PERSEUS MINING LIMITED — Interim / Quarterly Report 2005

Oct 28, 2004

SEPTEMBER 2004 OUARTERLY STOCK EXCHANGE REPORT

After Perseus raised $3,717,000 from its IPO, its securities commenced trading on the Australian Stock Exchange on 22 September 2004. While most activity during the quarter focused on the IPO process, there was some limited exploration, as reported below. Preparations were also being made for active exploration programs on the Grumesa and Tengrela projects, scheduled to commence in October.

Tengrela (Ivory Coast)

All necessary approvals to commence exploration have been obtained and the supervising geologist has made a field inspection in preparation for commencing pitting and infill and extension soil sampling programs in October and RAB drilling of the identified targets in November. An initial 3.000m drilling program will be commenced using a local drilling contractor and a second rig is expected to be operating within three months.

Grumesa (Ghana)

Drilling to infill and extend a higher-grade portion of the 450,000oz Kayeya deposit commenced in October. The two stage program consisting of 2,900m of RC resource drilling and 200m of diamond drilling for metallurgical purposes will be followed by a resource upgrade on the highergrade zone and a feasibility study assessing the viability of mining and trucking ore grade material to a toll treatment facility.

In addition to providing closer spaced drilling to enable an upgrade of the existing inferred resource to indicated status, the program will test a flat, shallow dipping gold mineralized structure defined in previous drilling near surface. The extent of this mineralisation was not tested previously since the average hole depth on the prospect is only 25m vertical.

Savoyardy - Kyrgyz Republic

Diamond drilling has commenced on the Savovardy project. A delay due to late commencement of road works meant that the target zones for a planned ten hole drilling campaign has not yet been reached. However, mineralisation encountered 700m south-west of Pogranichnoe was found to contain anomalous gold grades of up to 1.1g/t Au in four sub-zones totalling 26m in width in surface exposures. A two hole drilling program is in progress to test this zone. The 600m long Pogranichnoe zone is located 2.7km south-west of the Savoyardy zone, where high grade gold mineralisation ranging up to 12.4g/t over 13m has been delineated in adit sampling below low grade mineralisation at surface.

In view of the delays, joint venture partner Lalo Ventures Ltd ("Lalo") has been given extra time to complete its farmin commitments. Lalo now has until 30 June 2005 to spend a minimum of US$250,000 on exploration. It may then elect to spend a further US$750,000 by 31 December 2005 to maintain its farmin rights. To earn 70% equity, Lalo is required to spend a total of US$2 million by 31 December 2006, US$3 million by 31 December 2007 and US$6 million by 31 December 2008.

Tolubay - Kyrgyz Republic

At Tolubay gold is located within altered carbonaceous shale associated with arsenic mineralisation stratigraphically above cinnabar bearing jasperoid and limestone. Most of the limited number (<400) of samples taken intermittently within a 9.5km portion of the limestone shale contact zone returned significant grades ranging from $0.2$ to $19.8g/t$ Au. Higher grade gold mineralisation appears to be associated with local faulting and increases in grade with depth. This style of gold mineralisation has similarities to some deposits on the Carlin Trend in Nevada.

Three diamond drill holes are planned, the first below PDC 1-98, one of three holes drilled by Phelps Dodge in 1998 that intercepted stratagraphic mineralisation which included 20m $\omega$ 1.9g/t Au from 60m. The second and third holes will be drilled to test mineralisation associated with an offset fault where adit sampling returned 26m $\omega$ 4.45g/t and 12.5m $\omega$ 1.65g/t Au (horizontal sampling, open ended).

Data compilation and a recent site visit have revealed the Tolubay project to have significant potential for large tonnage low grade mineralisation in a favorable location. In addition to drilling, the company will undertake geochemical sampling for gold over the 15km target zone, where mercury was mined from the 1940s to 1990s. Sampling for gold was first carried out in the late 1990s but there has been no systematic exploration. The target area is located below 1400mASL and is amenable to almost year round exploration.

$Kyldoo - Kyrgyz Republic$

At Kyldoo, Lalo completed four diamond drill holes totalling 591m into the folded Vendian carbonaceous shale setting. The holes were spaced over 1.85km and were designed to test for Kumtor style mineralisation. Drill holes KDD01 to KDD03 were successful in confirming the overall geologically and metsomatic alteration, however alteration, sulphide and gold mineralisation in the core was weak. The last hole, KDD04, drilled 1.060m south-east of KDD03. encountered an altered porhyritic intrusive and pervasively altered limestone and shale host rocks containing abundant sulphides and anomalous gold mineralisation. The most significant intercept was 8m $\omega$ 0.5g/t Au. Alteration and mineralisation encountered in KDD04 are indicative of intrusive contact related mineralisation. The large Makmal gold mine, located 3.7km north-east from KDD04, comprises intrusive contact style gold mineralisation. Surface trench results including 4m $\omega$ 6.3g/t, 4m $\omega$ 6.4g/t and 8m $\omega$ 3.0g/t Au, soil anomalies located between KDD04 and Makmal and soil anomalies further south over larger intrusives are prospective untested targets.

Lalo withdrew from the joint venture, leaving Perseus with 50% equity in and management of the project. Perseus and joint venture partner JSC Kentor will fund ongoing exploration equally or dilute.

