to the Ukrainian Assets and for working capital.

There are significant risks associated with the exploration, mining, processing and marketing of mineral products, and with operating in Eastern Europe. Your attention is drawn to the Risk Factors set out in Part 5 of this Admission Document.

PLACING

Placing price per New Share	5p
Number of New Shares in Placing	48,000,000
Total amount of the Placing	£2,400,000

The Company proposes to use the funds from the Placing to complete a feasibility study for the development of its Saulyak Gold Project located in the Ukraine, to satisfy the final acquisition payment obligations in respect of the Ukrainian Assets and for working capital.

ADMISSION STATISTICS

Number of Shares on issue following the Placing	174, 165, 208
Shares which may be issued subject to Put and Call Agreement	30,000,000
Effective number of Shares on issue following the Placement (assuming exercise under the Put and Call Agreement)	204, 165, 208
Market capitalisation on Admission (post Placing at placing price) including the 30,000,000 Shares which may be issued pursuant to the Put and Call Agreement	£10.2 million

EXPECTED TIMETABLE

Date of Publication of Admission Document	14 July 2004
Delivery of Depository Interests into CREST	19 July 2004
Dealing to commence on AIM	20 July 2004

EXCHANGE RATE

The following exchange rates (being the approximate market rates as at 22 June 2004) have been used throughout this document with the exception of Parts 3 and 4:

£1.00 = A\$2.60 $A$1.00 = US$0.70$

Corporate Directory

Directors	Peter Lynton Gunzburg (Executive Chairman) Brett Montgomery (Non Executive Director) Dennis Wayne Franks (Non Executive Director) Christopher John Barker (Ukraine Operations Director)
	all of Level 4, 172 St George's Terrace, Perth, Western Australia 6000
	Neil Thacker MacLachlan (Non Executive Director)
	of 1 Victoria Square, London SW1W 0QY
Company Secretaries	Pauline A Collinson Les Gyozo Kozel
Registered and Operating Office	Level 4 172 St George's Terrace Perth, Western Australia Telephone: +61 8 9481 0572 Facsimile: +61 8 9481 3586
Website	www.eurogold.com.au
Nominated Adviser	RFC Corporate Finance Ltd Level 8 250 St George's Terrace Perth, Western Australia 6000
Broker	Durlacher Ltd Moorgate Hall 155 Moorgate London EC2M 6XB
Competent Person	RSG Global Pty Ltd 1162 Hay Street West Perth, Western Australia 6005
Auditor and Reporting Accountant	Ernst & Young Level 32, Central Park Building 152-158 St George's Terrace Perth, Western Australia 6000
Solicitors to the Company	As to Australian Law: Hardy Bowen Level 1 28 Ord Street West Perth, Western Australia 6005	As to English Law: Watson, Farley & Williams 15 Appold Street London EC2A 2HB
Registrars	In Australia: Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George's Terrace Perth, Western Australia 6000	In the United Kingdom: Computershare Investor Services plc PO Box 82 The Pavilions Bridgwater Road Bristol BS99 7NH

Definitions

The following definitions apply throughout this Admission Document, unless the context requires otherwise.

ACN	Australian Company Number
Admission	the admission of the Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules
Admission Document	this admission document issued by the Company
AIM	the Alternative Investment Market of the London Stock Exchange
AIM Rules	the rules governing the operation of AIM as published by the London Stock Exchange from time to time
ASX	Australian Stock Exchange Limited
AUD or A\$ or cents	Australian currency
Australian Corporations Act	The Australian Corporations Act 2001
Beregove Gold Project	the prospective gold projects of Muzhievo and Kvasova adjacent to the town of Beregove in Ukraine
Board or Directors	the directors of the Company whose names are set out on page 5 of this Admission Document
CHESS	Clearing House Electronic Sub-register System used for settlement under the ASX Listing Rules
Code	the UK City Code on Takeovers and Mergers
Company or Eurogold	Eurogold Limited, a company incorporated in Australia, and where relevant, its subsidiaries
Competent Person's Report	The report of RSG Global set out in Part 3 of this Admission Document
Constitution	the constitution of the Company, a summary of which is set out in Section 7 of Part 6 of this Admission Document
CREST	the computerised system for trading shares in uncertificated form in the UK operated by CRESTCo Limited

DOCA	Deed of Company Arrangement under the Australian Corporations Act
Durlacher	Durlacher Ltd, a company incorporated in England
EBL	Eurogold (Bermuda) Limited, a company incorporated in Bermuda
EHBL	Eurogold Holdings (Bermuda) Limited, a company incorporated in Bermuda
Explorer	SC Explorer SA, a company incorporated in Romania
GBP or £ or pence or p	UK currency
Group	the Company and its subsidiaries
JORC Code	The Australasian Code for Reporting of Mineral Resources and Ore Reserves, prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia
London Stock Exchange or LSE	London Stock Exchange plc
New Shares	The shares to be issued pursuant to the Placing
Nomad	Nominated Adviser as defined in the AIM Rules
Official List	the Official List maintained by the UK Listing Authority pursuant to the Financial Services and Markets Act 2000
Options	Options to subscribe for Shares
Placing	the Placing of 48,000,000 Shares at 5p per Share by Durlacher pursuant to this document and the placing agreement
POS Regulations	the Public Offers of Securities Regulations 1995 (as amended)

	require the Company to exchange all of the EHBL shares held by them for an equal number of Shares in Eurogold and the mutual right of Eurogold to require such exchange pursuant to the agreement described in Section 10 of Part 6
Remin	Remin SA, the Romanian state owned mining company
RFC	RFC Corporate Finance Limited, a company incorporated in Australia
Romanian Assets	Eurogold's 50% interest in Transgold and 99% interest in Explorer
RSG Global	RSG Global Pty Ltd, a company incorporated in Australia
Sale Agreement	the agreement pursuant to which the Ukrainian Assets were acquired, whose key terms are set out in Section 10 of Part 6
Saulyak Gold Project	the mining tenements (including tenement applications), assets, infrastructure and improvements which comprise the Saulyak Gold Project as owned by SLLC
SCH	Securities Clearing House of Australia
Shareholder(s)	Holder(s) of Ordinary Shares
Shares or Ordinary Shares	fully paid ordinary shares in the capital of the Company, including depository interests representing Ordinary Shares and issued through the Company's UK registrar
SLLC	Saulyak Limited Liability Company, incorporated in Ukraine
SRL	Saulyak Resources Limited, a company incorporated in Mauritius
Transgold	SC Transgold SA, a company incorporated in Romania
UK.	the United Kingdom of Great Britain and Northern Ireland
UK Companies Act or the Act	the Companies Act 1985 of the UK (as amended)
Ukrainian Assets	Eurogold's 74.68% interest in SLLC and 6.33% interest in ZLLC
Ukrainian Polymetals	Ukrainian Polymetals, a Ukrainian State Joint Stock Company which is the major shareholder in ZLLC
Vendors	the vendors of the Ukrainian Assets pursuant to the Sale Agreement
ZLLC	Zakarpatpolymetaly Limited Liability Company, incorporated in Ukraine
ZRL	Zakar Resources Limited, a company incorporated in Mauritius

Glossary of Selected Technical Terms

A detailed glossary of technical terms is provided at the end of the Competent Persons Report in Part 3.

adit	a horizontal tunnel dug into the side of a hill or mountain for the purposes of accessing a mineralised deposit for mining or exploration
CIL	"Carbon in Leach" mineral processing plant whereby gold and silver are recovered from slurried ore through cyanide leaching followed by adsorption onto activated carbon
free milling	Ores from which the precious metals can be recovered by concentrating methods without resort to leaching or other chemical treatment
slurry	A mixture of finely crushed ore and water, enabling the ore to be economically transported and handled in pipelines
tailings	Material rejected from a mineral processing plant (generally as a slurry) after economic recovery of valuable minerals has taken place
tailings dam	a dam to confine tailings, allowing time for solids to settle out or for cyanide to be destroyed before water is discharged or evaporates.

1 Introduction

Eurogold is a gold exploration and production company with a focus on Eastern Europe. The Company's principal assets comprise:

Romanian Assets

A 50% interest in Transgold which owns and operates the 2.5 million tonne per annum carbon in leach (CIL) Baia Mare Tailings Treatment Gold Facility in north west Romania originally established in 1998/9 to mine the nearby "Meda" and "Central" tailings dams: and
A 99% interest in Explorer which conducts gold exploration on three tenements, comprising around 75km². and a prospect area of around 330 km² that it holds in its own right. Explorer also manages exploration on three tenements comprising around 78km² held by Transgold.

Ukrainian Assets

Through effectively 100% owned subsidiaries:

A 75% interest in SLLC which holds the Saulyak Gold Project located in the south west of the Ukraine in the Carpathian Mountains, approximately 60km north east of the Transgold treatment plant at Baia Mare; and
A 6% interest in ZLLC which holds the Beregove Gold Project;

The other principal shareholders in the Romanian and Ukrainian Assets are government owned entities.

$\mathbf{2}$ Description of the Company's Activities

The Company commenced its life as an Australian based minerals explorer and is listed on the ASX.

The focus on Eastern Europe commenced in the late 1990s with the acquisition of the Romanian Assets. The acquisition of the Ukrainian Assets was approved by Shareholders at a general meeting held on 15 June 2004. The Company continues to be managed from a head office in Perth, Western Australia but has disposed of all its Australian mineral interests.

The Romanian Assets

Prior to the acquisition of the Ukrainian Assets, Eurogold's operating activities were solely in Romania where it holds a 50% interest in Transgold and certain exploration interests via its 99% owned Romanian subsidiary. Explorer.

Transgold (formerly Aurul SA) was originally formed in December 1995 to undertake the construction of a gold tailings treatment facility and to mine the nearby Meda and Central Tailings Dams. The other principal shareholder in Transgold is Remin, the Romanian state owned mining company whose operations generated the tailings, with a 45% interest. The processing plant at Baia Mare was built by the engineering firm Lycopodium in 1998 at a cost of approximately US\$28 million and processing of the Meda Tailings was carried out between 1999 and 2003.

The Baia Mare plant has a CIL and gold recovery circuit capable of processing up to 2.5 million tonnes per annum of gold and silver bearing solids in a slurry form. This allows the flexibility to recover gold and silver from slurries from a number of sources, including slurry produced from the Transgold's Baia Mare crushing and milling circuit which is able to process up to 300,000 tonnes per annum of hard ore.

Transgold is currently completing a feasibility study with a view to developing a project to reprocess the Central Tailings Dam gold and silver bearing tailings and first production from this source is expected by mid 2005. The Central Tailings Dam contains approximately 8.5 million tonnes of old tailings at an estimated recoverable grade of 0.42g/t for a total recovery of approximately 115,000 ounces of gold.

The upfront capital expenditure required for the construction of a slurry pipeline and associated works to facilitate the processing of the Central Tailings Dam tailings is estimated at US\$3.6 million. Transgold has commenced initial discussions with its banker, Unicredit Romania SA, for the provision of a debt facility of around US\$2.6 million to part fund this capital expenditure, and expects to finalise an agreement before the end of 2004.

Transgold is debt free, save for a US\$0.85 million working capital line of credit with Unicredit Romania SA that is currently fully drawn. The key terms of this line of credit are set out in Section 10 of Part 6.

Transgold has also been toll treating hard rock resources belonging to Remin and during 2004 anticipates beginning to treat its own hard rock material sourced from its Hanau deposit located 13km from its Baia Mare treatment plant. The Hanau deposit is located on Transgold's liba-Nucut exploration licence and is estimated to contain approximately 150,000 tonnes of vein hosted gold mineralisation at a predicted gold grade of 2.9g/t. Transgold has received approval for small scale mining of the Hanau deposit.

Transgold holds three exploration licences covering a total of around 75km² in the Baia Mare region. Exploration on these tenements is carried out for Transgold by Explorer. Explorer holds a further three exploration licences in the region in its own right, covering some $\overline{78}$ km², and a prospecting permit, covering 300km². Further details on the tenements and assets held by Transgold and Explorer are set out in RSG's Competent Persons Report in Part З.

The Ukrainian Assets

The Ukrainian Assets were acquired as a package and comprise an interest of around 75% in the Saulyak Gold Project and an interest of around 6% in the Beregove Gold Project. The other principal shareholder in the Ukrainian Assets is the Ukrainian State owned company, Ukrainian Polymetals. All of the purchase consideration for the Ukrainian Assets was ascribed to the Saulyak interest and Beregove is seen by the Company as an investment to which no value is attributed. The Group has certain rights and obligations in respect of the Beregove Gold Project which are described in Section 10 of Part 6.

Under the terms of the Sale Agreement the Vendors of the Ukrainian Assets will be issued 30,000,000 shares in EBHL. Under the Put and Call Agreement the Vendors have a put option and Eurogold a call option (which it intends to exercise at some point in the future) to swap the 30,000,000 shares in EBHL for 30,000,000 Shares in Eurogold, thus giving Eurogold effective ownership of the Ukrainian Assets.

The Saulyak Gold Project is located in the south west of the Ukraine in the Carpathian Mountains, approximately 60km north east of the Transgold treatment plant in Baia Mare. A granted $3.1 \text{km}^2$ exploration licence covers the project.

Geology and Exploration

The Saulyak Gold Project is an underground gold prospect, explored during the 1970's and 1980's when over 9km of underground development and 30km of drilling was completed by the former USSR State. No production took place but sampling and metallurgical test work, conforming to Soviet protocols, was completed and the two 30m spaced adits completed remain accessible.

Gold mineralisation at Saulyak is hosted by a laterally extensive, 40m thick, 30^o SW dipping thrust zone, located within Palaeozoic metasediments that has been exposed at the surface and in underground workings. Mineralisation is hosted within multiple, intensely deformed quartz-carbonate and biotite-sericite-chlorite schist bodies averaging 5-6 metres thick with individual zones up to 250m in strike length. Underground development and surface drilling has traced gold mineralisation along the principal mineralised zone for a strike distance of approximately 1km and down dip for up to 1.3km from the surface outcrops. (Figures 2 and 3). The Company believes that additional structurally controlled mineralised lenses will be defined within the plane of the thrust, such as has been intersected in drill hole C-304 (see Figure 2).

Gold mineralisation appears to be strongly correlated with abundance of silica, either in the form of strongly deformed quartz veins, or as silica alteration. The gold mineralised zones occur as multiple lenses within the thrust zone. It should be noted that surface trenching, drilling and down-hole geophysical exploration techniques indicate that there are up to four sub parallel horizons that have returned anomalous or potentially economic gold intercepts.

Gold distribution is highly irregular at a local scale but averages 6-9g/t over ore body widths. Gold occurs as discrete particles up to 0.2mm that are typically located along the margins of veins and on the boundaries of sulphide grains, resulting in free milling metallurgical characteristics. Metallurgical test work conducted to date indicates up to 95% gold recovery via direct cyanidation. Total sulphide content is typically less than 6% of ore volume and potentially deleterious elements are reported to be close to, or below, analytical detection limits.

The Company is currently creating a digital database of all previous exploration results to enable a resource estimate to be completed. Although re-sampling conducted by the Company to date has verified the mineralisation, it is likely that a more extensive program of re-sampling and some underground drilling will be required in order for any resource estimate to be JORC compliant. It is anticipated that this work will be completed by late 2004.

The Company believes this large mineralised system has the potential to host a significant gold deposit and that additional mineralised lenses will be delineated in the immediate vicinity of the Saulyak deposit. The Company has also applied for, but has not yet been granted, a 276km² exploration licence covering the region surrounding the Saulyak deposit. Several under-explored gold occurrences occur within the licence area and the Company believes it is likely that regional low-level geochemical exploration will identify additional targets. Total expenditure commitment for the exploration licence over the 5 year licence period will be US\$270,000. Further details on the Group's mineral licences are contained in Part 3 and in Section 10 of Part 6.

It should be noted that 30 - 40% of the broader area applied for is covered by a "biosphere reserve" which potentially restricts certain future activities, including mining and exploration, on that area. The Group intends to observe any such restrictions in its exploration activities and maintain active communications and relations with the relevant regional authorities.

Part of the existing Saulyak exploration licence area, being areas near its northern and western boundaries, may also be covered by the biosphere reserve, and this may similarly restrict activities of the Group on those areas. Whilst an official from the appropriate state agency has confirmed that the licenmoe area does not form part of the reserve, the Group has not been able to verify the exact boundaries of the reserve by reference to appropriately detailed maps or geographical coordinates. In any event, given the Group's planned surface activities are in the southern and eastern areas of the licence area, the Directors do not believe that this would materially impact its development plans for the Saulyak deposit.

Development Plan

The Saulvak Gold Project is on a rail link with the Baia Mare treatment facility and Eurogold intends to develop the Saulyak deposit such that ore may be transported by rail to Baja Mare for processing. This strategy has the support of Eurogold's partner shareholder in Transgold, Remin.

Figure 3 : Underground development at the Saulyak Gold Deposit

The Group intends to use the Placing proceeds predominantly to complete a feasibility study on the development of the Saulyak Gold Project. Assuming the feasibility confirms the project is economic, it is the Group's intention to then immediately progress the development. During the feasibility period, the Group also intends to commence initial investigations into potential funding sources for the development capital expenditure. However, given the existing CIL plant at Baia Mare, existing rail link and extensive underground development workings already in place, the amount of capital that will be required is expected to be relatively low.

During the feasibility period, the Group also intends to discuss the funding requirements and development alternatives for SLLC with Ukrainian Polymetals, as well as seeking the various approvals required from the Ukrainian and Romanian authorities that will be required for the planned project development. The approvals include:

$(a)$ land use approvals to use the land the subject of the exploration licences:
export and import approvals for the shipment of gold ore from the Ukraine to the Baia Mare treatment $(b)$ facility and otherwise to give effect to the cross-border transactions;
transportation approvals; and $(c)$
$(d)$ various other approvals required for the planned development project.

Under the current "Foundation" and "Investment" Agreements for Saulyak, various undertakings have been given in relation to the project development. These undertakings were formed prior to Eurogold's involvement in the project and its potential to utilise Transgold's CIL plant. The undertakings can be varied with the approval of the relevant authorities and it is the Group's intention to seek to vary them to match the final proposed development plan. Further details of these agreements and undertakings are contained at Section 10 of Part 6.

The Company's initial aim is to develop a 20-25,000 ounce per annum low cost gold mine at Saulyak, that may subsequently be increased to 50,000 ounces per annum, with a mine life in excess of 10 years based on present resources. The Directors believe that the Saulyak Gold Project is an excellent acquisition with strong prospects of success due to the following reasons:

Operations should be straightforward with easy adit access due to steep terrain and treatment via standard gravity and cyanidation concentration techniques resulting in low technical and regulatory risk;
$\blacksquare$ Existing underground development has demonstrated simple geometry and mineralisation continuity;
Access and infrastructure are good with paved highway, railway and power all adjacent;
A skilled workforce is locally available;
The rail links between the Saulyak site and Transgold's Baia Mare facility should permit ore to be economically transported for processing; and
Considerable additional exploration potential exists on the present licence areas and additional licence applications submitted for approval.

Further details on the Ukrainian Assets are set out in RSG Global's Competent Person's Report in Part 3.

Relationships between Members of the Group

The Company's main assets are held through Romanian and Ukrainian entities that are not wholly owned. The principal other shareholders in these assets are government owned entities. As the other shareholders typically have limited ability to contribute additional funding support for exploration and capital projects, from time to time the Company provides financial support to its Group companies in the form of loans and guarantees. The Company also provides members of the Group with technical services, including in relation to exploration, for which it charges an ongoing fee, which is generally equivalent to a reimbursement of costs incurred.

The financial support and technical services are provided under various agreements on an arms length basis.

3 Corporate History

Eurogold was incorporated in Western Australia in 1983 and listed on the ASX in March 1987.

The Company's current direction effectively commenced in 1996 when Transgold was formed by Eurogold in conjunction with Remin.

Transgold subsequently developed the Baia Mare Treatment Plant to mine and process the Meda and Central Tailings Dams, with the first gold pour taking place in April 1999.

In January 2000, a wall of the tailings dam associated with the Baia Mare treatment plant was breached and approximately 100,000 cubic metres of contaminated water was released into the local river system.

Because of the claims threatened or anticipated to be made against both Transgold and Eurogold, the then directors of Eurogold placed the company into voluntary administration on 15 March 2000. The Company remained in the hands of the administrators until a Deed of Company Arrangement was finalised on 29 September 2000 and the conditions precedent contained in the DOCA were satisfied. On 27 September 2001 control of the Company was returned to the directors.

The company changed its name from Esmeralda Limited to Eurogold on 28 May 2002.

As a consequence of the DOCA, proven creditors of the Company were paid out either from the existing assets of

the Company or from the Esmeralda Creditors Trust, formed as part of the DOCA. Secured creditors remained unaffected by the DOCA. Subsequently, on 26 June 2002 the secured creditors entered into an arrangement with the Company whereby the obligations of the Company to those secured creditors were discharged subject to the satisfaction of a number of conditions precedent.

The conditions precedent dealt with the identification and use of money for the rehabilitation of the Meda dam site, the obtaining and maintenance of all necessary permits and approvals, the approval of a rehabilitation plan and the engagement of appropriate experts. On or about 27 August 2002 the conditions precedent to the Deed of Release were satisfied. There are also conditions subsequent that require fulfilment, which are detailed in Section 10 of Part 6.

4 Legal Claims Against the Group

Arising from the incident referred to under the preceding heading, a range of proceedings were instituted against Transgold and the Company. A number of those proceedings were of a minor nature and were commenced by Romanian citizens in Romania. All of those actions have been settled.

Two separate actions of a more substantial nature were commenced, the first being by the Republic of Hungary in Hungary against Transgold. That action claims a range of remedies including substantial damages which it is alleged were suffered as a consequence of the negligent acts or omissions of Transgold in relation to the operation of its tailings dam. The proceedings have not been prosecuted with vigour and advice received from the Hungarian lawyers appointed by Transgold in Budapest is to the effect that the proceedings are likely to be successfully resisted.

The second claim was commenced by the Federal Republic of Yugoslavia against the Republic of Romania and Eurogold. Again, the proceedings have not been prosecuted with vigour and furthermore:

that part of the proceedings against the Republic of Romania has been discontinued; and $a)$
there is an application before the Court by the Plaintiff to name Transgold as the defendant, rather than $b)$ Eurogold.

The advice of the Yugoslavian lawyers appointed by Eurogold is that the prospects of successfully defending the action are good.

5 Summary Capital Structure

Eurogold's capital comprises:

Type of security	Number
Shares
Currently in issue	126,165,208
Placing Shares	48,000,000
Actual number of Shares in issue following Admission	174,165,208
Shares which would be issued under the Put and Call Agreement relating to the Saulyak Project	30,000,000
Effective number of issued Shares following Admission	204,165,208
(assuming exercise under the Put and Call Agreement)
Options (unlisted 30 cent 31 March 2007 expiry)
Granted to RFC	1.000.000
Granted to Durlacher	1,000,000
Total Number of Options on issue	2,000,000

Further information about the rights and liabilities attaching to the Shares and Options are provided in Part 6 of this Admission Document.

At a meeting of Shareholders held on 15 June 2004, the Company was granted the authority to issue up to 20,000,000 additional Shares pursuant to the exercise of rights under the Put and Call Agreement (increasing the total Shares under the Put and Call Agreement to 50,000,000). These Shares would only be issuable if the Company elects to increase its interest in ZLLC beyond its current 6.33% interest. At present the Company does not intend to increase its interest in ZLLC.

Shareholders of Eurogold

To the best of the knowledge of the Directors, Shareholders with an interest in Eurogold of 3% or more on 1 July 2004, on the basis of the existing issued Shares only (ie excluding any Shares issued pursuant to the Placing) and adjusted for the 30,000,000 Shares which may be issued under the Put and Call Agreement were as follows:

Beneficial Shareholder	Interest in issued Shares	Undiluted interest (%)	Current interest in Shares pursuant to the Put and Call Agreement	Interest in Shares adjusted for the Put and Call Agreement Shares	Diluted interest (%)
Peter Gunzburg	23,196,085	18.4%		23.196.085	14.8%
Nefco Nominees Pty Ltd	21,343,046	16.9%		21.343.046	13.7%
Golden Prospect Plc*	6,583,846	5.2%		6.583.846	4.2%
Christopher Barker			30,000,000	30,000,000	19.2%

* Golden Prospect's holding forms part of the holding disclosed and registered under Nefco Nominees Pty Ltd.

Further details of the Put and Call Agreement are set out in Section 10 of Part 6.

Current Share Price on the ASX

Eurogold's closing share price on the ASX on 9 July 2004 was A\$0.16, equivalent to just over 6p.

6 Summary Financial Information

Key financial information of the Group is provided in the Accountant's Report and Pro Forma Statement of Net Assets included at Part 4 of this Admission Document.

$\overline{7}$ Prospects, Future Strategy and Objectives

The primary objective of Eurogold is to maximise the returns to shareholders from its investments in both its Romanian and Ukrainian Assets.

The primary near term objectives of the Company are:

Through Transgold, to commence processing of the Central Tailings Dam and its hard rock resources; and
To develop the Saulyak Gold Project into an operating gold mine with ore being processed at Transgold's Baia Mare treatment plant.

The Company will also seek to identify opportunities to expand its asset base of Eastern European gold projects, particularly within the Carpathian Mountains, as and when opportunities permit.

8 Dividend Policy

The Company anticipates that significant expenditure will be incurred in the development of its projects, with a focus on the Saulyak Gold Project. This activity is expected to dominate the two year period following Admission. Accordingly, the Company does not expect to declare any dividends during that period. Thereafter it is the Directors' intention to pay dividends when profit, available cash flow and capital requirements allow.

9 Reasons for the AIM Listing

The listing on AIM forms part of the long term growth strategy to broaden the Company's investor base, especially within Europe, heighten awareness of the Company in international capital markets and provide improved access to future funding that may be needed to pursue growth opportunities.

10 Directors and Senior Management

Directors and Officers

Brief biographies for the Directors are set out below:

Peter Lynton Gunzburg - Executive Chairman (aged 52 years)

Mr Gunzburg has 20 years experience as a stockbroker. He has a Commerce Degree from the University of Western Australia and has previously been a director of Resolute Ltd, the Australian Stock Exchange (Perth) Limited, Eyres Reed Ltd and CIBC World Markets Australia Limited. He is the Chairman of ASX listed companies Fleetwood Corporation Limited and PieNetworks Limited.

Brett Montgomery - Non Executive Director (aged 50 years)

Mr Montgomery has over 20 years experience in the gold mining industry and management of public companies. As previous Chairman of Eurogold Mr Montgomery played a pivotal role in the initial financing of the Baia Mare Project and worked in conjunction with Eurogold's joint venture partners to ensure all Government approvals and permits were obtained for that project.

Dennis Wayne Franks - Non Executive Director (aged 53 years)

Mr Franks has in excess of 30 years experience in the finance/investment banking and mining and exploration industries. He has an Accounting Degree and has considerable experience in the management of listed companies both within Australia and overseas.

Christopher John Barker - Ukraine Operations Director (aged 61 years)

Mr Barker is an experienced management consultant and mining engineer, and is principal of a management consulting group specialising in the mining industry internationally. He has substantial experience in executive management roles at both large gold and base metals projects and operations around the world. These include the position of general manager of Ashanti Gold Corporation during their expansion in early 1990's and leading the successful development of the Macraes Mining Project in New Zealand. Following these roles. Mr Barker was a founding director of LionOre Nickel Ltd, and Great Southern Mines Ltd, both of which evolved into producers.

In more recent times Mr Barker has gained extensive experience in the Former Soviet Union. Mr Barker was appointed as the general director of the second largest gold project in Russia at Nezdaniskoye for the initial stage of the project development including the introduction and permitting of specialised cyanide processing technology into the operation. Most recently Mr Barker completed a review of various gold and base metals operations in the Ukraine prior to initiating the development at the Saulyak Gold Project. He holds certification to run operations in the FSU and has both resident and work permits for the Ukraine.

Neil Thacker MacLachlan - Non Executive Director (aged 61 years)

Mr MacLachlan has over 25 years investment banking experience in Europe, South East Asia and Australia and is a former director of Wardley Holdings and James Capel & Co Limited, investment banking subsidiaries of the Hongkong and Shanghai Banking Corporation. From 1993 until 1997 he was employed by Barrick Gold Corporation as Executive Vice President, Asia. Mr MacLachlan is also a director of Titan Resources NL and Golden Prospect Plc.

Senior Management

In addition to executive directors, the Group's senior management includes qualified and experienced personnel in the areas of exploration, operations, marketing, finance and administration.

Les Kozel - Financial Controller and Joint Company Secretary

Mr Kozel is a qualified accountant with over 15 years experience including senior corporate accounting roles with major resource companies. Mr Kozel was based in Romania for in excess of three years.

Mitch Cook - Senior Consulting Metallurgist

Mr Cook is a Metallurgist with over 17 years experience in the mining industry having worked in Australia, Asia and Europe. Companies he has worked for include Sons of Gwalia, Asarco, Normandy & Ivanhoe. Principally involved in gold, silver and copper ore processing, Mr Cook has gained extensive operational and project development experience in a wide variety of processes including CIL / CIP gold extraction, bacterial oxidation, heap leaching and tailings reclamation using hydro-monitoring techniques. For the last 4 years, Mr Cook has been working as an independent consultant in Europe, is a member of the European Community sponsored CLOTADAM research project team developing new Tailings Management Facility (TMF) closure techniques for the European Mining Sector. Mr Cook is a member of the Australasian Institute of Mining and Metallurgy.

Ioan Hudrea - Chairman/General Manager of Explorer and Director of Transgold

Mr Hudrea is a qualified geological engineer with postgraduate qualifications in Business Management. Mr Hudrea was previously General Manager of Remin's Baia Mare operations for 7 years.

Mikolai Horzak - Deputy director and of Exploration Manager of SLLC

Mr Horzak is a qualified geologist trained under the Soviet system who was previously Chief Geologist for the Ukrainian Zarkapatia region Geosurvey geology division for around 8 years. In this position, Mr Horzak was involved in the geological assessment of all of the deposits in the region, including Saulyak and Beregove. Mr Horzak also previously sat, in an elected position, on the Soviet Gold Resource Evaluation Committee.

Bohdan (Bo) Kenecky - First Deputy Director of SLLC

Mr Kenecky is a Ukraine born but US trained metallurgical and materials engineer with substantial operating management and business development experience in mining operations in Ukraine, Kazakhstan and CIS.

Mr Kenecky's experience covers the implementation of a gold mining processing project in Yakutia, facilities refurbishment, licensing and permitting activities coordination, liaison with governmental agencies, consulting to companies on business opportunities in the CIS, conducting field investigations and evaluation of potential business targets. Mr Kenecky has worked as a consultant for various companies, including the Ivanhoe Capital group (Australian Bulk Minerals, First Dynasty Mines) and Newmont Mining Corporation.

11 Corporate Governance

The Directors acknowledge the importance of the quidelines set out in the Principles of Good Corporate Governance and Code of Best Practice ("Combined Code"). They therefore intend to comply with the Combined Code so far as is appropriate having regard to the size and nature of the Group and the ASX Listing Rules.

For further information on the corporate governance practices of the Group, refer to Section 12 in Part 6 of this Admission Document.

Environmental Statement

The Group's corporate policy requires all operations within the Group to achieve a balance between economic development and protection of the environment. The Directors must integrate environmental considerations into decision making, regularly evaluate the environmental impact and risk potential of the Group's activities and correct any deficiencies identified, operate with due regard for environmental legislation and keep employees aware of the Company's environmental responsibilities.

$12 \,$ Admission, Settlement (CREST) and Dealings

CREST is a UK computerised paperless share transfer and settlement system, which allows shares and other securities, including depository interests, to be held in electronic form rather than in paper form.

The Company's Ordinary Shares will remain listed and traded on the ASX, with trades settled electronically on the Australian Register through the CHESS system. The Company, through its Registrar, Computershare, has established a depository whereby depository interests, representing Shares, will be issued to Shareholders who wish to hold their Shares in electronic form in CREST. The Company will apply for the depository interests which represent Shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in Shares following Admission may take place within the CREST system if the relevant Shareholders so wish. CREST is a voluntary system and holders of Shares who wish to deal on AIM and receive and retain share certificates will be able to do so.

For more information concerning CREST, Shareholders should contact their brokers or CRESTCo Limited at 33 Cannon Street, London EC4M 5SB.

It is emphasised that, although the Shares will trade on AIM, the Company will not be subject to takeover regulation in the UK. Being an Australian incorporated company, Eurogold is subject to the takeover and other provisions of the Australian Corporations Act, further details of which are provided in Section 2 of Part 6 of this Admission Document.

Further details in relation to trading in Eurogold Shares are outlined in the Risk Factors in Part 5 of this Admission Document.

Part 2 - Taxation Implications for UK Residents of Investing in Eurogold

Eurogold is incorporated in Australia and has subsidiary companies in a number of jurisdictions.

The contents of this Part of this Admission Document are intended only to provide a general outline of the taxation implications to UK residents of an investment in Eurogold Shares.

UK taxation general

The statements set out below are intended only as a general guide to the tax position based on current UK tax legislation and Inland Revenue practice and apply only to certain categories of UK persons. The summary does not purport to be a complete analysis or listing of all the potential tax consequences of holding Shares. Prospective purchasers of Shares are advised to consult their own tax advisers concerning the consequences under any tax laws of the acquisition, ownership and disposition of Shares in the Company. In particular, Shareholders are advised to consider the potential impact of any relevant Double Tax Agreement on their shareholding. Shareholders who may be subject to tax in any jurisdiction other than the United Kingdom should consult their professional advisers without delay.

The statements do not cover all aspects of UK taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of Shares in the Company by particular investors. The statements apply only to Shareholders who are the beneficial owners of the Shares but are not applicable to all categories of Shareholders, and in particular are not addressed to:

Shareholders who do not hold their Shares as capital assets;
Shareholders who own (directly or indirectly) 10% or more of the Company;
special classes of Shareholders such as dealers in securities or currencies, broker-dealers, or investment companies:
Shareholders who hold Shares as part of straddles, hedging or conversion transactions; or
Shareholders who hold Shares in connection with a trade, profession or vocation carried on in the UK (whether through a branch or agency or otherwise).

Except where indicated, the statements below in respect of the taxation of dividends and distributions and the taxation of chargeable gains only cover the principal UK tax consequences of holding Shares for holders who are resident in the UK for tax purposes although it should be noted that special rules, which are not covered, apply to such holders of Shares who are not domiciled in the UK.

UK Taxation of dividends and distributions (including Australian withholding taxes)

The Company will not be required to withhold UK tax from dividends paid on the Shares. A UK holder, or a holder of Shares who is carrying on a trade, profession or vocation in the UK through a branch or agency in connection with which the Shares are held will, depending upon the holder's particular circumstances, be subject to UK income tax or corporation tax as the case may be on the amount of any dividends paid by the Company. An individual Shareholder who is resident in the UK for tax purposes and who receives a dividend from the Company will be taxable at the Schedule F ordinary rate (10% in 2004-05) and/or (depending on the amount of the holder's overall taxable income) at the Schedule F upper rate (32.5% in 2004-05). A Shareholder resident outside the UK may also be subject to foreign taxation on dividend income under local law.

Dividends may be subject to Australian dividend withholding tax ("WHT"). If the Company pays Australian corporate tax on its earnings then it will accumulate "franking credits" that allow it to pay franked dividends to shareholders. To the extent of their franking, any dividends that are paid to UK residents will ordinarily not be subject to WHT. Any unfranked portion of dividends paid to UK residents will ordinarily be subject to 15% WHT.

