PRODIGY GOLD NL — Interim / Quarterly Report 2004

Jan 29, 2004

QUARTERLY REPORT

For the 3 Months Ended 31 December 2003

HIGHLIGHTS

OPERATIONS

Gascoyne Trial processing operation completed commissioning during November and commenced production during December. First shipment of raw concentrate received at Balcatta.

EXPLORATION

Detailed evaluation of Meekatharra (WA) and Clermont (Qld) gold project databases outlines numerous drill targets in extensions of existing deposits and in adjacent targets.

Joint Venture agreement covering base metal potential at the Gascoyne project signed with BHP Billiton.

RC drilling at the Norseman Gold Project has commenced.

BUSINESS DEVELOPMENT

Patent programme commences in conjunction with Boston University to secure rights over intellectual property created during the Phase | Tantalum SOM programme.

Option Agreement executed with Boston University over worldwide rights to Titanium and Magnesium metal production utilising the patented SOM process adding to the existing metals including Tantalum Niobium and Nickel covered by the existing license agreement.

CORPORATE

Placement of 20 million fully paid shares at a price of 8 cents per share to clients of Intersuisse Ltd completed during December.

31 January 2004

The Listing Manager Australian Stock Exchange Limited 10th Floor 10 Bond Street Sydney NSW 2000

Dear Sir.

OUARTERLY REPORT FOR THE 3 MONTHS ENDED 31 DECEMBER 2003

OPERATIONS

Gascoyne

Construction and dry commissioning of the Gascoyne Jig Plant was completed during the first week of November, and the plant was run up during the latter part of the month. The trial processing operations commenced in December on a one shift per day basis, testing ore parcels from various locations on the tenements. To the end of December approximately 4000 tonnes of material had been processed from two alluvial/eluvial systems adjacent to the plant site. The raw tantalum and niobium concentrate produced was delivered to the Balcatta facility for further processing.

Balcatta Mineral Dressing Facility

The Balcatta Mineral Dressing Facility received the initial wet concentrate feed from the Gascoyne project during the December quarter.

Reprocessing of low grade dry plant tailings was completed, and the pilot wet plant was used for preliminary metallurgical assessment of samples of gold ore from the company's Norseman tenements as part of the ongoing feasibility study.

No concentrate shipments were made during the December quarter.

Dalgaranga

The Dalgaranga plant remained on care and maintenance. Rehabilitation of the main tailings storage facility and a general site cleanup was conducted as part of the ongoing requirements.

EXPLORATION

Gold

Norseman (TAA 100%)

RC Drill sampling that had been programmed for the Norseman gold project was postponed due to a delay in the arrival of the drilling rig. The programme has now commenced and will continue during January-February 2004, Metallurgical test work. engineering design and resource estimation continued as part of a larger feasibility study into the development of an open pit operation. The study will be finalised after completion of the current drilling programme.

Meekatharra and Clermont (TAA 100%)

A detailed analysis of the geochemical and drilling database was completed with the aim of identifying additional drill targets at each project in extensions to existing mineralisation intersected by earlier drilling and in adjacent structural/geochemical targets. A number of priority targets were identified and a drilling programme has been designed to test each target.

Tantalum

The company has further refined its project portfolio to focus on four key regions that contain existing resources or have the highest potential for definition of economic hard rock or alluvial/eluvial mineralisation in WA being: Kimberley (incl. Brockman). Gascovne. Binneringie and Norseman (incl. Mt Deans). Also as part of the African operation evaluations of several projects that have been offered to the company are currently being undertaken.

In line with the Company's policy to rationalize its tenement holdings and terminate projects that it perceives to have inadequate economic potential, two exploration licences were relinquished at Dalgaranga. The Company has retained the tenements that host known resources and on which the plant and camp are located. In addition the option to purchase the Walwa property in Victoria was not exercised because the value of the modest grade of the resources was offset by anticipated infrastructural difficulties. Also, after initial field evaluation the Arkaroola project (South Australia) was terminated because of sub economic tantalum values returned from rock chip sampling.

