PERSEUS MINING LIMITED — Interim / Quarterly Report 2005

Oct 26, 2005

SEPTEMBER 2005 OUARTERLY STOCK EXCHANGE REPORT

Highlights

• Exploration at Tolubay in the Kyrgyz Republic has highlighted the potential for the discovery of a large gold deposit at Obdilla. Trenching continues to expand the defined limits of insitu mineralisation at Obdilla, with open ended intercepts including 78m @ 1.7g/t, 68m @ 1.7g/t, 30m @ 3.0g/t, 50m @ 1.6g/t and 156m $\hat{\omega}$ 0.6g/t Au. Drilling of the 2,000m long, 200m wide target zone has commenced.
• Adit sampling at Savoyardy in the Kyrgyz Republic has returned intercepts of 7m $\hat{a}$ 12.9g/t, 14m $\hat{a}$ 4.0g/t, 2m @ 38.9g/t and 2m @ 37.3 g/t Au from zones 4 and 10, soil sampling has defined a 3.5km by 0.5km area of strongly anomalous gold in soil adjacent to the high grade zones sampled in the adit.

Tolubay (Kyrgyz Republic)

The latest trenching at Obdilla has increased the known strike and width of the zone containing insitu gold Trenching continues to expand the defined limits of insitu mineralisation at Obdilla, with mineralisation. open ended intercepts including 78m @ 1.7g/t, 68m @ 1.7g/t, 30m @ 3.0g/t, 50m @ 1.6g/t, 36m @ 1.5g/t, 28m @ 1.8g/t, 18m @ 2.2g/t and 156m @ 0.6g/t Au

Drill access roads have recently reached the zones of insitu mineralisation on both the western and eastern ends of Obdilla Hill and sampling of road cuttings has further increased the width of the zone.

Drill pads are being prepared over the main anomaly at Obdilla Hill and diamond drilling of this target commenced in late October. The drill rig has moved to site ZDDH006, located between trench 27, which intercepted an open ended 50m @ 2.6g/t Au, and trench 41, which averaged 1.7g/t Au over its entire 78m length. Three drill holes are planned from this pad. A second drill rig is expected to arrive in November and drilling will continue throughout the northern winter.

Two holes drilled along the access road both ended before reaching the target zone. Drill hole ZDDH004 reached 260m but fell short of the zone of mineralisation located at surface 120m to the north. Additional drill rods are required to complete this hole. Drill hole ZDDH005, a reconnaissance hole drilled 140m west of the identified zone of insitu mineralisation, intercepted anomalous gold values averaging 0.3g/t over 26.4m from 116.6-143m, the hole was abandoned at 148.7m depth, short of the primary target depth.

Initial reconnaissance of soil anomalies east and north of Istagen has revealed extensive areas of favorable geology including the important Tolubai sequence and auriferous laminated limestones. Initial trenching at Istagen North ("Dome") has returned anomalous intercepts, including 40m @ $0.4$ g/t Au from a 40m trench which included 14m $@$ 0.7g/t Au. Mapping and sampling has also commenced at Istagen East. Drill pads will be prepared in this area after the completion of pads at Obdilla.

The structural setting and style of mineralisation present at Tolubay are similar to that found on the Carlin Trend in Nevada.

$\mathbf{I}$

Savoyardy (Kyrgyz Republic)

A total of 910m of adit sampling was undertaken during the quarter. Open ended intercepts from cross cuts included 7m @ 12.9g/t, 14m @ 4.0g/t, 32m @ 1.7g/t (incl. 9m @ 4.1g/t) and 11m @ 1.9g/t Au. Sampling across the lode exposed in the adit roof included 2m intercepts (open on both sides due to the width of the adit) of $2m (\omega)$ 38.9g/t, $2m (\omega)$ 37.3g/t, $2m (\omega)$ 22.8g/t, $2m (\omega)$ 18.0g/t, 2m @ 17.6g/t, 2m @ 14.9g/t, 2m @ 12.9g/t and 2m @ 12.1g/t Au. Most (+90%) of the gold in the +300m long Zone 4 is contained within high-grade sulphide rich shoots which have a high bulk density. Zone 10 has not been fully re-sampled due to access limitations within crosscuts where the soft carbonaceous shale contact containing high grades were previously intercepted. Hanging wall Devonian sediments have excellent stability. The adit does not accumulate noxious gases and oxygen levels are good, even without ventilation. Zones 4 and 10 represent excellent targets for selective underground mining of high grade shoots and is amenable to visual ore selection.