If the dividend has been subject to WHT, the amount of the dividend received plus the WHT will be included in the assessable income of the UK Shareholder. In these circumstances the shareholder should be entitled to a credit for the foreign tax paid. The credit would be limited to the lesser of the WHT or the UK tax payable on the combined amounts of the dividend plus WHT. If the WHT exceeds the UK tax payable on the dividend, the excess is neither creditable nor repayable.

Dividends paid to a UK resident company Shareholder will be assessable income of the Shareholder. If the dividend has been subject to WHT it will be treated as described above.

UK Taxation of chargeable gains

A disposal, or deemed disposal, of Shares in the Company by a Shareholder who is either resident or ordinarily resident for tax purposes in the UK will, depending on the Shareholder's circumstances and subject to any available exemption or relief, give rise to a chargeable gain or allowable loss for the purposes of the taxation of chargeable gains in the UK. Broadly, Shareholders who are not resident or ordinarily resident for tax purposes in the UK will not be liable for UK tax on capital gains realised on the disposal of their Shares unless such Shares are used, held or acquired for the purposes of a trade, profession or vocation or, in the case of companies only, a permanent establishment, carried on in the UK through a branch or agency or for the purpose of such branch or agency. Such Shareholders may be subject to foreign taxation on any gain under local law.

A Shareholder who is an individual and who has, on or after 17 March 1998, ceased to be resident or ordinarily resident for tax purposes in the UK for a period of less than five complete tax years and who disposes of the Shares during that period may also be liable to UK taxation of chargeable gains (subject to any available exemption or relief) as if, broadly, the disposal was made in such Shareholder's year of return to the UK.

There may be Australian capital gains tax implications for certain UK investors, in particular those who acquire a holding of above 5% of the Company's Shares. Such investors should consult with a tax adviser experienced in Australian taxation matters for further information on the applicability of the Australian capital gains tax to their shareholding.

UK Stamp duty

The following comments do not apply on the issue or transfer of Shares into depository or clearance arrangements, to which special rules apply. Transfers of depository interests within CREST will be subject to stamp duty reserve tax at the rate of 0.5%.

No liability to UK stamp duty or stamp duty reserve tax will generally arise on the issue of Shares by the Company under the Placing.

Any agreement to transfer, or any transfer of, Shares registered on the Company's UK branch register will generally be subject to UK stamp duty or stamp duty reserve tax at the rate of 0.5% of the consideration for the transfer. UK stamp duty may arise on transfers of other Shares depending on the circumstances, such as where the transfer is executed in the UK.

UK Inheritance tax

The Shares will not be assets situated in the UK for UK inheritance tax purposes. A gift of such assets by, or the death of, an individual holder who is domiciled, or is deemed to be domiciled under certain rules relating to long residence or previous domicile, may (subject to certain exemptions and relief) give rise to a liability to UK inheritance tax. For inheritance tax purposes a transfer of assets at less than market value may be treated as a gift and particular rules may apply where the donor reserves or retains some benefit.

The Company has been advised that any Shares registered on the Company's UK branch register will be regarded as situated in the UK for these purposes.

It is the responsibility of all persons to satisfy themselves of the particular taxation treatment that applies to them by consulting their own professional tax advisers before investing in Shares. Taxation consequences will depend on particular circumstances.

Neither the Company nor any of its officers, employees, agents and advisers accept any liability or responsibility in respect of taxation consequences connected with an investment in Shares in the Company.

Fart8 - Competent Person's Report

Competent Person's Report on the Mineral Assets of Eurogold Limited

Prepared by RSG Global on behalf of:

Eurogold Limited and RFC Corporate Finance Limited

GEOLOGY . EXPLORATION . RESOURCES . MINING ENGINEERING . METALLURGY

SUMMARY		22
Introduction 1.		24
1.1	Terms of Reference	24
1.2	Qualifications, Experience and Independence	25
1.3 2	Principal Sources of Information Romanian Properties	26 27
2.1	Background Information on Romania	27
2.2	Baia Mare Gold Tailings Reprocessing Operation	27
2.2.1	Introduction	27
2.2.2	Ownership	27
2.2.3 2.2.4	Tailings Reprocessing Operations Tailings Development and Production History	27 28
2.2.5	Tailings Resources and Reserves	29
2.2.6	Metallurgy and Processing	29
2.2.7	Infrastructure	30
2.2.8	Environmental Aspects	31
2.2.9 2.2.10	Development and Production Potential Proposed Development and Production Strategy	31 32
2.3	Baia Mare Gold Exploration Properties	33
2.3.1	Introduction	33
2.3.2	Tenure	33
2.3.3	Geology 2.3.3.1 General Geology	33 33
2.3.3.2	Bixad Licence	34
	2.3.3.3 Racsa-Zugau Licence	36
2.3.3.5	2.3.3.4 Racsa Southeast Licence Ilba-Nucut Licence	36 36
2.3.3.6	Baita-Nistru Licence	37
2.3.3.7	Sasar Licence	37
2.3.4	Exploration History	37
2.3.5 2.3.6	Resources Exploration and Resource Potential	38 38
2.3.7	Proposed Exploration Strategy	38
3	Ukraine Properties	39
3.1	Background Information on Ukraine	39
3.2 3.2.1	Saulyak Gold Project Introduction	40 40
3.2.2	Tenure	40
3.2.3	Geology	42
3.2.3.1 3.2.3.2	Regional Geology Project Geology	42 43
3.2.4	Exploration History	45
3.2.5	2004 Due Diligence Channel Sampling	49
3.2.6	Resources	52
3.2.7 3.2.7.1	Metallurgy Phase 1 Testwork	55 55
3.2.7.2	Phase 2 Testwork	55
3.2.7.3	Phase 3 Testwork	55
3.2.7.4 3.2.7.5	Conclusions on Ukrainian Metallurgical Testwork 2003 Metallurgical Testwork	56 56
3.2.8	Exploration and Mine Development	57
3.2.9	Exploration, Resource and Development Potential	57
3.2.10	Vulcan Minerals 2003 Due Diligence Programme	58
3.2.11 3.3	Planned Exploration Programme Beregove Gold Project	59 59
3.3.1	Introduction	59
3.3.2	Tenure	59
3.3.3 3.3.4	Geology Mining and Processing Operations	59 60
3.3.5	Exploration, Development and Production History	60
3.3.6	Resources and Reserves	61
3.3.7	Metallurgy and Processing	61
3.3.8 References 4	Proposed Exploration, Development and Production Strategy	61 62
5	Glossary of Technical Terms	64

Table 2 1 – Baia Mare Tailings Reprocessing Operation: 2003 – 2004 Processing Statistics
Table 2 2 – Baia Mare Tailings Reprocessing Operation: Bottle Roll Cyanidation Testwork
Table 2_3 – Explorer and Transgold Exploration Tenements in Romania
Table 3_1 - Saulyak Project : Licence 2146 Boundary Coordinates
Table 3_2 - Saulyak Project : Sequence of Lithologies
Table 3 3 - Saulyak Project : 2003 Re-Assay Programme on Ukrainian Drilling Pulps
Table 3 4 – Saulyak Project : February 2004 Due Diligence Channel Sampling Results
Table 3 5 – Saulyak Project : February 2004 Due Diligence Channel Sampling Intersection Summary 51
Table 3 6 – Saulyak Project : Approved 2003 'Reserves'
Table 3_7 - Saulyak Project : Gravity Gold Recovery Testwork
Table 3_8 - Saulyak Project : Flotation Testwork
Table 3 9 - Saulyak Project : Preliminary Data from the 2003 Metallurgical Sample Testwork57

List of Figures

Figure 1_1 - Project Location Plan
Figure 2 1 - Central Dam Drillhole Locations and Numbers Relative to Central Dam Tailings Outline 29
Figure 2_2 - Baia Mare Regional Plan: Including Baia Mare Location
Figure 2 3 - Regional Geology Plan of the Baia Mare Region
Figure 3 1 - Saulyak Project : Tenure and Infrastructure
Figure 3_2 - Saulyak Project: Underground Development & Mineralisation
Figure 3 3 - Saulvak Project : Schematic Cross Section
Figure 3_4 - Due Diligence Channel Sampling at Saulyak, February 2004

SUMMARY

Introduction

Eurogold Limited (Eurogold) and RFC Corporate Finance Limited (RFC) have commissioned RSG Global Pty Ltd (RSG Global) to prepare an independent Competent Person's Report for inclusion in an admission document, to be dated on or about 13 July 2004 for the admission of the ordinary shares of Eurogold Limited to trading on the Alternative Investment Market (AIM) in London.

The Eurogold properties include four separate project areas; Baia Mare, Baia Mare Exploration, Saulyak and Berehove, collectively comprising 8 granted exploration and mining tenements covering an aggregate area of approximately 3,666 square kilometres, and one exploration tenement application, variously located in Romania and Ukraine in Eastern Europe.

Baia Mare Processing Project

The Baia Mare processing operation is owned by Transgold SA (Transgold), a Romanian company that is 50% owned by Eurogold. The operation consists of a crushing and milling facility with a capacity of up to 250,000 tonnes to 300,000 tonnes per annum of 'hard' ore and a CIL and gold/silver recovery facility capable of treating up to 2.5 million tonnes per annum (Mtpa) of solids in a slurry form. If slurry optimisation is successful it is understood that the processing plant may be capable of 3Mtpa. The Baia Mare processing plant was built by international engineering group Lycopodium in 1998 and has processed some 5 million tonnes of ore to date.

The main proposed future source of ore at Baia Mare is the Central Dam from which it is planned to mine and process some 8.5 million tonnes at a recovered grade of 0.42g/t Au (from a head grade of 0.84g/t Au). First production from the Central Dam is expected by mid 2005.

Baia Mare Exploration Properties

The Baia Mare exploration properties comprise a contiguous block of licences covering an area of 486.42km². located immediately north and northeast of the Baia Mare tailings reprocessing operation and extending north to the Ukraine border. The Baia Mare exploration project comprises three Exploration Licences and a single Prospecting Permit held by Explorer SA, which is a 98.59% owned subsidiary of Eurogold, and a further three Exploration Licences held by Transgold SA. The most advanced project is the Hanau gold deposit, which is slated for test mining of a 150,000 tonne parcel for processing through the Baia Mare plant. A number of other prospects worthy of follow up exploration have also been identified.

Saulyak Gold Project

The Saulyak Gold Project is located 20km south of the regional centre of Rakhiv, in southwest Ukraine, close to the Romania-Ukraine border. The property comprises Licence 2146, granted by the Ministry of Ecology and Natural Resources, with an aggregate area of 3.144 square kilometres. The Licence is registered in the name of Saulyak Limited and is dated 21 November 2002, however the 'advice of grant' is noted as being 19 April 2002. The Licence has been granted for 5 (five) years. The Saulyak deposit is well located in terms of infrastructure with a sealed highway, 10kvA power line and a narrow gauge rail line located within 1km of the deposit.

Resources defined to date have been calculated under the system developed by the former USSR. This system uses a series of categories designated A, B, C1, C2, P1, P2 and P3. The system cannot be compared directly to the system promulgated by the Joint Ore Reserves Committee ("JORC). As a general guide, C1 and C2 class "reserves" could form part of the JORC resource classification categories, however the great majority of the P class "prognosticated resources" would remain unclassified under the JORC guidelines. In September 2003, the Ukrainian Geological Expedition updated the "reserves" in accordance with the requirements of the Central Commission of the Ukraine. Applying a cutoff grade of 1.5g/t, a total of 2.1Mt at 9.8g/t uncut (680,000oz) and 8.4g/t cut (580,000oz) has been estimated and classified in the higher confidence C1 and C2 categories, while a further 1.3Moz has been broadly estimated within the considerably more speculative P1 and P2 categories.

RSG Global considers it likely that the majority of the combined C class "reserves", amounting to approximately 600,000oz, will ultimately be confirmed via Eurogold's planned confirmation program of underground channel sampling of all safe and accessible pre-existing drives and cross cuts concomitant with detailed underground diamond drilling of areas adjacent to the underground development. The P class "prognosticated resources" 'estimated' under the Ukrainian system to comprise a further 0.5Moz to 1.3Moz are considerably more speculative and the vast majority lie outside the JORC classification guidelines. It is reasonable to estimate, however, that a proportion of the P class material will ultimately be defined as JORC compliant resources with further exploration, and that a total resource at Saulyak approximating 1Moz may potentially be identified.

In 2003 Vulcan Resources Limited (Vulcan) undertook a due diligence drilling programme comprising reverse circulation (RC) and diamond drilling. The results of the drilling programme have not been published. It is understood that Vulcan were seeking a major, tabular, multi-million ounce gold deposit and when the widely spaced 'scout' drilling failed to confirm the target deposit style Vulcan withdrew from further exploration.

In February 2004, RSG Global personnel and Eurogold senior geological personnel carried out a check underground channel sampling programme at Saulyak. Cross-cuts 12 and 28 were channel sampled to produce 20 one-metre samples. The samples were assaved at the SGS analytical laboratory at Gura Rosiei in Romania. The channel sampling exercise confirmed the presence of significant gold mineralisation wherein, once the high-grade samples in both the original and new sampling were cut to 30g/t Au, an identical metal content and overall grade were noted for both sets of sampling results.

It is planned to mine the Saulyak gold-silver deposit by mechanised underground methods and transport the ore using the railway system which links Saulyak in the Ukraine and Baia Mare in Romania for treatment at the Baia Mare processing plant, subject to obtaining the required approvals of the Ukrainian and Romanian authorities. The Ukrainian railway system passes within 1km of the Saulyak deposit and a rail link reaches the Remin Central plant in Baia Mare.

The Saulyak Project lies within the Eastern Carpathian Arc which forms part of the major Alpine-Balkan-Carpathian-Dinaride belt (ABCD belt), which traverses central and Eastern Europe through to Turkey, which is host to a large number of significant gold deposits. The Saulyak gold deposit is located within the Maramoshki massif, which straddles the Ukraine-Romania border in the eastern Carpathians. The massif represents a Proterozoic basement block that is overlain and overthrust by Neogene to Tertiary flysch units. The Saulyak deposit is hosted by highly deformed metasediments at the base of the Dilovetski Nappe structure, which separates the basement and younger terrains.

The gold mineralisation is associated with deformed quartz veins or siliceous alteration zones developed within multiple lenses (possibly four horizons) with an average thickness of 5m to 6m. The sulphide species associated with the gold mineralisation are dominated by pyrrhotite, arsenopyrite, sphalerite, galena, chalcopyrite, pyrite and rare altaite and hessite. Sulphides generally comprise no more than 2% to 6% of the rock, and gold is of high purity.

Based on the detailed exploration undertaken to date within the areas that are currently classified as C1 or C2 "reserves", the vertical thickness of the Saulyak Zone ranges from 3.6m to 6.4m. Average gold grades determined for the various defined blocks vary from approximately 5g/t Au to 10g/t Au. Given the shallow dipping, planar nature of the principal zone of gold mineralisation, it is considered that such widths and gold grades can realistically be mined by underground methods and processed economically.

The Saulyak deposit was discovered in 1974 as a result of regional litho-geochemical exploration. Over the period 1974 to 1989, extensive exploration was carried out on the deposit, which included geological mapping, soil sampling, rock chip sampling, stream sediment sampling and ground geophysical surveys, surface trenching, underground development, channel and face sampling, and surface and underground diamond and percussion drilling. In 1998, a Ukrainian-Soviet joint venture company, Tokaringa, was awarded a Licence to exploit the deposit. The Licence was apparently revoked in 2002 due to various unspecified irregularities. During the period 1998 to 2002, at least one foreign company reviewed the project but was unsuccessful in consummating an agreement. Saulyak LLC was established in November 2001 as a vehicle to acquire the Saulyak Project and to further exploration and development.

Metallurgical testwork was carried out on the Saulyak deposit in three main phases over the period 1978 to 1997. The results indicate that the gold appears to be readily extractable using a combination of gravity and flotation techniques. Fine grinding appears to show that gravity recoveries of some 80% can be achieved, which is then further enhanced by the production of a flotation concentrate derived from the tailings of the gravity extraction step. Cyanidation of the ore was also shown to be likely to further enhance the recovery. Metallurgical test work conducted at AMMTEC in Perth, Western Australia in 2003, under the supervision of Lycopodium, showed gold and silver extractions using cyanidation were both in excess of 97 % and 94 % respectively at relatively low cyanide and lime consumptions. These extractions indicate a likely overall gold recovery well in excess of 90%. This test work also showed that the Saulyak ore is relatively free from deleterious elements and that the ore can be considered relatively soft in terms of its crushing and milling characteristics.

If future success is forthcoming, as a result of concerted and well targeted exploration, it is believed that Saulyak has the potential to host a significant gold-silver deposit, in excess of the currently defined C class 'reserve', as defined under the Ukrainian State system.

Beregove Project

Eurogold has a 6.33% interest in the Beregove Project in Ukraine. Ukrainian government agencies are currently mining a series of polymetallic veins (lead, zinc, gold, and silver) and small areas of breccia (gold and silver only) by underground methods. A small processing plant at Beregove produces gold by gravity separation. (Beregove Project). It is understood that Eurogold currently considers the Beregove Project as a passive investment.

INTRODUCTION $\overline{1}$

$1.1$ Terms of Reference

RSG Global has not been requested to provide an Independent Valuation.

The Competent Person's Report has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (Valmin Code, 1998). The report has also been prepared in accordance with the Australasian Code for the Reporting of Identified Mineral Resources and Ore Reserves (JORC Code, 1999). These Codes are binding upon Members of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG), and the rules and guidelines issued by various international stock exchanges, which pertain to independent expert reports.

The Eurogold properties include four separate project areas, collectively comprising 8 granted exploration tenements covering an aggregate area of approximately 3,666 square kilometres and one exploration licence application at Saulyak of some 276 square kilometres area (Figure 1 1). RSG Global is not qualified to provide comment on the legal status associated with the tenure of the Eurogold properties, and these matters have therefore not been independently verified by RSG Global. The present status of tenements listed in this report is based on information provided by Eurogold, and the report has been prepared on the assumption that the tenements will prove lawfully accessible for evaluation.

The Competent Person's Report has been prepared on information available up to and including February 2004. The conclusions expressed in this Independent Valuation are therefore only valid for this date and may change with time in response to variations in economic, market, legal or political factors, in addition to on-going exploration results. All monetary figures included in this report are expressed in United States of America dollars (US\$) unless otherwise stated.

RSG Global has provided its consent for the inclusion of the Competent Person's Report in Part 3 of Eurogold's Admission Document and for the inclusion of references to its name in other sections of the Admission Document in the form and context in which the report and those statements appear, and has not withdrawn that consent prior to issue. RSG Global accepts responsibility for the Competent Person's Report for the purposes of paragraph 13(l)(d) of Schedule 1 of the Public Offers of Securities Regulations 1995.

$1.2$ Qualifications, Experience and Independence

RSG Global is a mining industry consulting firm, which has been providing services and advice to the international mineral industry and financial institutions since 1987.

The primary author of the Competent Person's Report, Dr Julian Barnes, is a professional geologist with over 23 years experience in project evaluation internationally, including extensive involvement with mineral projects throughout Eastern Europe. He is a Principal of RSG Global and a Member of the AuslMM and the AIG, and qualifies as an 'Expert' and 'Competent Person' as defined in the Valmin and JORC Codes respectively.

Dr Barnes was assisted in the preparation and compilation of this report by Richard Yeates and Timothy Kindred, both of whom qualify as 'Experts' and 'Competent Person's' as defined in the Valmin and JORC Codes respectively.

Richard Yeates is a professional geologist with 22 years experience in the exploration and evaluation of mineral properties internationally. He is a Principal of RSG Global, and a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG).

Timothy Kindred is a professional chemical engineer with 16 years experience in the evaluation of mineral processing operations internationally. He is Manager Metallurgy with RSG Global, and a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and an Associate Member of the Institution of Chemical Engineers (IChemE).

Neither RSG Global, nor the authors of this report, have or have previously had, any material interest in Eurogold Limited or the mineral properties in which Eurogold has an interest. Our relationship with Eurogold is solely one of professional association between client and independent consultant. This report is prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this report.

$1.3$ Principal Sources of Information

RSG Global has based its review of the Eurogold properties on information provided by Eurogold, along with technical reports prepared by Government agencies and previous tenement holders, and other relevant published and unpublished data.

The Valmin Code, which is binding upon Members of the AusIMM, requires that a site visit be undertaken to the projects or assets unless there are compelling reasons not to do so or that the technical assessment will not be significantly enhanced by such a visit. In this instance, site visits were undertaken to all projects by the primary author in February 2004 (Baia Mare tailings operation and exploration properties), September 2003 and February 2004 (Saulyak Project) and February 2004 (Beregove Project).

In addition to the site visits, RSG Global has made all reasonable enquires to ensure the authenticity and completeness of the technical data on which it has relied, and a final draft of the report was also provided to Eurogold, along with a written request to identify any material errors or omissions prior to lodgement.

ROMANIAN PROPERTIES $\overline{2}$

$2.1$ Background Information on Romania

Romania is located in south-eastern Central Europe, in the northern part of the Balkan Peninsula. Romania's neighbours are Bulgaria, Hungary, Serbia, Moldavia and the Ukraine and the country borders the Black Sea.

Romania comprises some 238,391 square kilometres and has a temperate, continental climate. The population as of December 31^st 1997 was 22.52 million and comprises the following ethnic groups; 89% Romanian, 7% Hungarian, 4% others.

The Romanian government system is a constitutional republic with a multi-party system bicameral Parliament. The country is divided into 41 counties and with some 262 towns and 2,687 communes (with 13,285 villages). The capital of Romania is Bucharest, which is a municipality divided into six administrative sectors with a population of 2 million inhabitants. The principal port is Constanta on the Black Sea, however, the Danube river also has a series of port facilities.

Romania is a member of the United Nations (UN) and has the objective of becoming a full member of the European Economic Community (EEC) in 2007.

The Romanian currency is the Leu (plural Lei). The average exchange rate (relative to the Euro) for the period 1^st January 2003 to 31^st December 2003 was 38,588.00 with a year high of 42,173.00 and a year low of 35,704.00. The corporate tax rate is 25% and the maximum personal tax rate is 40%. Value added tax (VAT) is currently 19% and the withholding tax on dividends is 10%.

There are no restrictions on foreign ownership, repatriation of capital or on payment of dividends. Customs duties and tariffs are in line with EU Standards.

$2.2$ Baia Mare Gold Tailings Reprocessing Operation

$2.2.1$ Introduction

The Baia Mare gold and silver processing plant is located within Baia Mare in north-eastern Romania. Access to the area is excellent by means of the national series of major sealed roads and highways. Baja Mare is located on a plain abutting a series of hills which form a part of the Carpathian mountain chain. Baia Mare is a major Romanian regional centre, with a population of approximately 150,000 and is linked by roads and rail and is fully serviced by the Romanian national electricity and gas grids.

$2.2.2$ Ownership

The Baia Mare processing plant is located on land owned by Transgold SA (Transgold), a Romanian company that is 50% owned by Eurogold, 45% owned by Remin (a Romanian state owned mining company) and 5% by other Romanian state and privately owned entities.

$2.2.3$ Tailings Reprocessing Operations

Various ore sources are treated via the processing plant, including existing tailings dumps in the immediate vicinity of Baia Mare and ore supplied by Remin.

The Baia Mare processing plant has capacity to process up to 250,000 tonnes to 300,000 tonnes per annum of 'hard' ore through a crushing and milling circuit. The Baia Mare plant has a Carbon in Leach (CIL) recovery circuit capable of processing up to 2.5 million tonnes per annum of gold and silver bearing solids in a slurry form. This configuration provides flexibility to recover gold and silver from slurried ore derived from a number of sources, including slurry produced from the crushing and milling circuit.

The Transgold processing facility at Baia Mare has sourced ore from a wide variety of locations in recent times, including the following:-

Approximately 20,000 tonnes of ore per month from the adjacent Remin Borzas underground mine and milling facility for toll treatment, supplied direct to the Transgold plant via a pipeline.

Ore and concentrate delivered from a variety of sources throughout Romania.
Tailings material derived from the vicinity of Baia Mare and some ore derived from mines around Baia Mare, including the Hanau deposit.

The cost of purchasing the different ore and concentrate sources varies with the gold price, with an increase in the gold price triggering an increase in the purchase price of concentrates. For the toll treatment of ore from Remin, the profit is the difference between the toll treatment price and the cost to treat the ore. A staggered scale has been developed whereby if Remin delivers more tonnes for treatment by Transgold, the price of toll treatment is reduced concomitantly.

It is understood that the pyrite concentrate project (Suior Project) has a payment structure in which, based on an estimated 5.5g/t Au recoverable gold grade, Remin receives a minimum of 2.5g/t Au for each tonne of concentrate that is processed, Transgold receives 3g/t Au and the proceeds from higher than anticipated recoveries are split equally between Eurogold and Remin. Transgold pays MinMet, the company which is providing the bio-leaching technology, some US\$8 per tonne of processed pyrite concentrate and splits equally with MinMet any value recovered in excess of US\$64 per tonne.

$2.2.4$ Tailings Development and Production History

Transgold recovered silver

(ounces)

The processing plant was built in 1998 by Lycopodium and has subsequently been enhanced, including the upgrading and enlargement of the crushing facility. The plant currently has the capacity to process 250,000 tonnes to 300,000 tonnes per annum of 'hard' ore and can process some 2.5 million tonnes per annum of crushed ore and tailings.

Initial tailings reprocessing centred on the laz Meda Dam, which had an initial reserve of some 4 million tonnes. This dam has subsequently been completely reprocessed and is in the final stages of reclamation. The eastern portion of the dam area has been rehabilitated and the remainder will be completed during the Spring of 2004, providing a completely grassed leisure area in the centre of Baia Mare township.

Table 2 1 Baia Mare Tailings Reprocessing Operation 2003 - 2004 Processing Statistics
Item 2003 Year Q1, 2004
Processed tonnes	280,883	68,116
Total recovered gold (ounces)	25,248	5.761
Total recovered silver (ounces)	99,137	30,996
Transgold recovered gold (ounces)	13,940	2,968

56,851

19,124

Production statistics for the 2003-2004 period are provided in Table 2_1 below.

The next tailings dam scheduled for reprocessing and reclamation is the Central Dam. In September and October 2002, eight vertical reverse circulation (RC) holes were drilled through the Central Dam at a spacing of approximately 200m (Figure 2_1) and sampled at two-metre intervals using a cyclone and Jones riffle splitter. Composite samples of the entire intersection of tailings for each hole were initially produced for first pass metallurgical testwork. Subsequently, samples were prepared from the individual two-metre intervals for testwork via bottle roll cyanidation.

$2.2.5$ Tailings Resources and Reserves

A total of 12 million tonnes of tailings exists in the Central Dam, however some 2 million tonnes has to remain in situ to preserve the integrity of Remin's operating tailings dump that immediately abuts the Central Dam. The current planned extractable reserves for the Central Dam are 8.5 million tonnes at a recoverable grade of 0.42g/t Au (based on a head grade 0.84g/t). The mining plan for the Central Dam involves extracting the central part of the dam initially in order to allow the outer part of the dam to be completely dewatered.

In addition, Eurogold are currently spreading some 525,000 tonnes of arsenopyrite concentrate, purchased from Remin, along with planned production by Remin (10,000 tonnes to 15,000 tonnes per annum) over the surface of the Central Dam. The project is referred to as the Suior Project. Following bacterial oxidation testwork, operated in conjunction with British biotechnology group, MinMet, it is planned to irrigate the pyrite concentrate with a suitable bacterial species during the Spring, Summer and Autumn months of 2004. The oxidised concentrate will then be reclaimed from mid-2005 via high-pressure water hoses (monitors) along with material from the Central tailings dam.

2.2.6 Metallurgy and Processing

Two metre samples derived from the 2002 RC drilling programme were generated from each of the drillholes, providing a total of 64 individual samples, from which composites of the entire interval of tailings in each hole were also prepared for initial metallurgical testing.

Cyanidation test work was completed on each individual sample as well as composites of each drillhole. Lime and cyanide were added to each of the samples and they were "bottle rolled" for 24 hours, replicating the conditions and available residence time in the Baia Mare processing plant. Sizing analysis of some of the tailings samples showed that the material is fine, in the range from 80% to 90% passing 75 microns, making the material amenable to hydraulic mining, slurry transport and direct gold and silver recovery. The testwork results relating to the composite samples are summarised in Table 2 2 below, indicating a typical extractable gold grade of 0.44g/t and extractable silver grade of 4.10g/t.

Table 2 2 Baia Mare Tailings Reprocessing Operation Central Tailings Dam - Bottle Roll Cyanidation Testwork
Calculated Head Sample Description Extracted Grade Extraction Reagents Grade
Drillhole Composites	Au g/t	Ag g/t	Au g/t	Ag g/t	Au %	Ag %	NaCN kg/t	Lime kg/t
Drillhole 1	0.96.	7.69	0.45	2.61	47.0	33.9	1.20	2.00.
Drillhole 2	0.86	6.52	0.43	3.26	50.0	50.0	1.20	2.00
Drillhole 3	0.92	9.90.	0.42	4.40	45.4	44.4	1.20	1.80
Drillhole 4	0.82	10.44	0.42	4.88	51.14	46.44	1.52	2.17
Drillhole 5	0.90	7.00	0.38	3.14	42.81	45.79	1.27	1.70
Drillhole 6	1.04	12.15	0.48	5.63	46.0	46.3	2.50	2.00
Drillhole 7	0.85	6.02.	0.42	3.19.	49.4	53.0	1.30	1.50
Drillhole 8	0.91	10.13	0.47	4.44	51.0	43.8	2.00	2.30

The samples demonstrate relatively consistent grade and extraction characteristics for both gold and silver. The test work performed on the tailings material is appropriate for the proposed processing route and the extraction results are considered applicable to the Baia Mare process plant. The typical cyanide consumption is in the range 1kg/t to 2kg/t and typical lime consumption is around 2kg/t.

Metallurgical testwork has also been completed on six diamond drillhole composite samples from the Hanau deposit. The samples were prepared by pulverising to 75% passing 75 microns, and lime and cyanide were added to each of the samples prior to being bottle rolled for 24 hours, replicating the conditions and available residence time in the Baia Mare process plant. Gold recovery ranged from 68.5% to 88.8%, averaging 84.4% for all completed tests. No comminution testwork was undertaken, although observations of quartz in the ore being porous and fractured may indicate potential for conventional crushing. Results from this test work indicate that recoveries from the Hanau ore are likely to be 80% or higher.

Testwork has been conducted on the Suior pyrite concentrate ore using bacterial oxidation to enhance gold and silver recoveries. Recovered grades have been between 5g/t Au and 6g/t Au, with typical recoveries of 40% to 50%. This technology will be applied to the Suior pyrite on an industrial scale in the coming months. The pyrite concentrate will be scattered on top of the Central tailings dam, inoculated with bacteria and the bacterial oxidation process allowed to take its course during the warmer summer months.

Metallurgical testwork completed on the Saulyak ore from the Ukraine (Section 3.2.7) indicates that recoveries of 80% and higher appear to be achievable using gravity separation, flotation and cyanidation, or a combination of these processes. Initial comminution testwork indicates that the Saulyak ore is relatively soft, indicating that it is likely to prove amenable to processing through the Baia Mare crushing and milling circuits.

Metallurgical performance of the various ores, pyritic material and concentrates is based on actual processing of these materials through the Baia Mare processing facility. There are a large number of ore sources (in excess of 15 different materials) with extractable gold grades typically ranging from 5g/t to 50g/t, and recoveries typically in a range from 30% to 70%.

$2.2.7$ Infrastructure

The Baia Mare processing plant was constructed by international engineering group Lycopodium and was completed in 1999. The plant has a full range of equipment and facilities to enable management and processing of up to 250,000 tonnes to 300,000 tonnes per annum of 'hard' ore through a crushing and milling circuit. The Baia Mare plant has a CIL and gold recovery circuit capable of processing up to 2.5 million tonnes per annum of gold and silver bearing solids in a slurry form. This allows the flexibility to recovery gold and silver from slurries from a number of sources, including slurry produced from the crushing and milling circuit.

A well equipped site laboratory has been established which is capable of supporting all the required analytical procedures including environmental monitoring tests, pyrite concentrate testwork, bottle roll cyanidation tests on both plant and exploration samples. The facility is capable of undertaking 40 bottle roll samples per day. Adjacent to the site laboratory a bacterial leaching test facility has been established which is endeavouring to identify the bacterial species that will determine optimum oxidation rates of the pyrite concentrate.

A pipeline is being constructed from the Central Dam to the Baia Mare processing facility in order to convey the slurried tailings and oxidised pyrite concentrate. A dual pipeline runs from the Baia Mare tailings reprocessing plant to the new tailings storage facility located some 5km west of Baia Mare.

Adjacent to the Transgold Baia Mare Central Dam resource in Baia Mare is the extensive Remin Central processing facility. The Remin facility has a direct rail link with the Ukraine that may ultimately be used to transport ore from the Saulyak Project to Baia Mare. The Romanian Government is planning to privatise the Remin operation and, although RSG Global has not visited the adjacent Remin plant, it is understood to incorporate a large comminution circuit, including five ball mills that are reported to be in good condition.

$2.2.8$ Environmental Aspects

The tailings retrieval and disposal pipelines are monitored by security patrols 24 hours a day and 365 days a year. Slurry pressure monitors are used to ensure that a constant internal pipe pressure is maintained and the pipe wall thickness is continually monitored. The pipes are routinely rotated prior to being replaced on a regular basis. The slurry and decant water lines are pressure tested every six months. Monitoring of the pipelines is undertaken by Transgold, the Romanian Government and an EEC-accredited independent testing agency. In addition, to the west of the Transgold tailings dam, a 6-metre high catchment wall has been constructed as an extra safety measure.

The new Transgold tailings dam, laz Aurul Bozanta, has been built with a 1.5 metre freeboard and a 'beach' greater than 25m wide. The tailings facility has a 15 million tonne capacity with the capability to be expanded. In conjunction with the EEC (which contributes 50% of the funds), Transgold maintains an active high profile research programme referred to as the 'CLOTADAM Project' to determine the optimum means of tailings dam closure techniques involving a combination of drainage methods and settling reagent additions. A series of 7 'mini-dams' has been constructed adjacent to the main Transgold tailings facility for the 4 year research project.

$2.2.9$ Development and Production Potential

The Central Tailings dam is planned to be the source of some 8.5 million tonnes of tailings and thus can provide some 4 years of tailings material. It is planned to supplement the Central Tailings with a variety of other ore sources such that the Central tailings will be processed over a period of approximately 4 years at a rate of 2.0 million tonnes per annum.

The projected gold and silver grades and recoveries for the Baia Mare Central tailings dam material as applied in production forecasts and financial modelling appears to be appropriate. The projected gold and silver grades and recoveries for the Hanau ore as applied in production forecasts and financial modelling also appear to be appropriate.

There have been some encouraging testwork results on the bacterial oxidation of the Suior pyrite concentrate material. This material is being spread over the top of the Central tailings dam, inoculated with bacteria and the bacterial oxidation process proceeding during the warmer summer months. Once oxidised, the material will be recovered when the Central tailings dam is hydraulically mined. Processing the Suior pyrite material using the bacterial gold recovery process plays an important role in future revenue. It needs to be understood that this technology will undergo its first industrial scale trial at Baia Mare this year and needs to be proven before this future revenue stream can be confirmed. Based on the completed metallurgical testwork, the recovered gold and silver grades projected in production forecasts and financial models appear to be reasonable, given the information at hand and the novel technology being applied to the Sulor pyrite material.

The projected gold recovery and performance of the other sources conventional ore, pyrite ore and concentrate applied in the production forecasts and financial models appear to be marginally optimistic. based on historical production information related to these ore sources.