Base Metals

Progress was made on joint venture negotiations for various rare metal and base metal projects. A joint venture agreement was concluded with a farm out of a tenement in the Gascoyne group to BHP Billiton who will conduct a base metal search. This tenement is one of a group acquired when Tantalum Australia acquired Rare Resources NL.

BUSINESS DEVELOPMENT

Boston University SOM R&D

The R&D programme for Tantalum Phase II was finalised with Boston University. This Phase II is essentially a pilot plant pre feasibility study. It is planned to commence this next Phase in April 2004. R&D programmes for Titanium and Magnesium are being prepared. These programs are provisionally set down to commence in the second Quarter of 2004. Discussions with interested parties in the SOM R&D programmes were in their early stages.

The company has presented a research funding proposal to a potential R&D partner during the quarter and has also had an unsolicited approach from a major offshore mining/refining group interested in participating in the SOM R&D project. Several technical partners have also offered services as part of the R&D programme.

Tantalum Market

Indications of a sustained improvement in the electronics sector that began in May 2003 (tantalum powder) continued as many capacitor, semiconductor and component manufacturers in the US, Asia and Japan reported capacity utilisation rates in excess of 80% up from below 50% during 2002 and the first half of 2003. The electronics sector consumes 60% of the world's tantalum production and the higher consumption rates are expected to lead to greater demand for tantalum raw materials during 2004 given that inventory levels have also been reduced significantly. The aerospace sector (tantalum metal) which accounts for about 25% of consumption is experiencing sluggish demand and any recovery is not expected until late 2004 and 2005, although General Electric announced in their December 2003 Quarterly that orders for iet engines and power systems are forecast to improve in 2004.

Consistent with the above turnaround in the electronics sector the Company has had a significant increase in customer enquiry for supply during 2004 and beyond. Discussions are currently being held with a number of parties regarding the establishment of one to three year off take agreements for tantalum concentrate.

CORPORATE

During the quarter the following ASX announcements were released regarding the Company's projects:

• 7 Oct 2003 Boston University announced the final results of the Stage I SOM R&D Project for high purity metal produced from concentrates.
• Tantalum Australia NL released a Prospectus for the offer of approximately 2,996,668 shares to the shareholders 12 Nov 2003 of Rare Resources NL in consideration for the acquisition of all their Rare Resources shares by Tantalum Australia Operations Pty Ltd (a wholly owned subsidiary of Tantalum Australia NL).
• 2 Dec 2003 Wholly owned subsidiary Rare Resources NL entered a Base Metal Farm-In Agreement with BHP Billiton.
• 3 Dec 2003 Tantalum Australia secured SOM rights to Tantalum and Magnesium metal processing technology.
• 12 Dec 2003 Placement to institutional investors to provide working capital to secure raw material for processing and fast track the SOM R&D to commercialise a new metal extraction technology.

At the end of the quarter the Company had cash and liquid assets (not including inventory) of \$1.25 million and \$0.70 million available in its drilling fund available for utilisation in future drilling programmes.

Yours faithfully.

Michael Fotios Managing Director

NOTE:

The information on mineralisation contained in this report accurately reflects information compiled by Tantalum Australia NL Managing Director Michael Fotios who is a Competent Person as defined in the Australasian Code for reporting of Identified Mineral Resources and Ore Reserves.

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98.

Name of entity

TANTALUM AUSTRALIA NL

ACN or ARBN

009 127 020

Quarter ended ("current quarter")

31 December 2003

Consolidated statement of cash flows

			Current quarter	Year to date
	Cash flows related to operating activities		\$A'000	(6 months)
				\$A'000
1.1	Receipts from product sales and related debtors -		102	557
	Receipts from product sales - prepaid
1.2	Payments for	(a) exploration and evaluation	(108)	(232)
		(b) development & R&D	(333)	(839)
		(c) production	Nil	(264)
		(d) administration & corporate	(400)	(690)
1.3	Dividends received
1.4	Interest and other items of a similar nature received		8	22
1.5	Interest and other costs of finance paid		(6)	(6)
1.6	Income taxes paid
1.7	Other (provide details if material)		(13)	(13)
	Net Operating Cash Flows		(750)	(1,465)
	Cash flows related to investing activities
1.8	Payment for purchases of:	(a)prospects
		(b) equity investments
		(c) other fixed assets	(1)	(108)
1.9	Proceeds from sale of:	(a)prospects
		(b) equity investments
		(c)other fixed assets
1.10	Loans to other entities
1.11	Loans repaid by other entities
1.12	Other (provide details if material)		50	50
	Net investing cash flows		49	(58)
1.13		Total operating and investing cash flows (carried