A total of 1,401 soil samples were collected from areas of anomalous stream sediments over about 13.5km strike. The most impressive areas of soil anomalism occur in an open ended arc 3,500m long and 500m wide, situated immediately east of the high grade Savoyardy deposit. The anomalous arc is located within a major flexure in the regional geology and probable associated dilation. An individual 400m long and 100m wide sub-anomaly, averaging 0.78g/t Au, 0.44% As and 0.28% Sb in soil, is located 600m west of the Savovardy deposit.

A further 196 infill soil samples and six trenches totaling 314m were completed prior to the suspension of exploration in October due to the onset of winter conditions. Results are awaited, though extensive sulphide mineralisation and quartz was noted during logging. A man portable diamond drill rig purchased for use in the Kyrgyz Republic will be used to test mineralised zones at Savoyardy next field season.

Tengrela (Ivory Coast)

The Company's reconnaissance drill rig is in the Ivory Coast, has completed customs clearance procedures and is enroute to the Tengrela project, where it will commence an initial 20,000m drilling program over the next six months to test a number of very strong soil anomalies on the Syama shear.

Grumesa (Ghana)

Feasibility work is continuing on the mine-haul-custom mill option for the Kayeya Gold Project on the Grumesa Licence.

Preparation of the Draft Environmental Impact Statement for the Kayeya Gold Project operation, including community consultation, is progressing well towards a target completion date of December 15, 2005.

Previously reported metallurgical test work undertaken in Australia returned high (97-99%) gold recoveries from gravity separation followed by conventional cyanide leaching, the process used at Anglogold Ashanti's oxide treatment plant in Sansu, Obuasi. Ball Mill Work Index (BBWI) work recently undertaken in the USA returned favourable results, with an average BBWI of 7.3 for transitional material and 12.6 for fresh material. The bulk of the target material is in fact oxide, which has a lower BBWI.

An assessment of the feasibility of a much larger, low grade, heap leach operation is also in progress. Initial metallurgical results from ongoing column test work in USA focused on the fresh material, as this potential ore type was considered the most important in terms of resource potential and least likely to be heap leachable. The 60 day leach test cycle has been completed and final results are awaited. Preliminary results at day 29 and day 44 indicate that recoveries will be far better than expected, with the three fresh rock column tests reporting recoveries apparently averaging 65% at day 29 and 69% on day 44.

Grumesa ID	Sample Type	BWi, kWr/st	BWi, kWr/mt
D007c	Transition - Ox	6.2	6.8
D007b	Transition - Fresh	7.0
D007d	Fresh	10.7	11.8
$D144a\&b + D145a$	Fresh	12.2	134

Ball Mill Work Index Testwork - Grumesa Project

Talas (Kyrgyz Republic)

Gold in soil results have been reported for 1,922 samples collected from three grids totaling 137 line km over a 100 sq km portion of the licence area. Relatively extensive gold anomalism has been identified over about 7km strike. Multi element geochemistry results are pending.

Scout outcrop sampling by Perseus in 2004 returned intercepts of 14m @ 1.9g/t, 26m @ 0.7g/t, 4m @ 1.5g/t, 6m @ 1.1g/t and 18m @ 0.3g/t Au. Most of the strongest soil values lie in areas not previously explored in detail.

The 905 sq km Talas licence is located 40km south west of the world class Jeroov gold deposit and 30km north east of the large Chaarat discovery.