The projected gold recoveries for the Saulyak material as applied in production forecasts and financial models appear to be reasonable, given the information at hand and the uncertainty on how this material will be processed.

The assumed realised gold and silver prices applied in financial models are US\$383/oz and US\$5.13/oz respectively. Based on the present market situation and outlook for precious metals, application of these prices would appear to be appropriate as at the date of this assessment.

The projected processing rates for slurry materials, including the Central tailings dam, slurries from Remin, and other concentrate streams, are within the indicated capacity of Baia Mare processing plant. The projected processing rates of 'hard' ores, including that derived from Hanau, potentially Saulyak, and other sources appear to be within the indicated capacity of the Baia Mare crushing and milling circuits, based on the limited available comminution test work.

A high level review of predicted processing costs in the Baia Mare forecast production model was completed. The processing unit costs, expressed in terms of US\$ per tonne processed, appear to be generally reasonable, although marginally lower than those typically anticipated. The decrease in unit costs of processing over time, as the tonnage of material processed increases, is consistent with expectations.

$2.2.10$ Proposed Development and Production Strategy

The Central Dam is due to come on stream in the last quarter of 2004, once the pyrite concentrates have been oxidised.

A significant opportunity exists to extend the bacterial oxidation technology to a dedicated bacterial oxidation plant, whereby high-grade concentrates (such as Suior) can be oxidised and recovered under optimal conditions. Pyrites and concentrates make up around 25 % of the feed tonnage projected for Baia Mare going forward, contain up to 50 % of the recovered gold ounces and the typical gold recovery on these materials is around 60 %. A dedicated bacterial oxidation plant would only need to treat a quarter of the feed material and may improve recoveries to in excess of 80 %. Such a plant would also offer the opportunity to continuously process the pyrites and concentrates all year round, as opposed to the opportunistic approach which is currently limited to the summer months.

A small proposed open pit operation, the Hanau Project, is located approximately 23km from the Baia Mare processing facility. The deposit was drilled out entirely by diamond drilling. It is planned to treat at least 150,000 tonnes of material at a predicted in situ grade of 2.9g/t Au by means of trial mining. The cost of transporting the ore to the Baia Mare processing facility is estimated to be 3.5 US cents per tonne/kilometre.

In the future, it is planned to mine underground ore from Saulyak in the Ukraine and transport it direct to the Baia Mare plant using the railway system which links Ukraine and Baia Mare. The Ukrainian railway system passes within 1km of the Saulyak deposit and a rail link reaches the Remin Central plant in Baia Mare.

In addition, Transgold maintains active communications with other exploration groups located in the Baia Mare area, for example Ore-Leave Capital Inc, who are actively exploring the Baia Sprie project, located approximately 20 kilometres from the Transgold processing facility. It is understood that Transgold has entered discussions concerning the toll treatment of any ore mined from this project.

$2.3$ Baia Mare Gold Exploration Properties

$2.3.1$ Introduction

The Baia Mare exploration properties comprise a contiguous block of licences covering an area of 486.42km², located immediately north and northeast of the Baia Mare tailings reprocessing operation and extending north to the Ukraine border (Figure 2_2).

Table 2_3 summarises tenure of the Baia Mare gold exploration properties.

Table 2 3 Explorer and Transgold Exploration Tenements in Romania
Area $(km^2)$ Tenement Name Licence Holder Grant Date Expiry Date Туре
Racsa SE	Exploration Licence	Explorer	24/04/2000	23/05/2005	53.43
Racsa-Zugau	Exploration Licence	Explorer	22/04/1999	21/04/2007	11.47
Bixad	Exploration Licence	Explorer	22/04/1999	21/04/2007	10.00
Ilba-Nucut	Exploration Licence	Transgold	26/04/1999	25/04/2007	19.84
Baita-Nistru	Exploration Licence	Transgold	26/04/1999	25/04/2007	15.05
Sasar	Exploration Licence	Transgold	23/04/1999	22/04/2007	43.63
Oas.	Prospecting Permit	Explorer	15/12/2003	14/12/2005	333.0
Total					486.42

$2.3.2$ Tenure

The Baia Mare exploration project comprises three exploration licences and a single Prospecting Permit held by Explorer SA (Explorer), which is a 97.5% owned subsidiary of Eurogold, and a further three Exploration Licences held by Transgold.

$2.3.3$ Geology

2.3.3.1 General Geology

The exploration properties are located on the Baia Mare zone of the Inner Carpathian Volcanic Belt that resulted from Cretaceous to Neogene tectonic and magmatic activity associated with the latter stages of the Alpine Orogeny. Crustal scale faulting of the Cambrian basement and the associated intermediate to felsic volcanism resulted in the development of classic low-sulphidation epithermal precious metal mineralisation.

Precious metal mineralisation is associated with conjugate northeast and northwest trending faults, however is dominantly related to the former, more dilational structures. Numerous extensive zones of brecciation and hydrothermal alteration appear to be spatially associated with the two principal structural elements within the project tenements. Mineralisation is hosted within open vein, stockwork and breccia systems. The base of sulphide oxidation generally exceeds 65m and may persist to 100m depth.

The metallogeny of the various deposits is commonly vertically zoned in a manner consistent with epithermal regimes elsewhere, with base metals (copper, zinc, lead) predominating at depth and precious metals becoming more abundant at shallower formation depths and temperatures. Veins are generally steeply dipping and occur individually or as more cohesive sub-parallel vein zones, frequently transitional with stockwork and breccia styles. Individual veins vary in width from 0.5m to 40m with strike lengths up to 1.500m.

The precious metal mineralogy is usually relatively simple, with gold occurring in either free form, or more typically as electrum. The gold-silver ratios range from 1:5 to 1:10. Zoned alteration haloes comprising silicic, argillic and propylitic assemblages are common, with adularia being more readily discernable.

Figure 2_3 summarises the regional geology of the Baia Mare area.

2.3.3.2 Bixad Licence

The Bixad Licence comprises an area of 10km² located 40km northeast of the Baia Mare processing plant, adjacent to the Ukraine border. Trenching and drilling completed by Explorer has identified gold-silver mineralisation target, suitable for open pit mining and worthy of concerted follow-up exploration, within two sub-parallel north-northwest trending veins, termed the Corneasca veins, to a maximum depth of 60m. The two veins converge towards the north where inter-vein brecciation and alteration appear to increase in intensity before disappearing beneath a post-mineralising cover sequence. Reconnaissance rock chip sampling of highly fractured and altered andesite in the central part of the tenement has return gold assays up to 2.4g/t.

2.3.3.3 Racsa-Zugau Licence

The Racsa-Zugau Licence comprises a 11.47km² area lying 12km to the northwest of the Baia Mare processing facility. During the 1960's, exploration by Romanian government agencies is reported to have delineated potentially economic gold mineralisation. Mineralisation appears to be associated with veining within a hydrothermal breccia zone located in the neck of an interpreted diatreme. Explorer completed seven shallow holes to confirm the resource, however the holes are interpreted by Explorer to have been drilled too far to the east and failed to encounter significant mineralisation.

2.3.3.4 Racsa Southeast Licence

The Racsa Southeast Licence covers an area of $53km^2$ , and was acquired to link the remaining licences into a contiguous block along the axis of the main mineralised trend, extending northwest from the Baia Mare processing facility, thereby preserving any additional exploration potential. The only target of any significance investigated within the Racsa Southeast Licence is the Salvador Prospect, which is located on the margins of an interpreted unexplored stockwork system. The Salvador Prospect comprises approximately 6ha of historic excavations believed to relate to the Austro-Hungarian period. Trenching has identified back-filled workings and marginal stockwork veining. More significant channel sampling intervals of 12m at 4.25g/t Au and 19m at 1.9g/t Au were followed up with a four-hole diamond drilling programme.

2.3.3.5 Ilba-Nucut Licence

The Ilba-Nucut Licence comprises approximately 20 $km²$ and is situated approximately 12 $km$ northwest of the Baia Mare processing facility. The licence incorporates the intersection of the fundamental Firizan and Mihai-Nepomuc lineaments, which appear to provide the primary control on the distribution of mineralisation within the Baia Mare region.

Numerous northeast and northwest trending veins are distributed throughout the tenement, many of which are associated with historic mining activity. Varying quantities of gold are recorded within the upper levels of these mines, however the majority of veins were mined for base metals. In an epithermal context, this implies that the upper levels of these mineralised systems, which are more prospective for precious metals, have been exhumed by uplift and erosion.

Vein systems currently being investigated include the Hanau, Firizan, Venera, Mihau-Nepomuc, 200 and Purcaret Prospects. Explorer is planning to test mine, by open pit methods, approximately 150,000t of vein hosted gold mineralisation at predicted gold grade 2.9g/t Au at the Hanau Prospect.

The Firizan Vein has been traced via trenching and drilling over a strike length in excess of 1,000m, including better channel sample intervals of 4.4m at 6.2q/t, 3.1m at 9.6q/t Au and 21.9m at 3.6q/t Au. Potential open pittable gold mineralisation has been idenitified on the northeastern portion of the prospect area, to the immediate south of which the vein width and grade appear to rapidly diminish with depth.

The northwest striking Venera Vein has been the subject of significant historic mining activity, where production from the upper levels is reported to have averaged 13g/t Au. Although understood to have been mined out, surface trenching returned a best intersection of 15.9m at 4.63g/t Au, and it is intended to drill test the upper levels for remnant pillars and peripheral mineralisation.

The Mihai-Nepomuc Vein occupies a major regional structure, near its intersection with the Firizan Lineament. Mineralisation comprises polyphase (copper, lead, zinc, gold) sulphide development, with precious metal values increasing with elevation, reaching widths of up to 30m. A limited strike interval was previously mined to surface, returning grades of 2g/t to 4g/t Au. Explorer SA recently drilled the strike extensions of this mineralisation, intersecting significant thicknesses of highly sulphidic breccia, overprinted by low temperature gold mineralisation within the footwall of the main structure.

A series of veins and vein zones have been identified within the Purcaret Peak area, however the target of greater potential interest is the Purcaret North breccia. This prospect is defined on satellite image as a distinctly circular feature located close to the intersection of the Firizan and Mihai-Nepomuc Lineaments. Although outcrop is sparse, historic mapping and more recent trenching has identified an apparently extensive area of highly silicified andesitic breccia, possibly associated with a diatreme. A channel sampling interval of 13m at 0.49g/t Au provides evidence that the system is mineralised and encouragement for further exploration.

2.3.3.6 Baita-Nistru Licence

The Baita-Nistru Licence, comprising 15km², is located 6km northwest of the processing facility at Baia Mare. The geology is essentially identical to the adjacent Ilba-Nucut tenement, with numerous northeast striking vein systems, some of which have been mined, hosted by andesitic volcanics.

The most significant prospect is the III Lapusna Vein, which has been extensively mined for base metals. and to a lesser extent gold, during Austro-Hungarian times. Surface subsidence has exposed a 900m long section, with extensive veining persisting into the footwall and hangingwall. Channel sampling along a 100m strike length of the exposed wallrocks (parallel to the principal vein) returned several significant mineralised intervals, including 14m at 16.2g/t Au and 16.7g/t Ag, 10m at 5.55g/t Au and 17.3g/t Ag, 13m at 3.42g/t Au and 6.23g/t Ag, and 25m at 2.35g/t Au and 7.63g/t Ag. Further channel sampling and a limited drilling programme is proposed to assess the extent of wallrock mineralisation and the distribution of remnant mineralised pillars.

Explorer delineated a significant zone of gold mineralisation, termed the Nistru deposit, associated with an extensive branching vein system lying sub-parallel to and immediately southeast of the main Lapusna Vein. The mineralisation has been ceded to the State mining company, Remin, who plan to mine the deposit and toll treat the ore through Transgold's Baia Mare processing facility.

The Piatra Handel Prospect, which is located in the centre of the Baita-Nistru Licence, forms a prominent hill of silicified diatreme breccia 300m in diameter, which has received no previous exploration. Reconnaissance rock chip sampling by Explorer SA returned anomalous gold assays up to 0.5g/t. The northeast striking, high grade Coroana de Aur Vein intersects the diatreme breccia, providing a focus for further exploration.

2.3.3.7 Sasar Licence

The Sasar Licence comprises an area of $43km^2$ , lying immediately north of the Baia Mare processing facility at the southeastern extent of the major mineralised corridor straddling the Mihai-Nepomuc Lineament. One of the more significant and advanced prospects within the licence area is the Borzas goldsilver stockwork system, where Remin are understood to be currently mining.

Numerous other vertically zoned, polymetallic vein deposits occur throughout the licence area, including the Aurum, Wilhelm, Valea Rosie, Dealul Crucii and Sophia Prospects. The latter deposit comprises a system of northeast trending veins hosted by a siliceous breccia that is characterised by abundant adularia. Recent drilling by Explorer indicated the presence of narrow high-grade veins, however the breccia is insufficiently mineralised to represent a bulk mining proposition.

$2.3.4$ Exploration History

Mineralisation within the Baia Mare area has been known for several centuries, with evidence of significant mining activity during the Austro-Hungarian period. More recently, the Baia Mare area has been subject of concerted exploration by the Romanian Government for over 30 years.

A wide variety of exploration methods have been used including surface exploration techniques, surface diamond drilling, underground development and underground diamond drilling. It is understood that the results of the exploration programmes have been made available to Eurogold technical staff.

Via its majority-owned subsidiary Explorer SA, Eurogold, through Explorer and Transgold, has undertaken concerted exploration programmes including a logical sequence of geological mapping, data compilation, remote sensing, soil sampling, rock chip sampling, trenching and finally diamond and RC drilling.

$2.3.5$ Resources

A JORC compliant resource has not been developed for the Hanau Prospect to date. Instead first pass polygonal estimates were established in order to determine areas suitable for trial mining.

$2.3.6$ Exploration and Resource Potential

Eurogold, through Explorer and Transgold, has maintained an active exploration programme in the immediate vicinity of Baia Mare. A significant tenement package has been acquired and a detailed knowledge of the geology and mineralisation styles of the region has been developed.

Soil sampling has successfully located all areas of known previous exploration and development. The Hanau Prospect is the most advanced project for Eurogold.

Exploration to date has indicated that there is potential for numerous small to medium sized zones of openpittable gold mineralisation distributed throughout the Transgold and Explorer tenements.

2.3.7 Proposed Exploration Strategy

It is understood that Eurogold's exploration strategy is to rank the various known gold zones and systematically drill them so that reserves suitable for transport to the Baia Mare processing plant can be defined and exploited.

UKRAINE PROPERTIES $\overline{3}$

$3.1$ Background Information on Ukraine

Ukraine is a country of 49 million people, with an area of $603,700 \text{km}^2$ . The capital city Kiev has a population of 2.6 million. Languages spoken within Ukraine include Ukrainian, Russian, Romanian, Polish and Hungarian. The distribution of nationalities within Ukraine is Ukrainian 77.8%, Russian 17.3%, Belarusian 0.6%, Moldovan 0.5%, Crimean Tatar 0.5%, Bulgarian 0.4%, Hungarian 0.3%, Romanian 0.3%, Polish 0.3%, Jewish 0.2%, and other 1.8% (2001).

The climate is temperate continental with warm summers and cold winters. Most of Ukraine consists of fertile plains (steppes) and plateaus, mountains being found only in the west (the Carpathians) and the Crimean Peninsula in the extreme south.

Ukraine was the centre of the first Slavic state, Kievan Rus, which during the 10th and 11th centuries was the largest and most powerful state in Europe. Weakened by internecine quarrels and Mongol invasions, Kievan Rus was incorporated into the Grand Duchy of Lithuania and eventually into the Polish-Lithuanian Commonwealth. The cultural and religious legacy of Kievan Rus laid the foundation for Ukrainian A new Ukrainian state, the Cossack Hetmanate, was nationalism through subsequent centuries. established during the mid-17th century after an uprising against the Poles. Despite continuous Muscovite pressure, the Hetmanate managed to remain autonomous for well over 100 years. During the latter part of the 18th century most of the Ukrainian ethnographic territory was absorbed by the Russian Empire. Following the collapse of Czarist Russia in 1917, Ukraine was able to bring about a short-lived period of independence until the commencement of Soviet rule in 1920.

After contracting in every year since independence in 1991, Ukraine's economy started growing in 2000, with real GNP growing by 5.8% and industrial output, disposable income and consumer spending all growing by double-digit figures. The pace of growth has continued to accelerate (4.1% in 2002). At the same time, inflation dropped to 5.7% in 2002, down from over 20% in the same period of 2000. The national currency, the hryvnia, has remained stable. Ukraine's external economic situation remains sound as the trade surplus and foreign currency reserves grow and foreign debt declines.

Exports and consumer spending have been the main factors behind Ukraine's strong economic performance. Strong growth in Russia, Ukraine's main trading partner, boosted Ukrainian exports. At home, pension and wage arrears were paid off, lifting consumer spending and consumer confidence. Food products and consumer goods industries are now the fastest growing sectors in Ukraine. Increased consumer confidence is also being reflected in the troubled banking sector with household bank accounts growing markedly. Business confidence is up in general, as evidenced by the strong growth in new business registrations, mostly in the small to medium-enterprise sector. Growth was also fuelled by the first successes of the reform-minded government that came into power in early 2000. Cash collections and transparency were improved in the energy sector, and new legislation was enacted which should simplify the licencing of business activity.

The chief of state is President Leonid D Kuchma (since July 1994), whilst the head of government is Prime Minister Viktor Yanukovych (since November 2002) along with First Deputy Prime Minister Mykola Azarov (since November 2002). The Prime Minister governs with a Cabinet of Ministers appointed by the President and approved by the Supreme Council. The President is elected by popular vote for a five-year term; and the next elections are to be held in October 2004. There is also a National Security and Defence Council or NSDC, originally created in 1992 as the National Security Council, but significantly revamped and strengthened under President Kuchma. The NSDC staff is tasked with developing national security policy on domestic and international matters and advising the President. A Presidential Administration helps draft presidential edicts and provides policy support to the President. A Council of Regions serves as an advisory body created by President Kuchma in September 1994, that includes chairmen of the Kiev and Sevastopol municipalities and chairmen of the Oblasti (the Ukrainian parliament).

$3.2$ Saulyak Gold Project

$3.2.1$ Introduction

The Saulyak Gold Project (Saulyak) is located 20km south of the regional centre of Rakhiv, in the Rakhiv District, Zakarpatski Region of southwest Ukraine, close to the Romania-Ukraine border (Figure 1_1). Saulyak is located on the western outskirts of the village of Dilove (Figure 3 1)

The project is accessed via the sealed P03 Highway, which links the western Ukrainian regional centres of Uzhhorod and Ivano-Frankiusk. The Tisa River, which forms part of the border between Romania and Ukraine flows directly to the south of Dilove. The project area lies at an elevation of 380m above sea level within the Carpathian Mountains and is characterised by steep, hilly terrain with narrow incised valleys. The peaks rise to approximately 1,200m above sea level.

The project is well situated with respect to infrastructure (Figure 3_1), located on a major sealed road coinciding with a 10kW power transmission line, and a narrow gauge railway (currently being upgraded to standard gauge) linking Ivano-Frankiusk in Ukraine with Cluj-Napoca in Romania. As shown in Figure 3 1, the rail link passes immediately adjacent to Dilove, on the south side of the Tisa River. The Ukraine/Romania border post for the rail link is located just to the south of Dilove.

$3.2.2$ Tenure

The Saulyak Project comprises Licence 2146, granted by the Ministry of Ecology and Natural Resources, with an aggregate area of $3.144 \text{km}^2$ , as shown on Figure $3.1$ . The Licence is registered in the name of Saulyak Limited, code 31880159, No. 1, Mira Street, Rakhiv, 90600, Rakhiv, Zaparpatsky Region, 90600, Ukraine. The licence document is dated 21 November 2002, however the 'advice of grant' from State Department of Ecology and Natural Resources, Zaparpatsky Region, is noted as being 19 April 2002 (#653/09). The Licence has been granted for 5 (five) years. A translation of the licence document has been sighted by the authors. The geographical coordinates of the Licence are shown in Table 3_1 below.

Table 3 1 Saulyak Project
Point	Licence 2146 Boundary Coordinates North	East
	47Deg 56' 52"	24Deg 09' 43"
2	47Deg 56' 18"	24 Deg 10' 10"
3	47 Deg 56' 03"	24 Deg 10' 10"
4	47 Deg 55' 37"	24 Deg 09' 48"
5	47 Deg 55' 32"	24 Deg 09' 19"
6	47 Deg 55' 48"	24 Deg 08' 44"
	47 Deg 55' 59"	24 Deg 08' 44"
8	47 Deg 56' 48"	24 Deg 09' 08"

The legal status of mineral tenements comprising the Saulyak Gold Project has not been independently verified by RSG Global.

The following conditions are attached to the Licence:-

Type of use: Geological study including pilot exploitation.
Object of the Licence: Saulyak deposit.
Commodity: Gold.
Goal of the Licence: Extra exploration of medium and lower horizons of the deposit: calculation of reserves as to the industrial categories C1 + C2; approval of reserves of the State Reserve Commission of Ukraine.
Special additional conditions:
Exploitation of the "materials" within 5 years on approval of reserves to State Reserve $\bullet$ Commission of Ukraine.
Follow the requirements of the State Department of Ecological Resources, Zakarpatsky Region $\bullet$ (Ecological card of 18 April 2002).
Timely and complete payment of the necessary fees (including payment of the geological $\bullet$ works) to the State budget according to the Act.
Handover of geological information, according to the Act, within three months of the approval $\bullet$ of the report, to Geoinform of Ukraine.
Licensee is obliged to start the works according to the programme of works immediately after obtaining the licence.
In the case that the licensee does not follow the requirements of the Licence conditions and the Act, the Licence can be rescinded.
Finance source: Non-governmental.
Minimum expenditures, rentals: Nil (approved work programs are understood to be adequate).

The Company has informed RSG Global that Saulyak Limited is 74.68% owned by Eurogold.

It is understood that Saulyak LLC has made an application for conversion of the above Licence to a Mining Licence. In Ukraine a Mining Licence is obtained by completing a "reserve" certification process (for the currently defined C1 and C2 class "reserves"). The Zarkaptesky Geological Expedition completed a Reserve Certification Report, which was completed and submitted to the Ministry of Natural Resources on 26^th October 2003. Upon acceptance of the "Reserve", Saulyak LLC must obtain the approval of the various local and regional government entities before the Ministry will grant the Licence. In addition, it is understood that a further application has been made to the Ministry of Ecology and Natural Resources for a large Exploration Licence of some 276 $km^2$ , which will encompass most of the prospective Maramoshki block.

It should be noted that an operating marble quarry currently lies within the Saulyak Licence area. The deposit has been successfully mined over 50 years and demonstrates the ability to obtain mining approvals in the project area.

$3.2.3$ Geology

$3.2.3.1$ Regional Geology

The Saulyak Project lies within the Eastern Carpathian Arc which forms part of the major ABCD belt (Alpine-Balkan-Carpathian-Dinaride belt) which traverses central and Eastern Europe and through to Turkey. The ABCD belt is a complex, arcuate, double vergent orogen that formed during two independent stages of continental collision. The ABCD belt has a very complex history spanning a period from the Cretaceous (approximately 100 Ma) through to the present day. The ABCD orogen has a geological history characterised by complex interactions between various 'micro-plates' compressed between the African and Eurasian continents.

During the Cretaceous, ductile nappe structures were formed in the Southern and Eastern Carpathians. The mountain chains represent basement-cover nappes that formed during ductile thrusting under lowgrade metamorphic conditions.

Mineralisation occurred in two distinct phases between the Late Cretaceous and the Neogene. Most age dating in the inner Carpathians suggests that the majority of gold mineralisation is of Neogene age, covering the period 13Ma to 9Ma.

The mineralisation at Saulyak is very strongly deformed, which is quite atypical of Neogene age mineralisation elsewhere in the ABCD belt. A possibility exists that the mineralisation is actually earlier. related to the Cretaceous age nappe development. Recent studies on geodynamics in southeast Europe suggest that a period of fast convergence of the plate boundaries in the East Carpathians, over the period 15MA to 5Ma resulted in a process known as 'roll-back' wherein the subducted plate is consumed faster than the rate of convergence resulting in crustal extension and reactivation of pre-existing thrusts. As such the gold mineralisation may be of Neogene age, but unusually strongly deformed.

$3.2.3.2$ Project Geology

The Saulyak gold deposit is located within the Maramoshki massif, a basement block overlain and overthrust by Neogene to Tertiary flysch units. The massif straddles the Ukraine-Romania border in the eastern Carpathians. Some four regionally important nappe/thrust structures have been mapped follows (from the uppermost structure to the lowermost structure) as follows:-

Berlibashi: mid-Palaeozoic dolomites and shales unconformably overlying Cambrian schists, quartz porphyries, carbonates and shales.
Dilove: Upper Ordovician medium to high-grade metamorphic schists, marble and amphibolite.
Late Palaeozoic phyllites. Rozis:
Bilypotik: Jurassic and Triassic carbonates and sediments unconformably overlying Upper Proterozoic medium grade (amphibolite facies) metamorphic rocks.

Each major structural unit is separated by a regionally significant thrust plane, however, numerous internal thrusts and higher angle faults have also been mapped.

Overlying all the above units are Cainozoic rocks comprising limestone, dolomites, sandstone and shales.

The Saulyak deposit occurs in metasediments at the base of the Dilove Nappe, which overlies the Bilipotik Nappe.

The Dilove Nappe in the region of the Saulyak deposit comprises epidote-chlorite-quartz schists with associated carbonate horizons. The schists are interpreted to be meta-sediments, however the origin of the carbonate horizons is more problematic. The carbonate may be strongly deformed and metamorphosed carbonate alteration.

At the base of the Dilove Nappe is a +50m zone of intense silicification, quartz-sericite-chlorite-green mica schist, carbonate, quartz-carbonate and biotite-sericite-chlorite schist. A basal unit of strongly silicified carbonaceous shale occurs at the thrust contact, directly overlying the garnet-chlorite schists and amphibolite of the Lower Proterozoic Bilipotik Nappe.

Table 3_2 below summarises the sequence of lithologies that has been mapped (from the top to the basal thrust) in the mineralised zone at Saulyak.

	Table 3 2
	Saulyak Project
	Sequence of Lithologies
Thickness	Description
20m to 30m	Quartz-sericite-chlorite schist with secondary quartz-fuchsite. Minor lensoid carbonate zones and lenses of silica. Strong mylonitic textures.
10m to 18m	Carbonate and quartz-carbonate with minor schists. Masses of solid silica are locally referred to as "quartzite".
8m to 12m	Biotite-sericite-chlorite schists with strong silicification.
10m to 20m	Quartz-sericite-chlorite schist with strong silicification. Minor lensoid carbonate zones and lenses of silica. Strong mylonitic textures.
5m to 10m	Silicified carbonaceous shale.
	Basal Thrust?

A review of outcrop and underground exposures at the Saulyak deposit indicate that the mineralised zone comprises the following components:-

Strongly deformed schists with mylonitic textures.
Zones of intense silicification and quartz-carbonate rock.
Intensely deformed quartz veins (strongly boudinaged, 'rootless' fold hinges, ptygmatically folded etc).
The geometry of the above components within the overall flat dipping (average of approximately 30°) is extremely complex on a local scale.

The overall thrust zone is characterised by strong sericite alteration and a marked increased in fabric intensity. There is evidence for a multi-phase deformation sequence, suggesting that the mineralised zones have been compressed and transposed.

Gold mineralisation appears to be strongly correlated with abundance of silica, either in the form of strongly deformed quartz veins or as silica alteration. The gold mineralised zones occur as multiple lenses within the overall package described above. Based on the underground development etc, the mineralised lenses have an average thickness of 3m to 6m.

Mineralogical assessment undertaken during the main phase of exploration from 1974 to 1988 indicates that the gold is distributed throughout the mineralised zones, however the quartz veins are much higher grade than the schistose wall rock. According to the reported mineralogical testwork the following 'average' grades occur:-

$\bullet$	Quartz veins (7% by volume):	41g/t Au.
$\bullet$	Quartz-carbonate rock (3% by volume):	30g/t Au.
$\bullet$	Quartz-sericite rock (85% by volume):	2.7g/t Au.
$\bullet$	Unspecified (5% by volume):	No information.

In addition, mineralogical work has shown that the gold is of high purity (840 to 880 fineness) and the main sulphide minerals associated with the gold mineralisation are pyrrhotite, arsenopyrite, sphalerite, galena, chalcopyrite, pyrite and rare altaite and hessite. Sulphides generally comprise no more than 2% to 6% of the rock. In microscopic analysis, the gold is described as dendtritic, lamellar and rounded, with a size range from 0.001 mm to 0.2 mm with most observed gold particles being in the range 0.02mm to 0.12mm. In addition, gold has been noted to occur in much more complex forms (dendritic) from 0.04mm to 0.6mm, with most of this coarser gold being in the range 0.05mm to 0.20mm. Gold also has been noted directly associated with galena, sphalerite and rare arsenopyrite. Gold appears to be dominantly distributed along grain boundaries and at the margins of veins, which provides an explanation for the free milling metallurgical response.

Potentially deleterious elements such as arsenic and antimony are reported as being close to or below the detection limit (100ppm for arsenic; below detection limit for antimony).

$3.2.4$ Exploration History

The Saulyak deposit was discovered in 1974 as a result of regional litho-geochemical exploration (stream sediment sampling allied with rock chip sampling) carried out between 1946 and 1970 over the entire Rakhiv region. Detailed exploration for gold in the Rakhiv region commenced in 1972.

Over the period 1974 to 1982, extensive exploration was carried out on the deposit, which included the following activities:-

Surface trenching and channel sampling where the deposit is exposed at 530m above sea level $\bullet$ ("ASL") and 560m ASL. The surface trenching exposed the mineralisation over some 450m of strike length.
Underground development (drives and cross-cuts on two levels, at 468m ASL and 498m ASL), as shown in Figure 3 1. The bulk of the underground development was undertaken over the period 1982 to 1984. Approximately 9km of underground development was undertaken. Underground development was focussed on a series of drives and cross-cuts over two areas, each of approximately 200m by 200m, as is typical for the Soviet style of exploration. Two levels of drives and cross-cuts were developed.
Underground channel sampling. Continuous channel samples were taken with mechanical aids for $\blacksquare$ an average size of 10cm high by 5cm deep with an average sample interval of approximately 1m. Both walls of drives and cross-cuts were routinely sampled. Vertical channel samples were also routinely collected in drives, rises and winzes. The mineralised zone, as sampled underground is typically 5m to 6m thick and shallow dipping (Figure 3 3)
Underground diamond and percussion drilling.
Surface diamond drilling. Reportedly, poor sample recoveries were obtained in highly sheared zones due to the use of non-wireline equipment, and the Ukrainian geologists interviewed consider that the underground channel samples form the most dependable assay estimates. It is considered that the diamond drillholes may be understating the true grade of the intersections.

As a result of the exploration programme, the first state sanctioned estimate of resources was declared and approved in 1984 by the Central Commission on Reserves of the USSR.

From 1984 to 1989 limited additional work was carried out on the deposit. Over this period more extensive regional exploration was undertaken including geological mapping, soil sampling, rock chip sampling, stream sediment sampling and ground geophysical surveys.

It is understood that in 1998, a Ukrainian-Soviet joint venture company, Tokaringa was awarded a Licence to exploit the deposit. The Licence was apparently revoked in 2002, due to various unspecified irregularities.

During the period 1998 to 2002, Renison Goldfields Consolidated Limited (RGC), and possibly other international companies, reviewed the project but were unsuccessful in consummating an agreement.

Saulyak LLC was established in November 2001 as a vehicle to acquire the Saulyak Project and to further exploration and development.

The Saulyak deposit has been accessed at two levels; 498mASL (Adit 1) and 468mASL (Adit 2), as shown on Figure 3_1 and 3_2, and channel sampled both horizontally and vertically at nominal 1m intervals along cross-cuts constructed at approximately 10m intervals across the main mineralised zone, with wider spacing on other mineralised zones. Sample intervals were reportedly adjusted for geological boundaries. Both sides of the underground drives were routinely sampled and, in addition, vertical channel samples were also routinely collected. The deposit was also extensively drilled both from underground and surface.

Samples have been routinely assayed by fire assay at the laboratory run by the Ukrainian Geological Expedition. Drillholes were commonly originally 'scan analysed' using spectral analysis followed by fire assay of intervals of interest. It is of note that under the Ukrainian system fire assays were performed in duplicate. If the two assays differ by more than 10% both sets of assays were rejected and a further pair of duplicates were assayed. The process was repeated until the two assays were within the prescribed range and an average of the pair was then recorded as the sample assay in the official records. It is understood that numerous assays were carried out as a result of this requirement, however the replicate data has not been sighted.

Extensive validation of exploration data was a routine part of Soviet exploration requirements, however, accredited international standards were not submitted as part of the assaying process, and hence the exact accuracy of the assaying cannot be established. Vulcan obtained 5 pulps from the original sampling and these were re-assayed in Perth by internationally recognised Genalysis Laboratory Services. Although limited in number, the results of the check assaying process indicate close agreement of the original and re-assay pairs and no significant bias as shown in Table 3_3 below.

Table 3 3 Saulyak Project 2003 Re-Assay Programme on Ukrainian Drilling Pulps
Drillhole Number	From (m)	То (m)	Genalysis Fire Assay $(q/t \text{ Au})$	Genalysis 'Leachwell' $(q/t \text{ Au})$	Original Assay $(q/t \text{ Au})$	Note
38		8	5.32	5.27	5.60	Underground hole
38	11	12	3.48	3.14	2.50	Underground hole
41	9	10	2.72	3.53	2.40	Underground hole
307	486 21.20 487 19.60 Surface hole
307	488	489	20.44	$\overline{\phantom{0}}$	15.55	Surface hole

$3.2.5$ 2004 Due Diligence Channel Sampling

Two cross-cuts, No's 12 and 28, from the 498 RL underground workings of the Saulyak deposit, were resampled on 11th of February 2004 as part of a due diligence exercise conducted by RSG on behalf of Eurogold Limited. The primary author of this report supervised the due diligence channel sampling programme, which was undertaken by the author and the Eurogold exploration manager.

The original sampling of the exploration drives was carried out during the 1970's when samples were collected from horizontal and vertical channels 10m wide by 5cm deep. The samples were typically collected over one metre intervals but occasionally shorter intervals were sampled to correspond with significant geological boundaries. The original sample channels are still visible.

The due diligence sampling programme also sampled a horizontal channel. A 5cm wide by 2cm deep channel situated approximately 50cm above the old channel had been pre-cut with a hand held diamond saw. The pre-cut channel was sampled on 1m intervals that were understood to correspond to the same intervals as the original sampling. 2-4kg samples were chipped out and collected on a plastic sheet. Figure 3 4 shows the position of the original and new channels that were sampled in cross-cut 12.

It was planned that the samples would be transported directly to the SGS laboratory at Rosia Montana, however, a bureaucratic hitch at the Ukrainian border required the samples to be left in the care of Saulyak LLC personnel for 4 days while the correct documentation was procured. The samples were subsequently delivered to Baia Mare on 16th February. When the samples returned to the custody of Eurogold staff it was not apparent whether there had been any attempt to tamper with the samples. The samples were delivered to the SGS laboratory at Gura Rosiei in Romania on Wednesday 18th of February 2004.

The samples were analysed for Au only by 50g fire assay with an atomic absorption finish to a detection limit of 0.01ppm. The RMGC laboratory is independently managed by SGS, a certified international analytical group and has been subject to numerous audits during its operation as the principal laboratory for the Rosia Montana Gold Project.