1.13	Total operating and investing cash flows (brought forward)	(701)	(1,523)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	1,654	2,651
1.15	Proceeds from sale of forfeited shares
1.16	Payment for borrowings/environmental bonds
1.17	Repayment of borrowings	(71)	(302)
1.18	Dividends paid
1.19	Other (provide details if material)	20	79
	Net financing cash flows	1,603	2,428
	Net increase (decrease) in cash held	902	905
1.20 1.21	Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20	307	304
1.22	Cash at end of quarter	1,209	1,209

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

		SA'000
1.23	Aggregate amount of payments to the parties included in item 1.2	59
1.24	Aggregate amount of loans to the parties included in item 1.10
1.25	Explanation necessary for an understanding of the transactions

Current quarter

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

November 2003 Acquisition of Rare Resources NL : Issue of 2,996,668 shares to Rare Resources NL shareholders as consideration for the acquisition of Rare Resources NL.

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

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 (Note 6)	245	129
3.2	Credit standby arrangements

Estimated cash outflows for next quarter

	Total
4.2	Development & R&D	392
4.1	Exploration and evaluation	208
		\$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	1.209	307
5.2	Deposits at call
5.3	Bank overdraft
5.4	Other (provide details)
	Total: cash at end of quarter (item 1.22)	1.209	307

Changes in interests in mining tenements

		Tenement reference	Nature of interest (note $(2)$ and note $(7)$ )	Interest at beginning of quarter	Interest at end of quarter
6.1	Interests in mining	Broad Arrow L24/131	owned	100%	$0\%$
	tenements relinquished,	Broad Arrow L24/132	owned	100%	$0\%$
	reduced or lapsed	Dalgaranga E59/969	owned	100%	$0\%$
		Dalgaranga E59/970	owned	100%	0%
		Walwa E4431	option	$0\%$	$0\%$
		Arkaroola E3047	owned	80%	$0\%$
6.2	Interests in mining	Gascoyne M09/62	owned	$0\%$	100%
	tenements acquired or	Gascoyne M09/75	owned	$0\%$	100%
	increased	Gascoyne ELA09/1047	owned	$0\%$	100%
		Gascoyne PLA09/417	owned	$0\%$	100%

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	Issue price per security (see note $3)$ (cents)	Amount paid up per security (see note 3) (cents)
7.1	Preference +securities (description)	Nil
7.2	Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3	+Ordinary securities	243,492,046	243,492,046
7.4	Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs	22,996,668	22,996,668
7.5	+Contributing shareas(description)	Nil
7.6	Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7	Options (description and conversion factor)	Unlisted 3,250,000 1,345,000		Exercise Price \$0.20 \$0.25	Expiry Date 31 March 04 28 February 05
7.8	Issued during quarter	Nil
7.9	Exercised during quarter	Nil
7.10	Expired during quarter	$N$ il
7.11	Debentures (totals only)	$N$ il
7.12	Unsecured notes (totals only)	$N$ il

Compliance statement

This statement has been prepared under accounting policies which comply with $\mathbf{1}$ accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4).