Interest in assets sold to Monaro Mining NL

Perseus (20%) in conjunction with a group of Kyrgyz partners have secured a suite of uranium leases in the Kyrgyz Republic which it is intended will be sold, subject to due diligence and shareholder approval of the purchaser, to Monaro Mining NL (ASX code MRO). The sale will be completed by transferring equity in Carbeck Pty Ltd to Monaro for the consideration detailed in the ASX announcement by Monaro on 26 October 2005. Perseus's 20% equity will entitle it to 700,000 Monaro shares, 600,000 options to acquire Monaro shares exercisable at 40 cents on or before 30 June 2007 and 600,000 options to acquire Monaro shares exercisable at 60 cents on or before 31 December 2008 at settlement. Perseus will also be entitled to an additional 400,000 Monaro shares upon granting of all approvals required to commence mining on any one of the projects and 0.2% gross royalty on production, payable from when sales from mining operations exceed direct mine operating expenses and the cost of mine plant and infrastructure.

The interest in Monaro that Perseus will acquire on completion of the transaction gives it an exposure to some highly prospective uranium projects while it continues to focus on its own exciting gold projects.

Odlace.

Mark Calderwood Managing Director

27 October 2005

The information in this report that relates to exploration results, is based on information compiled by Mr Mark Calderwood, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Calderwood is a full-time employee of the Company. Mr Calderwood has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results. Mineral Resources and Ore Reserves'. Mr Calderwood consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Trench	East	North	Length	Azm	From	Tо	Intercept	Au
			(m)	(°)	(m)	(m)	(m)	(g/t)
T 2 8	251991	4447688	68	190	0	68#	68	1.7
				incl.	$\pmb{0}$	$30*$	30	2.1
T 29	252022	4447682	36	135	$\theta$	36#	36	1.5
T31	252025	4447638	30	190	$\boldsymbol{0}$	$18*$	18	2.2
				incl.	2	10	8	3.3
T33	251586	4447523	184	80	$\theta$	156*	156	0.6
				incl.	$\boldsymbol{0}$	$4*$	4	1.2
					58 82	72 102	14 20	0.8 0.8
					108	124	16	1.0
T34	251243	4447608	40	130	$\overline{2}$	32	30	0.7
T37	251102	4447476	32	140	$\boldsymbol{0}$	$18*$	18	1.3
				incl.	0	$10*$	10	1.7
T38	251000	4447518	24	175	$\theta$	24#	24	$0.8\,$
				incl.	18	$24*$	6	1.6
T39	250995	4447490	30	180	8	14	6	1.5
					22	$30*$	8	0.9
T40	250872	4447445	54	165	$\boldsymbol{0}$	$4*$	$\overline{4}$	0.6
					18	28	10	1.0
					28	48	20	0.3
T41	251805	4447643	78	115 incl.	$\boldsymbol{0}$ $\boldsymbol{0}$	78# $52*$	78 52	1.7 2.0
T45	251545	4447604	30	140	$\overline{2}$	$30*$	28	1.8
T49	251733	4447644	18	40	$\boldsymbol{0}$	$18\pi$	18	1.4
T50	251685	4447620	20	220	$\boldsymbol{0}$	$10*$	10	2.3
T51	251667	4447667	34	135	$\overline{2}$	$34*$	32	1.0
T53	251468	4447600	42	130	6	32	26	0.8
T65	251298	4447481	55	190	5	55*	50	1.6
				incl.	25	40	15	3.5
T66	251325	4447499	26	150	$\overline{2}$	18	16	1.2
					24	$26*$	$\overline{2}$	3.9
T67	251378	4447505	20	215	$\overline{c}$	18	16	0.7
T68 T69	251398 251402	4447520 4447518	10 14	140 130	0 $\overline{2}$	6* 12	6 12	1.6 1.3
T71	251238	4447626	50	110	14	50*	36	1.0
				incl.	14	20	6	1.7
				and	38	50	12	1.7
$\mathrm{T}74$	250742	4447433	22	160	$\overline{2}$	$22*$	20	1.3
T75	250723	4447447	18	165	$\overline{2}$	$18*$	16	1.0
T80	250725	4447524	20	170	$\pmb{0}$	16	16	2.5
T83	252247	4447709	10	150	$\overline{2}$	8	6	1.4
T84	251962	4447635	36	135	0	$30*$	30	3.0
				incl.	0	$16*$	16	3.8
T95	250573	4447525	33	150	$\overline{2}$	$33*$	31	0.9
T98	250596	4447444	14	205 incl.	4 6	$14*$ 12	10 6	2.6 4