The results of the re-sampling (SGS Au) confirm the presence of significant gold mineralisation in the interpreted ore body at Saulyak. Extremely high grades intersected in the original sampling in cross-cut 12 were not duplicated in the Eurogold sampling, although the highest assay recorded in the cross-cut (21.67g/t) corresponds to a quartz-carbonate vein that assayed 243g/t Au in the original sampling. Nevertheless, an encouraging ore intersection of 10m at 6.75g/t Au was reported from the cross-cut. The opposite situation occurred at cross-cut 28 where the Eurogold sampling returned values significantly higher than the original sampling. It should be noted that the expedition collected 3 samples over the interval 4-6m on cross-cut 28. To enable comparison with the re-sampling, a weighted average of the Expedition samples has been reported, resulting in identical grades over the 2m interval. Table 3 4 summarises the assay results for the due diligence sampling and the original Expedition sampling. The horizontal sampling channels are spaced approximately 50-75cm apart and the orebody dips at approximately 25O so that horizontal sampling has intersected the strongly foliated mineralisation at a low angle. As such, the individual sample intervals cannot be compared on a sample-by-sample basis and need to be assessed as complete intersections.

The assay data indicates significant variability on an individual sample basis, but with no overall bias. Intersections at a 1g/t cut-off were calculated for each cross-cut, incorporating an arbitrary 30g/t top cut. The results show the original Expedition sampling returning higher results for cross-cut 12 and a lower mean grade for cross-cut 28, as summarised in Table 3 5. It is of note that the combined significant intersections for the two sampled cross-cuts return effectively the same metal. The check-sampling programme has highlighted that the gold mineralisation at Saulyak is variable on a local basis, as is typical for this style of gold deposit.

It is recommended that a more extensive program of re-sampling be completed to enable a larger data set to be compared to ascertain whether all ore zones will require re-sampling prior to estimation of a JORC compliant resource.

	Table 3_4
Saulyak Project
	February 2004 Due Diligence Channel Sampling Results
Sample No	SGS_Au (g/t)	Expedition_Au (g/t)
	Cross-Cut 12
71572	2.96	1.0
71573	9.30	9.2
71574	6.85	76
71575	21.67	243
71576	9.35	47
71577	0.97	4.0
71578	7.75	8.0
71579	4.51	1.6
71580	0.53	0.8
71581	3.63	0.6
71582	0.24	0.4
71583	0.25	0.4
	Cross-Cut 28
71584	30.41	6.1
71585	33.15	3.6
71586	7.54	8.6
71587	4.39	2.0
71588	3.08	6.7
71589	0.99	6.7
71590	0.01	1.6

Table 3_5
Saulyak Project
February 2004 Due Diligence Channel Sampling Intersection Summary
		(1g/t Cutoff, 30g/t Upper Cut)
Analabs Au Expedition Au Comments Intersection/Sample (g/t) (g/t)
		Cross-Cut 12
1	2.96	1.0
2	9.30	9.2
3	6.85	76.0	Cut to 30g/t
4	21.67	243.0	Cut to 30g/t
5	9.35	47.0	Cut to 30g/t
6	0.97	4.0
7	7.75	8.0
8	4.51	1.6
9	0.53	0.8
10	3.63	0.6
11	0.24	0.4
12	0.25	0.4
Intersection	10m at 6.75	8m at 14.22	Using 30g/t top cut
	Cross-Cut 28
	30.41	6.1	Cut to 30g/t
	33.15	3.6	Cut to 30g/t
	7.54	8.6
	4.39	2.0
	3.08	6.7
	0.99	6.7
	0.01	1.6
Intersection	5m at 15.00	7m at 5.04	Using 30g/t top cut.
Combined Intersections	15m at 9.50	15m at 9.93	Using 30g/t top cut

$3.2.6$ Resources

Geological Expedition Resource Estimates

Resources to date have been calculated under the system developed by the former USSR (the "Russian" system). This system uses a series of categories designated A, B, C1, C2, P1, P2 and P3. The system cannot be compared directly to the system promulgated by the Joint Ore Reserves Committee ("JORC). Under the Australasian JORC Code, the C1 and C2 "reserves" could reasonably be classified as Indicated and higher confidence Inferred respectively, while the P1 and P2 "prognosticated resources" will likely include a portion of lower confidence Inferred material with the balance remaining unclassified, being of lower confidence than the JORC Inferred category.

Following the initial period of concerted exploration, in 1985 the "reserves" were stated as shown below, by the Central Commission on Reserves of the USSR as follows:-

"Reserves":
$\bullet$ Category C1: 9 tonnes contained gold (289,000oz).
Category C2: 11.3 tonnes contained gold (363,000oz).
Total C1 and C2: 20.3 tonnes of contained gold (642,000oz)
"Prognosticated Resources":

	Category P1:	35 tonnes contained gold (1,125,000oz)
--	--------------	----------------------------------------	--

	• Category $P2$ :		65 tonnes contained gold (2,100,000oz)
--	-------------------	--	----------------------------------------	--	--	--

The reserves were based on the following parameters:-

$\bullet$	Cutoff grade:	$1.5$ g/t.
$\bullet$	Minimum average gold content of the intersection:	$3.5$ $\alpha$ /t.
$\bullet$	Minimum working thickness:	1.5m.
$\bullet$	Maximum included waste:	3.0 _m

As stated in the documentation, the estimates was based on the following exploration data:-

$\bullet$	Trenching:	1.14km.
$\bullet$	Underground development:	9.22km.
$\bullet$	Surface drilling:	13.686m.
$\bullet$	Underground drilling:	16.372m.

In September 2003, the Geological Expedition updated the "reserves" in accordance with the requirements of the Central Commission of the Ukraine. The following techniques were applied to estimate the resource in accordance with the regulations stipulated by the Ministry of Ecology and Natural Resources of Ukraine:-

Data derived from channel samples:
It is understood that, geological boundaries were determined, using the parameters summarised above. It should be noted that no external dilution was added at this stage.
In order to apply upper cuts, the gold accumulation was calculated for each run of samples lying within the defined geological boundaries, and any sample which represented more than 10% of the total metal was cut until the value represented 10% of the accumulated metal. The accumulation was then re-calculated with the reduced assay.
If a sample was considered an outlier, the value was replaced with the nearest sample not ٠ considered an outlier. Distribution graphs were produced to assist in the determination of outlier samples.
The resources were calculated using vertical projection methods, wherein the area of the geological outline was determined and then multiplied by the vertical thickness to calculate a volume, and multiplied by a density and the average grade of the block (from all the intercepts calculated in the step above).
The relevant values for each block were then tabulated.
Data derived from drillholes:
The same approach was adopted as for the channel samples.
In determining the upper cuts to apply, a value of 20% of the accumulated metal was used, due to the lower numbers of samples comprising the intercept.
The density was determined by removing all material from one cross-cut (with a 5m² face area) and weighing the individual trolley loads. The aggregate weight was then divided by the volume of the cross-cut in order to determine the bulk density. A density of 2.75t/m³ has been applied in the calculation of the "reserves". Independent density measurements have not been undertaken to date.
The blocks defined by the surface trenching and the underground channel sampling were assigned a C1 "reserve" category.
Mineralisation extending away from the C1 category blocks for a maximum of 200m, and defined by surface and underground diamond drillholes, was assigned to the C2 "reserve" category. The grade of the C2 blocks was extrapolated from the calculated gold grade for the adjacent C1 block, rather than applying the average grade of the drillholes within the C2 block itself. The grades of the C1 class blocks are based on some 540 samples, the distribution of which demonstrates a lack of any significant skew or nugget effect.
The P category blocks were extended a considerable distance away from the zones of underground development (200m in the case of Block 1 and 600m in the case of Block 2 with the outer boundaries defined by sparse scout drilling). The grade assigned to the P2 blocks represented the average of the intercepts, whilst the thickness applied to the P category blocks represents the average thickness of the drill intersections.
The certification process involves review and audit of the calculations made by the Geological Expedition by a panel of 5 government-assigned and accredited experts in a review committee. Prior to the collapse of the USSR, the "reserves" were also reviewed and certified by a similar committee in Moscow.

The 'reserves' calculated by the Geological Expedition and approved in September 2003 are provided in Table 3 6 below, based on a 1.5g/t Au cutoff grade. It should be noted that the calculation was also undertaken for 1g/t and 2g/t cutoffs, as well as for a 1.5g/t cutoff. In summary, using a cutoff grade of 1.5g/t, a total of 2.1mt at 9.8g/t uncut (680,000oz) and 8.4g/t cut (580,000oz) has been estimated and classified in the C1 and C2 "reserve" categories.

Table 3 6 Saulyak Project Ukrainian Government Approved 2003 'Reserves'
Block	Category	Tonnes	Grade	Cut Grade	Ounces	Cut Ounces
Block #1	C1	587.000	7.80	7.80	147.000	147,000
	C2	375,000	6.80	6.80	82,000	82.000
Block #2	C1	151,000	8.60	8.60	42,000	42.000
	C2.	1,025,000	12.30	9.30	405,000	307,000
Total	$C1+C2$	2,138,000	9.84	8.40	676,000	578,000

In terms of the JORC quidelines it is considered that only the C1 and C2 class "reserves" can be considered as resources. Given the current wide spacing between drillholes in the area away from the C1 and C2 class resource blocks, it is not considered prudent to include any of the stated P class "prognosticated resources", amounting to a further 1.3Moz, as the vast majority are likely to lie outside the JORC classification system.

Other Resource Estimates

In 1998, Renison Goldfields Consolidated Limited (RGC) reviewed the Saulyak Project, including the associated gold resources. RGC entered all underground assay data and that derived from surface trenches, along with selected drillholes, providing a total of 4,264 records. A block model was created in Micromine software via the inverse distance squared (ID2) method using a search ellipsoid of 60m down dip, and 10m along and across strike. A block size of 5m by 5m by 30m RL, with the latter adopted to conform to the two underground development levels (468m and 498m), and the level of trenches (530m).

Mineralised zone outlines were assigned to produce models at a range of cutoff grades up to 3.5g/t Au, and were not geologically constrained. No upper cut was applied to the high-grade outliers. It also appears that topographic control was limited or not applied in any meaningful manner. A bulk density of 2.7t/m³, consistent with that adopted by the Expedition, was assigned in the modelling process.

Assessment of the resulting grade-tonnage curve indicates that at a 1.5g/t cutoff, the average grade is entirely consistent with that estimated by the Expedition, however the tonnage of the RGC estimate is considerably larger, as the RGC model was neither constrained by the ore outlines applied by the Expedition, nor by topography. The grade tonnage curve also identifies that an increase in the cutoff grade, emulating a more selective approach to mining has the effect of increasing the average grade without a significant decrease in tonnage. After applying an upper cut of 100g/t (approximating the 98th percentile), the overall grade was reduced by 10%.

RGC also completed a simple sectional model to emulate the down dip potential of the deposit including that currently classified as a combination of C1 and C2 categories. Based on a 2g/t Au cutoff grade, RGC estimated mineralisation amounting to some 3.7Mt at 8.75g/t Au (1.04Moz). While this estimate is highly simplistic and based on extremely limited data, the result is broadly consistent with the combined C and P class categories estimated by the Expedition. The estimate is in no way compatible with the JORC Code and should not be construed as such.

In May 2003, consulting group GeoMine Solutions prepared an independent resource estimate on behalf of Saulyak LLC. A site visit during April 2003 formed part of the preparation of the resource estimate. A wireframe model using Surpac software was constructed using the sampling data displayed on plans and sections prepared by the Geological Expedition. A database of drilling and underground channel sampling was created. Wireframes of the underground development were created along with a digital terrain model.

A series of wireframes corresponding to the interpreted mineralised zones were created, including the area corresponding to the P1 category resource. The cutoff grade used to define the mineralised zone wireframes was not stated.

Statistical analysis and variography was undertaken on the underground channel sampling database. A block model using a 1m³ block size was produced to fill the mineralised zone wireframes. A density of 2.7t/m³ was used to determine tonnage. Lognormal kriging was used to estimate grades into the block model. For the C1 category blocks, a 15m search radius was used, for the C2 category zones a search radius of 100m was employed, whilst for the P1 category zone the weighted average grade (4.84g/t) of the drill intersections passing through the relevant wireframe was used. It appears that the resource was estimated without the use of upper cuts.

The resultant block model was then categorised as Measured, Inferred or Speculative; considered by GeoMine Solutions to represent the zones coded C1, C2 and P1 respectively in the Ukrainian 'reserve' estimates.

The following resources were stated:-

Measured Resources: 728,851t at 8.01g/t (187,700oz). ¥.

Inferred Resources:			853,387t at 5.93g/t (162,700oz)
---------------------	--	--	---------------------------------

Total Measured and Inferred: 1,582,248t at 6.89g/t (350,400oz).

In addition a "Speculative Resource" of 3,506,444t at 4.84g/t (545,600oz) was declared, representing the wireframe produced for the P1 category zone.

It is considered that the resource categorisation listed above does not comply fully with the JORC guidelines. The information has only been included for the purposes of full disclosure of available information.

$3.2.7$ Metallurgy

Metallurgical testwork has been carried out on the Saulyak deposit in three main phases over the period 1978 to 1997. The metallurgical information has been summarised in a document produced and translated in 2003 ("Preliminary Feasibility Estimation of the Saulyak Gold Deposit Development"). Details of where exactly the samples were taken from within the Saulyak deposit and the exact distribution of mineralised lithologies are not contained in the above metallurgical testwork summary document, but are understood to be detailed within untranslated reports sighted by the principal author.

3.2.7.1 Phase 1 Testwork

Four series of tests were undertaken, first in the Central Scientific Exploration Institute (CSEI), with the remainder being undertaken in the Institute of Mineral Resources and the Tula branch of the CSEI. The studies included testwork on cyanidation, gravity recovery, flotation and combinations of gravity recovery and cyanidation. Most emphasis was reportedly put on cyanidation testwork.

The first phase of testwork established that gold is extractable by cyanidation and is readily enriched via gravity separation and flotation, however a combined gravity and flotation flowsheet was not tested.

$3.2.7.2$ Phase 2 Testwork

Between 1981 and 1985 a series of tests were carried out on samples derived from the various sectors of the defined deposit. A total of 12 tests were undertaken and included individual tests and combinations of gravity recovery, flotation and cyanidation. Conclusions from the second series of tests included:-

Gravity concentration recovered an average of 40% of the gold, varying between 20% and 71% in the seven samples.
Combined gravity and flotation recovered an average of 93% of the gold, with the majority of the gold being won from flotation.
Combined gravity and cyanidation recovered some 96% of the gold.
Flotation alone resulted in gold recoveries of 91%.
Direct cyanidation recovered 97% of the gold.
The various parts of the Saulyak deposit have a uniform metallurgical response.

Other testwork was carried out on samples produced from mixing mineralisation from the Saulyak and Muzhievo deposits, however, the results are not relevant to the current assessment.

$3.2.7.3$ Phase 3 Testwork

Between 1993 and 1997 further metallurgical testwork was carried out. A 50 tonne trial sample was delivered to the Mechanobrchermet laboratory in Ukraine. The predicted grade of the sample (5.2q/t Au) was determined by the Zakarpatska Expedition, which was the Ukrainian referee laboratory used during this period. The key conclusions from the testwork were:-

Total volume of concentrate: 4.7% of the total mass of the sample. $\blacksquare$
91% (39% to gravity and 51% to flotation). Overall recovery to gravity and flotation:

It was noted that due to equipment restrictions only coarse gold could be recovered by gravity and hence the flotation stage was necessary.

In another metallurgical report, dated 1993, testwork was undertaken by staff from the VostGOL NPO (Eastern Mining and Ore Washing Research and Production Association) and the VNII Chemical Technology Research Institute on a two samples weighing 2kg and 30kg. The 30kg sample comprised material passing -8mm following preliminary crushing. The head grade of the sample was determined to be 2.1g/t Au and 1.3g/t Ag. Gravity separation tests and subsequent floatation of the gravity tailings were undertaken. A three pass process was used wherein the gravity tailings were subsequently re-ground after each stage (0.5mm initially, followed by grinding to -0.2mm and -0.074mm) and then re-subjected to gravity concentration. The results, which were stated as being considered preliminary, are provided in Table 3_7 below.

Table3 7
	Saulyak Project
		1993 Gravity Gold Recovery Testwork
Product	Volume $(\%)$	Gold (g/t)	Silver (g/t)	Gold Extraction $( \% )$	Silver Extraction (%)
Gravity concentrate	1.24	142.00	63.7	83.0	58.9
Intermediate product	4.35	2.00	5.3	4.1	17.2
Intermediate product tails	5.01	0.80	1.0	1.9	3.7
Tails	0.3 20.2 89.40 0.26 11.0
Total	100.00	2.12	1.3	100.0	100.0

As such, a concentrate comprising 1.2% of the total volume of the sample was produced grading 142g/t Au and 64g/t Ag for overall recoveries of 83% and 59% for gold and silver respectively.

The tails material was subjected to flotation tests, using standard flotation agents. The tails sample had a gold grade of 0.56g/t. Table 3_8 below summarises the results of the tests.

Table 3 8
	Saulyak Project 1993 Flotation Testwork

Product	Volume $(\%)$	Gold (g/t)	Silver (g/t)	Gold Extraction (%)	Silver Extraction $(\%)$
Flotation concentrate	4.08	10.3	6.4	75.5	64.5
Flotation tails	20.2 95.92 0.15 24.5 0.15
l Total 100.00 0.56 100.0 100.0 0.41

The flotation tests indicated that a flotation concentrate forming 3.5% of the original ore sample volume was produced with a grade of 10.3g/t Au and 6.4g/t Ag.

The testwork is considered encouraging as it demonstrates, albeit on a very small sample, that high gold recoveries are achievable following fine grinding and that flotation of the gravity tails was also successful in producing a gold-rich sulphide concentrate. It should be noted, however, that the head grade of the original sample is significantly below the mean grade of the current "reserves" and, as such, a higher-grade concentrate is likely from both the initial gravity stage and the subsequent flotation stage.

$3.2.7.4$ Conclusions on Ukrainian Metallurgical Testwork

The metallurgical testwork above indicates that the gold mineralisation at Saulyak appears to be readily extractable using a combination of gravity and flotation techniques. Fine grinding appears to show that gravity recoveries of some 80% can be achieved, which is then further enhanced by the production of a flotation concentrate derived from the tailings of the gravity extraction step.

3.2.7.5 2003 Metallurgical Testwork

Two 50kg metallurgical samples were collected from surface exposures of the main mineralised zone adjacent to Adit 1. The geographical coordinates of the two metallurgical samples are as follows:-

Met1: 490373E 7023680N 528RL
Met2: 490363E 7023680N 528RL

Great care was taken to collect representative samples of the entire width of the mineralised zone. These samples were dispatched to Lycopodium Pty Ltd in Perth, Western Australia, which supervised a program of metallurgical testwork conducted by AMMTEC, a listed and internationally recognised metallurgical laboratory also based in Perth.

The results of this testwork are summarised in Table 3 9. The results are encouraging, with very good cyanidation gold and silver extractions recorded at the residence time applicable to the Baia Mare processing facility, with relatively low associated cyanide and lime consumptions. These extractions do not represent an overall recovery, however they indicate that gold recoveries are likely to be in excess of 90%. The ore also exhibits low levels of potentially deleterious elements such as sulphur, arsenic (<50ppm), copper (<50ppm), nickel (<50ppm) and organic carbon (<0.05%). The sample can be described as metallurgically 'clean'. The bond mill work index (which is a measure of the ease of comminution of the rock) is relatively low, indicating that the material will likely be amenable to comminution through the Baia Mare facility.

$3.2.8$ Exploration and Mine Development

Some 9km of underground development has been completed at the Saulyak deposit. The underground drives and cross-cuts were developed as part of the exploration strategy required under the system of the former USSR and Ukraine. The underground development was visited as part of the site visit. Although most of the wooden reinforcement within the drives and crosscuts has rotted some 25 years after being installed, it is of note that the walls and 'backs' of the drives have, for the most, part remained in a stable condition. The underground development will require cleaning and stabilising prior to further concerted underground exploration, however the process should be relatively rapid. It was also noted that there is little influx of groundwater into the underground development.

	Table 3 9 Saulyak Project Summary Data from the 2003 Metallurgical Sample Testwork Programme
	Assay		Calc	Residue					Gold Extraction Au %				Lime	Cvanid
Sample	Head Au g/t		Head Au g/t	Au g/t	$\mathbf{z}$	4	8	12	24	36	48	72	Cons kg/t	e Cons kg/t
Met 1	7.34/6.70		7.35	0.123	88.9	94.2	95.1	95.5	97.1	98.3	98.3	98.3	0.35	0.72
Met 2	6.00/5.24		5.05	0.128	95.1	96.3	96.9	97.5	97.5	97.5	97.5	97.5	0.54	1.31
	Calc Assay		Residue		Silver Extraction Ag % Lime						Cyanid
Sample	Head Ag g/t		Head Ag g/t	Ag g/t	$\mathbf{z}$	4	8	12	24	36	48	72	Cons kg/t	e Cons kg/t
Met 1	2.2/2.4		3	0.05	89.0	93.9	96.4	96.9	97.4	97.9	98.4	98.4	0.35	0.72
Met 2	1.5		2.4	0.1	86.5	92.7	93.4	94.0	94.6	95.9	95.9	95.9	0.54	1.31
Sample					Head Assays					Gold Silver Ratio				Ball Mill Work index
	Au 1 αiί	Au 2 aft	Ag αit	As g/t	Сu aft	Ní αit	s ٥,	Corg ⅍	Sample		Percen t Au	Percen t Aq	Sample	BWI kWh/t
Met 1	7.34	6.30	23	40	$<$ 2	27	< 0.05	0.03	Comp. 1		71	29	Met 1	11.4
Met 2	6.00	5.24	1.5	50	44	44	0.44	0.07	Comp. 2		68	32	Met 2	8.0

Preliminary assessment of the potential economics of the Saulyak deposit indicates that underground development will be the most cost effective method, given the significant topography that exists in the area and the shallow dipping nature of the gold mineralisation. The steep hillsides have a marked advantage in that further underground access is readily available via additional adits or declines.

$3.2.9$ Exploration, Resource and Development Potential

RSG Global considers it likely that the majority of the combined C class "reserves", amounting to approximately 600,000oz, will be ultimately be confirmed via Eurogold's planned confirmation program of underground channel sampling of all safe and accessible pre-existing drives and cross cuts concomitant with detailed underground diamond drilling of areas adjacent to the underground development. The P class "prognosticated resources" 'estimated' under the Ukrainian system to comprise a further 0.5Moz to 1.3Moz are considerably more speculative and the vast majority lie outside the JORC classification guidelines. It is reasonable to estimate, however, that a proportion of the P class material will ultimately be defined as JORC compliant resources with further exploration, and that a total resource at Saulyak approximating 1Moz may potentially be identified.

Based on the detailed exploration undertaken to date, the vertical thickness of the Saulyak Zone ranges from 3.6m to 6.4m at a cutoff grade of 1.5g/t Au and without the addition of edge dilution. Average gold grades determined for the various defined blocks vary from approximately 5g/t Au to 10g/t Au. It is worthy of note that the average vertical thickness and average gold grade do not vary significantly when the lower cutoff grade is changed, which suggests that there is a 'natural' cutoff to the mineralisation.

Given the shallow dipping, planar nature of the principal zone of gold mineralisation, it is considered that such widths and gold grades can realistically be mined via underground methods and processed economically.

While no meaningful mining studies have been completed on the Saulvak deposit, it is estimated that if the resources are ultimately confirmed, a resource to reserve conversion ratio of approximately 60% could reasonably be achieved, potentially providing a reserve of approximately 350,000oz to 600,000oz, depending on confirmation of the deposit and exploration success. However, considerable additional confirmatory sampling and resource definition drilling campaigns, along with development studies will be required to achieve this status, consistent with the proposed work program.

3.2.10 Vulcan Minerals 2003 Due Diligence Programme

During 2003, Vulcan Minerals undertook a due diligence drilling programme on the Saulyak deposit. The programme was formulated with 4 key objectives:-

To validate exploration data used to calculate the C1 and C2 class "reserves".
To determine the potential extent of the down dip extension from the area of underground development and detailed exploration.
To provide metallurgical samples and concomitant testwork to confirm that a simple metallurgical flowsheet is practicable (for example, gravity recovery alone or gravity recovery followed by production of a flotation concentrate).
¥. To provide confirmation of a major, tabular gold deposit in excess of at least 2Moz of gold.

Six diamond drillholes were completed, using an expatriate drilling company, and a man portable drilling rig, in the area of the C1 and C2 "reserves".

Five diamond drillholes with reverse circulation pre-collars were drilled in an attempt to replicate previous drillholes up to 1.3km down dip from the mineralised outcrop in order to test a minimum 1km of down dip extension and to test for the presence of up to 3 potentially parallel mineralised structures indicated by prior exploration.

Two 50kg metallurgical samples were collected from an un-oxidised surface exposure quarried into the deposit outcrop. One sample represents quartz-carbonate mineralisation, whilst the other comprises mixed quartz-veined schists and quartz-carbonate rock.

Although the results of the exploration programme have not been publicly released, it is understood that the drilling did not provide evidence of a major, tabular, multi-million ounce gold deposit, which would be required to support a full stand-alone operation of significant size. It is understood that, as a result, Vulcan terminated the due diligence programme.

It should be noted that, given the existence of the Baia Mare processing plant and the ease of rail transport of ore to the Remin Central facility in Baia Mare, a smaller gold deposit at Saulyak is a much more economically attractive target for Eurogold.

3.2.11 Planned Exploration Programme

Eurogold have developed an exploration programme with the specific aim of rapidly proving up an underground mineable gold deposit at Saulyak, for transport to the processing facilities at Baia Mare.

Due to the close access to the Ukrainian railway system, which connects with the Romanian railway system, it is planned to transport ore directly from the Saulyak deposit to Baia Mare, via the gauge changing facility, located on the Romanian-Ukrainian border, where the railway system passes through Djakove in Ukraine and Helmeu in Romania. The railway line reaches the Remin Central processing facility in Baia Mare.

Detailed re-sampling of all safe underground development is planned in order to develop a JORC complaint reserve. Given successful refurbishment of the underground development it is also planned to undertake underground diamond drilling to delineate extensions to the gold mineralisation adjacent to and away from the existing underground development.

Concomitant with the underground sampling and drilling program, extensive metallurgical sampling and testwork, along with geotechnical assessment, and engineering studies will be undertaken. The completion of the program will provide sufficient information for a feasibility study to be prepared for the project.

The exploration and development program proposed by Eurogold is considered to be entirely consistent with the status and potential of the Saulyak Project. A complimentary exploration budget of US\$2M (A\$2.9M) is generally considered to be adequate to achieve the objectives of the proposed program.

$3.3$ Beregove Gold Project

$3.3.1$ Introduction

The Beregove gold deposit was visited on the 10^th February 2004 and underground visit was undertaken in addition to extensive discussions with mine management. Eurogold has an effective 6.33% interest in the Beregove Gold project. An underground mine is currently in operation.

Beregove is located near to the village of Muzhievo in the Beregove district of Ukraine. The project is located 10 kilometres east of the border between Hungary and Ukraine. The nearest major settlement is Beregove, with a population of approximately 50,000, which is located 4 kilometres northwest of the project area. Access to the area is excellent via the Ukraine system of sealed roads and highways.

Infrastructure is well developed in the area with power, water and communications including excellent mobile phone coverage.

The climate can be characterised as temperate, continental.

$3.3.2$ Tenure

Mining tenure at Beregove comprises two Subsoil Use Licences (special permission), 2693 (the Muzhiivske Deposit) and 1966 (Kvasivske Deposit), which are valid for 14 years and 5 years respectively, and were dated on the 3^rd June 2002. Other licences covering exploration and mining activities have also been granted (Licence Series AA No 20591 and Licence Series AA No. 238887). The status of the mining licences has not been independently verified by RSG Global. Eurogold has an effective 6.33% interest in the Beregove project. It is understood that ZLLC has also applied to the appropriate State authorities in order to obtain a subsoil use license for geological exploration of the Beregove Mining Area.

$3.3.3$ Geology

The Beregove and Muzhievo polymetallic deposits occur within a large caldera, which is covered in younger sediments. Polymetallic 'veins' (more strictly linear breccia/fault zones) up to 2 metres wide are surrounded by a broader halo of disseminated mineralisation, up to 5 metres wide.

Two distinct styles of 'vein' are developed at Beregove and Muzhievo:-

An initial lead-zinc-silver phase.
A later gold-silver phase.

The relationship between the two sets of mineralisation is complex both in terms of spatial location and geometry. Composite 'veins' are common, thus it is not possible to readily mine a gold - silver only ore.

Underground exposure indicates that the polymetallic 'veins' are actually small fault zones, exhibiting evidence for a complex multi-phase deformation history. Very little quartz veining was evident and the maiority of the main veins are less than 1 metre wide. The 'gold rich veins' are also small breccia/fault zones associated with a strong hematite alteration, minor silicification and very strong kaolinisation.

A number of discrete veins have been defined by both extensive surface diamond drilling and underground development.

In addition a number of small gold bearing stockwork/breccia zones have been identified and exploited, known as the 36/1, 36/2, 36/3 and 36/4 etc deposits. The breccia zones have a very limited vertical extent and appear to be part of the later gold-silver rich mineralisation phase, being located at the termination of a number of discrete veins. The breccia zones comprise a small (10 metres wide) high grade core surrounded by a lower grade (1g/t to 3g/t) outer breccia zone of approximately 20 metre to 50 metre horizontal extent with a limited vertical extent (approximately 40 metres) 'pinching out' rapidly with depth. The breccias are considered to represent small 'boiling zones' and are associated with intense clay-rich argillic alteration including hematite, kaolinite and barite. Adjacent to some of the small explosion breccias are zones of almost pure kaolinite, which were reportedly mined as an industrial resource earlier in the life of the mine.

Overall, the vein mineralisation at Beregove is generally narrow (1 to 2 metres wide), low grade (1g/t Au to 3g/t Au with similar levels of silver) with a strong base metal component (5% to 10% combined lead-zinc). The veins appear to exhibit complex zonation in three dimensions.

$3.3.4$ Mining and Processing Operations

Processing has been undertaken at the deposit since April 1999, following many years of testwork, including pilot plant testwork. The processing plant at the site is based on a crush-gravity recovery circuit. Crushing is undertaken using a jaw crusher and a ball mill and gravity recovery is undertaken using a series of Knelson concentrators. The gravity concentrate is passed over a Gemini vibrating table to produce a final gold concentrate.

It is understood that the plant has not performed satisfactorily and overall throughput has been low.

$3.3.5$ Exploration, Development and Production History

The Beregove and Muzhievo deposits have been the subject of intensive 'Soviet style' exploration comprising extensive surface diamond drilling programmes and underground development, geological mapping, surface and underground sampling and extensive geophysical and geochemical surveying.

Base metal mineralisation was initially discovered at Beregove in 1949, as a result of exploration for kaolin deposits, and for some 10 years exploration was focussed on lead-zinc exploration. In the 1970's the sample pulps were re-assayed for gold and the presence of gold mineralisation was confirmed. Over the period 1974 to 1978 reconnaissance exploration for gold was undertaken in the Beregove district, followed up by detailed exploration over the period 1978 to 1980.

During the 1980's underground development and sampling was initiated as per the requirements of the Soviet system for confirmation of 'reserves'. The underground development has been undertaken only on the Muzhievo deposit whereas the Beregove deposit has been drilled tested by diamond drilling only. Underground development comprised a 170 metre deep vertical shaft, an inclined shaft (Number 2) and off shaft access at the 90, 130 and 160 metre levels, along with adits developed at the 210, 230 and 250 metre levels.

It is understood that more than 190,000 metres of surface diamond drilling, over 23,000 metres of underground diamond drilling and 40 kilometres of underground development were completed as part of the 'Soviet' style exploration programmes.

During the 1990's a number of international mining and exploration companies have assessed the project, including First Dynasty Mines, Argosy Mining and RGC.

$3.3.6$ Resources and Reserves

It is understood that 'official reserves' were approved by the relevant Ukrainian authorities in 1990 and in 1994 and have been regularly updated subsequently. A similar approach to that used at Saulyak was undertaken to define the 'reserves' at Beregove and Muzhievo, with the following criteria being used:-

Mineralised zone cutoff grade: 1.5g/t Au. ×.
$\ddot{\phantom{a}}$ Minimum mining width: 1 metre.
Cut of gold equivalent to define block boundaries: 1.5g/t Au equivalent. (Gold equivalent grade based on metal prices at the time of resource estimation).
Maximum internal block dilution: 4 metres (for stockwork zones), 3 metres (for vein mineralisation).

$3.3.7$ Metallurgy and Processing

The current processing operation achieves around 60 % gold recovery using gravity concentration methods. Only preliminary test work has been conducted on gold recovery using flotation and cyanidation techniques. There appears to be some opportunity to improve gold recovery above gravity concentration techniques only. Initial, high level test work on producing zinc and lead sulphide concentrates indicated that sub-commercial to commercial concentrates might be produced.

$3.3.8$ Proposed Exploration, Development and Production Strategy

The Beregove project is considered by Eurogold to be a small 'passive' investment.

REFERENCES $\overline{\mathbf{4}}$

General

Appleyard, G R	1994.	Joint Venture Terms as a Basis for Valuation. Mineral Valuation Methodologies 1994 (Valmin 1994).
AuslMM	1998	Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (The Valmin Code) issued April 1998. AusIMM.
Lawrence, M J	2001	An outline of market-based approaches for mineral asset valuation best practice. Valmin 01, Mineral Asset valuation issues for the next millennium 2001, Sydney, Australia, 25-26 October 2001. The Australasian Institute of Mining and Metallurgy, Melbourne, Australia.
Onley, P G	1994	Multiples of Exploration Expenditure as a Basis of Mineral Valuation. Mineral Valuation Methodologies 1994 (Valmin 1994).
US Commercial Service	2001	Country Commercial Guide, 2002, Ukraine. Country Commercial Guide prepared by the US & Foreign Commercial Service and the US State Department.

Baia Mare Tailings Reprocessing Operation

Eurogold Limited	Various	Internal company documents and memoranda
Independent Mining Research	2003	Eurogold Limited - Research Paper
Baia Mare Exploration Properties
Eurogold Limited	2003	Exploration project summary (internal Eurogold report)
Independent Mining Research	2003	Eurogold Limited - Research Paper
Saulyak Project
Blakiston and Crabb	2003	Due Diligence Review, Saulyak Limited Liability Company ("Saulyak LLC"). Report prepared for Vulcan Resources.
Geomine Solutions	2003	Report on the Geological Modelling of the Saulyak Gold Deposit, Ukraine. Report prepared for Saulyak LLC
Management Consultants Mining	2003	Saulyak Resources Ltd, Geological Plans and Sections. Confidential internal memorandum prepared for Saulyak LLC
Ministry of Ecology and Natural Resources	2002.	License (Special Permission) on using Natural Resources. Translation of Licence document, Registration #2146, issued by the Ukraine Ministry of Ecology and Natural Resources.
Renison Goldfields Consolidated Limited	1998?	Briefing Memorandum Summary
Riakhovsky, S M	1993	Technological Sample of the Sauliak Deposit: Elementary Composition and the Gravitational Washing Technologies Effectiveness Analysis. Report prepared by the Laboratory of Magnetic and Special Washing Technologies, ChinTechnoMet Department, VNII Chemical Technology Research Institute, Moscow.
Unknown - No Author	2003	Preliminary Feasibility Estimation of the Saulyak Gold Deposit Development.
Unknown - No Author	?	Review of the Saulyak Gold Field, Ukraine.
Vulcan Resources Limited	2003	Acquisition of the Saulyak Gold Project, Ukraine. ASX/Media Release prepared by Vulcan Resources Limited.
Vulcan Resources Limited	2003	Drilling Commenced at the Saulyak Gold Deposit, Ukraine. ASX/Media Release prepared by Vulcan Resources Limited.