Talas - Kvrgyz Republic

Outcrop channel sampling was undertaken on the Talas Project, with 630 samples collected from two prospect areas covering 30sq km. Early results from the wide spaced sampling are consistent with previous exploration, and included intercepts of 4m @ 4.6g/t, 4m @ 1.5g/t, 2m @ 1.6g/t, 26m @ $0.7g/t$ and 8m @ $0.4g/t$ Au. Gold is associated with pyrite, chalcopyrite and alteration minerals within sheared metasediments, metabasalt and quartz veining. Secondary copper, pyrite minerals and barites are widespread, as are alteration minerals. Anomalous gold occurs over at least 40km Extensive previous geochemical and geological data is currently being digitized in strike. preparation for the next exploration season, which is expected to commence in April 2005.

$Malv \nNarvn - Kvrycz Republic$

A total of 825 outcrop channel samples have been collected over an area of 15sq km at Maly Naryn. The sampling programme was undertaken to extend the area of defined insitu gold occurrences and to test a stream sediment gold anomaly. Anomalous results were widespread, though grades were typically below 0.5g/t Au. Exploration will recommence in May 2005 after the winter break and will focus intrusive contact style gold mineralisation associated with the granodiorite intrusive. Previous scout sampling included grades up to $42g/t$ Au in sulphide bearing sandstone, up to $71g/t$ Au in quartz veins and up to $10g/t$ Au in skarn samples.

Yours faithfully

Salta de Carlos de Carlos de Carlos de Carlos de Carlos de Carlos de Carlos de Carlos de Carlos de Carlos de

Mark Calderwood Managing Director

The geological information included in this report has been prepared by Mr Mark Calderwood, a director of the company, who is a member of The Australian Institute of Mining $&$ Metallurgy and has more than the required 5 years experience.

Appendix 5B

Mining exploration entity quarterly report

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Name of entity

PERSEUS MINING LIMITED

ABN

27 106 808 986

Quarter ended ("current quarter")

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30 September 2004

Consolidated statement of cash flows

Cash flows related to operating activities		Current quarter$A'000	Year to date(3 months)$A'000
1.1	Receipts from product sales and related debtors
1.2	(a) exploration and evaluationPayments for(b) development(c) production	(80)	(80)
1.31.4	(d) administrationDividends received	(68)	(68)
	Interest and other items of a similar naturereceived	19	19
1.51.61.7	Interest and other costs of finance paidIncome taxes paidOther - (provide details if material)
	Net Operating Cash Flows	(129)	(129)
1.8	Cash flows related to investing activitiesPayment for purchase or renewal of:
	(a) prospects(b) equity investments(c) other fixed assets	(157)	(157)
1.9	Proceeds from sale of:(a) prospects(b) equity investments(c) other fixed assets
1.101.111.12	Loans repaid to other entitiesLoans repaid by other entitiesOther - (provide details if material)	(102)31	(102)31
	Net investing cash flows	(228)	(228)
1.13	Total operating and investing cash flows (carriedforward)	(357)	(357)

1.13	Total operating and investing cash flows (broughtforward)	(357)	(357)
1.141.151.161.171.181.19	Cash flows related to financing activitiesProceeds from issues of shares, options, etc.Proceeds from sale of forfeited sharesProceeds from borrowingsRepayment of borrowingsDividends paidOther - share issue expenses	3,717	3,717
	Net financing cash flows	(220)3,497	(220)3,497
	Net increase (decrease) in cash held	3,140	3,140
1.201.21	Cash at beginning of quarter/year to dateExchange rate adjustments to item 1.20	403(2)	403(2)
1.22	Cash at end of quarter	3,541	3,541

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

		Current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	44
1.24	Aggregate amount of loans to the parties included in item 1.10	-

1.25 Explanation necessary for an understanding of the transactions

	A$'000
Consultancy fees and Executive Directors' remuneration
Accounting, secretarial and corporate services

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

$N/A$

$2.2^{\circ}$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Lalo Ventures Ltd - Savoyardy project - US$68,142 Lalo Ventures Ltd - Kyldoo project - US$80,000

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
3.1	Loan facilities
3.2	Credit standby arrangements		-

Estimated cash outflows for next quarter

-4.2	Development	$\blacksquare$
	Total	400

Reconciliation of cash

Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows) tothe related items in the accounts is as follows.		Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	329	163
5.2	Deposits at call	3,212	240
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	3,541	403

Changes in interests in mining tenements

		Tenement reference	Nature of interest(note (2))	Interest atbeginningof quarter	Interest atend ofquarter
-6.1	Interests in miningtenements relinquished,reduced or lapsedInterests in miningtenements acquired orincreased	None
-6.2		None

Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	$^-\text{price}$Issuepersecurity (cents)	Amount paid up persecurity (cents)
7.1	Preference+ securities(description)
7.2	Changes duringquarter
7.3	+ Ordinarysecurities	59,518,450	22,335,005
$7.4,$	Changes duringquarter	18,585,000	18,585,000	20 cents	20 cents
7.5	+ Convertible debtsecurities(description)
7.6	Changes duringquarter
7.7	Options(description andconversion factor)			Exercise price	Expiry date
		19,982,500	11,167,500	20 cents	31/03/2009
7.8	Issued duringquarter
		16,232,500	9,292,500	20 cents	31/03/2009
7.9	Exercised duringquarter
7.10	Cancelled/Expiredduring quarter
7.11	Debentures(totals only)	۰
7.12	Unsecured notes(totals only)	۰

Compliance statement

• This statement has been prepared under accounting policies, which comply with $\mathbf{1}$ accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
• $\overline{2}$ This statement gives a true and fair view of the matters disclosed.

føller blessor

Sign here:

Print name:

Director COLIN JOHN CARSON

Date: 29 October 2004