Significant Trench intercepts Obdilla Prospect - Tolubay Project

$*$ ended or commenced in mineralisation, $#$ entire trench

Savoyardy Prospect - Savoyardy Gold Project

Appendix 5B

Mining exploration entity quarterly report

Name of entity

PERSEUS MINING LIMITED

ABN

27 106 808 986

Quarter ended ("current quarter")

Year to date

30 September 2005

Current quarter

Consolidated statement of cash flows

	Cash flows related to operating activities		\$A'000	(3 months) \$A'000
1.1	Receipts from product sales and related debtors
1.2	Payments for	(a) exploration and evaluation	(523)	(523)
		(b) development
	(c) production
		(d) administration	(265)	(265)
1.3	Dividends received
1.4		Interest and other items of a similar nature
	received		17	17
1.5	Interest and other costs of finance paid
1.6 1.7	Income taxes paid
	Other – (provide details if material)
	Net Operating Cash Flows		(771)	(771)
1.8	Cash flows related to investing activities Payment for purchase or renewal of:
		(a) prospects
		(b) equity investments
		(c) other fixed assets	(2)	(2)
1.9	Proceeds from sale of:	(a) prospects
		(b) equity investments
		(c) other fixed assets
$1.10 -$	Loans repaid to other entities		(15)	(15)
1.11	Loans repaid by other entities		23	23
1.12	Other
	Net investing cash flows		6	6
1.13	forward)	Total operating and investing cash flows (carried	(765)	(765)

1.13	Total operating and investing cash flows (brought forward)
1.14 1.15 1.16 1.17 1.18 1.19	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other – share issue expenses	700.	700.
	Net financing cash flows	700.	700.
	Net increase (decrease) in cash held	(65)	(65)
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	1,917 (3)	1,917 (3)
1.22	Cash at end of quarter	1,849	1,849

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	155
1.24	Aggregate amount of loans to the parties included in item 1.10	۰

$1.25$ Explanation necessary for an understanding of the transactions

——————————————————————————————————————
	A\$'000
Directors fees, consultancy charges and remuneration
Accounting, secretarial and occupancy expenses	60

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

$N/A$

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

$\mathbf{N}/\mathbf{A}$

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available \$A'000	Amount used \$A'000
$-31$	Loan facilities		$\blacksquare$
3.2	Credit standby arrangements		-

Estimated cash outflows for next quarter

	Total	750
4.2	Development	$\blacksquare$
4.1	Exploration and evaluation	750
		\$A'000

Reconciliation of cash

	Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter \$A'000	Previous quarter \$A'000
5.1	Cash on hand and at bank	274	111
5.2	Deposits at call	1,575	1,806
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	1.849	1.917

Changes in interests in mining tenements

		Tenement reference	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
-6.1	Interests in mining tenements relinquished, reduced or lapsed	None
6.2	Interests in mining tenements acquired or increased	None

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

		Total number	Number quoted	price Issue per	Amount paid up per
				security (cents)	security (cents)
7.1	Preference
	*securities
	(description)
7.2	Changes during
	quarter
7.3	+ Ordinary securities	63,018,450	29,585,005
	Changes during
	quarter	3,500,000	3,500,000	$20$ cents	20 cents
$\frac{7.4}{7.5}$	+ Convertible debt
	securities
	(description)
7.6	Changes during
	quarter
7.7	Options			Exercise price	Expiry date
	(description and conversion factor)
		24,532,500	14,792,500	20 cents	31/03/2009
$7.8\,$	Issued during
	quarter	1,750,000	1,750,000	$20$ cents	20 cents
7.9	Exercised during
	quarter
7.10	Cancelled/Expired
	during quarter
7.11	Debentures (totals only)
7.12	Unsecured notes	$\overline{\phantom{a}}$
	(totals only)

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.

Children .

Sign here:

Date: 27 October 2005

Print name: Mark Calderwood Managing Director