Beregove Project

John S Dunlop & Associates	1997	Field report and preliminary project evaluation of the Muzhievo gold- polymetallic project.
Management Consultant Mining	2003	Information Memorandum - Beregove, Muzhievo and Kvasove Gold and Polymetallic Deposits
Eurogold	2003	Various internal company memoranda

GLOSSARY OF TECHNICAL TERMS 5

adit	A horizontal or sub horizontal mine tunnel in the side of a hill to access ore.
altaite	Grey-white lead telluride
amphibolite	A metamorphic crystalline rock consisting mainly of amphibole and some plagioclase.
amphibolite facies	An assemblage of minerals formed at moderate to high temperatures during regional metamorphism.
anomaly	An area where exploration has revealed results higher (or sometimes lower) than the local background level.
arsenopyrite	An iron and arsenic sulphide mineral, FeAsS.
biotite	A dark brown to green, magnesium-iron mica commonly found in igneous and metamorphic rocks.
block model	A 3D array of cells constructed to enable recording of variables of interest such as grade and geology.
Bond Work Index	Measure of the amount of work required to crush a rock.
boundinaged	Highly deformed by elongation such that the structure thickens and thins dramatically along strike.
carbonaceous	Containing carbon, often in the form of graphite.
carbonaceous shale	A shale which usually contains carbon.
carbonate	A rock, usually of sedimentary origin, composed primarily of calcium, magnesium or iron and CO3. Essential component of limestones and marbles, but may also occur as a product of alteration.
chalcopyrite	A copper iron sulphide, CuFeS2.
channel sample	Sample obtained by cutting a representative channel or grove across a rock face or profile.
chlorite	A green coloured hydrated aluminium-iron-magnesium silicate mineral (mica) common in metamorphic rocks.
Competent Person	A 'Competent Person' is a person who is a Member or Fellow of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists with a minimum of five years experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which that person is undertaking
copper	A reddish metallic element, used as an electrical conductor an the basis of brass and bronze.
core	A tube of rock produced by diamond drilling.
Cretaceous	Applied to the third and final period of the Mesozoic era.
cutoff	The value of an ore variable below which material is classified as waste.
cutoff grade	The threshold applied in grade-tonnage reporting, wherein only blocks that return a value above the particular cutoff grade are reported.
cyanidation	The process of gold dissolution in sodium cyanide solution.
decline	An inclined tunnel-like excavation into the ground to allow vehicle and equipment access for the mining of ore bodies.
dendritic	Branching like a tree, a form of crystalline gold
diamond drilling	Method of obtaining cylindrical core of rock by drilling with a diamond set or diamond impregnated bit.
dolomite	A rock composed of calcium and magnesium carbonate.

ductile	Deformation of rocks or rock structures involving stretching or bending in a plastic manner without breaking.
epidote	A basic silicate of aluminium, calcium and iron.
Expert	An appropriately qualified person who prepares and is responsible for a report issued under the Valmin Code, who can demonstrate independence and competence in the preparation of the Report, and is a professional having at least ten years of relevant expertise and experience in the general, mining or petroleum industry.
face sampling	Sampling of an exposed rock face in underground development
fire assay	The assaying of metallic ores, usually gold and silver, by methods requiring a furnace heat.
fiotation	The method of mineral separation in which a froth created in water by a variety of reagents floats some finely crushed minerals, whereas other minerals sink.
flysch	Monotonous and widespread deposits of sandstones, shales and clays.
fuchsite	A bright green, fine grained variety of muscovite mineral containing high chromium.
galena	A grey sulphide ore of lead, PbS.
garnet	A brown-red silicate mineral.
geological mapping	The process of identifying and recording the distribution and types of rocks and other geological features.
geophysical	Use of electrical techniques or the measure of natural phenomena to assist in determining sub-surface features.
gold	A heavy, soft, yellow, ductile, malleable, precious metal.
gravity recovery	The concentration of dense minerals via means of gravity separation.
hessite	A silver telluride
inverse distance squared ("ID2")	A grade estimation technique in which the influence of assays is determined by the inverse of the square of the distance away from the point being estimated.
JORC Code	Code and Guidelines for the assessment of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy.
kriging	A geostatistical technique of grade interpolation between data points in mineral resource/ore reserve calculation.
lamellar	Composed of thin layers
limestone	A sedimentary rock containing at least 50% calcium or calcium-magnesium carbonates.
litho-geochemical	Samples of rock chips or sub-surface material analysed for the metal commodity being sought and/or path finder elements.
log normal kriging	Geostatistical grade estimation method in which the data are log transformed prior to kriging.
marble	Metamorphosed carbonate rock.
metamorphic	A rock that has been modified by the effects of pressure, heat and fluids within the crust.
metasediments	Metamorphosed sedimentary rocks.
mica schist	A foliated, metamorphic rock containing abundant mica.
mylonite	A hard compact rock with a streaky or banded structure produced by extreme granulation of the original rock mass in a fault or thrust zone.
nappe	A major structure of mountain chains, associated with folding.
Neogene	The later of two periods into which the Cenozoic era is divided.

nickel	Silvery-white metal used in alloys.
organic carbon	Carbon derived from organic processes.
orogen	A belt of deformed rocks, in many places accompanied by metamorphic and plutonic rocks.
outlier	In statistics, a value that lies outside the normally expected data range.
percussion drilling	A drilling method which uses a percussive hammer on a set of drill rods to drill a hole, using compressed air to power the hammer and remove drill cuttings.
phyllite	A metasedimentary rock displaying a platy cleavage.
precollar	Initial part of a drillhole, typically completed with the RAB or RC drilling method, drilled prior to deepening with diamond drilling.
Proterozoic	An era of geological time spanning the period from 2,500 million years to 570 million years before present.
ptygmatic folding	Complex non-regular folds, commonly observed in high-grade metamorphic rocks.
pyrite	An iron sulphide mineral FeS2.
pyrrhotite	An iron sulphide mineral, FeS.
quartz	A mineral composed of silicon dioxide, SiO2.
quartz porphyry	A medium grained igneous rock of granitic composition occurring normally as minor intrusions, and carrying prominent phenocrysts of quartz.
Reverse Circulation (RC)	A drilling method in which the fragmented sample is brought to the surface inside the drill rods, thereby reducing contamination. Commonly used with a percussion hammer bit.
rock chip sampling	The collection of selective or representative samples of rock fragments within a limited area.
sandstone	A sedimentary rock composed of cemented or compacted detrital minerals, principally quartz grains.
schist	A crystalline metamorphic rock having a foliated or parallel structure due to the recrystallisation of the constituent minerals.
sericite	A white or pale apple green potassium mica, very common as an alteration product in metamorphic and hydrothermally altered rocks.
shale	A fine grained, laminated sedimentary rock formed from clay, mud and silt.
silicification	Replacement by, or introduction of, appreciable quantities of silicon dioxide minerals.
soil sampling	The collection of soil specimens for mineral analysis.
spectral analysis	Qualitative analytical technique, commonly used in the former Soviet Republic and former client states.
sphalerite	A black to brown sulphide ore of zinc, ZnS.
stream sediment sampling	The collection of samples of stream sediment with the intention of analysing them for trace elements.
subduction	The process describing the downward movement and assimilation of a relatively dense tectonic plate (usually oceanic crust) beneath a less dense plate (usually continental crust) on collision.
Tertiary	Subdivision of geological time covering the period from 65 million years to 1.6 million years ago.
thrust	A low angle (shallowly inclined) fault or shear on which the rocks on the top have moved up and over the rocks on the bottom.
trench sampling	A sampling technique in which a shallow linear excavation is made in the ground surface which is then methodically sampled, generally along one wall.

Valmin Code	Code and Guidelines for the Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports; maintained by the Australasian Institute of Mining and Metallurgy (AusIMM).
wireframe	A computer technique to enclose a volume of interest within a series of three dimensional coordinates which form an enveloping surface.
wireline	Diamond drilling method using a wire attached to the core barrel to raise and recovery the core and return the core barrel to the drill bit.

Part 4 - Accounting Information on the Group

EII ERNST & YOUNG

$\blacksquare$ Central Park 152 St Georges Terrace Perth WA 6000 Australia

GPO Box M939 Perth WA 6843 Tel 61 8 9429 2222 Fax: 63 8 9429 2436

13 July 2004

The Directors Eurogold Limited Level 4, 172 St Georges Terrace PERTH WA 6000

The Directors RFC Corporate Finance Limited Level 8, 250 St Georges Terrace PERTH WA 6000

Dear Sirs

Eurogold Limited

Introduction

We report on the financial information of Eurogold Limited (formerly Esmeralda Exploration Limited) ("the Company") set out below. This financial information has been prepared for inclusion in the AIM Admission Document dated 13 July 2004 of the Company ("the AIM Admission Document").

Basis of preparation

The financial information is based on the audited non-statutory consolidated financial statements of the Company and its subsidiary undertakings ("the Group") for the nine months ending 31 March 2004, the audited statutory financial statements of the Group for the years ended 30 June 2003 and 30 June 2002 and the unaudited non-statutory financial statements of the Group for the year ended 30 June 2001, to which no adjustments were considered necessary.

The Company went into administration on 15 March 2000, entered into a Deed of Company Arrangement ("DOCA") on 29 September 2000 and the Administrator withdrew on 27 September 2001. During the time the Company was in administration it was not subject to audit.

Responsibility

The statutory and non-statutory financial statements are the responsibility of the Directors of the Company. The Directors of the Company are responsible for the contents of the AIM Admission Document in which this report is included.

It is our responsibility to compile the financial information set out in this report from the financial statements, to form an opinion on the financial information and to report our opinion to you.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards issued by the Auditing Practices Board. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. The evidence included that which was previously obtained by us relating to the audited consolidated financial statements of the Group. It also included an assessment of significant estimates and judgements made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irreqularity or error except that the scope of our work was limited by the matter set out below.

Fundamental Uncertainty - Going Concern

In forming our opinion in respect of the financial information, we have taken into account the disclosures made in note 1 concerning the uncertainties over the Group's ability to meet its contractual obligations and to develop its properties to commercial production. The financial information has been prepared on the going concern basis, the validity of which depends upon future funding being available. It is envisaged that these uncertainties will be resolved upon raising of £2.4 million as detailed within the AIM Admission Document.

The financial information does not include any adjustments which would result should the Group be unable to raise sufficient funds to meet its contractual obligations and to develop its properties to commercial production. Our opinion is not qualified in this report.

Scope limitation

As explained above the Company was not required to prepare audited financial statements for the year ended 30 June 2001. It has not been possible to conduct such alternative procedures as we consider necessary and consequently we are unable to express an opinion on the financial information for the year ended 30 June 2001.

Opinion

As explained above we are unable to express an opinion on the financial information for the year ended 30 June 2001.

In our opinion, the financial information gives, for the purposes of the AIM Admission Document dated 13 July 2004, a true and fair view of the state of affairs of the Group as at 31 March 2004, 30 June 2003 and 30 June 2002, and of its profits and cash flows for the periods then ended.

Consent

We consent to the inclusion of this report in the AIM Admission Document and accept responsibility for this report for the purposes of paragraph 45(2)(b)(iii) of Schedule 1 to the Public Offers of Securities Regulations 1995.

EUROGOLD LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE

		9 months ending 31 March 2004 А\$	Year ended 30 June 2003 Å\$	Year ended 30 June 2002 A\$	Year ended 30 June 2001 A\$*
REVENUES FROM ORDINARY
ACTIVITIES	2	504,682	1,283,098	2,243,739
Borrowing costs	3		(92)	(1,909)
Depreciation expense	3	(45, 152)	(57, 222)	(36, 765)
Consumables		(71, 579)	(167, 779)	(337, 376)
Administration expenses		(527, 208)	(456, 661)	(282, 408)
Salaries and employee benefits Consultants fees		(303, 829)	(695, 341)	(425,708)
Write off of capitalised expenditure		(64, 844) (265, 768)	(482, 633) (210, 694)	(304, 301)	(295, 163)
Write down of investments in associates					(8,472,530)
Foreign exchange gain/(loss)	3	51.689	80,398	54.866
Cost of listed investments disposed of		(138, 877)	(746, 800)	(885,068)
Other expenses from ordinary activities		(12, 391)			(795, 687)
PROFIT / (LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE		(873, 277)	(1,453,726)	25,070	(9,563,380)
INCOME TAX BENEFIT / (EXPENSE) RELATING TO ORDINARY ACTIVITIES	4	8,421	101,010	(202, 386)
NET LOSS		(864, 856)	(1,352,716)	(177, 316)	(9,563,380)
NET LOSS/(PROFIT) ATTRIBUTABLE TO OUTSIDE EQUITY INTERESTS	16	286	10,996	(4,970)
NET LOSS ATTRIBUTABLE TO THE MEMBERS OF EUROGOLD LIMITED	15	(864, 570)	(1, 341, 720)	(182, 286)	(9,563,380)
Share issue costs	14(a)	(75, 502)	(47, 273)
TOTAL CHANGES IN EQUITY OTHER THAN THOSE RESULTING FROM TRANSACTIONS WITH OWNERS AS OWNERS ATTRIBUTABLE TO
MEMBERS OF EUROGOLD LIMITED		(940, 072)	(1,388,993)	(182, 286)	(9,563,380)
Basic loss per share (cents) Diluted loss per share (cents)	21 21	$(0.7)$ cents $(0.7)$ cents	$(1.4)$ cents $(1.4)$ cents	$(0.3)$ cents $(0.3)$ cents	$(19.6)$ cents $(19.6)$ cents

EUROGOLD LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		As at 31 March 2004 A\$	As at 30 June 2003 A\$	As at 30 June 2002 A\$	As at 30 June 2001 A\$*
CURRENT ASSETS
Cash assets	17(b)	1,264,481	1,040,022	668,559	145,519
Receivables	5	124,737	75,319	127,883	131,017
Inventory	6			1,770
Other financial assets	7	64,170	118,682	631,875
Other	8	5,271	1,498
TOTAL CURRENT ASSETS		1,458,659	1,235,521	1,430,087	276,536
NON-CURRENT ASSETS
Receivables	5	7,906	8,990	10,623
Property, plant and equipment	O.	151,656	194.770	135,209	70,213
Deferred exploration and evaluation
expenditure	10	1,081,673	1,223,932	1,296,448	341,199
Other	11	681,799
TOTAL NON-CURRENT ASSETS		1,923,034	1,427,692	1,442,280	411,412
TOTAL ASSETS		3,381,693	2,663,213	2,872,367	687,948
CURRENT LIABILITIES
Payables	12	306,899	90,877	343,059	198,512
Provisions	13	21,181	18,551	13,280	7,255

TOTAL CURRENT LIABILITIES		328,080	109,428	356,339	205,767
NON-CURRENT LIABILITIES
Deferred tax liabilities	4	7,906	70,423	187,677
TOTAL NON-CURRENT LIABILITIES		7,906	70,423	187,677	$\omega$
TOTAL LIABILITIES		335,986	179,851	544,016
NET ASSETS		3,045,707	2,483,362	2,328,351	482,181

EQUITY
Contributed equity	14	18,986,292	17,561,794	16,054,067	14,042,817
Accumulated losses	15	(15,949,212)	(15,084,642)	(13,742,922)	(13,560,636)
Total parent entity interest in equity		3,037,080	2,477,152	2,311,145	482,181
Total outside equity interest	16	8,627	6,210	17,206
TOTAL EQUITY		3,045,707	2,483,362	2,328,351	482,181

EUROGOLD LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS

	9 months ending 31 March 2004 A\$	Year ended 30 June 2003 A\$	Year ended 30 June 2002 A\$	Year ended 30 June 2001 A\$*

	299,735 (934, 195)	664,173 (1,946,677)	929,829 (1,205,813)	202,806
			1,500
	(123, 509)	(138, 178)	(715, 978)
				(183, 447) 19,359

	(8, 211)	(116, 783)	(64, 482)
	800	43,452	700
	(84, 365)	(233, 607)	(1,392,835)
	(531, 803)
	(444, 238)	297,227	(510, 803)

	1,500,000	1,555,000	2,011,250
	1,424,498	1,507,727	2,011,250
	245,262 1.040.022	396,480 668,559	555,119 145,519	19,359 126,160
	(20, 803)	(25, 017)	(32,079)
17(b)	1,264,481	1,040,022	668,559	145,519
	17(a)	22,971 (734, 998) 179,341 (75, 502)	12,300 (92) (1,408,474) 604,165 (47, 273)	47,043 (1,909) (945, 328) 945,814

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.

$(a)$ Basis of accounting

The financial information has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) in Australia.

The financial information has been prepared in accordance with the historical cost convention.

Fundamental accounting concept - going concern

The Company has, as at the date of this report, acquired 100% of the issued share capital of Saulyak Resources Limited ("SRL") and Zakar Resources Limited ("ZRL"), as approved by shareholders on 15 June 2004. In order to meet the remaining terms of this acquisition and to enable the development of its properties to commercial production, the Company is reliant on raising the £2.4 million as detailed in the AIM Admission Document. In the event that the fund raising is unsuccessful, the Directors will need to seek alternative sources of finance, and if this is unsuccessful the going concern concept may be invalid.

The financial information does not include any adjustments that would result from the failure to meet the remaining terms of the acquisition or to enable the development of its properties to commercial production. Should the going concern basis provide to be inappropriate, a reassessment of the carrying value of assets and liabilities would have to be undertaken. Under such a reassessment the value of assets would need to be reduced to their realisable amount, and non-current assets and liabilities reclassified as current.

$(b)$ Comparatives

Where necessary, comparatives have been reclassified and repositioned for consistency with current year disclosures.

(i) AASB 1044

As a result of the first time application of AASB 1044 "Provisions, Contingent Liabilities and Contingent Assets" for the year ended 30 June 2003, comparatives for provisions, as set out in Note 13, have not been disclosed in preceding periods as allowed under the standard.

(ii) AASB 1041

Similarly as a result of the first time application of AASB "Revaluation of Non-Current Assets for the year ended 30 June 2002, comparatives for provisions, as set out in Note 9, have not been disclosed in preceding periods as allowed under this standard.

The impact of these two standards to the Company only affected disclosure and not the measurement criteria of balances concerned.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) 1.

Principles of consolidation $(c)$

The financial information presented is that of the Group, comprising Eurogold Limited and all entities that Eurogold Limited (the parent entity) controlled from time to time during each financial period and at each balance date.

Information from the financial statements of subsidiaries is included from the date the parent company obtained control until such time as control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control. Subsidiary acquisitions are accounted for using the purchase method of accounting.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

$(d)$ Foreign currencies

Translation of foreign currency transactions

Transactions in foreign currencies of entities within the Group are converted to local currency at the rate of exchange ruling at the date of the transaction.

Amounts payable to and by the entities within the Group that are outstanding at the reporting date and are denominated in foreign currencies have been converted to local currency using rates of exchange ruling at the end of the financial period.

All resulting exchange differences arising on settlement or restatement are brought to account in determining the net profit or loss for the financial period.

Translation of financial reports of overseas operations

All overseas operations are deemed integrated foreign operations, as each is financially and operationally dependent on Eurogold Limited. The financial reports of overseas operations are translated using the temporal method and any exchange differences are recognised as revenue or expense in net profit or loss in the reporting period in which they arise.

$(e)$ Cash and cash equivalents

Cash on hand and in banks and short-term deposits are stated at nominal value. For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 2 working days, net of outstanding bank overdrafts.

Bank overdrafts are carried at the principal amount. Interest is charged as an expense as it accrues.

$(f)$ Receivables

Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at the nominal amount due. Interest is taken up as income on an accrual basis.

Inventories $(g)$

Inventories are valued at the lower of cost and net realisable value on a first in first out basis.

Investments $(h)$

Listed shares held for trading are carried at cost.

Investments in associates are carried at the lower of the equity-accounted amount and recoverable amount.

All other non-current investments are carried at the lower of cost and recoverable amount.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) 1.

$(i)$ Recoverable amount

Non-current assets are not revalued to an amount above their recoverable amount, and where carrying values exceed this recoverable amount assets are written down. In determining recoverable amount the expected net cash flows have not been discounted to their present value.

Property, plant and equipment $(i)$

Cost and valuation

All classes of plant and equipment are measured at cost.

Depreciation

Depreciation is provided on a straight-line basis on all plant and equipment, at rates calculated to allocate the cost less estimated residual value at the end of the useful lives of the assets against revenue over those estimated useful lives.

Major depreciation periods are: Plant and equipment $3 - 5$ years

$(k)$ Exploration, evaluation, development and restoration costs

Costs carried forward

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, or where activities in the area have not at balance date. reached a stage to allow reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an area of interest abandoned are written off in full in the financial period in which the decision to abandon the area of interest is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Amortisation

When production commences the accumulated costs for the relevant area of interest are amortised over the life of the area on a production output basis.

Restoration costs

While an obligation exists for restoration activities to be undertaken for any exploration activities performed on the tenements, these are usually incurred during the period in which those activities were performed and recognised in the statement of financial performance for that period.

$(1)$ Pavables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity.

Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accruals basis.

$(m)$ Employee entitiements

Provision is made for employee entitlement benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave.

Liabilities arising in respect of wages and salaries, annual leave and any other employee entitlements expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates expected to be paid when the liability is settled. All other employee entitlement liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the interest rates attaching to government guaranteed securities that have terms to maturity approximating the terms of the related liability are used.

Employee benefit expenses and revenues arising in respect of the following categories:

wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave benefits; and
other types of employee benefits

are recognised against profit on a net basis in their respective categories.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

$(n)$ Provisions

Provisions are recognised when the consolidated entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation.

$\omega$ Contributed equity

Issued and paid up capital is recognised at the fair value of the consideration received by the Company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

$(p)$ Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Rendering of Services

Revenue is recognised when the services have been rendered in accordance with the terms and conditions of the contract.

Interest

Control of a right to receive consideration for the provision of, or investment in, assets has been attained.

Dividends

Control of a right to receive consideration for the investment in assets is attained, usually evidenced by approval of the dividend at a meeting of shareholders.

$(q)$ Taxes

Income tax

Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

The income tax expense for the year is calculated using the 30% tax rate.

Goods and services tax

Revenues, expenses and assets are recognised net of the amount of GST except:

where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd) 1.

$(r)$ Earnings per share

Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted EPS is calculated as net profit attributable to members, adjusted for:

costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the $\blacksquare$ dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

$(s)$ Operating Leases

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense on a straight-line basis.

		9 months ending 31 March 2004 A\$	Year ended 30 June 2003 A\$	Year ended 30 June 2002 A\$
2. REVENUES FROM ORDINARY
ACTIVITIES Revenues from operating activities
Revenues from the provision of exploration
services to associate		256,842	621,469	1,244,864
Revenues from outside the operatin
activities
Interest received
- Other persons/corporations		22,971	14,012	48,952
Dividend received
- Other persons/corporations				1,500
Proceeds from disposal of investments Proceeds from sale of property, plant &		179,341	604,165	945,814
equipment		800	43,452	700
Other income		44,728		1,909
Total revenues from outside the operating
activities		247,840	661,629	998,875
Total revenue from ordinary activities		504,682	1,283,098	2,243,739
3. EXPENSES AND LOSSES/(GAINS) (a) Expenses Depreciation of non current assets Plant and equipment		45,152	57,222	36,765
Borrowing costs expensed
Interest expense
- Other persons/corporations			92	1,909
Operating lease rental Minimum lease payments		20,211	20,414	12,020
Provision for employee entitlements	13(a)	2,630	9,578	6,024
Losses/(Gains) (b) Net loss/(gain) on disposal of investments Net foreign currency losses/(gains) Net loss/(gain) on disposal of property, plant		(40, 464) (51,689)	142,635 (80, 398)	(60, 746) (54, 866)
& equipment		5,373	(43, 452)	(700)

	9 months ending 31 March 2004 A\$	Year ended 30 June 2003 А\$	Year ended 30 June 2002 A\$	Year ended 30 June 2001 A\$*
INCOME TAX 4.
The prima facie tax on operating loss is different to the income tax provided in the financial statements as follows:
facie tax (benefit)/expense Prima - on (loss)/profit from ordinary activities at 30%	(261, 983)	(436, 118)	7,521	(2,869,014)
effect Add/(less) tax permanent οf differences: Non-deductible expenditure Other items (net) Tax losses not brought to account as future	(8,421)	(101, 010)	65,423
income tax benefits	261,983	436,118	129.442	2.869.014
Income tax (benefit)/expense attributable to ordinary activities	(8,421)	(101, 010)	202,386
Deferred tax assets and liabilities Current tax payable Provision for deferred income tax - non current	7,906	70,423	187,677
Future income tax benefit - non current
	As at $31$ March 2004 A\$	As at $30$ June 2003 А\$	As at $30$ June 2002 A\$	As at $30$ June 2001 A\$*
RECEIVABLES 5.

CURRENT Other debtors	5(a)	18.836	21.378	25.192	5.674
debts other Amounts than trade receivable from related parties: Other related parties
- directors of controlled entities	$5(a)$ , 26	38,667		$\overline{\phantom{a}}$
- associated companies	$5(a)$ , 26	67.234	53.941	102.691	125,343

		124,737	75,319	127.883	131.017
NON-CURRENT
Other receivables	18(b)	7.906	8.990	10.623

(a) Terms and conditions
Terms and conditions relating to the above financial instruments:

Other debtors are non-interest bearing and have repayment terms between 30 days and 60 days.
Details of the terms and conditions of related party receivable are set out in note 26. $(i)$

$(ii)$

6. INVENTORIES

	Raw materials and stores
.

At cost		10.623
Provision for diminution in value	$\overline{\phantom{a}}$	(8.853)
Total inventories at lower of cost and
net realisable value		.770

			As at $31$ March 2004 A\$	As at $30$ June 2003 А\$	As at 30 June 2002 А\$	As at 30 June 2001 A\$*
7.	OTHER FINANCIAL ASSETS
CURRENT Shares	unlisted at cost			50,000
	listed at cost	7(a)	64,170	68,682	631,875
			64,170	118,682	631,875
(a)	Quoted market value of shares listed on a prescribed stock exchange at balance date Listed shares (b) Particulars relating to controlled entities: Chief Entity	Country of Incorporation	79,321	56,000 Percentage held	622,653
			2004	2003	2002	2001
	Chief Entity: Eurogold Limited		%	%	%	%
Controlled	entities Eurogold οf
Limited:
	Australia Mining Investment S.A. (ii) Explorer S.A. (iii)	Romania Romania	99	98	100 98	100 98

All interests in controlled entities are in the ordinary shares of these entities.

Cyprus

$\left( i\right)$

100

This entity is not audited by Ernst & Young, as there is no statutory requirement for this entity to be audited.
This entity was deregistered during 2003. Prior to that time the entity was dormant, as such there was no $(ii)$ financial impact on the accounts of the Group.

(iii) This entity is audited by a member firm of Ernst & Young International.

*Amounts have not been subject to audit or review.

Esmeralda Mining Limited (i)

$\overline{7}$ . OTHER FINANCIAL ASSETS (cont'd)

		(c) Investments in associated entities comprise:
	Name	Country of Incorporat ion		Percentage held by consolidated entity
			2004 %	2003 %	2002 %	2001 %
Transgold S.A.		Romania	50	50	50	50

The principal activity of Transgold S.A. is the operation of a tailings retreatment facility in Romania and associated exploration.

The directors have assessed that the investment in Transgold S.A. has no recoverable amount due to the potential liability to Transgold S.A. that may arise due to litigation resulting from the accidental overflow of treatment water from the tailings dam spillage in January 2000. The equity method of accounting has been suspended following the write down of the investment to nil.

			As at $31$ March 2004 A\$	As at 30 June 2003 A\$	As at 30 June 2002 A\$	As at 30 June 2001 А\$*
8.	OTHER (CURRENT)
	Prepayments		5,271	1.498
9.	PROPERTY, PLANT AND EQUIPMENT
- At cost	Plant and equipment - Accumulated depreciation		346,916 (195, 260)	369,028 (174, 258)	252,245 (117,036)	124,102 (53, 889)
	Total plant and equipment	9(a)	151,656	194,770	135,209	70,213
(a)	Reconciliations Reconciliations of the carrying amounts of plant and equipment and at the beginning and end of the current and previous financial year.
Additions Disposals	Plant and equipment Carrying amount at beginning Depreciation expense		194,770 8,211 (6, 173) (45, 152)	135,209 116,783 (57, 222)	70,213 101,761 (36, 765)
	Carrying amount at end		151,656	194,770	135,209
10. interest	DEFERRED EXPLORATION AND EVALUATION COSTS Exploration and evaluation costs carried forward in respect of mining areas of
	Pre-production - exploration and evaluation phases		1,081,673	1,223,932	1,296,448	341,199

The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective mining areas.

11.	OTHER (NON-CURRENT)		As at 31 March 2004 A\$	As at 30 June 2003 A\$	As at 30 June 2002 A\$	As at 30 June 2001 A\$*
	Expenditure carried forward in respect of acquisitions of assets in process at balance date		681,799
2004.	The ultimate recoupment of costs carried forward is dependent upon the settlement of the agreement to acquire Saulyak Resources Limited and Zakar Resources Limited. Shareholder approval for which occurred on 15 June
12.	PAYABLES (CURRENT)
	Trade creditors Sundry creditors and accruals	12(a) 12(a)	271,946 34,953	66,873 24,004	149,900 193,159	182,031 16,481
			306,899	90,877	343,059	198,512
parties: - directors	Aggregate amounts payable to related Directors and director-related entities		9,165		14.164
(a) $\left( i\right)$ (iii)	Terms and conditions Terms and conditions relating to the above financial instruments Trade liabilities are non-interest bearing and are normally settled on 30 day terms. Sundry creditors and accruals are non interest bearing and have an average term of 45 days.
13.	PROVISIONS (CURRENT)
	Employee entitlements (a) Movements in employee	13(a) 22	21,181	18,551	13,280	7,255
vear	entitlement provision Carrying amount at beginning of financial Additional provision Amounts utilised during the year Carrying amount at end of financial year		18,551 2,630 21,181	13,280 9,578 (4, 307) 18,551

			As at 31 March 2004 A\$	As at 30 June 2003 A\$	As at 30 June 2002 A\$	As at 30 June 2001 А\$*
14.	CONTRIBUTED EQUITY
	Issued and paid up capital
	Ordinary shares fully paid	14(a)	18,986,292	17,561,794	16,054,067	14,042,817
(a)	Movements in shares on issue			Number of shares	A\$
	As at 1 July 2000 Issued during the year			48.840.209	14,042,817
	- capital raising for working capital - exercise of options
	- share issue costs As at 30 June 2001			48,840,209	14,042,817
	Issued during the year
	- capital raising for working capital - exercise of options - share issue costs			40,000,000 225,000	2,000,000 11,250
	As at 30 June 2002			89,065,209	16,054,067
	Issued during the year - capital raising for working capital - exercise of options			20,000,000 7,100,000	1,200,000 355,000
	- share issue costs As at 30 June 2003			116,165,209	(47, 273) 17,561,794
	Issued during the year - capital raising for working capital - share issue costs			10,000,000	1,500,000 (75, 502)
	As at 31 March 2004*			126, 165, 209	18,986,292
(b)	Movements in options on issue		2004 Number of options	2003 Number of options	2002 Number of options	2001* Number of options
A\$0.40:	(i) 22 December 2002 options exercisable at
- lapsed	Beginning of the financial year			7,325,000 (7,325,000)	7,325,000	7,325,000
	End of the financial year				7,325,000	7,325,000
A\$0.05:	(i) 22 December 2005 options exercisable at
	Beginning of the financial year			7,100,000
- issued - exercised				(7, 100, 000)	7,325,000 (225,000)
	End of the financial year				7,100,000
	Total options outstanding at balance date				14,425,000	7,325,000

$(c)$ Terms and conditions of contributed equity

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

		9 months ending 31 March 2004 A\$	Year ended 30 June 2003 A\$	Year ended 30 June 2002 А\$	Year ended 30 June 2001 A\$*
15.	ACCUMULATED LOSSES
	Balance at the beginning of the year Net loss attributable to members of	(15,084,642)	(13,742,922)	(13,560,636)	(3,997,256)
	Eurogold Limited	(864, 570)	(1,341,720)	(182, 286)	(9,563,380)
	Balance at end of the year	(15,949,212)	(15,084,642)	(13,742,922)	(13,560,636)
16.	OUTSIDE EQUITY INTEREST
	Reconciliation of outside equity interest in controlled entities:
	Opening balance Gain on disproportionate issue of	6,210	17,206	12,236
	equity	2,703
	Add share of operating (loss)/profit	(286)	(10,996)	4,970
	Closing balance	8,627	6,210	17,206
17.	STATEMENT OF CASH FLOWS
(a)	Reconciliation of the operating loss after tax to the net cash flows from operations
	Net loss Non cash items	(864, 856)	(1,352,716)	(177, 316)	(9,563,380)
	Depreciation of non-current assets	45,152	57,222	36,765
	Loss/(profit) on disposal of property,
	plant and equipment (Profit)/loss on disposal of investments	5,373	(43, 452) 142,635	(700) (60, 746)
	Net foreign currency (gains)/losses	(40, 464) (51,689)	(80, 398)	(54, 866)
	Write off of capitalised expenditure	265,768	210,694		295,163
	Write down of investments in
	associates				8,472,341
	Changes in assets and liabilities (Increase)/decrease in receivables	48,334
	(Increase)/decrease in prepayments	(3,773)	54,197 (1,498)	(7,489)	202,806 444,527
	(Increase)/decrease in inventory		1,770	(1,770)
	(Increase)/decrease in other assets -
	exploration	(123, 509)	(138, 178)	(955, 249)
	(Decrease)/increase in payables (Decrease)/increase in provisions	44,553 2,630	(146, 767) 5,271	82,341 6,025	171,163 (3,261)
	(Decrease)/increase in deferred tax
	liability	(62, 517)	(117, 254)	187,677
	Net cash flows (used in) / from operating activities	(734, 998)	(1,408,474)	(945, 328)	19,359

			As at $31$ March 2004 А\$	As at $30$ June 2003 A\$	As at 30 June 2002 А\$	As at $30$ June 2001 A\$*
17.	STATEMENT OF CASH FLOWS (cont'd)
(b)	Reconciliation of cash Cash balances comprises - Cash at bank Deposits at call		1,116,899 147,582	920,154 119,868	636,690 31,869	145,519
			1,264,481	1,040,022	668,559	145,519
18.	EXPENDITURE COMMITMENTS
(a)	Exploration expenditure commitments - not later than one year - later than one year but not later than five years	18(b)	263,539	299,670 614,324	3,282,507 9,118,075
	- later than five years
	- aggregate expenditure contracted for at balance date but not provided for		263,539	913,994	12,400,582

$(b)$ The amounts are part of the exploration activity permit obligations agreed with the National Agency for Minerals and Resources (Romania). One of the conditions for retention of the exploration licenses held is meeting the stipulated regulations, minimum exploration expenditure and activity as set by the National Agency for Minerals and Resources. Otherwise forfeiture of tenements may occur.

There are three bank deposit guarantees included in non-current assets totalling A\$7,906 (2003: A\$8,990) (note 5), that have been granted in favour of the National Agency for Minerals and Resources representing 0.5% of the annual required exploration expenditure program submitted by Explorer S.A. and approved by the National Agency for Minerals and Resources.

Operating lease commitments Minimum lease payments
- not later than one year	14.688	14.148	12.096
- later than one year but not later than five years - later than five years		6.120	28.166 -44
- aggregate expenditure contracted for at balance date
but not provided for	14.688	20.268	40.262

Operating leases have an average lease term of 5 years and relate to the office space of Eurogold. $(d)$

19. SEGMENT INFORMATION

Revenue is derived by the Group from the provision of exploration services.