$\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Date: 30 January 2004

Print name: Peter Farrah

Notes

• $\mathbf{1}$ The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $\overline{2}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
• $\overline{3}$ Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
• The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries $\overline{4}$ and AASB 1026: Statement of Cash Flows apply to this report.
• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
• $6(a)$ During the March 2003 quarter, Tantalum Australia NL entered into a Loan Agreement with Austminex NL (a company associated with Michael Fotios, Managing Director of Tantalum Australia NL) to provide working capital for the Company totalling up to \$225,000. As at 31 December 2003, these funds were drawn down to \$108,768. The loan is secured over tantalum concentrate currently held by the Company and a large ballmill in Norseman currently owned by the Company. The interest rate is 7.5% per annum. The due date for repayment of the loan has been extended to 31 March 2004.

$(b)$ On December 2 2003, Tantalum Australia NL entered into a Loan Agreement with Rexfam Consulting Pty Ltd (a company associated with Timothy King, Chairman of Tantalum Australia NL) for an amount of \$20,000, at an interest rate of 7.5% p.a. As at December 31 2003, the loan was drawn down to \$20,000. The purpose of the loan is to provide working capital to Tantalum Australia NL until such time as Tantalum Australia NL completes a proposed capital raising or otherwise has sufficient financial capacity to repay the loan.

FOR THE QUARTER ENDED 31 December 2003
Areas of interest	Tenements	Economic Entity's Interest	Joint Venture Partners
WESTERN AUSTRALIA
Broad's Dam	G16/11	100	Kinross Option
	G16/12	100	Kinross Option
	G16/13	100	Kinross Option
	G16/14	100	Kinross Option
	M16/88	100	Kinross Option
Broad Arrow	G24/14	100
	G24/15	100
	G24/16	100
	M24/104	100
Dalgaranga	E59/967	100
	M59/106	100
	MLA59/553 MLA59/554	100 100	Part E59/967 Part E59/967
Meekatharra	E51/319	100
	E51/361	100
	MLA51/691	100	formerly E51/319
	MLA51/692	100	formerly E51/319
	MLA51/693	100	formerly E51/319
	MLA51/708	100	formerly E51/324
	MLA51/701	100	formerly E51/361
	MLA51/702 ELA51/984	100 100	formerly E51/361
	ELA51/985	100
	E51/290	$75.76 -$	{Barrick Gold of Australia Ltd, Murchison Resources Pty Ltd}
	MLA51/695	75.76	formerly E51/408
	MLA51/696	75.76	formerly E51/408
	MLA51/697	75.76	formerly E51/409
	MLA51/689	75.76	formerly E51/290
	MLA51/690	$75.76$ $-$	formerly E51/290
Mt Gibson South	ELA59/875 ELA59/876	75 75	Mawson West Mawson West
	ELA59/890	75	Mawson West
Norseman	L63/46	100
	P63/719	100
	P63/749	100
	P63/798	100
	P63/799	100
	P63/800	100
	P63/801 P63/911	100 100
	M63/172	100
	M63/225	100
	M63/226	100
	M63/247	100
	M63/262	100
	M63/229	100
	MLA63/369	100	Formerly P63/749

SUMMARY OF MINING TENEMENTS AND AREAS OF INTEREST Note 7

Areas of interest	Tenements	Economic Entity's Interest	Joint Venture Partners
Norseman cont.	MLA63/347	100	Formerly P63/719
	MLA63/374	100	Formerly P63/800
	MLA63/375	100	Formerly P63/801
	MLA63/376	100	Formerly P63/798
	MLA63/377	100	Formerly P63/799
	MLA63/475	100	Formerly P63/911
Binneringie	M15/217	100
	M15/468	100
Mt Deans	P63/740	100
	P63/741	100
	P63/758	100
	P63/945	100
	P63/946	100
	P63/947	100
	P63/948	100
	P63/949	100
	P63/950	100
	MLA63/397	100	Formerly P63/740,741,758
	MLA63/513	100	Formerly P63/945-950
	MLA63/541	100	Formerly P63/1074,1075
Gascoyne	ELA09/1099	100
	ELA09/1100	100
	ELA09/1136	100
	ELA09/1137	100
	M09/62	100
	M09/75	100
	ELA09/1047	100	BHP Billiton (Base Metals only)
	PLA09/417	100
QUEENSLAND
Clermont	MDL28	100
	MDL103	100
	MDL106	100
	MDL143	100