KINGSROSE MINING LIMITED — Interim / Quarterly Report 2012

Jan 24, 2012

Kingsrose

Mining
Limited

==> picture [62 x 60] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

**Record

Production
and
extremely
low
costs
generate US$16.7m
cash
surplus
in
December
Quarter _Significant
exploration
results
from
three
new
prospects
at
Way
linggo**_

• Way Linggo Gold Project (85% KRM) produced
  a
  record 11,576oz of
  gold and 126,495oz
  of
  silver
  (or
  13,718oz
  gold
  equivalent)
  for
  the
  Quarter,
  a
  19%
  increase
  in
  gold production
  from
  the
  previous
  Quarter.

**Quarterly

Production:**

Quarterly Production:
	Sep-11 Qtr	Dec-11 Qtr	Year To Date
Gold – oz	9,702	11,576	21,278
Silver - oz	120,663	126,495	247,158
Gold Equivalent – oz*	11,918	13,718	25,636

• Cash
  operating
  costs
  for
  the
  Quarter
  were US$287 per
  gold
  ounce.
  This
  falls
  to US$199 per
  gold
  ounce
  when
  allowing
  for
  unsold
  silver
  bullion
  inventory
  at
  end-­‐December
  2011 (sold
  in
  January).

• The
  Way
  Linggo
  Project
  generated
  an
  unaudited
  cash
  operating
  surplus (EBITDA)
  of US$16.7
  million for
  the
  Quarter.

• A
  maiden
  resource
  was
  calculated
  for
  Talang
  Santo
  with
  a
  Total
  Inferred
  Resource
  of 879,000
  tonnes
  at
  5.89
  g/t
  gold
  and
  14.63
  g/t
  silver
  containing
  an
  estimated
  166,400oz
  of gold
  and
  413,000oz
  of
  silver.
  A
  mine
  adit
  and
  separate
  inclined
  shaft
  for
  trial
  mining
  at Talang
  Santo
  was
  commenced.

• Metallurgical
  testwork
  was
  completed
  on
  a
  composite
  of
  vein
  intercepts
  from
  Talang Santo
  and
  concluded
  a
  clean
  ore
  with
  gold
  recoveries
  of
  92.3%
  and
  silver
  recoveries
  of 96%
  using
  parameters
  typical
  of
  the
  Way
  Linggo
  ore
  processing
  circuit.

• Gold
  equivalent
  oz
  was
  calculated
  by
  dividing
  the
  silver
  ounces
  by
  the
  average
  gold
  price
  received
  and
  multiplied
  by
  the
  average
  silver price
  received
  for
  the
  Quarter.

Kingsrose
Mining
Limited Suite
9,
Level
2,
12-­‐14
Thelma
Street ABN
49
112
389
910 West
Perth,
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

==> picture [34 x 33] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

• Exploration
  focused
  was
  on
  the
  further
  infill
  and
  extension
  drilling
  of
  the
  Talang
  Santo
  vein system.
  In
  addition
  significant
  ground
  reconnaissance
  works
  and
  scout
  drilling
  commenced
  on high
  priority
  targets
  at
  Semung
  Kecil,
  Linggo-­‐Sapta
  and
  Rowo
  Rejo
  Prospects.

The

more
significant
results
received
were:

Hole No.	Prospect	Intercept Weighted Average	From	True Width
DDH-236	Talang Santo	2.25m@6.81g/t Au and 20.86g/t Ag	370.6	1.87
DDH-246	Talang Santo	3.65m@8.38g/t Au and 36.00g/t Ag	417.1	3.18
DDH-247	Talang Santo	1.75m@7.66g/t Au and 5.56g/t Ag	264.9	1.52
DDH-249	Talang Santo	6.3m@5.54g/t Au and 10.73g/t Ag	131.45	5.15
DDH-253	Talang Santo	5.45m@8.56g/t Au and 21.04g/t Ag	111.4	5.02
DDH-258	Talang Santo	1.2m @ 18.91 g/t Au and 115.94 g/t Ag	391.1	0.96
DDH-259	Talang Santo	1.05m@13.14g/t Au and 9.74g/t Ag	113.75	0.92

• Announced
  that
  Kingsrose
  had
  resolved
  to
  introduce
  a
  dividend
  policy,
  whereby
  it
  intends
  to pay
  an
  annual
  dividend
  to
  shareholders
  in
  the
  June
  Quarter
  of
  2012,
  subject
  to
  capital expenditure
  requirements,
  acquisition
  activity
  and
  liquidity
  needs
  (see
  ASX
  announcement dated
  21
  December
  2011).