The Group operates predominantly within the gold exploration and extraction business segment and in one geographical segment being Romania.

$20.$ ECONOMIC DEPENDENCY

The Group does not have any economic dependency with any one client or group of clients.

	As at 31 March 2004 A\$	As at 30 June 2003 А\$	As at 30 June 2002 A\$	As at 30 June 2001 A\$*
21. LOSS PER SHARE
The following reflects the income and share data used in the calculation of basic and diluted earnings per share:
Net loss Adjustments:	(864, 856)	(1,352,716)	(177, 316)	(9,563,380)
Less net loss/(profit) attributable to outside equity interest	286	10,996	(4,970)
Earnings used in calculation of diluted earnings per share	(864.570)	(1,341,720)	(182, 286)	(9,563,380)
	No.	No.	No.	No.
Weighted average number of ordinary shares on issue used in the calculation of basic EPS	118,019,754	98,379,456	73,519,154	48,840,209
Effect of dilutive securities Share options (i)
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share	118,019,754	98,379,456	73,519,154	48,840,209

(i) Share options are not considered dilutive, as their impact would be to decrease the net loss per share.

		As at $31$ March 2004 А\$	As at 30 June 2003 A\$	As at $30$ June 2002 A\$	As at $30$ June 2001 A\$*
22. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS
Employee Entitlements The aggregate employee entitlements liability is comprised of:
Accrued wages, salaries and on costs				11,140
		8.479
Provisions (current)	13	21,181	18,551	13,280	7,255
		29,660	18,551	24,420	7,255
		9 months ending 31 March 2004 A\$	Year ended 30 June 2003 Α\$	Year ended 30 June 2002 A\$	Year ended 30 June 2001 A\$*
23. REMUNERATION OF DIRECTORS Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of each entity in the Group, directly or indirectly, by the entities of which they are directors or any related party		203,795	288,108	181,434
The number of directors of Eurogold Limited whose remuneration (including superannuation contributions) falls within the following bands is:
		No.	No.	No.	No.
A\$0 $-$ A\$9,999				$\blacksquare$	3
A\$10,000 $- A$19,999$		1		1
A\$20,000 $-$ A\$29,999		1	1	1
$- A$ \$39,999 A\$30,000			1	L.
A\$110,000 $-$ A\$119,999		1		1
A\$120,000 - A\$129,999 A\$160,000 - A\$169,999			1

	9 months ending 31 March 2004 AS	Year ended 30 June 2003 A\$	Year ended 30 June 2002 A\$	Year ended 30 June 2001 A\$*
24. REMUNERATION OF EXECUTIVES
Remuneration received or due and receivable by executive officers of the consolidated entity whose remuneration is A\$100,000 or more, from entities in the Group or a related party, in connection with the management of the affairs of the entities in the Group whether as an executive officer or otherwise:	122.625	163,500	218,732
The number of executives of the Group and the Company whose remuneration (including superannuation contributions) falls within the following bands is:
	No.	No.	No.	No.
A\$100,000 - A\$109,999			1
A\$110,000 - A\$119,999			1
A\$120,000 - A\$129,999	1
A\$160,000 - A\$169,999		1
	9 months ending 31 March 2004 A\$	Year ended 30 June 2003 A\$	Year ended 30 June 2002 A\$	Year ended 30 June 2001 A\$*
AUDITORS' REMUNERATION 25.
Amounts received or due and receivable by Ernst & Young Australia for:
an audit or review of the financial report of the entity and any other entity in the Group tax advice provided to the entity and any other	35,340	30,975	39,165
entity in the Group other assurance and accounting assistance	15,200	19,650	20,583
services				15,000
	50,540	50,625	59,748	15,000
Amounts received or due and receivable by a related practice of Ernst & Young Australia for: an audit or review of the financial report of
subsidiaries	5,614	13,183	8,853
	56,154	63,808	68,601	15,000

26. RELATED PARTY DISCLOSURES

Directors

The directors of Eurogold Limited during the financial periods contained in this report were:

Peter L Gunzburg (appointed 24 September 2001) Brett Montgomery (appointed 15 August 1989) Dennis W Franks (appointed 24 September 2001) Neil MacLachlan (appointed June 2004) Christopher Barker (appointed June 2004) Peter G Cordin (resigned 24 September 2001)

Director transactions

Loans

No director transactions, requiring disclosure took place during the financial period ended 31 March 2004. During 2003 Mr P L Gunzburg advanced A\$75,000 interest free to Eurogold Limited to fund working capital requirements. This advance was fully repaid by the Company at 30 June 2003.

Director related entity transactions

Services

Consulting fees of A\$18,750 (2003: A\$25,000) were paid to Gerise Pty Ltd a company in which Mr B Montgomery is a director and has a financial interest and all transactions are on normal commercial terms and have been included in remuneration of directors (Note 23).

Other related party transactions

Loans

During the financial period to 31 March 2004, Eurogold Limited has provided interest free loans to controlled entities totalling A\$291,087 (2003: A\$593,606). On 31 December 2003, Eurogold Limited was issued 12,500 USA\$20 ordinary shares in its controlled entity Explorer SA as repayment of amounts owing under the interest free loans. Additionally, on this date the directors of Eurogold Limited resolved to forgive A\$176,132 of the amounts owing from Explorer SA. At balance date the total amount outstanding was A\$771,060 (2003: A\$1,109,096). There is no specified repayment date.

On 11 September 2003, an unsecured short term advance of A\$38,667 (US\$29,000) was made by Eurogold Limited to a director of its controlled entity, Explorer SA. The advance is interest free and repayable within one year.

During the financial period ended 31 March 2004, Eurogold Limited has provided interest free loans to associated entities totalling A\$55,375 (2003: A\$Nil). At balance date the total amount outstanding was A\$55,375 (2003: A\$Nil). There is no specified repayment date and no repayments were made during the period.

During the period, exploration services totalling A\$256,842 (2003: A\$621,469) were provided by a controlled entity of the Company to an associate of the Company on normal commercial terms and conditions. At balance date, the consolidated entity has a receivable outstanding in relation to these services of A\$11,859 (2003: A\$53,941).

RELATED PARTY DISCLOSURES 26. (cont'd)

Equity instruments of directors

Interests at balance date

Interests in shares and options of entities within the Group held by directors of the reporting entity and their director related entities.

		Eurogold Limited Ordinary Shares
	31 March 2004	30 June 2003	30 June 2002	30 June 2001
Director		No.* No. No. No.
P L Gunzburg	23.348.685	23,196,085	15,907,751	Nil'
B Montgomery	Nil	Νil	Nil	700.000
D W Franks	Nil	ΝiΙ	Nil	Νil
P G Cordin	Ni ²	Ni ²	Ni ²	500,000

		Eurogold Limited Options Over Ordinary Shares
		31 March 2004	30 June 2003		30 June 2002		30 June 2001*
Director	No.	Ex. Pricel Expiry	No.	Ex. Price/ Expiry	No.	Ex. Price/ Expiry	No.	Ex. Price/ Expiry
P L Gunzburg	Nil	N/A	Nil	N/A	2.500.000	$40$ cents $-$ 22/12/02	Nii'	N/A
	Nil	N/A	Nil	N/A	2,500,000	$5$ cents $-$ 22/12/05	Ni ¹	N/A ¹
B Montgomery	Νil	N/A	Nil	N/A	ΝiΙ	N/A	Nil	N/A
D W Franks	Nil	N/A	Nil	N/A	Νil	N/A	Nil	N/A
P G Cordin	Ni ²	$N/A^2$	Ni ²	$N/A^2$	Ni ²	$N/A^2$	Νil	N/A

¹ Mr PL Gunzburg and Mr DW Franks were appointed as directors of Eurogold Limited on 24 September 2001.

² Mr PG Cordin resigned as a director of Eurogold Limited on 24 September 2001.

Movements in directors' equity holdings

During February 2004, Mr P L Gunzburg acquired 152,600 ordinary shares through an on market purchase.

During 2003 Mr P L Gunzburg acquired 2,500,000 ordinary shares through the exercise of options at an average exercise price of 5 cents, 3,963,334 ordinary shares under the terms of the capital raising in April 2003, and 825,000 ordinary shares through an on market purchase in January 2003.

There have been no other transactions concerning shares or share options between entities in the reporting entity and directors of the reporting entity or their director related entities.

All equity dealings with directors have been entered into with terms and conditions no more favourable than those that the entity would have adopted if dealing at arm's length.

Ultimate parent

Eurogold Limited is the ultimate Australian holding company.

$27.$ FINANCIAL INSTRUMENTS

(a) Interest rate risk
The Group's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, are as follows:

FINANCIAL INSTRUMENT		FLOATING INTEREST RATE				NON-INTEREST BEARING				TOTAL					AVERAGE EFFECTIVE INTEREST RATE
	2004 A\$	2003 A\$	2002 A\$	2001 A\$*	2004 A\$	2003 A\$	2002 A\$	2001 A\$*	2004 A\$	2003 A\$	2002 A\$	2001 A\$*	2004 A\$	2003 %	2002 %	2001 $\frac{1}{2}$
FINANCIAL ASSETS ${i}$
Cash assets	264.481	1,040,022	668,559	145,519				$\sim$	.264,481	1,040,022	668,559	145,519	4.23	3.36	3.12
Trade and other receivables				$\sim$	26,742	30,368	35,815	5,674	26,742	30,368	35,815	5,674	N/A	N/A	N/A	N/A
Receivables - other related parties				$\sim$	105,901	53,941	102,691	125,343	105,901	53,941	102,691	125,343	N/A	N/A	N/A	N/A
Other financial assets		$\overline{r}$		$\cdot$	64,170	118,682	631,875		64,170	118,682	631,875	$\sim$	N/A	N/A	N/A	N/A
Total financial assets	,264,481	1,040,022	668,559	145,519	196,813	202,991	770,381	131,017	1,461,294	1,234,013	1,438,940	276,536
FINANCIAL (ii) LIABILITIES
Trade and other payables				$\overline{\phantom{a}}$	297.734	90.877	328,895	198,512	297.734	90.877	328,895	198,512	N/A	N/A	N/A	N/A
Payables - other related parties				$\mathbf{r}$	9,165	$\sim$	14.164	$\mathbf{r}$	9,165		14,164	$\sim$	N/A	N/A	N/A	N/A
Total financial liabilities				$\mathbf{r}$	306,899	90,877	343,059	198,512	306,899	90,877	343,059	198,512

$27.$ FINANCIAL INSTRUMENTS (cont'd)

(b) Net fair values of financial assets and liabilities

All financial assets and liabilities have been recognised at the balance date at their net fair values, except for listed shares which have a fair value of A\$79,321 (2003: A\$56,000). The directors have not reduced the carrying value to fair value as the impact on the financial information is immaterial.

(i) The following methods and assumptions are used to determine the net fair values of financial assets and liabilities

Recognised Financial Instruments

Cash and cash equivalent: The carrying amount approximates fair value because of their short-term maturity.

Receivables and payables: The carrying amount approximates fair value.

Listed shares: Fair value is the current quoted market bid price, adjusted for transaction costs necessary to realise the asset or settle the liability.

(c) Credit Risk Exposures

The Group's maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount, net of any provision for doubtful debts, of those assets as indicated in the balance sheet.

Concentration of Credit Risk

The Group minimises concentrations of credit risk in relation to accounts receivable by undertaking transactions with a large number of customers within the resources industry. The consolidated entity is not materially exposed to any individual overseas country or individual customer.

28. CONTINGENT LIABILITIES

Eurogold Limited is a defendant in proceedings commenced by the Republic of Yugoslavia in Yugoslavia seeking damages for the accidental overflow of treatment water from the tailings dam spillage on January 30, 2000. Legal advice received by Eurogold Limited is that Eurogold Limited has no liability to the Republic of Yugoslavia with respect to those proceedings.

Eurogold Limited has a contingent liability under the terms of the release of its obligations to the bankers to the construction of the Baia Mare Project. Eurogold Limited was a security provider to the bankers. An associated company, Transgold S.A., must comply with its obligations to rehabilitate the Meda dam-site, failing which the company's obligations (otherwise released by Deed of Release) will be reinstated. The directors believe that Transgold S.A. will be able to comply with its rehabilitation obligations.

29. RECONCILIATION WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS")

	Group 9 months ending 31 March 2004 А\$
Net loss attributable to members of Eurogold Limited under Australian GAAP	864,570
Increase / (decrease) in loss, net of tax, in respect of: Taxation
De-recognition of Intangible Assets Foreign Exchange	1,081,673
Net loss attributable to members of Eurogold Limited under IFRS	1,946,243
Earnings per ordinary share under IFRS	(1.6)
Diluted earnings per ordinary share under IFRS	(1.6)
Equity attributable to members of Eurogold Limited under Australian GAAP	3,045,707
Increase / (decrease) net of tax in respect of: Taxation
De-recognition of Intangible Assets Foreign Exchange	(1,081,673)
Equity attributable to members of Eurogold Limited under IFRS	1.964.034

The Group's financial information has been prepared in accordance with generally accepted accounting principles in Australia ("Australian GAAP"), which differ in certain respects from International Financial Reporting Standards ("IFRS") applicable as at the date of this report. The material differences relate principally to the following items, and the effect of each of the adjustments to net profit and equity, attributable to members of Eurogold Limited, which would be required under IFRS is set out above.

Taxation

IAS 12 "Income Taxes" follows the balance sheet method of tax effect accounting. Under this method deferred tax assets and liabilities are recognised for temporary differences. Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base. Temporary differences may be either:

(a) Taxable temporary differences, which are temporary differences that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled; or
(b) Deductible temporary differences, which are temporary differences that will result in amounts that are deductible in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

The adjustment above represents the application of tax effective accounting in accordance with IAS 12 including the tax effect of the other adjustments included in the above reconciliation.

29. RECONCILIATION WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRS") (cont'd)

Derecognition of Intangible Assets

The financial report has been prepared in accordance with Australian Accounting Standard AASB 1022 "Accounting for the Extractive Industries" ("AASB 1022").

Currently, the International Accounting Standards Board ("IASB") is yet to determine the appropriate accounting treatment of exploration and evaluation costs, including whether they satisfy the definition of an asset.

In the absence of specific quidance as to how to account for exploration and evaluation, under existing IFRS as at the date of this report, we must refer to IAS 38 "Intangible Assets". Under this standard an intangible asset must only be recognised if it is probable that expected future economic benefits attributable to the asset will flow to entity. Under Australian GAAP exploration and evaluation expenditure is currently being carried forward on the basis that the exploration and evaluation activities in the area of interest have not reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. It is therefore not probable at this stage of exploration and evaluation that economic benefits will flow to the entity.

The costs incurred as at 31 March 2004, totalling A\$1,081,673, therefore do not meet the definition of an intangible asset as so defined under IAS 38, and an adjustment has accordingly been raised in the above reconciliation.

Foreign Exchange

IAS 21 "The Effect of Changes in Foreign Exchange Rates" adopts a fundamentally different approach to the measurement of foreign exchange differences under AASB 1012 "Foreign Currency Translation". Under IAS 21, Eurogold is required to determine its functional currency for each entity within the Group. This represents the currency in which the entity measures items in its financial statements.

Applying the principles of IAS 21 to the results and equity of Eurogold Limited would not result in a material difference.

Restoration and Rehabilitation Costs

Applying the principles of IAS 37 "Provisions and Contingencies" to the results and equity of Eurogold Limited would not result in a material difference.

Recognition & Measurement of Financial Instruments

Applying the principles of IAS 39 "Financial Instruments: Recognition & Measurement" to the results and equity would not result in a material difference.

Yours faithfully

lement

Ernst & Young

GH Meyerowitz Partner

Pro forma Consolidated Balance Sheet

The below Pro forma consolidated balance sheet of the Group ("Pro forma") following the Placing on the Alternative Investment Market ("AIM"), has been prepared for illustrative purposes only to show the effect of the transactions set out in the Notes below. The following exchange rates have been used in its completion:

$\mathbf{1}$ . Australian Dollar/US Dollar: 0.71
$2.$ Australian Dollar/Ukraine Hryvnia: 3.596
$3.$ Australian Dollar/Sterling: 0.39

The Pro forma, because of its nature, may not give a true picture of the financial position of the Group. It is based on the financial information in the Accountants' Report on Eurogold Limited on pages 68 to 94 of the Admission Document and adjusted for the transactions as described below.

	Eurogold Limited consolidated balance sheet	Adjustments		Pro forma consolidated balance sheet
CURRENT ASSETS	A\$	A\$	Note	А\$
Other financial assets	64,170			64,170
Other current assets	5.271			5,271
Trade and other receivables	124,737			124,737
Cash and cash equivalents	1,264,481	5,440,292	1	6,704,773
TOTAL CURRENT ASSETS	1,458,659			6,898,951
NON-CURRENT ASSETS
Other	681,799	(681,799)	2
Deferred expenditure	1,081,673	6,602,434	3	7,684,107
Property, plant & equipment Receivables	153,824			153,824
	7,906			7,906
TOTAL NON-CURRENT ASSETS	1,925,202			7,845,837
TOTAL ASSETS	3,383,861			14,744,788
CURRENT LIABILITIES
Trade and other payables	306,899	176,772	4	483,671
Other accruals		940,508	5	940,508
Provisions	21,181			21,181
TOTAL CURRENT LIABILITIES	328,080			1,445,360
NON-CURRENT LIABILITIES
Deferred tax liabilities	7,906			7,906
TOTAL NON-CURRENT LIABILITIES	7,906			7,906
TOTAL LIABILITIES	335,986			1,453,266
NET ASSETS	3,047,875			13,291,522
EQUITY
Issued capital	18,986,292	9,940,292	6	28,926,584
Accumulated (losses)/ profits	(15,947,074)			(15, 947, 074)
Outside equity interest	8,657	303,355	7	312,012
TOTAL EQUITY	3,047,875			13,291,522

Assumptions on which the Pro forma consolidated balance sheet of Eurogold Limited ("Eurogold") is based

The Pro forma consolidated balance sheet of Eurogold Limited has been prepared on the basis that the following transactions which have taken place since 31 March 2004, or are to take place as a result of the Eurogold's admission to AIM, had taken place as at 31 March 2004:

The issue of 48 million Eurogold ordinary shares at £0.05 per share amounting to £2,400,000 (A\$6,153.846), less estimated expenses of £300.516 (A\$770.554), including 2 million options valued at £22,230 (A\$57,000), pursuant to Eurogold's proposed admission to AIM;
The acquisition of Saulyak Resources Limited ("SRL") and Zakar Resources Limited ("ZRL") satisfied through the issue of 30 million Eurogold fully paid ordinary shares (following the exercise of the Put and Call option) at A\$0.15 per share plus:
The payment of A\$140,845 (US\$100,000) to the vendors in respect of their obligation to Ukrainian Polymetals:
The reimbursement of the vendors expenses in relation to the Saulyak and Beregove projects, totalling A\$563,380 (US\$400,000);
The payment of management fees to Management Consultants Mining ("MCM") of A\$28,026;
The repayment of operating expenses in relation to the Saulyak and Beregove projects totalling A\$104,029:
Other expected costs of acquisition totalling A\$245,073;

Save for the matters disclosed above, no adjustment has been made for events or transactions that have taken place since 31 March 2004.

Note 1: Reconciliation of Adjustments to Cash

	A\$
Opening unadjusted balance	1.264.481
Adjustments:
Proceeds from the issue of 48 million Eurogold ordinary shares at £0.05	6.153.846
Expected cash cost of issue	(713.554)
Pro forma cash balance	6.704.773

Note 2: Other Non-Current Assets

The balance of "Other Non-Current Assets" in the unadjusted net asset statement of Eurogold Limited represents payments made to 31 March 2004 in respect of the acquisition of SRL and ZRL. The adjustment represents the elimination of this cost of acquisition as the Pro forma consolidated entity includes SRL and ZRL.

Note 3: Reconciliation of Adjustments to Deferred Expenditure

	A\$
Opening unadjusted balance	1.081.673
Adjustments:
Fair value of deferred expenditure acquired through the acquisition of SRL	1.321.480
Excess of cost of acquisition over the fair value of net assets of SRL	5.280.954
Pro forma deferred expenditure balance	7.684.107

	A\$
Opening unadjusted balance Adjustments:	306,899
Fair value of trade and other payables acquired through the acquisition of SRL	35,927
Payment to the vendors in respect of their obligation to Ukrainian Polymetals	140.845
Pro forma trade and other payables balance	483,671
Note 5: Reconciliation of Adjustments to Other Accruals
	A\$
Opening unadjusted balance Adjustments:
Reimbursement of the vendors expenses in relation to the Saulyak and Beregrove projects	563,380
Payment of management fees to MCM Repayment of operating expenses in relation to the Saulyak and Beregrove projects	28,026 104.029
Other expected costs of acquisition	245.073
Pro forma other accruals balance	940,508
Note 6: Reconciliation of Issued Capital
	A\$
Opening unadjusted balance Adjustments:	18,986,292
Issue of 48 million Eurogold ordinary shares at £0.05 pursuant to AIM listing	6,153,846
Issue of 30 million Eurogold ordinary shares at A\$0.15 to the vendors of SRL and ZRL	4,500,000
Issue of 2 million options over Eurogold ordinary shares at A\$0.0285 in consideration of
services provided by RFC Corporate Finance and Durlacher Expected cost of issue	57.000 (770.554)

Proforma issued capital	28,926,584

Note 4: Reconciliation of Adjustments to Trade and Other Payables

Note 7: Outside Equity Interest

This adjustment represents the effective outside equity interest in SLLC.

EUROGOLD LIMITED A.C.N. 009 070 384 HALF YEAR REPORT 31 DECEMBER 2003

EUROGOLD LIMITED DIRECTORS' REPORT

Your directors submit their report for the half-year ended 31 December 2003.

DIRECTORS

The names and details of the directors of the company in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Peter L Gunzburg (Chairman) Brett Montgomery (Director) Dennis Franks (Director)

REVIEW AND RESULTS OF OPERATIONS

Review of Operations

REVIEW OF OPERATIONS

Corporate

Placement of 10,000,000 shares @ \$0.15 each $\bullet$

Romania

Successful completion and commissioning of a 10,000 tpm hard rock ore crushing facility $\bullet$
Significant breakthrough using a biological leaching process to treat pyrite concentrate
Granting of 333km² Qas Prospecting Permit in Romania
Total of 147,702 tonnes of material treated during the half-year
Production of 14,454 ounces of gold (EUG 50%)
Production of 60,580 ounces of silver (EUG 50%)

Ukraine

Agreement to acquire 75% of the Saulyak Gold Deposit
Agreement to acquire 270km² exploration licence surrounding the Saulyak deposit
Agreement to acquire 6.33% of the Beregove, Muzhievo and Kvasove gold deposits

Transgold SA Baia Mare Tailings Retreatment Project, Romania (50% Eurogold)

Summary

A total of 147,702 tonnes of material was treated in the plant during the half-year.

A significant breakthrough was achieved by Transgold during the half-year using a biological leaching process to treat a State owned pyrite concentrate containing some 170,000 ounces of gold equivalent. Transgold reached agreement with the State owned mining company, Remin, whereby Transgold will process the material after first applying a biological oxidization process. Transgold is now in the unique position to apply this technology to other pyrite ore bodies found in the region.

Production

During the half-year a total of 13.762 ounces Au were recovered from toll treatment and concentrate campaigns. A further 692 ounces Au were recovered from toll refining services provided to third parties. Total silver produced during the half-year was 60,580 ounces.

The plant is considered to be performing well.

Exploration

Exploration work including trenching, diamond drilling and channel sampling continued during the half-year on all tenements.

The industrial trial phase of the Suior project continued with encouraging results to date. Some 11,980 tonnes of material had been treated to date with an average of 5.45 g/t of gold and 12.1 g/t of silver being recovered. The terms of the contract with the State mining company Remin have been satisfactorily met and it is likely that phase 2, being the commercial production, will commence in the second quarter of 2004.

Explorer SA (Eurogold 98%)

Exploration work including trenching, diamond drilling, geochemical sampling and reconnaissance sampling continued during the half-year.

Exploration work on the Explorer tenements was scaled back during the half-year while work focussed on the Transgold tenements.

The National Agency for Mineral Resources of Romania granted Explorer a 333km² Prospecting Permit to explore for base and precious metals over the Qas and Gutai mountains located between Explorer's existing tenure in Baia Mare region and the Ukrainian border to the Northwest. This permit entitles Explorer to conduct non-invasive prospecting techniques over the area for a period of 2 years with the right to apply for exploration licences over specific targets.

Signed in accordance with a resolution of the Directors.

P L Gunzburg Chairman

Perth. 15 March 2004

EUROGOLD LIMITED CONDENSED STATEMENT OF FINANCIAL PERFORMANCE
HALF-YEAR ENDED 31 DECEMBER 2003

		CONSOLIDATED
		31 December 2003	31 December 2002
	Notes	\$	\$
REVENUES FROM ORDINARY ACTIVITIES	$\overline{2}$	430,923	955,325
Depreciation expense		(24, 166)	(23, 390)
Raw materials and consumables		(200, 321)	(49, 806)
Salaries and employee benefits		(218, 548)	(116, 953)
Consultants fees		(363, 013)	(409, 100)
Cost of investments sold		(68, 682)	(696, 801)
Write off of exploration expenditure		(269, 122)
Other expenses from ordinary activities		(273)	(8, 364)
LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE		(713, 202)	(349,089)
INCOME TAX EXPENSE RELATING TO ORDINARY ACTIVITIES		(16,007)	(11, 022)
NET LOSS		(729, 209)	(360, 111)
NET PROFIT LOSS ATTRIBUTABLE TO OUTSIDE EQUITY INTEREST		150	950
NET LOSS ATTRIBUTABLE TO MEMBERS OF EUROGOLD LIMITED		(729, 059)	(359, 161)

Basic loss per share (cents per share)		(0.5)	(0.5)
Diluted loss per share (cents per share)		(0.5)	(0.5)

EUROGOLD LIMITED
CONDENSED STATEMENT OF FINANCIAL PERFORMANCE AS AT 31 DECEMBER 2003

	CONSOLIDATED
	As at 31 December 2003 \$	As at 30 June 2003 \$
CURRENT ASSETS
Cash assets	569,140	1,040,022
Receivables	69,465	75,319
Other financial assets	129,047	118,682
Other	4,000	1,498
TOTAL CURRENT ASSETS	771,652	1,235,521
NON-CURRENT ASSETS
Receivables	8,000	8,990
Property, plant and equipment	171,357	194,770
Deferred exploration and evaluation expenditure	1,072,680	1,223,932
TOTAL NON-CURRENT ASSETS	1,252,037	1,427,692
TOTAL ASSETS	2,023,689	2,663,213
CURRENT LIABILITIES
Payables	237,710	90,877
Provisions	17,159	18,551
TOTAL CURRENT LIABILITIES	254,869	109,428
NON-CURRENT LIABILITIES
Deferred tax liabilities	14,667	70,423
TOTAL NON-CURRENT LIABILITIES	14,667	70,423
TOTAL LIABILITIES	269,536	179,851
NET ASSETS	1,754,153	2,483,362
EQUITY
Contributed equity	17,561,794	17,561,794
Accumulated losses	(15, 813, 701)	(15,084,642)
Total parent entity interest in equity	1,748,093	2,477,152
Total outside equity interest	6,060	6,210
TOTAL EQUITY	1,754,153	2,483,362

EUROGOLD LIMITED
CONDENSED STATEMENT OF FINANCIAL PERFORMANCE
HALF-YEAR ENDED 31 DECEMBER 2003

	CONSOLIDATED
	31 December 2003 \$	31 December 2002 \$
CASH FLOWS USED IN OPERATING ACTIVITIES
Receipts from customers	218,254	440,337
Payments to suppliers and employees	(584, 811)	(767, 187)
Interest received	11,786	5,591
Expenditure on mining interests	(117, 870)	(688, 595)
Other		250
NET CASH FLOWS USED IN OPERATING ACTIVITIES	(472, 641)	(1,009,604)
CASH FLOWS USED IN INVESTING ACTIVITIES
Proceeds on sale of property, plant and equipment	800
Purchase of property, plant and equipment	(1,826)	(105,960)
Proceeds from sale of shares	106,577	564,709
Purchase of shares	(79, 047)
NET CASH FLOWS FROM INVESTING ACTIVITIES	26.504	458,749
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares		355,000
NET CASH FLOWS FROM FINANCING ACTIVITIES		355,000
NET DECREASE IN CASH HELD	(446, 137)	(195, 855)
Add opening cash brought forward	1,040,022	668,559
Effects of exchange rate changes on cash	(24, 745)	(287)
CLOSING CASH CARRIED FORWARD	569,140	472,417

EUROGOLD LIMITED NOTES TO DIRECTORSDECLARATIONTHE HALF YEAR FINANCIAL STATEMENTS 31 DECEMBER 2003 (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the Annual Financial Report of Eurogold Limited as at 30 June 2003. It is also recommended that the half-year financial report be considered together with any public announcements made by Eurogold Limited and its controlled entities during the half-year ended 31 December 2003 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.

Basis of accounting $(a)$

The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views).

The half-year financial report has been prepared in accordance with the historical cost convention, except for current listed shares measured at market value.

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

$(b)$ Changes in accounting policies

The accounting policies adopted are consistent with those applied in the last audited financial report being 30 June 2003.

EUROGOLD LIMITED NOTES TO DIRECTORSDECLARATIONTHE HALF YEAR FINANCIAL STATEMENTS 31 DECEMBER 2003 (CONTINUED)

	CONSOLIDATED
2. LOSS FROM ORDINARY ACTIVITIES	31 December 2003 s	31 December 2002
Loss from ordinary activities before income tax expense includes the following revenues and expenses whose disclosure is relevant in explaining the financial performance of the entity:
Revenues from ordinary activities Revenue from services Proceeds from sale of investments Unrealised foreign exchange gains Interest income	259.440 106.577 51.408 13.498	373.169 576,565 5.591
	430.923	955.325

3. CONTINGENT ASSETS AND LIABILITIES

Since the last annual reporting date, there has been no change of any contingent liabilities or contingent assets.

4. SEGMENT INFORMATION

The consolidated entity operates predominantly in the mining exploration industry in Romania.

5. SUBSEQUENT EVENTS

A share placement of 10,000,000 shares was made on 9 February 2004 to raise \$1,500,000.

In accordance with a resolution of the directors of Eurogold Limited, I state that:

In the opinion of the directors:

the financial statements and notes of the consolidated entity are in accordance with the $(a)$ Corporations Act 2001, including:
$\ddot{\theta}$ giving a true and fair view of the financial position as at 31 December 2003 and the performance for the half-year ended on that date of the consolidated entity; and
$(ii)$ complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and
$(b)$ there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

P L Gunzburg Chairman

Perth, 15 March 2004

$E$ l Frnst & Young

E Central Park 152 St Georges Terrace Perth WA 6000 Australia.

GPO Box M939 Perth WA 6843

Independent review report to members of Eurogold Limited

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows and accompanying notes to the financial statements for the consolidated entity comprising both Eurogold Limited (the company) and the entities it controlled during the half-year, and the directors' declaration for the company, for the half-year ended 31 December 2003.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the consolidated entity, and that complies with Accounting Standard AASB 1029 "Interim Financial Reporting", in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory financial reporting requirements in Australia, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. In addition to our review of the financial report, we were engaged to undertake other non-audit services. The provision of these services has not impaired our independence.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of the consolidated entity, comprising Eurogold Limited and the entities it controlled during the half-year is not in accordance with:

$(a)$ the Corporations Act 2001, including:
giving a true and fair view of the financial position of the consolidated entity at 31 December $\langle 0 \rangle$ 2003 and of its performance for the half-year ended on that date; and
$(i)$ complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and
$(b)$ other mandatory financial reporting requirements in Australia.

Ernst & Young

GH Meyerowitz Partner Perth 15 March 2004

Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW).

Part 5 - Risk Factors

The risk factors set out below are not exhaustive of the risks faced by the Company. Neither the Company nor the Directors provide any assurances or guarantees of future profitability, distributions, payment of dividends, return of capital or performance of the Company or its Shares.

Prospective investors should carefully consider the risks described below, together with all other information contained in this Admission Document and all other information subsequently released to the market, before deciding whether to invest in Eurogold Shares or other securities. These risks have the potential to materially adversely affect the Group's business, financial condition and/or results of operations. In such case, an investor may lose all or part of his or her investment. Investors are accordingly advised to consult an independent financial adviser who specialises in advising on the acquisition of shares and other securities before making a decision to invest

The principal risk factors associated with an investment in the Company include, but are not limited to, the following:

a) General Securities Risks

Securities investments

There are risks associated with any securities investment. The prices at which the Shares trade may fluctuate in response to a number of factors.

Further, the stock market and in particular the market for mining and exploration companies, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. These factors may materially affect the market price of the Shares regardless of the Company's operational performance.

Share market conditions

The market price of the Shares may fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource stocks in particular. The past performance of the Ordinary Shares is not necessarily an indication as to future performance and there can be no quarantee that prevailing trading prices will be sustained. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company. Admission of the Ordinary Shares to trading on AIM as well as the existing listing of the Shares on ASX should not be taken as implying that there will be an ongoing liquid market for the Shares.

b) Risks Specific to the Gold Mining and Exploration Companies

Economic and gold price risks

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors that may contribute to that general economic climate include, industrial disruption and the demand for gold (which is influenced by many factors including, central bank policies, inflation, interest rates and perceived world economic risks).

Foreign exchange risk

The Company operates internationally and is therefore exposed to the effects of changes in currency exchange rates. In particular, gold sales are denominated in United States dollars, whereas a portion of the Company's costs (capital and revenues) are incurred in the currencies of Romania, the Ukraine and Australia. The Company does not currently hedge these currency risks.

Competition

The Company competes with other companies, including major mineral exploration and mining companies. Some of these companies have greater financial and other resources than the Company and, as a result, may be in a better position to compete for future business opportunities. Many of the Company's competitors not only explore for and produce minerals, but also carry out refining operations and other products on a worldwide basis. There can be no assurance that the Company can compete effectively with these companies.

Title

All of the tenements or licences in which the Company has or may earn an interest in will be subject to applications for renewal or grant (as the case may be). The renewal or grant of the term of each tenement or licence is usually at the discretion of the relevant government authority. If a tenement or licence is not renewed or granted, the Company may suffer significant damage through loss of the opportunity to develop and discover any mineral resources on that tenement. Under the Ukraine mineral title system, the issuance of an exploration licence does not imply that other parties do not have any prior claims over that area. Whilst the Group has made investigations and found no prior rights there can be no assurance that such rights do not exist.

Exploration, project development and mining risks

Exploration for mineral resources is speculative and involves significant degrees of risk. There is no guarantee that exploration on the Group's permits and licence interests will lead to further commercial discovery of mineral resources. If there is commercial discovery, there is no guarantee that the Group will be able to realise such ore reserves as intended through the successful establishment of mining operations. Factors including costs, actual mineralisation, consistency and reliability of ore grades, and the gold price affect project development, as does the design and construction of efficient processing facilities, competent operational management and prudent financial administration. Such exploitation may involve the need to obtain licences or clearances from the relevant authorities, which may require conditions to be satisfied and/or the exercise of discretion by such authorities. It may or may not be possible for such conditions to be satisfied, or it may be that the satisfaction of the conditions is not commercially practicable.

Exploration, mining, processing and transporting activities may be prevented, delayed or adversely affected by many factors outside the control of the Group. These include adverse operating conditions (such as unexpected geological conditions, seismic events, fire, weather, accidents), compliance with governmental requirements, labour and safety issues, shortages or delays in installing, commissioning and repairing plant and equipment or import or customs delays. Problems may also arise due to interruptions to essential services (such as power, water, fuel, equipment or transport capacity) or technical support which result in a failure to achieve expected target dates for exploration or production and/or result in a requirement for greater expenditure.

Resource and reserve estimates

Resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates that were valid when made may change significantly when new information becomes available.

In addition, resource estimates are necessarily imprecise and depend to some extent on interpretations, which may prove to be inaccurate. Should the Company encounter mineralisation or formations different from those predicted by drilling, sampling and similar examinations, resource estimates may have to be adjusted and mining plans may have to be altered in a way which could adversely affect the Company's operations.

Payment obligations

Under the exploration permits and licences and certain other contractual agreements to which the Company is or may in the future become party, the Company is or may become subject to payment and other obligations. In particular, the permit holders are required to expend the funds necessary to meet the minimum work commitments attaching to the permits and licences. Failure to meet these work commitments will render the permit liable to be cancelled. Further, if any contractual obligations are not complied with when due, in addition to any other remedies which may be available to other parties, this could result in dilution or forfeiture of interests held by the Company.

Operating risks

As a proportion of the Company's current mineral assets are moving to a development phase, the Company is expected to be subject to all the risks inherent in the establishment of new mining operations. No assurances can be given that development projects will become viable mining operations.

The current and planned mining and processing operations of the Company may have to be shut down or may otherwise be disrupted by a variety of risks and hazards which are beyond the control of the Company, including environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, flooding and extended interruptions due to inclement or hazardous weather conditions, fire, explosions and other accidents at the mine, processing plant or related facilities beyond the control of the Company.

These risks and hazards could also result in damage to, or destruction of, production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability. While the Company currently intends to maintain insurance within ranges of coverage consistent with industry practice, no assurance can be given that the Company will be able to obtain such insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims. Further, whilst the Group has received advice that it has good prospects of successfully defending proceedings currently against the Group (see Section 4 of Part 1 of this Admission Document), the Directors believe that such claims (and the costs of defending them) are not covered by the Group's insurance policies. Should the Group's defence of these claims be unsuccessful in full or in part this may have a significant adverse impact on the Company and the Group.

Environmental risks

The Company's projects are subject to regulations regarding environmental matters and the discharge of hazardous wastes and materials. The respective governments and other authorities that administer and enforce environmental laws determine these environmental requirements. As with all mining projects, these projects would be expected to have a variety of environmental impacts should development proceed. The Company's policy is to conduct its activities in an environmentally responsible manner and in accordance with applicable laws.

The cost and complexity of complying with the applicable environmental laws and regulations may prevent the Company from being able to develop potentially economically viable mineral deposits.

Although the Company believes that it is in compliance in all material respects with all applicable environmental laws and requlations, there are certain risks inherent to its activities, such as accidental spills, leakages or other unforseen circumstances, which could subject the Company to extensive liability.

Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and requlations. which may be adopted in the future, including whether any such laws or regulations would materially increase the Company's cost of doing business or affect is operations in any area.

The Company believes that it is presently in material compliance with all applicable laws relating to the protection of the environment, including laws regulating the discharge of materials. However, there can be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Company to incur significant expenses and undertake significant investments in such respect which could have a material adverse effect on the Company's business, financial condition and results of operations.

$c)$ Risks Specific to Eurogold

Litigation

Litigation has been commenced against the Group in relation to the tailings spill in January 2000. Details of this litigation is set out in Section 4 of Part 1 of this Admission Document. If any of these actions are successful then this could substantially and adversely affect the Company or the Group's investment in Transgold.

Reliance on Key Personnel

The Group has a small management team and the loss of any members may have an adverse effect on its operational performance and growth plans.

Retention of Key Business Relationships

The Group relies significantly on strategic relationships with other entities and also on good relationships with requiatory and governmental departments. The Group also relies upon third parties to provide essential contracting services, such as mining and the transportation of mine products.

While the Directors have no reason to believe otherwise, there can be no assurance that its existing relationships will continue to be maintained or that new ones will be successfully formed and the Group could be adversely affected by changes to such relationships or difficulties in forming new ones. Any circumstance, which causes the early termination or non-renewal of one or more of these key business alliances or contracts, could adversely impact the Group, its business, operating results and prospects.

Sovereign Risks

The Company's gold projects are located in Romania and the Ukraine. The economies of these countries differ from the economies of many developed countries in many respects, including government intervention; level of development; growth rate; control of foreign exchange; and allocation of resources.

Political risk i)

The Company's investments in gold projects may be exposed to adverse political developments that could affect these projects. The relevant authorities in the countries the Company operates in have supported the projects to date, but there is no assurance that this support will continue for the projects' duration. Furthermore, the Group's current intention not to increase its investment in the Beregove Gold Project may adversely affect the support from its state owned partner and other government authorities for the Group's proposed development plans for the Saulyak Gold Project.

ii) State ownership

The economies of Romania and the Ukraine have been undergoing a transition from a planned economy to a more market-oriented economy. Although in recent years the governments of these countries have implemented economic reforms, reduced state ownership and established improvements in corporate governance in business enterprises, a substantial portion of productive assets in both Romania and the Ukraine are still owned by government agencies. In addition, the relevant governments continue to play a significant role in regulating industry by imposing industrial policies. They also exercise significant control over economic growth through the allocation of resources, control of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Future earnings by the Company could be affected if the Romanian or Ukrainian governments were to reverse recent trends and impose restrictions on business.

iii) Foreian investment

In Ukraine, foreign companies could be required to work within a framework, which is different to that imposed on local companies. The Ukrainian government may also prevent and/or influence the sale of interests in the Saulyak and Beregove Gold Projects or other companies registered in Ukraine, which may reduce the value of investments and/or mining projects located in Ukraine. Such risks are also applicable in Romania, although to a lesser extent as Romania prepares for its anticipated joining of the European Union in 2007.

$iv)$ Currency controls

Foreign exchange transactions in parts of Eastern Europe continue to be subject to foreign exchange controls and require certain approvals. These limitations could affect the ability to obtain foreign exchange through debt or equity funding, or for capital expenditures, or for the repatriation of profits and capital from Eastern European based foreign operated mining operations which could have a significant effect on business operations.

v) Developing legal system

The Romanian and Ukrainian governments have been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organisation and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, interpretation and enforcement of these laws and regulations involve uncertainties. In addition, as the Romanian and Ukrainian legal systems develop, changes in such laws and regulations, their interpretation or their enforcement may have a material adverse effect on business operations.

Any material adverse changes in government policies or legislation of Romania or the People's Republic of Ukraine that affect mineral exploration, development or mining activities, may adversely affect the viability and profitability of the Company's projects.

The Group's interests in the Romanian and Ukrainian companies depend on constituent documents which may have been affected by changes in law. The Group seeks to address any such matters as they arise but cannot guarantee that all such matters can be dealt with in an expedient or satisfactory manner.

vi) Approval process

Nearly all projects require government or other regulatory approval. The Group does not yet have all of the approvals required for the development of the Saulyak Gold Project, or for the transport to, and processing of, the ore from Saulyak at Transgold's Baia Mare plant. There can be no certainty that these approvals will be granted in a timely manner, or at all.

Joint Venture Party and Contractor risks

The Company is unable to predict the risk of:

i) financial failure, non compliance with obligations or default by a participant in any joint venture to which it (through the subsidiaries it owns or will acquire) is, or may become, a party; or
insolvency or other managerial failure by any of the contractors used by any joint venture in its ii) exploration activities; or
iii} insolvency or other managerial failure by any of the other service provider used by any joint venture for any activity.

Dealings with Privately Held Companies

The Company has entered into the Sale Agreement and Put and Call Agreement with the Vendors which are privately held companies. SRL and ZRL, the companies that the Company is acquiring, are Mauritian incorporated companies which are privately held by the Vendors. SRL and ZRL own the Group's interest in SLLC and ZLLC which are also private companies.

Private companies are not subject to the continuous disclosure and audit obligations that listed companies must comply with. As a consequence, the Company has placed reliance on its own due diligence investigations and the cooperation of the Vendors, SRL, ZRL, SLLC and ZLLC in conducting its due diligence investigations. Whilst the Company is satisfied with the extent of its due diligence investigations, the level of assurance that the Company has in respect of the activities of SRL, ZRL, SLLC and ZLLC can never be equivalent to that which the Company would take if it were acquiring the Ukraine assets from a publicly listed company. The Company has also taken comfort from the warranties given by the Vendors as detailed in the summary of the Share Sale Agreement contained in Section 10 of Part 6. However, there can be no assurance that the investigations and warranties are true, complete and accurate and not misleading or that, if a warranty claim exists, this will be met in full or at all.

1 CORPORATE INFORMATION

The Company was incorporated as Esmeralda Exploration Pty Ltd in Western Australia under the National Companies and Securities Commission Companies (Western Australia) Code on 30 June 1983. The Company changed its status to a public company on 8 October 1985 and changed its name to Eurogold Limited on 23 May 2002.

The liability of the members of the Company is limited.

The registered office of the Company is Level 4, 172 St George's Terrace, Perth, Western Australia 6000.

The Company originally listed on the ASX in March 1997.

The current constitution of the Company was adopted on 15 June 2004. The constitution of the Company may be inspected during normal business hours at the offices of Durlacher Ltd at Moorgate Hall, 155 Moorgate, London EC2M 6XB for a period of 14 days following the date of this Admission Document.

The corporate structure of the Group is as follows:

Key corporate information on the three main non wholly owned operating subsidiaries is set out below. For all three of these entities shareholders have voting rights in proportion to their shareholding and the Company is not aware of any restrictions on the ability of the companies to distribute profits as dividends to shareholders.

Transgold SA

Transgold was incorporated on 14 December 1995 as a private-owned joint stock company under the name of Aurul SA pursuant to a joint venture agreement between Eurogold, Remin, Geomin SA, ICPM and UUMR (see Transgold was registered with the Romanian Trade Registry (Maramures County) under number above). J24/300/1996. It changed its registered name to Transgold on 18 October 2001.

Transgold was established for a limited period of duration of 15 years, and Eurogold intends to seek to convert this to a non-limited period of duration prior to expiry of this period.

Transgold's registered office is at 77B Victoriei St, Baia Mare, Maramures County, Romania.

The liability of the members of Transgold is limited to the current amount of contributed capital.

Shareholders have pre-emptive rights over any proposed share sale or transfer by another member, except bona fide transfers to related parties of equal competence.

The company is managed by a board of six directors, who are nominated by shareholders. Every 15% of shares owned by a shareholder or group of shareholders gives them the right to nominate one director. Effectively this results in Eurogold and Remin each nominating 3 directors.

Explorer SA

Explorer was established on 5 August 1997 as a private-owned joint stock company pursuant to a joint venture agreement between Eurogold, Cuart SA (a Romanian state owned company) and three other minority shareholders. Cuart subsequently transferred its shares to IPEG (see above for current shareholder details). Transgold was registered with the Trade Registry under number J24/525/19.11.1997.

Explorer was established for a limited period of duration of 15 years, and Eurogold intends to seek to convert Explorer to a non limited period of duration prior to expiry of this period.

Explorer's registered office is at 24 Nuclului St, Baia Mare, Maramures County, Romania.

The liability of the members of Explorer is limited to the current amount of contributed capital.

Shareholders have pre-emptive rights over any proposed share sale or transfer by another member, except bona fide transfers to related parties of equal competence.

The company is managed by a board of five directors, all of whom are nominated by Eurogold.

Saulyak Limited Liability Company

SLLC was duly registered as a legal Ukrainian entity on 7 February 2002 with registration confirmed by the Certificate of State Registration issued by the Rahiv District Council under reg. number 22106207100010224. The identification code of SLLC in the Single Register of Enterprises and Organisations of Global Ukraine is 31880159. SLLC is also duly registered with other relevant State agencies as required, including the State Statistics Committee of Ukraine, the local tax authority, the Pension Fund of Ukraine and Social Funds.

The rights and obligations of shareholders are set out in the Charter.

The liability of the members of SLLC is limited to the Charter capital, which has been paid in full. However, it should be noted that, pursuant to the Loan Agreement detailed in Section 10.13 of Part 6, the Group has committed to provide the first US\$500,000 of funding to SLLC.

SLLC is managed by a General Director, who is appointed by shareholders at a Participants Meeting. Chris Barker is currently the General Director.

Other key SLLC documents include the Foundation Agreement and Investment Agreement which both contemplate the eventual construction of a mine and processing plant in the Rahiv region by certain dates. Concurrent with the proposed feasibility study, the Group intends to seek to amend these agreements to reflect the treatment of Saulyak ore at Transgold's plant in Romania. Further details of these agreements are set out in Section 10.11 and 10.12 of this Part 6.

$\mathbf{2}$ THE AUSTRALIAN CORPORATIONS ACT 2001

The Company is obliged to comply with the Australian Corporations Act and also with specific obligations arising from other laws that relate to its activities.

The Australian Securities and Investments Commission is responsible for administering and enforcing the Australian Corporations Act.

The takeovers provisions of the Australian Corporations Act apply to dealings in the Company's Shares and other securities. The Australian Corporations Act forbids the acquisition of a "relevant interest" (basically power to vote or dispose of the share) in voting shares in a company incorporated in Australia if, as a result, the "voting power" of the acquirer (or any other person) would increase from 20% or below to more than 20%. Similarly, the acquisition is forbidden if any person who already has more than 20%, but less than 90%, of the voting power gains increased voting power in the target company.

There are several exceptions which allow acquisitions which would otherwise be prohibited from taking place. These exceptions include acquisitions:

under a formal takeover offer in which all Shareholders can participate:
with the formal approval of the Company's Shareholders given at a general meeting of the Company; and
in 3% increments every 6 months (provided that the acquirer has had voting power of at least 19% in the target company for at least six months).

3 THE CITY CODE

The Company is incorporated in Australia, has its head office and place of central management in Australia and is resident in Australia. Accordingly, transactions in Shares of the Company will not be subject to the provisions of the Code. There are, however, provisions under Australian law and regulation applicable to the Company that are similar or analogous to certain provisions of the Code, as described in Section 2 of this Part 6.

4 SHARE CAPITAL

The Company's issued share capital on Admission will comprise 174,165,208 fully paid Shares of no par value. Under the terms of the Put and Call Agreement the Company has an effective further 30,000,000 Shares on issue bringing the effective total issued Shares of the Company on Admission to 204,165,208.

In addition, at Admission, the Company will have on issue 2,000,000 options to subscribe for Shares at A\$0.30 each at any time up to and including 31 March 2007.

There are no other listed or unlisted securities issued by the Company not representing share capital other than as set out in this section.

Pursuant to the Australian Corporations Act, Australian companies are no longer required to have a par value for their issued shares nor have a specified authorised share capital. The consequence of this is that there is generally no limit in the Australian Corporations Act or a company's constitution on the power of the directors to issue shares in a company. However, subject to certain exceptions (including those in respect of pro rata issues and issues under employee schemes), Rule 7.1 of the ASX Listing Rules prohibits a company which is listed on ASX from issuing shares or options representing more than 15% of its issued capital in any 12 month period without approval of its members. Such approval of members requires an ordinary resolution (a simple majority).

Application for Admission is being made in respect of all of the Company's Ordinary Shares. As noted in Section 1 of this Part 6, the Company is admitted to the official list of ASX.

Other than as set out above, the Shares have not been admitted to dealing on any recognised investment exchange, no application for such admission has been made and there are no other intended arrangements for dealings in Shares.

5 OPTIONS

The options that the Company has on issue as at the date of this Admission Document are detailed in Section 5 of Part 1. Each option entitles the holder to purchase 1 Share. The numbers, exercise prices and expiry dates of the options currently on issue are detailed in Section 5 of Part 1. All of the options are unlisted, non-transferable and subject to standard adjustments (in accordance with ASX Listing Rules) for changes in Eurogold's capital (eg rights issues, consolidations).

EMPLOYEE OPTION SCHEME 6

The Directors are empowered to operate an employee option scheme ("Scheme") in accordance with the ASX Listing Rules. A summary of the key terms and conditions of the Scheme is as follows:

The Directors may issue employee options to eligible employees in their absolute discretion, taking into $a$ account skills, experience, length of service with the Company, remuneration level and such other criteria as the Directors consider appropriate in the circumstances. The terms upon which options will be issued may incorporate performance related factors, including profitability levels, increases in production or decreases in production costs and may be amended from time to time in a manner favourable to the option holder.
Options may be issued to employees under the Scheme representing in aggregate (over the previous 5 b) years) up to 5% of the current issued share capital of the Company without a prospectus. Up to 10% may be issued provided that the issue is made in accordance with the prospectus requirements of Chapter 6D of the Australian Corporations Act;
Each option will entitle the holder to subscribe for and be issued one Share and they will be issued free of C) charge to eligible employees. The exercise price of the options shall be as the Directors in their absolute discretion determine, provided that it shall not be less than that amount which is equal to 90% of the

weighted average market price of the Shares in the 5 days in which sales in the Shares were recorded immediately preceding the day on which the Directors resolve to offer the options.

d) The options are not exercisable unless the Shares have been quoted on ASX throughout the 12 month period immediately preceding the exercise of the options, without suspension during that period exceeding in total 2 trading days. The options are ordinarily not transferable.
The options may be exercised by an eligible employee at any time during the period commencing 12 $e)$ months from the date the options are issued and ending on the expiry date of the options. The Directors may limit the total number of options which may be exercised under the Scheme in any year.
All employee options with a common expiry date shall have the same exercise price and rights to f) participate in issues of securities by the Company.
Unless the Directors in their absolute discretion determine otherwise, employee options shall lapse upon g} the earlier of:
i) the expiry of the exercise date;
ii) the option holder ceasing to be an eligible employees by reason of dismissal, resignation or termination of employment, office or services for any reason;
iii) the expiry of 30 days after the option holder ceases to be an eligible employees by reason of retirement; or
a determination by the Directors that the option holder has acted fraudulently, dishonestly or in iv) breach of his or her obligations to the Company or an associated body corporate;
i) There are no participating rights or entitlements inherent in the options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the options. Shares issued pursuant to the exercise of options will in all respects rank equally and carry the same rights and entitlements as other Shares on issue.
The options will not be quoted on ASX or AIM. However, application will be made to ASX for official $\mathsf{k}$ quotation of the Shares issued on the exercise of the options if the Shares are listed on ASX at that time.
If at any time the issued capital of the Company is reconstructed, all rights of option holders are to be I) changed in a manner consistent with the ASX Listing Rules.
$m)$ Upon the occurrence of a takeover bid, proposed scheme of arrangement or other potential event leading to a change in control of the Company, the Directors may determine that the options may be exercised early so as to permit the holder to participate in any such change of control. Thereafter, the employee options shall lapse to the extent they have not been exercised. Alternatively, upon such event the Directors may seek to procure an offer for the options on like terms (having regard to the nature and value of the employee options) to the terms proposed for the Company's Shares. Any such options not sold into such offer or not exercised during a determined period will then lapse.

$\overline{7}$ RIGHTS ATTACHING TO SHARES AND POWERS OF THE COMPANY

Rights attaching to Shares

The rights attaching to Shares are generally set out in the Constitution and, in certain circumstances, are regulated by the Australian Corporations Act, the ASX Listing Rules and general law.

The following is a summary of the principal rights attaching to Shares in the Company. This summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of the holders of Shares.

a) General meeting and notices

Each member is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents required to be sent to members under the Constitution, the Australian Corporations Act or the Listing Rules.

b) Voting rights

Subject to any rights or restrictions attached to any class of shares, at a general meeting of the Company every holder of shares present in person or by an attorney, representative or proxy has one vote on a show of hands and one vote per share on a poll.

A person who holds a share which is not fully paid is entitled, on a poll, to a fraction of a vote equal to the proportion which the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited). Amounts paid in advance of a call are ignored when calculating the proportion. Notwithstanding anything, a member is not entitled to vote shares in respect of which a call is payable but unpaid.

Where there are 2 or more joint holders of a share and more than one of them is present at a meeting (either personally or by attorney, representative or proxy), then only the member, or the attorney, representative or proxy (as the case may be) of the member, whose name appears first in the Company's register of members is entitled to vote and no other person is entitled to vote in respect of that share.

c) Issues of Shares

The directors may, on behalf of the Company, issue, grant options over or otherwise dispose of unissued shares to any person on the terms, with the rights, and at the times that the directors decide. However, the Company must not issue any share with a voting right more advantageous than that available to any share previously issued or without voting rights which, in the opinion of ASX, are appropriate and confer equitable representation on the holders of those shares.

Additionally, despite the above, no shares of the Company shall be allotted to any person without the prior approval of the members where such an allotment would have the effect of the allottee holding a majority of the issued shares in the Company, subject to certain exceptions (where the person is already the majority holder, where the allotment is pursuant to an offer to substantially all of the holders of Ordinary Shares in proportion to their shareholding or where the allotment is authorised pursuant to the Australian Corporations Act or the exercise of power by the Courts or ASIC).

The directors must also act in accordance with the restrictions imposed by the Constitution, the ASX Listing Rules, the Australian Corporations Act and any rights for the time being attached to any issued shares.

The Company must not issue more than one class of partly paid shares.

d) Variation of rights

At present, the Company has on issue one class of shares, namely the Shares. Unless otherwise provided by the Constitution or by the terms of issue of a class of shares, the rights and privileges attached to the shares in any class may be varied only by a special resolution passed at a separate meeting of the holders of the issued shares of the affected class. If a quorum is not present at such a meeting or the resolution is not passed, the rights and privileges attached to the shares in that class may be varied with the written consent of the holders of at least 75% of the issued shares of the affected class within 2 calendar months of that meeting. Any such variation will be subject to sections 246B to 246E of the Australian Corporations Act.

$e)$ Transfer of Shares

Subject to the Constitution, the Australian Corporations Act and the ASX Listing Rules, the Company's shares are freely transferable.

Where the Company participates in a computerised or electronic share transfer system conducted in accordance with the ASX Listing Rules, the transfer of shares must be in accordance with the applicable rules including (if appropriate) the ASX Settlement & Transfer Corporation Pty Ltd ("ASTC") Operating Rules. Subject to this, an instrument of transfer of any shares must be in writing in the form approved by ASX or in such other form as the directors may approve or in particular cases accept.

The Company may participate in any clearing and settlement facility provided under the Corporations Act, the ASX Listing Rules and. Transfers through ASTC are affected electronically in ASTC's Clearing House Electronic Sub register System (CHESS). For the purposes of the Company's participation in the CHESS, the Company may issue holding statements in lieu of share certificates. The Company will not charge any fee for registering a transfer of shares. The Directors may refuse to register a transfer of shares in the circumstances permitted or required under the Corporations Act and ASX Listing Rules.

Securities clarified by ASX as "restricted securities" cannot be disposed of during the escrow period except as permitted under the ASX Listing Rules or by ASX.

$\mathbf{f}$ Dividends

The directors may from time to time determine dividends (including interim dividends) to be distributed to members according to their rights and interests. The directors may fix the time for distribution and the method of distribution. Subject to the terms of issue of shares, the Company may pay a dividend on one class of shares to the exclusion of another class.

Dividends are payable to the members in proportion to the number of shares held by them, irrespective of the amount paid up, or credited as paid up, on the shares. A member is not entitled to a dividend if a call on the share and is due and unpaid.

Winding up g)

Subject to the rights of holders of shares with special rights on a winding-up, if the Company is wound up members will be entitled to participate in any surplus assets of the Company in proportion to the number of shares held by them, irrespective of the amounts paid up on those shares. A member is not entitled to participate in a distribution of a surplus on a winding up on the basis of holding a share where that member is in arrears in payment of a call on that share.

Where share capital is issued to vendors or promoters for consideration other than cash or could be classified by ASX as "vendor securities", then on a winding up of the Company shares issued to members of the public for cash rank in priority to any such vendor or promoter securities. Additionally, on a winding up of the Company, the holders of shares which are classified under the ASX Listing Rules or by ASX as "vendor securities" and which are subject to escrow restrictions at the commencement of the winding up rank on a return of capital behind all other shares in the Company.

Dividend reinvestment and Share plans h)

Members may resolve to authorise the directors to establish and maintain one or more dividend plans pursuant to which a member may elect that all or some of the shares held by that member will participate in the relevant dividend plans. These plans include the investment of dividends by subscribing for shares in the capital of the Company, receiving dividends in the form of an allotment of fully paid shares from the Company, electing to receive a payment or distribution rather than a dividend, electing to receive dividends from a related corporation of the Company and electing to receive a dividend from the Company or a related corporation of the Company.

The directors may declare the dividend wholly or partly in kind (ie by distribution of specific assets (including paid up shares)) or from time to time grant to members, or any class of members, the right to elect to receive shares in lieu of dividends or to reinvest all or part of the dividend in the Company and may implement or maintain schemes or plans for that purpose.

i) Sale of non marketable parcels

The Company may, and is authorised to, dispose of the shareholdings of any member of the Company who from time to time holds less than that number of shares which in aggregate constitutes a marketable parcel of shares in the Company within the meaning of the ASX Listing Rules (being a parcel of shares with a market value of less than \$500). To invoke this procedure, the Directors must first give notice to the relevant Shareholder holding less than a marketable parcel of shares, who may then elect not to have his or her shares sold by notifying the Directors.

Alteration of capital j)

The Company may by resolution alter its capital in any manner permitted by law. In particular, subject to the Australian Corporations Act, the Company may reduce its capital, increase its capital, consolidate and divide any or all of its capital, subdivide its shares into shares of a greater number (provided that the proportion between the amount paid and unpaid (if any) on each reduced share is the same as it was before the subdivision), cancel shares which have not been taken or agreed to be taken by any person or which have been forfeited and accept a surrender of shares.

k) Preference Shares

The Constitution provides for the Company to issue preference shares and sets out the principal rights attaching to them. At the date of this Admission Document the Company has no preference shares on issue.

Powers of the Company and Directors

$a)$ Powers of the Company

A company in Australia, pursuant to its constitution and the Australian Corporations Act, has the legal capacity of an individual both within and outside Australia. An Australian company also has a number of additional powers, including the power to:

issue and cancel shares;
issue debentures:
grant options over unissued shares;
distribute any of the company's property among its members, in kind or otherwise;
give security by charging uncalled capital;
grant a floating charge over the company's property;
be registered or recognised as a body corporate in any place outside Australia; and
do anything that it is authorised to do by any other law (including a law of a foreign country).

b) Directors

The Company must have not less than 3 directors.

At each annual general meeting of the Company one-third (or the nearest whole number not exceeding one-third) of the directors must retire provided that a director (except the Managing Director) may retain office for no more than 3 years or until the third annual general meeting following his or her appointment, whichever is the longer. The directors who have been longest in office are those who must retire each year. A retiring director is eligible for re-election.

The directors may from time to time appoint one of their body to be Managing Director and define, limit and restrict his powers.

Subject to the Australian Corporations Act, the ASX Listing Rules and to any other provisions of the Constitution, the management and control of the Company is vested in its directors who may exercise all powers of the Company which are not required by the Constitution or the Australian Corporations Act to be exercised by the Company in general meeting. The directors have the power to raise or borrow money and to secure the payment or repayment of that money and any other obligation or liability of the Company in such manner and on such terms and conditions as they think fit. The directors may delegate their powers as they think fit. A meeting of directors (at which a quorum is present) is competent to exercise all or any of the powers of the directors.

8 DIRECTORS' AND OTHER INTERESTS

Directors' interests a)

$\ddot{\theta}$ Interests in share capital

The interests of the Directors and of the persons connected with them (within the meaning of section 346 of the Companies Act 1985 of the UK (as amended)) in the issued share capital, options and convertible notes of the Company at the date of this Admission Document are as follows:

Director	Number of Shares	Number of Shares adjusted for the Put and Call Agreement Shares
Peter L Gunzburg	23,196,085	Nil
Brett Montgomery	Nil	Νil
Dennis W Franks	Nil	Νil
Christopher Barker	Nil	30,000,000
Neil MacLachlan	350,000	Nii

^1. The interest of Chris Barker is held through the Vendors, being Alpha Minerals Ltd and Ukraine Resources Ltd,

for which he is the ultimate beneficial owner. This interest may increase to 50,000,000 if the company decides to increase its interest in ZLLC pursuant to Sale Agreement, details of which are set out in Section 10.2 of Part 6. It is not the current intention of the Company to increase its interest in ZLLC.

All of the above interests are beneficially held by the relevant director.

In addition to the Shares detailed above, Neil MacLachlan is also a director of Golden Prospect plc, a listed investment company that holds an interest in 6,583,846 Shares.

Save as set out above, none of the Directors has any interest in the share capital of any company in the Group.

ii) Transactions, assets, contracts or arrangements

Other than as described below, no Director has, or has had, any direct or indirect interest in any:

transaction which is or was unusual in its nature or conditions or significant to the business of the Group taken as a whole and which has been effected in the current or immediately preceding financial period or was effected during any earlier financial period and remains in any respect outstanding or unperformed;
asset which has been acquired or disposed of by, or leased to, any member of the Group or which is proposed to be so acquired, disposed of, or leased; or
contract or arrangement existing at the date of this Admission Document which is significant to the business of the Group.

The Directors' related party transactions are set out in Note 26 to the financial statements of the Company contained in Part 4 of this Admission Document. All transactions between the Directors or their related parties and the Group have been on terms no more favourable than those with which it is reasonable to expect the Group would have adopted if dealing with the Director or Director-related entity at arms length in similar circumstances.

Mr Chris Barker is the ultimate beneficial owner of the Vendors under the Sale Agreement, and in addition to the interest in the Company's share capital referred to in the Section above, the Vendors have been paid a total of US\$500,000 under the Sale Agreement and the Heads of Agreement that preceded the Sale Agreement. US\$400,000 of this amount relates to a reimbursement of past costs incurred by the Vendors in relation to the Ukrainian Assets.

$iii)$ Directors' service agreements and remuneration

Details of the nature and amount of each element of the emoluments of each Director of the Company for the year ended 30 June 2003 are as follows:

	Base salary Director fees		Super-annuation	Total
	з.,	$\mathbf{F}$	$\mathbf{F}$	£.
Executive Director
Peter L Gunzburg	88.000	12.000	63.500	163,500
Non-Executive Directors
Brett Montgomery	25,000	Nil	Nil	25,000
Dennis W Franks	34,500	Nil	3.105	37,605

Totals	147.500	12.000	66.605	226,105

Christopher Barker and Neil MacLachlan were not appointed directors of the Company until June 2004.

Mr MacLachlan has been retained as a Non Executive Director for a fee of £15,000 per annum.

Since January 2004 when the Heads of Agreement for the Ukrainian Assets acquisition was entered into, Mr Barker, through a related entity, MCM Consulting, has been paid consulting fees in respect of the Ukrainian Assets of A\$61,399. Mr Barker is to be retained as Ukraine Operations Director on a consulting basis on usual and reasonable terms through MCM Consulting to assist the Group with the development of the Ukrainian Assets, for a period not exceeding 2 weeks per calendar month.

The aggregate of the remuneration, including benefits in kind, paid to the Directors of the Company and

Director-related entities for the year ended 30 June 2003 was A\$226,105. It is estimated that the aggregate remuneration, including benefits in kind, to be paid to the Directors of the Company in the current financial year under arrangements currently in force will not exceed A\$320,000 and that the aggregate remuneration, including benefits in kind, to be paid to the Directors of the Company in the financial year ending 30 June 2005 will not exceed A\$440,000. Further details are set out in note 23 to the financial statements contained in Part 4 of this Admission Document.

b) Additional directorships/partnerships

In addition to their directorships of the Company, the Directors hold or have held at some time during the 5 years preceding the date of this Admission Document the following directorships or are or have been at some time in the 5 years preceding the date of this Admission Document partners in the following businesses:

Name		Current directorships/ partnerships Past directorships/ partnerships
Peter Gunzburg	Fleetwood Corporation Ltd PieNetworks Ltd Bay Securities Pty Ltd Roktluwi Pty Ltd Trovex Pty Ltd Worldwise Enterprises Pty Ltd Dee Road Pty Ltd	Australian Visa & Migration Services Pty Ltd Equity in Industry CIBC Australia Ltd CIBC Eyres Reed Funds Management Pty Ltd CIBC World Markets Securities Australia Ltd CIBC World Markets Asset Securitisation Pty Ltd CIBC World Markets Australia Ltd E.R.M, Investments Pty Ltd Exchange Nominee Pty Ltd Eyres Reed Holdings Pty Ltd Eyres Reed Settlement Nominee Pty Ltd Martin Corporation Services Pty Ltd Pandaton Pty Ltd Erlacc Nominee Pty Ltd Erlup Nominee Pty Ltd
Christopher Barker	Dalecliff Holdings Pty Ltd Eleventh Ambridge Pty Ltd Highvast Pty Ltd	Australian Healthcare Technology Ltd E-Medsoft.com Pty Ltd Egypt Holdings Pty Ltd Fist Capital Group Ltd Great Southern Mines NL Lionore Australia (Nickel) Ltd Minelink Australia Pty Ltd Newbrook Holdings Pty Ltd Newcoast Nominess Pty Ltd Total Mineral Resources NL Wesport Holdings Pty Ltd Yilgarn Gold Ltd
Denis Franks	Matrix Nominees Pty Ltd Reigate Investments Pty Ltd Agri-Management Services Pty Ltd Sykes Investments Pty Ltd	Gold Mines of Sardinia Limited Gold Mines of Sardinia Pty Ltd Sardinia Gold Mining S.p.A. Australian Truffle Farms Marketing & Management Pty Ltd Australian Truffle Farms Limited Euro Miing Pty Ltd Mediterranean Gold Mines Pty Ltd
Brett Montgomery	Gerise Pty Ltd Harsav Pty Ltd	Stericorp Limited
Neil MacLachlan	Markham Associates Golden Prospect Plc Titan Resources NL Samson Exploration NL	Samson Exploration NL Kestrel Energy Inc Hill Young & Associates PieNETWORKS Plc Georgraphe Resources Ltd Planet E World Ltd

c) Directors' background

Other than as disclosed below, no Director has:

any unspent convictions in relation to indictable offences;
ever been declared bankrupt or been the subject of an individual voluntary arrangement;
ever been a director of a company which, while he was a director or within 12 months after his ceasing to be a director, had a receiver appointed, entered into liquidation, entered into administration, entered into a voluntary arrangement, or made any composition or arrangement with its creditors generally, or with any class of its creditors:
ever been a partner in a partnership which, while he was a partner or within 12 months after his ceasing to be a partner, entered into compulsory liquidation, administration or a partnership voluntary arrangement;
owned, or been a partner in a partnership which owned, any asset which, while he owned that asset, or while he was a partner or within 12 months after his ceasing to be a partner in the partnership which owned that asset, entered into receivership:
been the subject of any public criticism by any statutory or regulatory authority (including recognised professional bodies); or
been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company.

Mr MacLachlan was a non executive director of Planet E World Ltd up until his resignation in 2003. This company is currently in the process of being wound up after an Official Receiver was appointed pursuant to a claim for the recovery of an advance music royalty from Universal Music which was initially paid to Planet E World in relation to a music CD that was never ultimately released to the market. Mr MacLachlan believes that this was the only royalty received by Planet E World and that there were no other material creditors.

d) Benefits

Save as disclosed elsewhere in this Admission Document, no person, directly or indirectly, in the last 12 months has received or is contractually entitled to receive, directly or indirectly, from the Company on or after Admission (excluding in either case persons who are trade suppliers, professional advisers or otherwise as disclosed in this Admission Document) any payment or benefit from the Company or securities in the Company to the value of £10,000 or entered into any contractual arrangements to receive the same from the Company at the date of Admission.

e) Shareholders

The details of all Shareholders who had a beneficial interest in at least 3% of the issued share capital of the Company as at 21 June 2004, insofar as is known to the Directors, is set out in the table in Section 5 of Part 1.