• Closing
  cash
  balance
  and
  bullion
  increased
  A$7m
  for
  the
  Quarter
  to
  A$39.2
  million:
  no
  debt.

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [34 x 33] intentionally omitted <==

WAY LINGGO PROJECT (85% KRM)

**OPERATIONS

SUMMARY**

The
table
below
shows
Way
Linggo
Project
performance
over
the
Quarter:

KEYINDICATORS	Unit	SepJ11Qtr	DecJ11Qtr	YTD2012
WAYLINGGO
OreMined	t	21,775	17,150	38,925
MinedGrade,Gold	g/t	15.0	16.2	15.5
MinedGrade,Silver	g/t	191	219	203
OreProcessed	t	30,779	29,860	60,639
HeadGrade,Gold	g/t	11.3	12.8	12.0
HeadGrade,Silver	g/t	148	161	154
Recovery,Gold	%	89.8	91.6	90.6
Recovery,Silver	%	82.9	82.4	82.6
GoldRecovered	oz	9,997	11,235	21,233
SilverRecovered	oz	120,698	126,944	247,642
GoldProduced(i)	oz	9,702	11,576	21,278
SilverProduced(i)	oz	120,663	126,495	247,158
CashOperatingCost(beforeAgcredit)	US$/oz	484	578	535
LessSilverBy,ProductCredit(ii)	US$/oz	(330)	(291)	(309)
CashOperatingCost(iii)	US$/oz	154	287	226
TotalProductionCosts(iv)	US$/oz	382	589	495
COSTSADJUSTEDFORUNSOLDSILVER
CashOperatingCost(beforeAgcredit)	US$/oz	484	578	535
LessSilverBy,ProductCredit(v)	US$/oz	(330)	(379)	(357)
CashOperatingCost	US$/oz	154	199	178
Capitalisedminedevelopment	US$m	0.6	1.7	2.3
Capitalplant&equipment	US$m	1.6	1.0	2.6
Exploration	US$m	4.2	3.2	7.4
GoldSold	oz	8,519	12,152	20,671
AverageGoldPriceReceived	US$/oz	1,728	1,685	1,703
SilverSold	oz	101,017	118,000	219,018
AverageSilverPriceReceived	US$/oz	32	29	30

(i)$Gold$and$silver$production$is$actual$metal$poured.

(ii)$Calculated$using$actual$silver$sales$for$the$period.

(iii) $Includes$all$expenditure$incurred$at$site$plus$dore$trans p ortation$and$refining$costs$less$by,p r oduct,$ adjusted$for$inventory$movements$less$capitalised$mine$development$and$exploration$expenditure$and$royalties.

(iv) $Includes$cash$operating$costs$plus$royalties,$depreciatio n $and$mine$development$amortisation.

(v)$Calculated$by$including$unsold$silver$bullion$inventory$as$at$31$Dec,11$sold$in$January)$.

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [34 x 33] intentionally omitted <==

Way Linggo Mine

The
mine
produced
17,150
tonnes
of
ore
at
a
grade
of
16.2
g/t
gold
and
219
g/t
silver
during
the
Quarter.

The
mined
production
for
the
Project
to
date now
stands
at
123,511
tonnes
at
a
grade
of
14.8 g/t
gold
and
185
g/t
silver.

Mined
ore
continued
to
be
sourced
from
a combination
of
sub-­‐level
development
(30%
of production)
and
short-­‐hole
stoping.
Productivity was
lower
during
the
Quarter
as
areas
of
the orebody
were
set-­‐up
for
post-­‐fill
stoping methods.

In
addition,
stoping
in
some
upper areas
necessitated
additional
timber
support which
slowed
ore
extraction.

==> picture [243 x 163] intentionally omitted <==

----- Start of picture text -----

Mine&Produc3on&
Ore#hauled#to#surface# Mined#Ore#Grade#
25,000## 20.0#
18.0#
20,000## 16.0#
14.0#
15,000## 12.0#
10.0#
10,000## 8.0#
6.0#
5,000## 4.0#
2.0#
0## 0.0#
SepQ10# DecQ10# MarQ11# JunQ11# SepQ11# DecQ11#
Ore&Mined&(t)&
Mined&Ore&grade&(g/t)&
----- End of picture text -----

A
rail
underlay
drive
commenced
on
ore
below
the
3
level
to
enable
production
from
deeper
parts
of
the
mine. Plant
feed
was
supplemented
from
the
last
of
the
pre-­‐commissioning
ore
stocks.

Talang Santo Project

Since
the
discovery
of
Talang
Santo
in
June
2011,
Kingsrose
has
rapidly
advanced
the
Project
with
an
aggressive drilling
program
that
enabled
a
maiden
resource
for
the
deposit
to
be
calculated
(announced
to
the
ASX
on December
7,
2011):

December 7, 2011):
Classification	Tonnes	g/t Au	g/t Ag	Gold Oz	Silver Oz
Measured	0	0	0	0	0
Indicated	0	0	0	0	0
Inferred	879,000	5.89	14.63	166,400	413,000
Total	879,000	5.89	14.63	166,400	413,000

As
previously
announced
Kingsrose
has
established
an
adit
into
the
upper
parts
of
the
outcropping
vein
system
and has
commenced
an
underlay
shaft
to
enable
trial
mining.
A
total
of
134
metres
were
advanced
in
the
adit
and
11 metres
in
the
shaft
were
completed
by
the
end
of
the
Quarter.

Kingsrose
anticipates
that
by
adopting
this
aggressive
development
approach
it
will
access
trial
parcels
of
ore
for evaluation
in
the
June
Quarter.

Further,
issues
associated
with
the
intense
argillic
alteration,
erratic
quartz development
and
grade
estimation
can
be
resolved
ahead
of
full-­‐scale
mine
development.

Metallurgical
testwork
was
completed
on
a
composite
of
vein
intercepts
from
Talang
Santo
and
concluded
a
clean ore
with
gold
recoveries
of
92.3%
and
silver
recoveries
of
96%
using
parameters
typical
of
the
Way
Linggo
ore processing
circuit.
Kingsrose
expects
no
issues
with
the
processing
of
Talang
Santo
ores.

Processing

Plant
throughput
for
the
Quarter
was
29,860
tonnes
at
a
head
grade
of
12.8
g/t
gold
and
161
g/t
silver.
The
plant availability
remained
high
at
95.2%
and
is
benefitting
from
the
installation
of
the
SAG
mill
in
the
September Quarter
with
steadier
operation
and
a
significant
reduction
of
materials
handling
issues.

Metallurgical
recovery
improved
to
91.6%
for
gold
and
remained
steady
at
82.4%
for
silver.

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

==> picture [34 x 33] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [448 x 145] intentionally omitted <==

----- Start of picture text -----

Mill$Throughput$ Metals'Produc.on'
35,000
Au!Poured! Ag!Poured!
30,000 14,000!! !140,000!!
25,000 12,000!! !120,000!!
10,000!! !100,000!!
20,000
8,000!! !80,000!!
15,000
6,000!! !60,000!!
10,000 4,000!! !40,000!!
5,000 2,000!! !20,000!!
0 0!! !"!!!!
SepQ10' DecQ10' MarQ11' JunQ11' SepQ11' DecQ11' SepQ10! DecQ10! MarQ11! JunQ11! SepQ11! DecQ11!
Dry$tonnes$
----- End of picture text -----

Record
gold
production
was
achieved
in
the
December
Quarter
with
11,576
oz
of
gold
produced,
which
exceeded
the September
Quarter
by
19.3%
primarily
due
to
higher
head
grade.

Gold
sales
for
the
Quarter
totalled
US$20.5
million
from
the
sale
of
12,152
gold
ounces
at
an
average
price
of US$1,685/oz.
Silver
sales
for
the
Quarter
(silver
sold
is
treated
as
a
by-­‐product
credit)
totalled
US$3.4
million
from
the sale
of
118,000
ounces
at
an
average
price
of
US$29/oz.
This
included
the
delivery
of
60,015
forward
sold
ounces
at
a fixed
price
of
US$26.86/oz.

Operating
margins
were
excellent
and
the
Project
generated
a
cash
operating
surplus
(EBITDA)
of
US$16.7
million
for the
Quarter
(Kingsrose
share
85%).
Cash
operating
costs
were
higher
due
to
a
rise
in
ground
support
costs
and
a reduction
of
expatriate
personnel
with
resultant
one-­‐off
redundancy
payments
adding
approximately
US$18
to
the cash
operating
cost
per
gold
ounce
produced.

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [34 x 33] intentionally omitted <==

**EXPLORATION

ACTIVITIES**

A
high
level
of
exploration
activity
continued
during
the
December
2011
Quarter.
Works
were
completed
on eight
of
the
17
defined
target
areas
where
strong
indications
of
epithermal
gold
veins
have
been
discovered. Refer
to
diagram
below:

==> picture [401 x 577] intentionally omitted <==

Figure
1:
PT
Natarang
Mining
Contract
of
Work
area
showing
exploration
prospect
areas

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [34 x 33] intentionally omitted <==

The
maiden
resource
estimate
for
the
recently
discovered
Talang
Santo
Prospect
was
announced
to
the
ASX
on 7th
December
2011
as
a
Total
Inferred
Resource
of
879,000
tonnes
at
5.89
g/t
gold
and
14.63
g/t
silver containing
an
estimated
166,400
ounces
of
gold
and
413,000
ounces
of
silver.

Resource
definition
and extensional
drilling
continued
at
Talang
Santo
during
the
Quarter
and
is
ongoing.

In
addition,
scout
drilling
was
progressed
at
the
Semung
Kecil,
Linggo-­‐Sapta
and
Rowo
Rejo
Prospects
to evaluate
already
defined
epithermal
mineralization
and
their
coincident
argillic
alteration
zones. The
following
table
summarises
exploration
activity
statistics
for
the
Quarter:

Exploration Activity	Units
Diamond Drilling	12,248 m
Stream Traverses	47,513 m
Soil Sample Traverse Line	1,262 m
Ridge and Spurs Sample Traverses	1,938 m
Hand TrenchingTraverses	99 m
Road and Exposed Face Mapping	0
CSAMT Geophysics Traverses	57,250 m
Samples Collected
Drill Core Sample	1,862
Rock ChipSample	285
Soil Sample	45
Total Sample	2,192

**EXPLORATION

HIGHLIGHTS**

Talang Santo Project

The
focus
for
the
Quarter
was
on
resource
definition
drilling
of
the
up-­‐dip
projection
of
the
main
“Mawi
Vein” and
further
extensional
drilling
along
strike
to
the
east
and
west.
A
total
of
22
holes
were
collared
during
the Quarter
with
17
completed
and
five
in
progress
for
a
Quarterly
total
of
6,981m.

High-­‐grade
intercepts
were
returned
from
up-­‐dip
vein
positions
with
best
results
including
5.45m
at
8.56
g/t
Au and
21.04
g/t
Ag
from
111.4m
in
Hole
DDH-­‐253
and
6.3m
at
5.54
g/t
Au
and
10.73
g/t
Ag
from
130.7m
in
Hole DDH-­‐249.
These
holes
confirm
the
up-­‐dip
extension
of
mineralization
of
the
Mawi
Vein.

Deeper
drilling
along
strike
to
the
east
and
west
and
also
down-­‐dip
continued
to
verify
and
extend
the
resource estimate.
DDH-­‐258
is
the
deepest
hole
drilled
into
the
system
so
far
and
it
has
returned
an
intercept
of
1.2m
at 18.91
g/t
Au
and
115.94
g/t
Ag
from
391.1m
(approximately
300m
vertical
depth).

A
table
summarising
all significant
(veins
with
assays

1.0
g/t
Au)
diamond
drill
core
intercepts
received
during
the
Quarter
is
attached in
Appendix
1.

Petai Kayu Prospect

Seven
scout
drill
holes
were
collared
in
this
prospect
during
the
Quarter
for
a
total
of
2,242
metres
drilled, including
five
completed
holes
and
two
holes
still
in
progress.
The
aim
of
these
holes
is
to
test
downward
dip continuity
of
disclosed
quartz
veins
that
DDH
250
intercepted
and
returned
0.3m
at
4.12
g/t
Au
and
13.30
g/t Ag
from
276m
and
0.20m
at
2.03
g/t
Au
and
4.12
g/t
Ag
from
294.2m.
Hole
DDH
254
returned
1.6m
at
1.11g/t Au
and
5.99g/t
Ag.
Both
intercepts
proving
that
the
Petai
Kayu
area
has
been
a
fluid
pathway
for
mineralizing fluids.

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [34 x 33] intentionally omitted <==

Semung Kecil Prospect

A
field
camp
and
access
to
Semung
Kecil
Prospect
was
established
during
the
Quarter
and
reconnaissance works
have
commenced.

A
significant
amount
of
ground
traversing,
sampling
and
CSAMT
resistivity
surveys was
completed.

A
number
of
anomalies
and
targets
have
been
defined
and
a
helicopter
supported
drill
rig
commenced
works late
in
the
Quarter.

One
diamond
hole
was
completed
(DDH
261)
which
intersected
a
narrow
zone
of
sulphide-­‐quartz-­‐silica
hair-­‐ line
fractures
in
propylitic
altered
lithic
tuff
and
returned
gold
grades
of
0.85m
at
1.01
g/t
Au
and
3.17
g/t
Ag from
downhole
depth
327.9m.
The
objective
of
the
hole
was
to
test
the
new
interpretation
of
the
Vein
Creek structure
and
a
revised
interpretation
of
the
previous
and
randomly
positioned
(1994)
drill
holes
results.

==> picture [377 x 445] intentionally omitted <==

Figure
2:
Geological
map
of
the
Semung
Kecil
Prospect
area

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

==> picture [34 x 33] intentionally omitted <==

_**Linggo

– Sapta Prospect**_

Surface
geology
mapping,
sampling
and
trenching
was
progressed
in
over
the
Linggo
–
Sapta
area.
Four
parallel epithermal
veins
were
found
outcropping
in
the
area
in
late
December
with
the
following
rock
chip
results:

	Nort hing	Easting	Dip/Strike	Intercept
Vein 1	415014	435729	-70sw/N120	0.4m@0.62g/t Au & 4.31g/t Ag
Vein 2	15m south of Vein 1		-70sw/N135	0.7m@1.14g/t Au & 15.1g/t Ag
Qtz Breccia	414011	435767	-75sw/N130	0.4m@0.74g/t Au & 13.93g/t Ag
Vein 3	415138	435641	-84w/N110	0.65m@2.49g/t Au & 10.58g/t Ag
Vein 4	415240	435565	-70se/N80	1.2m@3.5g/t Au & 25.71g/t Ag

Kingsrose
is
very
encouraged
by
these
discoveries
given
their
near
proximity
and
being
parallel
to
the
Way Linggo
mine
veins.

==> picture [443 x 298] intentionally omitted <==

Figure
3:
Geological
Map
of
the
Linggo
Sapta
Prospect

A
decision
to
immediately
drill
test
the
veins
was
taken
and
the
first
hole
was
collared
on
December
22,
2011 with
drilling
still
underway.
The
aim
of
the
first
hole
(DDH-­‐269)
is
to
test
drilling
downward
dip
of
quartz-­‐ chalcedonic
dominant
vein
found
in
outcrop.
Whilst
the
hole
is
still
in
progress,
the
upper
section
of
the
hole has
intersected
a
narrow
vein
which
has
returned
0.3m
at
0.41
g/t
Au
and
5.83
g/t
Ag
from
18.6m
down
hole.

Rowo Rejo Prospect

The
Rowo
Rejo
Prospect
manifests
as
a
large
sinter
zone
with
associated
brecciation.
CSAMT
traverses
defined
a well
developed
resistivity
zone,
considered
to
be
the
feeder
of
the
anomaly.

Detail
geology
mapping
and
a
small
grid
based
soil
(C-­‐horizon)
geochemistry
program
was
completed
over
the Rowo
Rejo
prospect
during
the
Quarter.
Brecciated
siliceous
rock
with
chalcedonic
banded
veins
fragments
often

Kingsrose
Mining
Limited Suite
9,
Level
2,
12-­‐14
Thelma
Street ABN
49
112
389
910 West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

==> picture [34 x 33] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

cut
by
quartz-­‐silica
veinlets
with
minor
hematite
and
pyrite
were
observed
in
this
prospect.
A
single
rock
float sample
of
silica-­‐clay
altered
rhyodacitic
crystal
tuff
collected
assayed
14.88
g/t
Au
and
126.16
g/t
Ag,
providing further
evidence
of
epithermal
gold
mineralization
in
the
prospect.

Sinter
silica
zones
are
common
at
the prospect
and
a
hot
spring
was
also
noted
in
the
area.

Reconnaissance
drilling
has
commenced
with
two
holes
completed
and
two
underway
at
the
end
of
the
Quarter. The
first
hole
into
the
prospect
DDH
-­‐251
intersected
a
zone
of
quartz-­‐silica
pyrite
breccia
with
hematite
filled quartz
crackle
veins
which
returned
0.8
m
at
7.28
g/t
Au
and
10.01
g/t
Ag,
from
302.4
m
down
hole.
Unfortunately the
hole
had
to
be
abandoned
at
this
intercept
due
to
drilling
complications.

==> picture [391 x 270] intentionally omitted <==

Figure
4:
CSAMT
Geophysics
results
at
the
Rowo
Rejo
Prospect
-­‐
11000
Northing

The
second
hole
DDH-­‐256
is
located
100m
north
of
DDH-­‐251
and
the
objective
of
this
hole
is
to
test,
at
a
deeper level,
the
zone
of
silica-­‐pyrite-­‐breccia
which
exhibited
vuggy
quartz
veinlets
and
was
associated
with
the
sinter
and hot
spring
at
surface.
The
hole
intersected
pervasive
moderate-­‐strong
silica
altered
rhyodacitic
tuff
with
minor
to moderate
quartz-­‐silica-­‐pyrite
veinlets
with
the
following
interesting
assay
results:

• 0.2m
  1.62
  g/t
  Au
  and
  3.93
  g/t
  Ag
  from
  145.1m

• 0.8m
  at
  0.65
  g/t
  Au
  and
  7.41
  g/t
  Ag
  from
  153.3m

• 0.15m
  at
  5.13
  g/t
  Au
  and
  7.60
  g/t
  Ag
  from
  184.2m

• 0.8m
  @
  1.26
  g/t
  Au
  and
  6.84
  g/t
  Ag
  from
  183.40m

• 0.30m
  at
  1.45
  g/t
  Au
  and
  6.33
  g/t
  Ag
  from
  187.7m

• 0.9m
  at
  1.96
  g/t
  Au
  and
  3.10
  g/t
  Ag
  from
  329.1m

• 0.6m
  at
  3.67
  g/t
  Au
  and
  7.22
  g/t
  Ag
  from
  332.7m

**SARINC

– SARDINIA ZINC TAILINGS PROJECT**

The
Company
has
put
its
SARINC
Project
on
hold.

The
project
concept
for
SARINC
was
to
commercially
extract
metals
from
historic
tailings
dams
and
dumps resulting
from
mining
and
processing
of
lead-­‐zinc-­‐silver
ores
in
south-­‐western
Sardinia,
Italy.

The
objective
was

Kingsrose
Mining
Limited Suite
9,
Level
2,
12-­‐14
Thelma
Street ABN
49
112
389
910 West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

==> picture [34 x 33] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

the
commercial
extraction
as
part
of
an
initiative
to
detoxify
and
reclaim
the
legacy
environmental
impact
of centuries
of
mining.

While
Kingsrose
confirmed
the
existence
of
large
tonnages
of
both
oxide
and
sulphide
tailings
and
initial
tests showed
that
the
extraction
was
technically
possible,
the
complexity
and
potential
capital
cost
of
the
project concept
is
unattractive
to
Kingsrose
without
full
support
of
the
regional
authorities.

After
significant
effort
and commitment
and
despite
the
economic
output
and
flow
on
benefits,
Kingsrose
has
not
received
the commensurate
support
and
enthusiasm
from
the
Sardinian
Government
or
received
adequate
security
of
title
to justify
further
investment
in
the
Project.

CORPORATE

Cash and bullion on hand at end of Quarter :

Cash A$34.9m Bullion A$4.3m Total A$39.2m _Bullion
includes
unrefined
(filter
cake,
dore)
and
refined
gold
and
silver_

Securities :

During
the
Quarter:

• 4,264,242
  listed
  and
  unlisted
  options
  were
  exercised
  for
  a
  total
  consideration
  of
  A$871,848.

At
the
end
of
the
Quarter
the
Company
had
the
following
securities
on
issue:

• 271,487,968
  Fully
  Paid
  Ordinary
  Shares

• 15,837,062
  Listed
  Options

• 11,175,000
  Unlisted
  Options
  issued
  to
  directors,
  employees
  and/or
  contractors
  under
  the
  ESOP
  or
  directors’ 15%
  rule.

==> picture [108 x 41] intentionally omitted <==

**CHRIS

START MANAGING
DIRECTOR**

25
January
2012

_**Competent

Person
Statement**_

The
information
in
this
report
that
relates
to
exploration
results,
mineral
resources
and
ore
reserves
is
based
on
information compiled
by
Mr.
Peter
G.
Cook, BSc
Applied
Geol,
MSc
(Min
Econ), who
is
a
Member
of
the
Australasian
Institute
of
Mining
and Metallurgy,
and
a
Director
of
and
a
consultant
to
Kingsrose
Mining
Limited.
Mr.
Cook
has
sufficient
experience
which
is
relevant to
the
styles
of
mineralisation
and
types
of
deposits
and
to
the
activity
he
is
undertaking
to
qualify
as
a
Competent
Person
as defined
in
the
2004
edition
of
the
Australasian
Code
for
Reporting
of
Exploration
Results,
Mineral
Resources
and
Ore
Reserves (“JORC
Code”).
Mr.
Cook
consents
to
the
inclusion
in
this
report
of
the
matters
based
on
his
information
in
the
form
and
context in
which
it
appears.

Kingsrose
Mining
Limited Suite
9,
Level
2,
12-­‐14
Thelma
Street ABN
49
112
389
910 West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

==> picture [34 x 33] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

**APPENDIX

“A”**

All
significant
diamond
hole
intercepts
received
during
December
Quarter
–
2011.
(NB:
significant
meaning
with
a
vein which
assays
above
1g/t
gold).

Hole No.	N	E	RL	Dip /Azimuth	Intercept Weighted Average	Depth From	True Width
DDH-236	19135	15241	1400	-65/198	2.25 m@6.81g/t Au,20.86g/t Ag		1.87
					(including0.4 m@8.68g/t Au,27.55g/t Ag)	370.6
					(including0.1 m@56.94g/t Au,221.41g/t Ag)	372.1
					(including0.55 m@8.36g/t Au,18.24g/t Ag)	372.2
DDH-238	19184	15169	1371	-70/200	2.3@1.85g/t Au,4.59g/t Au		1.85
					(including0.9 m@3.10g/t Au,7.73g/t Ag)	351.85
DDH-243	19217	15142	1358	-70/209	1.05m@2.71g/t Au and 4.96g/t Ag		0.81
					(including0.60 m@4.31g/t Au,8.11g/t Ag)	338
DDH-246	19254	15094	1357	-60/200	1.75m@1.62g/t Au and 10.96g/tAg		1.49
					2.60m@1.66g/t Au and 2.59g/t Ag		0.98
					(including0.65 m@3.55g/t Au,3.99g/t Ag)	289.95
					3.65m@8.38g/t Au and 36g/t Ag		3.18
					(including0.85 m@12.41g/t Au,41.93/t Ag)	417.1
					(including0.90 m@18.18g/t Au,86.07g/t Ag)	419.2
					(including0.20 m@5.32g/t Au,26.98g/t Ag)	420.1
DDH-247	19001	15245	1371	-60/195	1.75m@7.66g/t Au and 5.56g/t Ag		1.52
					(including0.55 m@13.30g/t Au,9.69g/t Ag)	264.9
					(including1.20 m@5.07g/t Au,3.67g/t Ag)	265.45
					2.6m@1.31g/t Au and 1.69g/t Ag		2.24
					(including0.90 m@1.54g/t Au,1.90/t Ag)	271.35
					0.15m@3.80g/t Au and 5.51g/t Ag	338.6	0.13
					0.15m@11.46g/t Au and 9.56g/t Ag	352.7	0.12
					0.20m@1.73g/t Au and 11.72g/t Ag	550.8	0.16
DDH-248	19270.5	15048.8	1341.6	-61/248	2.30 m@2.77g/t Au and 15.85g/t Ag	131	1.78
					(including1.3 m@3.67g/t Au, 13.43g/t Ag)	132
					1.4 m@2.01g/t Au and 2.01g/t Ag	135.90	1.1
					(including0.8 m@3.17g/t Au, 5.95g/t Ag)	136.50
					1.15 m@1.08g/t Au and 4.94g/t Ag	347.80	0.93
DDH-249	19103	15018	1339	-60/200	2.80m@1.01g/t Au and 24.94g/t Ag		2.48
					(including0.60 m@2.14g/t Au,21.60g/t Ag)	126.9
					6.3m@5.54g/tAu and 10.73g/tAg		5.15
					(including0.60 m@9.75g/t Au,17.67g/t Ag)	131.45
					(including0.75 m@12.03g/t Au,19.51g/t Ag)	132.05
					(including0.45 m@9.06g/t Au,5.19g/t Ag)	134.15
					(including0.4 m@6.71g/t Au,9.94g/t Ag)	135.3
					(including0.95 m@5.13g/t Au,12.03g/t Ag)	136.05
					1.3m@3.28g/t Au and 10.66g/t Ag		1.13
					(including0.90 m@4.62g/t Au,13.74g/t Ag)	286.4
DDH-250	18802	15197	1335	-60/238	0.30m@4.12g/t Au and 13.30g/t Ag	276	0.3
					0.20m@2.03g/t Au and 4.12g/t Ag	294.2	0.2
DDH-251	11460	6067	1069	-50/90	0.80m@7.28g/t Au,10.01g/t Ag	302.4
DDH-252	18909	15153	1362	-60/184	1.45 m@1.63g/t Au and 10.11g/t Ag		1.27
					(including0.20 m@5.32g/t Au,36.48g/t Ag)	428.5
DDH-253	19027	15071	1311	-50/200	5.45 m@8.56g/t Au and 21.04g/t Ag		5.02
					(including0.25 m@62.83g/t Au,72.01g/t Ag)	111.4
					(including0.25 m@30.34g/t Au,62.76g/t Ag)	111.65
					(including0.80 m@14.69g/t Au,17.04g/t Ag)	112.2
					(including1.05 m@5.70g/t Au,14.06g/t Ag)	114.8

Kingsrose
Mining
Limited Suite
9,
Level
2,
12-­‐14
Thelma
Street ABN
49
112
389
910 West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au

==> picture [34 x 33] intentionally omitted <==

Quarterly
Activities
Report
for
the
three
months
ended
31
December
2011

Hole No.	N	E	RL	Dip /Azimuth	Intercept Weighted Average	Depth From	True Width
DDH-254	18292.2	15023	1276.2	-61/146	1.6 m@1.11g/t Au and 5.99g/t Ag	242.5	1.6
					(including0.4m@1.32g/t Au,8.74g/t Ag)	243.7
DDH-255	19046	15005	1334	-60/200	1.5m@4.73g/t Au and 20.63g/t Ag		1.36
					(including0.50 m@12.22g/t Au,14.50g/t Ag)	91.65
					2.30 m@2.77g/t Au and 15.85g/t Ag	131	1.78
					(including1.3 m@3.67g/t Au,13.43g/t Ag)	132
					1.4 m@2.01g/t Au and 2.01g/t Ag	135.9	1.1
					(including0.8 m@3.17g/t Au,5.95g/t Ag)	136.5
					1.15 m@1.08g/t Au and 4.94g/t Ag	347.8	0.93
DDH-256	11543.8	6123.5	1046.9	-50/131	0.2 m@1.62g/t Au and 3.93g/t Ag	145.1	0.12
					0.8 m@1.26g/t Au and 6.84g/t Ag	183.4	0.8
					0.1 m@5.13g/t Au and 7.60g/t Ag	184.2	0.02
					0.30 m@1.45g/t Au and 6.33g/t Ag	187.7	0.3
					0.9 m@1.09g/t Au and 19.95g/t Ag	204.55	0.9
					0.9 m@1.96g/t Au and 3.10g/t Ag	329.1	0.9
					0.6 m@3.67g/t Au and 7.22g/t Ag	332.7	0.6
DDH-257	19067.9	15256.2	1386.8	-60/233	2.15 m@1.83g/t Au and 2.4g/t Ag	305.25	1.8
					(including0.15 m@5.32g/t Au,3.93g/t Ag)	305.85
					0.95 m@2.1g/t Au and 1.76g/t Ag	308.6	0.49
					(including0.35 m@3.61g/t Au,1.84g/t Ag)	308.6
					0.95 m@7.86g/t Au and 6.36g/t Ag	310.6	0.75
					(including0.45 m@13.36g/t Au,8.36g/t Ag)	311.1
					0.25 m@11.21g/t Au and 7.41g/t Ag	321.5	0.2
DDH-258	19032.4	15302.9	1391.4	-64/226	2.3 m@1.17g/t Au and 3.71g/t Ag	365.6	1.85
					(including0.20 m@3.04g/t Au,10.39g/t Ag)	365.6
					1.2 m@18.91g/t Au and 115.94g/t Ag	391.1	0.96
					(including0.40 m@18.18g/t Au,119.07g/t Ag)	391.1
					(including0.63 m@11.34g/t Au,51.81g/t Ag)	391.5
					(including0.17 m@48.70g/t Au,346.24g/t Ag)	392.13
DDH-259	18953.6	15096.4	1332.8	-50/217	1.05 m@13.14g/t Au and 9.74g/t Ag	113.75	0.92
					(including0.45 m@13.87g/t Au,10.32g/t Ag)	113.75
					(including0.60 m@12.60g/t Au,9.31g/t Ag)	114.2
DDH-261	8507.93	11151.7	1325	-60/90	0.85 m@1.01g/t Au and 3.17g/t Ag	327.9	0.85
DDH-265	18894.5	15101.1	1344.4	-56/241	0.35 m@1.51g/t Au and 315.97g/t Ag	164.45	0.29

Kingsrose
Mining
Limited ABN
49
112
389
910

Suite
9,
Level
2,
12-­‐14
Thelma
Street West
Perth
Western
Australia
6005

T:
+61
8
9486
1149
F:
+61
8
9486
1151 E: info@kingsrosemining.com.au