Save as described in that table, the Directors are not aware of any person who is interested, directly or indirectly, in 3% or more of the issued share capital of the Company or of any other person who, directly or indirectly, jointly or severally, could exercise control over the Company.

9 LOCK IN AGREEMENTS

Under the Placing Agreement, the directors' and their related parties' holdings of Shares have been locked in for a period of 12 months from Admission.

In addition to the Placing Agreement, Mr Barker and Mr Gunzburg and the entities which hold their Shares in the Company, have entered into Lock In Agreements with the Company for a 12 month period.

10 MATERIAL CONTRACTS

Save as set out below, the Group has not entered into any material contracts not being contracts entered into in the ordinary course of business within the previous two years nor has any other contract been entered into which contains any provision under which any member of the Group has any obligation or entitlement which is material to the Group.

At the Eurogold Level

$10.1$ "Deed of Release" and related agreements in respect of release of debt obligations secured against the Transgold CIL plant

The Company was a "Security Provider" under the terms of a "Project Finance Facility Agreement" entered into on 21 January 1998 with respect to borrowings made by S.C. Transgold S.A. (then called SC Aurul S.A.). Pursuant to the terms of the "Second Amending Agreement", the parties agreed upon terms and conditions upon which the Project Finance Facility Agreement would be deemed to be satisfied and thereupon terminated.

The Deed of Release records the fact that the terms and conditions set out in the Second Amending Agreement were satisfied on 26 June 2002, and provides that the Project Finance Facility Agreement is terminated and that the Borrower and the Security Providers are released from their obligations under the Project Finance Facility Agreement, except with respect to the following preserved obligations of the "Debtors" (being the Borrower and the Security Providers) under the Second Amending Agreement:

The obligation to produce evidence satisfactory to the Lenders that the Debtors have retained the services $(a)$ of an independent technical consultant to monitor the "Rehabilitation Plan" developed to rehabilitate areas affected by the January 2000 environmental incident and approve the release of funds jointly with the authorized officer of the debtors in accordance with the Rehabilitation Plan;
The conditions subsequent set out in Schedule 2 of the Second Amending Agreement, which require the $(b)$ Debtors to do the following:
$\ddot{H}$ Complete the Rehabilitation Plan and a mine closure plan as soon as practicable;
Operate the ore processing plant in accordance with the operating and environmental standards $(ii)$ referred to in the Business Plan that was agreed for the purposes of the Second Amending Agreement:
As soon as practicable adopt, implement and maintain a cyanide management code consistent with $(iii)$ the Draft International Cyanide Management Code for Gold Mining of 5 September 2001;
As soon as practicable ensure elimination of environmental risk associated with operation of the $(w)$ plant and pipelines through installation of a tailings detoxification facility (or such other technological or environmental measures as deemed appropriate by the shareholders);
$(v)$ Ensure that there are adequate resources of material to enable sustainability of operations with a view to eventual rehabilitation; and
$(v_i)$ Take all reasonable steps to secure additional capital to enable achievement of the foregoing.

The Directors believe that Transgold is currently materially in compliance with the above conditions subsequent, however, not all of them have yet been fully satisfied.

The Deed of Release defines the period of time up until all of the abovementioned "Preserved Obligations" are satisfied as the "Reinstatement Period". If any payment, receipt transaction or activity made in connection with satisfying the Preserved Obligations is subsequently claimed during the Reinstatement Period to be void, voidable or capable of being set aside due to either an insolvency event or a failure by the Borrower to implement the Rehabilitation Plan under the Second Amending Agreement, and such claim is upheld, conceded or compromised, the rights of the Security Agent and the Lenders are re-instated as if the Deed of Release was not entered into. These reinstatement rights expire at the expiry of the Reinstatement Period.

$10.2$ Share Sale Agreement between Alpha Minerals Limited and Ukraine Resources Limited as Vendors, Eurogold (Bermuda) Limited ("EBL") as Purchaser, Hemery Alpha Limited and Hemery Beta Limited (Trustees) and the Company, dated June 2004

Pursuant to this agreement, EBL as the Purchaser acquires from the Trustees (as legal owners) and the Vendors (as beneficial owners) all of the issued shares in SRL and ZRL. The consideration payable to the vendors for the acquisition is as follows:

The issue of up to 50,000,000 EHBL Shares to the Vendors, comprising 30,000,000 EHBL shares at $(a)$ completion of the acquisition with up to 20,000,000 EHBL shares to be issued if EBL elects to obtain greater than a 50.1% interest in the Beregove Gold Project; and

$(b)$ The reimbursement of costs of the Vendors incurred in relation to the acquisition of their interest in and the development costs of the Saulyak and Beregove Gold Projects up to a maximum of US\$400,000.

The Company guarantees the performance of EBL under the Agreement.

The reimbursable costs in respect of the Saulyak Gold Project are capped at US\$200,000. Reimbursable costs in respect of the Beregove Gold Project are capped at US\$200,000. These amounts will be paid on the earlier to occur of the successful listing of Eurogold on AIM or Eurogold raising AUD\$1,000,000 (the "Beregove Payment"). US\$125,000 has been retained in respect of a potential liability in SLLC.

From AIM listing of the Company until the earlier of:

$(a)$ completion of the Put and Call Agreement (as detailed below);
the listing of EBL in place of the Company (or any other entity in place of the Company) on AIM; or $(b)$
$(c)$ the expiry of the option term,

("Voting Restriction Period"),

the EHBL shares held by the Vendors will have restricted voting entitlements. From the end of the Voting Restriction Period the EHBL shares issued to the Vendors will have the same voting entitlements as all other shares on issue in EHBL.

EBL may at its discretion increase its interest in the Beregove Gold Project subject to further negotiations and government approvals. Upon EBL obtaining an interest in the Beregove Gold Project of 50.1% (via its interest in ZRL) at any time within 23 months after the completion of the acquisition of SRL and ZRL, EHBL will issue 15,000,000 EHBL shares to the Vendors. For each 1% increase in the interest in the Beregove Gold Project above 50.1% a further 200,000 EHBL shares will be issued to the Vendors up to a maximum of 20,000,000 EHBL shares.

If the Company does not acquire a greater than 50.1% interest in the Beregove Gold Project by the date which is 23 months after the completion of the acquisition of SRL and ZRL, then the Vendors may at no cost require EBL to transfer its interest in the Beregove Project (via its interest in ZRL) back to the Vendors.

Any time 6 months after completion of the acquisition of SRL and ZRL, the Vendors have the right to request EBL to re-transfer its right in the Beregove Gold Project to the Vendors. If this right is exercised by the Vendors, then the Vendors must reimburse the Beregove Payment to the Vendors. The obligation of the Vendors to reimburse the Beregove Payment is reduced by US\$10,000 for each month that elapses after the right to exercise the retransfer first arises (6 months after completion of the acquisition of SRL and ZRL). If the re-transfer occurs then the Vendors must not enter into any transaction with a third party (other than an existing shareholder of ZRL) involving a change in ownership of the Beregove Gold Project without first offering EBL a first right of refusal.

If an opportunity arises to increase the EBL's interest in the Beregove Gold Project in the period of the first 6 months after completion of the acquisition of SRL and ZRL and EBL elects not to exercise that right, then the Vendors may immediately exercise the re-transfer rights detailed in the paragraph above and the terms and conditions set out in that paragraph will apply save that the amount of the Beregove Payment to be reimbursed by the Vendors will be reduced by US\$10,000 per month from the date of completion of the acquisition of SRL and ZRL.

If at any time within 6 months of the re-transfer of the Beregove Gold Project to the Vendors, the Vendors negotiate a deal with a third party (after allowing EBL to exercise its first right of refusal) which incorporates the right to reimbursement of prior costs EBL and the Vendors will share the reimbursement equally.

If EBL acquires a greater than 50.1% interest in the Beregove Gold Project then the re-transfer rights above terminate.

In addition to standard warranties given by all parties as to their power and authority to enter into the Agreement the Vendors give warranties covering the following points:

the shares acquired by EBL being fully paid, unencumbered and representing the entire issued share $(a)$ capital of ZRL and SRL respectively;
$(b)$ no parties having any rights to acquire or be issued with shares in either of SRL or ZRL;
$(c)$ Saulyak Limited Liability Company ("SLLC") having 100% of the rights to the Saulyuk gold project and Zakarpatpolymetaly Ltd ("ZLLC") having 100% of the rights to the Beregove gold project;
SRL an ZRL being special purpose vehicles whose sole activities have been to hold the interests in the $(d)$ SLLC and ZLLC respectively;
SRL holding 74.68% of the issued share capital of SLLC; $(e)$
$(f)$ ZRL holding 6.33% of the issued share capital of ZLLC:
ZRL, SRL and SLLC having no liabilities except as specifically provided for and disclosed in the $(q)$ Agreement:
all loan accounts of SRL and ZRL having being forgiven or capitalised: and $(h)$
$(i)$ the accounts of SLLC, ZRL and SRL show a true and fair view of their financial positions.

No claim can be made under the warranties until the aggregate amount of all claims exceeds US\$10,000. Liability under the warranties is capped at the lesser of US\$4,500,000 or the market value of the shares issued to the Vendors as consideration for the sale and purchase. However, there is no cap on liability for claims relating to EBL obtaining unencumbered title to the SRL or ZRL shares purchased and no other parties having rights to be issued with SRL or ZRL shares.

$10.3$ Put and Call Option Agreement between Alpha Minerals Limited and Ukraine Resources Limited as Vendors and the Company as Purchaser dated June 2004

It is proposed that the Company and the Vendors will enter into the Put and Call Agreement under which put and call options will be granted over the EHBL shares issued to the Vendors under the terms of the Sale Agreement. The purpose of this is to give the Company and the Vendors the ability to change the Vendors' shareholding in EHBL into a direct shareholding in the Company.

The Put and Call Options may be exercised at any time by the Vendors or Eurogold after the completion of the acquisition of ZRL and SRL.

On exercise of either the Put Option or the Call Option, the Company will issue one (1) Share in the Company for each EHBL share transferred to the Company.

The Put and Call Options expire 24 months from completion of the acquisition of SRL and ZRL.

If the Company elects to exercise the Call Option, such election will be subject to shareholder approval under Rule 10.1 of the ASX Listing Rules.

If any of the additional 20,000,000 EHBL shares are issued to the Vendors as a consequence of EHBL increasing its interest in the Beregove Gold Project to greater than 50.1%, then the terms of the Put and Call Option will apply to the EHBL shares from the date of their issue.

The exchange of EHBL shares for Company Shares on the exercise of the Put or Call Option in respect of any of the additional 20,000,000 EHBL shares issued may be subject to Shareholder approval pursuant to section 611(7) of the Australian Corporations Act. If the exchange of EHBL shares for Company Shares is subject to Shareholder approval under section 611(7) of the Australian Corporations Act and such Shareholder approval is not obtained within 3 months of the option exercise notice then the Vendors will be entitled to reacquire its direct interest in the Beregove Gold Project and be paid a break fee of US\$500,000.

$10.4$ MCM Consultancy Arrangements

The Group has agreed that following completion of the acquisition of the Ukrainian Assets, it will retain MCM Consultants (a related entity of Christopher Barker) as consultants to assist in the development of the Saulyuk and Beregove Gold Projects for a period not exceeding 2 weeks in each calendar month.

10.5 Nominated Adviser Engagement Agreement

Under an agreement entered into on 7 April 2004 between the Company and RFC Corporate Finance Ltd ("RFC"), the Company appointed RFC as its nominated adviser for the purposes of the AIM Rules for an initial period of 12 months after the Admission, which will continue thereafter until terminated by either the Company or RFC giving the other party 2 months written notice. If RFC gives such notice to the Company, RFC will provide all reasonable assistance to transfer the engagement to another nominated adviser. During the initial appointment period, either party can terminate the agreement if the other party is in breach of the agreement or the AIM Rules.

Under the terms of the agreement, the Company agreed to pay RFC:

a fee of A\$35,000 upon execution of the agreement;
a fee of A\$50,000 upon RFC completing initial due diligence upon Eurogold and forming the view on Eurogold's suitability for Admission;
a fee of A\$65,000 on Admission plus the issue of 1 million options (as described in Section 4 of Part 1 of this Admission Document); and

an annual fee of A\$60,000 payable quarterly in advance from Admission.

RFC agrees to provide services required by the Company in relation to the Admission and the Company accepts certain obligations including, amongst other things to advise and consult with RFC in relation to certain matters. The Company also agrees to indemnify RFC in relation to any loss or damage suffered by RFC that is in any way related to the engagement except in certain restricted circumstances.

10.6 Broker Engagement Agreement

Under an agreement entered into in May 2004 between the Company and Durlacher Ltd ("Durlacher"), the Company appointed Durlacher as its broker for the purposes of the AIM Rules for Admission, which will continue thereafter until terminated by either the Company or RFC giving the other party 3 months written notice. If Durlacher gives such notice to the Company, Durlacher will provide all reasonable assistance to transfer the engagement to another broker. Either party can terminate the agreement if the other party is in breach of the agreement or the AIM Rules.

Under the terms of the agreement, the Company agreed to pay Durlacher:

on Admission, a fee of £15,000 plus a commission of 5% of funds raised in the Placing:
on Admission, issue to Durlacher 1 million options (as described in Section 4 of Part 1 of this Admission Document); and
an annual fee of £30,000 payable quarterly in advance from Admission.

Durlacher agrees to provide services required by the Company in relation to the Admission and trading in the Shares of the Company, and the Company accepts certain obligations including, amongst other things to advise and consult with Durlacher in relation to certain matters. The Company also agrees to indemnify Durlacher in relation to any loss or damage suffered by Durlacher that is in any way related to the engagement except in certain restricted circumstances.

$10.7$ Placing Agreement

The Placing Agreement is dated [13 July 2004] and made between (1) the Company, (2) the Directors and (3) Durlacher under which Durlacher has agreed to use its reasonable endeavours as agent to procure Placees on behalf of the Company to subscribe for New Shares at the Placing Price. Under the Placing Agreement the Company has agreed, subject to Admission, to pay the fees as set out under the Broker Engagement Agreement above.

The Directors and the Company have given certain warranties and indemnities as to the accuracy of the information contained in the Placing Agreement and other matters in relation to the Company and its business.

The Placing Agreement may be terminated prior to Admission by Durlacher should its performance be delayed or impaired by a force majeure event which in Durlacher's opinion affects the financial position or prospects of the Company or makes the success of the Placing doubtful. The Placing Agreement may also be terminated in certain other circumstances, including for material breach of its warranties.

At the Transgold Level

10.8 Remin Aurum / Borzas Toll Treatment Agreement

This agreement between Transgold and Remin, dated 10 October 2002, sets out the terms and conditions for the processing of slurried ore from Remin's Aurum operation (from the Borzas mine) at Transgold's CIL plant. Under the agreement Remin is to pay Transgold a toll treatment fee of US\$12/t for each tonne of slurried ore processed by Transgold where the monthly tonnage is below 23,000 tonnes. This is the current rate being received based on the current average monthly quantity of around 20,000 tonnes. Lower per tonnage rates apply at higher monthly throughput levels.

The agreement also provides for Transgold to pay Remin for the contained gold based on a minimum guaranteed recovery of 78% and for Transgold to be reimbursed for refining and related costs in respect of the Remin gold. Transgold is currently negotiating with Remin for the removal of the minimum recovery term.

10.9 Suior Pyrites Processing Agreements

These agreements between Transgold, Remin and a subsidiary of MinMet Plc ("MinMet"), entered into in 2003, set out the terms and conditions for the processing of the approximately 525,000 tonnes of "Suior" refractory pyrite concentrates currently stockpiled near Remin's Central plant using bio-oxidation technology provided by Minmet followed by processing through Transgold'd CIL plant.

Under the agreements, MinMet warrants that a minimum of 5.5g/t gold and 10g/t of silver would be recovered from the Suior pyrites after they are treated using their bio-oxidation leach technology and then processed through Transgold's CIL plant. Under stage 2 of the project (stage 1 pilot testing has been completed). MinMet would be paid a royalty of US\$8 for each tonne of Suior pyrite processed.

As consideration for providing the stockpiled material. Remin will be paid a minimum of 2.5g/t gold and 10g/t silver for material processed through the Transgold plant plus 20% of any additional gold recovery above 5.5g/t (up to 10.3g/t). Should the gold recovery be between 10.3g/t and 12.3g/t Remin will receive 50% of the additional amount, and if it exceeds 12.3g/t, Remin will receive 80% of the additional amount.

Transgold would pay for the handling and processing of the material and receive 3g/t gold for the material processed. The value of any gold and silver recovery above US\$64/t, after deducting the amount paid to Remin, would be shared equally with MinMet.

10.10 Unicredit Credit Agreement and Related Agreements

These agreements between between Transgold and Unicredit Romania SA ("Unicredit"), dated 29 April 2004, set out the terms and conditions for the provision of a US\$850,000 working capital line of credit by Unicredit to The line of credit has a term of 1 year with US\$400,000 to be repaid on 25 March 2005 and Transpold US\$450,000 on 25 April 2005. The normal interest rate is US\$ LIBOR plus 5% per annum with a minimum rate of 6% per annum. Penalty interest rates apply to outstanding amounts or if Transgold does not transact specified minimum turnover levels through its operating accounts with Unicredit.

As security, Transgold has assigned commercial receivables to Unicredit, has pledged its inventories of gold dore and other semi finished production to Unicredit, has granted a mortgage over its Baia Mare plant to Unicredit and has signed (but not issued) a 950,000 Euro promissory note in favour of Unicredit.

At the SLLC/ZLLC Level

10.11 SLLC Foundation Agreement

An agreement as to the continuation of the activities of SLLC was made between SRL. ZLLC and the Rakhiv Department of Housing and Communal Facilities Management (which are the participants in SLLC) and was approved by Protocol No. 5 of the General Meeting of the Participants of SLLC on 27 March 2003 (the "Foundation Agreement").

The Foundation Agreement was duly registered with the Rahiv Region State Administration of the Zakarpatska Oblast on 28 March 2003. It provides legal status for SLLC, the term of the company's duration, procedure for the transfer and assignment of interests in SLLC, and the procedures for the establishment of and changes in the charter capital of SLLC. The Foundation Agreement also provides for the terms of the implementation of the proposed project relating to exploration, development and mining of the Saulyak Deposit. The Foundation Agreement sets out the phases of the implementation of the Saulyak Development Project, namely:

the first phase to include preliminary exploration of the deposit within the limits of the licensed area, and $(1)$ to be completed within at least one year from the date of the Foundation Agreement;
$(i)$ the second phase to include preparation of a feasibility study as to the development of the deposit, including additional exploration of the deposit, if necessary, and to be completed within no more than three years from the date of the Foundation Agreement; and
the third phase to include construction of ore mining and processing plant, processing and sale of the $(iii)$ produced raw material or products and investments payback, and its implementation as well as continuation of SLLC to be approved by a general meeting of the participants.

In SLLC, the participants have a number of votes pro-rata their participation in the charter capital. Each participation in the charter capital having a par value of UAH 100 is equivalent to one vote at a general meeting of the participants.

Under the terms of the Agreement, SRL had to contribute to the charter capital of SLLC, in total, US\$550,000 within one (1) year from the date of the state registration of the Foundation Agreement, i.e. by 28 March 2004. If any additional funds are required to finance the implementation of the second phase of the project, the parties agreed to increase the charter capital by providing additional funds, first by ZLLC and the Rahiv Department of Housing, in the amount they deem necessary, and by SRL in an amount necessary to maintain SRL's percentage participation. If the parties decide later to continue into the third phase of the project, they will increase the charter capital and make additional contributions to be approved by the participants based on the approved budget of the third phase. If such financing is insufficient, SRL committed to raise necessary debt finance, in such manner as it determines in its discretion. The Foundation Agreement also provides for certain additional obligations of SRL. SRL's additional obligations include implementing the phases of the project within the established time periods, raising additional finance for the implementation of the project by any means available to it. If for any reason, SRL decides not to continue the project, it is committed to sell its participation to a third party which commits to assume all of SRL's obligations under the Foundation Agreement, failing which the SRL's participation will be sold to SLLC, for consideration of US\$1m.

10.12 SLLC Investment Agreement

An agreement no. 108/2003 dated 23 December 2003, made between (1) SLLC and (2) Zakarpatska Oblast State Administration relating to the implementation of an investment project in the territory of the priority development (the "Investment Agreement"). This Investment Agreement is made according to Law of Ukraine No. 357-XIV "On Special Regime of Investment Activities in Zakarpatska Oblast" dated 24 December 1998 and Decision No. 161 of Experts' Council on Consideration of Investment Projects in Priority Types of Economic Activities regarding approval of the investment project of SLLC "Construction and operation of module gold production plant in Rahiv Region" dated 23 December 2003. The term of the Investment Agreement is until 31 December 2010. Under the terms of the Investment Agreement, SLLC has agreed:

within a period from 1 January 2004 to 31 December 2006, to make investments in the amount of $\langle i \rangle$ US\$3,000,000 in geological exploration and estimation and approval of the explored resources, and to create 15 work places;
$(ii)$ within a period from 1 January 2006 to 1 July 2007, to develop a gold development project;
$(iii)$ within a period from 1 July 2007 to 31 December 2009, to make investments in the amount of US\$13,719,000 in the construction of a mine, processing plant, and necessary infrastructure, and to create 235 work places:
to import into Ukraine equipment for the mine with a value of US\$4,500,000 and equipment for the plant $(iv)$ with a value of US\$3,200,000.
$(v)$ to ensure the average level of salary in the amount of at least UAH 650 (about US\$122) to be increased 10% annually.

The investment obligations under the Investment Agreement can be amended pursuant to written agreement of the parties.

The Investment Agreement contains a liability clause providing that in the event of default on investment obligations, employment of workers, and the average amount of salary of local workers, the Investment Agreement may be terminated by Zakarpatska Oblast State Administration.

It is important to note that either party may not transfer their rights under the Investment Agreement to a third party without written consent of the other party.

10.13 Loan Agreement between SLLC and SRL

A loan agreement no. 1 dated 7 April 2004, made between (1) SLLC and (2) SRL (the "Loan Agreement"), pursuant to which SRL agreed to extend a loan in the amount of US\$500,000 accruing interest at 9% per annum. Under the Loan Agreement, SRL has agreed to disburse the loan to SLLC within a period of three (3) years from the effective date of the Loan Agreement, whereas SLLC has agreed to start loan repayment at the end of the disbursement period. On 21 May 2004 SLLC received two tranches under this Loan Agreement in the amount of US\$14,000 and US\$17,976.35, respectively.

10.14 ZLLC Foundation Agreement

An agreement as to the continuation of the activities of ZLLC was made between (1) Ukrainian Polymetally State Joint Stock Company and (2) ZRL which are the participants in ZLLC, and was approved by Protocol No. 13 of the General Meeting of the Participants of ZLLC on 1 September 2003 (the "Foundation Agreement").

The Foundation Agreement provides legal status for ZLLC, the procedure for the transfer and assignment of participatory interests in its charter capital, withdrawal and expulsion of participants from ZLLC, procedures for termination and liquidation of ZLLC, as well as the procedures for the establishment of and changes in the charter capital of ZLLC. According to the Foundation Agreement, each participant of SLLC has a number of votes prorata their participations in the charter capital (on a one hryvnya- one vote principle). Participants have a right of first refusal in case of sale of the participation by any withdrawing participant. The Foundation Agreement also provides for certain additional obligations of ZRL (a participant in ZLLC). ZRL's obligations include carrying out a due diligence and financial audit of ZLLC; preparing a feasibility study; drafting a development program; preparing an analysis of the geological data regarding the Beregove Gold Mining Region; and preparing a cost estimate for the implementation of a Beregove Gold Mining Region Development Project.

The above obligations are to be performed at the expense of the contribution of ZRL to the charter capital of ZLLC in the amount of US\$250,000, which was to have been contributed within four months prior to the registration of the Foundation Agreement. If such funds are insufficient to cover the performance of such obligations, ZRL is under an obligation to make additional contributions to the charter capital of ZLLC and to increase its participation in ZLLC. The Foundation Agreement does not provide for any limit of either the additional contributions or increase in participation.

Mineral Licences

The Group holds a total of 7 exploration licences and 1 prospecting permit in Romania and Ukraine and has applied for an additional exploration licence in Ukraine. Details of these tenements are contained in the Competent Persons Report in Part 3 of this document.

The terms and conditions of the exploration licences are broadly in line with those in force in other countries. Namely, the licences give the holder exclusive rights to conduct certain exploration activities on the licence areas for the terms of the licences. The licences also impose obligations on the holder to carry out their activities in a responsible manner, observe other applicable regulations, report exploration results to the relevant mining authority, pay applicable fees, meet expenditure commitments and rehabilitate any disturbed areas.

$11$ WORKING CAPITAL

The Directors, having made due and careful inquiry, and taking into account the net proceeds of the Placing and existing cash and other finance facilities, are of the opinion that the working capital available to the Company and the Group will, from the time of the Company's Admission, be sufficient for the requirements of the Group for at least 12 months from the date of Admission. This opinion implicitly assumes and reflects the Directors' opinion that no adverse resolution of the litigation discussed in Section 4 of Part 1 of this Admission Document will occur during this period, and that Transgold's existing US\$0.85m working capital line of credit will be rolled over at its maturity in April 2005.

$12$ CORPORATE GOVERNANCE

The following outlines the main corporate governance practices that have been adopted by the Board.

a) Board

The Board is responsible for the overall corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the achievement of those goals.

The Board meets regularly in order to retain full and effective control over the Company and to monitor the executive management.

Each director has the right to seek independent professional advice on matters relating to his position as a director of the Company at the Company's expense, subject to the prior approval of the chairman, which shall not be unreasonably withheld.

The Company presently does not have separate audit or remuneration committees as the Directors believe that the Company is not of a size, nor are its financial affairs of such complexity to justify separate committees and as such are subject to the scrutiny of the full Board. This decision will be reviewed as the Company develops in the future.

b) Composition of the Board

The Board (subject to members voting rights in general meeting) is responsible for selection of new members and has regard to a candidates experience and competence in areas such as mining, exploration, geology, finance and administration that can assist the Company in meeting its corporate objectives and plans. The Board delegates responsibility for the Company's administration to its managing Director who is accountable to the Board.

e) Internal control framework

The Board acknowledges that it is responsible for the overall internal control framework but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the Board has instigated an internal control framework that can be summarised as follows:

Financial reporting $\mathbf{f}$

A comprehensive budgeting system with an annual budget approved by the Directors has been established. Monthly actual results are reported against budget and revised forecasts for the year are prepared and presented to the Board regularly. Procedures are in place to ensure that price sensitive information is reported to the stock exchanges on which the Company's securities are listed and in accordance with continuous disclosure requirements.

Quality and integrity of personnel q)

The Company conducts a comprehensive review of the ability and experience of potential employees prior to appointment. Informal appraisals are conducted regularly with continuous feedback and on the job monitoring and training for all employees.

$h)$ Operational reporting

The executive directors are in regular contact with senior personnel at the Group's operating sites. In addition, formal monthly reporting together with periodic site visits by the executive directors contribute to appropriate controls in this area.

$\mathbf{i}$ Business risks

The Board adopts practices designed to identify areas of business risk and to effectively manage those risks in accordance with the Company's risk profile. Where necessary, the Board draws on the expertise of appropriate external consultants to assist in dealing with or mitigating risk. The Company's main areas of risk include:

mining operations;
exploration and development;
fluctuating commodity prices and exchange rates;
financing; and
title to assets.

Regular consideration is given to all these matters by the Board.

The principal risk factors to which the Company is exposed are considered in more detail in Part 5 of this document.

13 GENERAL

Expenses a)

The expenses of or incidental to Admission that are payable by the Company are estimated to amount to £278,286 including commissions of £120,000.

b) Placing and Allotment Details

The amount payable on application and allotment of each of the New Shares pursuant to the Placing is 5p.

The period within which placing participations may be accepted pursuant to the Placing and arrangements for the payment and holding of monies payable thereunder pending Admission are set out in the Placing Agreement (a summary of which is set out in Section 10.7 of this Part 6) and in the placing letters sent to prospective placees.

The Placing Shares are not being offered generally and no applications will be accepted other than under the terms of the Placing Agreement and in the placing letters. The Placing Shares have been conditionally placed. The Placing is not being guaranteed or underwritten by any person.

The New Shares are to be subscribed for by the date of Admission. Monies received pursuant to the Placing will be held in accordance with the terms of the placing letters distributed by Durlacher until such time as the Placing Agreement becomes unconditional in all respects. If the Placing Agreement does not become unconditional in all respects by 10 August 2004 or any placing application is otherwise rejected the relevant application monies will be returned to the Placees entitled to the same at their own risk without interest.

The Directors have applied on 13 July 2004 for the Depository Interests, representing the New Shares to be

issued pursuant to the Placing, to be admitted to CREST with effect from Admission. Accordingly, it is expected that the Depository Interests will be enabled for settlement in CREST from Admission.

c) Financial position

Save as disclosed in this Admission Document there has been no significant change in the financial position or prospects of the Group since 31 March 2004.

d) Litigation and arbitration

Neither the Company nor any other member of the Group is engaged in any legal or arbitration proceedings nor, as far as the Directors are aware, are any legal or arbitration proceedings, active, pending or threatened against, or being brought by, the Company or any other member of the Group which may have or have had a significant effect on the Group's financial position, other than the legal claims against the Group detailed in Section 4 of Part $1₁$

SLLC has been issued with two tax assessments from the State tax inspectorate in the Ukraine. The amount of these assessments is approximately US\$137,000. Whilst the Group does not believe that the claims of the tax inspectorate are well grounded and believes that the tax dispute is likely to be solved positively for SLLC, there can be no quarantee that such tax dispute can be resolved in favour of SLLC.

Exceptional factors е)

The Directors are unaware of any exceptional factors which have influenced the Group's recent activities.

$f$ Investments in progress

Save as disclosed, there are no significant investments in progress. The Company continuously evaluates new investment opportunities, however, no significant investment commitments in relation to any such opportunities have been made by the Company as at the date of this Admission Document.

$g)$ Dependence on licences, contracts etc

The Group does not depend on any patents or other intellectual property rights, licences or particular contracts save as disclosed in this Admission Document.

h) Consents

RSG Global has given and not withdrawn its written consent for the inclusion of references to its name in the form and context in which it appears and to the inclusion of its report set out in Part 3. RSG Global accepts responsibility for their report for the purposes of Regulation 13(1)(d) of the POS Regulations. To the maximum extent permitted by law, RSG expressly disclaims and takes no responsibility for any part of this Admission Document other than the statements referred to above and the statements identified in this Admission Document as being based on statements made by them.

Ernst & Young have consented to the inclusion in the Admission Document dated 13 July 2004 in the form and context in which they appear and authorize for the pruposes of Regulation 13(1) of the POS Regulations of their:

Accountant's report in respect of the accounts of Eurogold Limited for the nine month period ended 31 March 2004, the years ended 30 June 2003, 30 June 2002, and 30 June 2001; and
Review statement in respect of the accounts of Eurogold Limited for the half year ended 31 December 2003.

The following persons have given and not withdrawn their written consent to being named in this Admission Document but have not made any statements that are included in this Admission Document or statements identified in this Admission Document as being based on any statements made by those persons:

RFC Corporate Finance Ltd;
Durlacher Ltd;
Hardy Bowen;
Watson, Farley & Williams;
Computershare Investor Services Pty Ltd; and
Computershare Investor Services Plc.

To the maximum extent permitted by law, each of the persons referred to above expressly disclaims and takes no responsibility for any part of this Admission Document other than the references to their name.

i) Inspection of documents

Copies of the following documents may be inspected at the offices of Durlacher Ltd at Moorgate Hall, 155 Moorgate, London EC2M 6XB during usual business hours on any business day for a period of 14 days following the date of this Admission Document:

the Constitution: ×
the audited accounts for the Company for years ended 30 June 2002 and 30 June 2003 and for the 9 months × ended 31 March 2004;
× RSG Global's report contained in Part 3;
Ernst & Young's report contained in Part 4; $\blacksquare$
the directors' service and other agreements referred to in Section 10 of this Part 6; and $\blacksquare$
the written consents referred to in this Section. $\bullet$

$14$ AVAILABILITY OF ADMISSION DOCUMENT

Copies of the Admission Document will be available during normal business hours on any business day free of charge to the public at the offices of Durlacher Ltd at Moorgate Hall, 155 Moorgate, London EC2M 6XB or on Eurogold's website (www.eurogold.com.au) for a period of one month from the date of Admission.

Dated: 14 July 2004

AI assistant

INOVIQ LTD — Capital/Financing Update 2004

65112_rns_2004-07-13_fc64c120-3bb1-4447-899a-45879cf1fe48.pdf

Placing and Admission to AIM

July 2004

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

Placing of 48 million New Shares at a price of 5p per Share to raise gross proceeds of £2.4 million

and Admission to trading on the Alternative Investment Market

IMPORTANT NOTICES

Contents

Romanian Assets

Ukrainian Assets

PLACING

ADMISSION STATISTICS

EXPECTED TIMETABLE

EXCHANGE RATE

Corporate Directory

Definitions

Glossary of Selected Technical Terms

1 Introduction

Romanian Assets

Ukrainian Assets

$\mathbf{2}$ Description of the Company's Activities

The Romanian Assets

The Ukrainian Assets

Geology and Exploration

Development Plan

Relationships between Members of the Group

3 Corporate History

4 Legal Claims Against the Group

5 Summary Capital Structure

Shareholders of Eurogold

Current Share Price on the ASX

6 Summary Financial Information

$\overline{7}$ Prospects, Future Strategy and Objectives

8 Dividend Policy

9 Reasons for the AIM Listing

10 Directors and Senior Management

Directors and Officers

Peter Lynton Gunzburg - Executive Chairman (aged 52 years)

Brett Montgomery - Non Executive Director (aged 50 years)

Dennis Wayne Franks - Non Executive Director (aged 53 years)

Christopher John Barker - Ukraine Operations Director (aged 61 years)

Neil Thacker MacLachlan - Non Executive Director (aged 61 years)

Senior Management

Les Kozel - Financial Controller and Joint Company Secretary

Mitch Cook - Senior Consulting Metallurgist

Mikolai Horzak - Deputy director and of Exploration Manager of SLLC

Bohdan (Bo) Kenecky - First Deputy Director of SLLC

11 Corporate Governance

Environmental Statement

$12 \,$ Admission, Settlement (CREST) and Dealings

Part 2 - Taxation Implications for UK Residents of Investing in Eurogold

UK taxation general

UK Taxation of dividends and distributions (including Australian withholding taxes)

UK Taxation of chargeable gains

UK Stamp duty

UK Inheritance tax

Fart8 - Competent Person's Report

Competent Person's Report on the Mineral Assets of Eurogold Limited

Table of Contents

List of Figures

SUMMARY

Introduction

Baia Mare Processing Project

Baia Mare Exploration Properties

Saulyak Gold Project

Beregove Project

INTRODUCTION $\overline{1}$

$1.1$ Terms of Reference

$1.2$ Qualifications, Experience and Independence

$1.3$ Principal Sources of Information

ROMANIAN PROPERTIES $\overline{2}$

$2.1$ Background Information on Romania

$2.2$ Baia Mare Gold Tailings Reprocessing Operation

$2.2.1$ Introduction

$2.2.2$ Ownership

$2.2.3$ Tailings Reprocessing Operations

$2.2.4$ Tailings Development and Production History

$2.2.5$ Tailings Resources and Reserves

INOVIQ LTD Capital/Financing Update 2004

EUROGOLD LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE

EUROGOLD LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION