SAVANNAH GOLDFIELDS LIMITED — Capital/Financing Update 2005

Mar 2, 2005

ACN 003 049 714

Mail Address GPO Box 5268 Brisbane Old 4001

Street Address Level 5, 60 Edward Street Brisbane Old 4000

Phone: (07) 3303 0630 Fax: (07) 3303 0601 Email: admin@rcm.com.au

ASX ANNOUNCEMENT - 3 March 2005

TOM'S GULLY GOLD PROJECT -POSITIVE FEASIBLITY STIIDY AND PROJECT MOVES TOWARDS DEVELOPMENT

The Directors of Renison Consolidated Mines NL are pleased to advise on the positive outcomes of the feasibility studies relating to the Tom's Gully Gold Mine development.

FEASIBILITY STUDY HIGHLIGHTS

• The Feasibility Study on underground gold mining at Tom's Gully has concluded that the project is $\bullet$ technically and economically feasible.
• Projected Base Case production from underground averaging 240,000 tonnes per annum for 45,000 $\bullet$ ounces per annum of gold for an initial 5 year mine life.
• Base Case resource (combined indicated and inferred) of 1.82 million tonnes at 8.1 g/t gold for $\bullet$ 472,000 contained ounces.
• Cash operating costs estimated at A\$370 per ounce. $\bullet$
• Base Case project cash flow surplus of A\$25 million over the initial mine life of 5 years at an $\bullet$ assumed gold price of A\$540 per ounce.
• Processing route to utilize existing Tom's Gully CIL gold processing plant following upgrade and refurbishment.
• Capital costs for pre-production plant refurbishment and upgrade of \$3.5 million. ٠
• Relevant statutory approvals for the project have been received. $\bullet$
• Debt financing package being progressed with a range of funding alternatives being considered. $\bullet$
• Decision to mine will be made once the financing and mining arrangements have been finalized. $\bullet$
• To facilitate a timely development, initial site-works and ordering of long lead items for the ٠ refurbishment and upgrade of the existing CfL gold treatment plant has already commenced.
• Commencement of gold production targeted for mid year 2005. ٠
• Stage 2 expansion development targeting production of over 60,000 ounces per annum via increased $\bullet$ recovery and treatment of existing tailings and open cut ore.
• Potential for increased mine life from exploration on the Tom's Gully reef. The underground $\bullet$ resource is open down dip and drilling is scheduled for this year.

ACN 003 049 714

Additional potential for open cut ore from exploration on the company's 1,060 square kilometres of $\bullet$ . exploration licences in the Northern Territory including the Quest 29 and Steve's Hill projects.

Introduction

Renison committed to undertake the feasibility study on the Tom's Gully mine in January 2004 following completion of an 8 hole drilling programme, metallurgical testwork, mining study and economic review over the previous six months.

The study incorporated a wide range of disciplines and investigations including:

• geological interpretation and database compilation
• 14,000m of resource definition drilling $\bullet$
• resource modelling and validation $\bullet$
• metallurgical testwork and process flow sheet design $\bullet$
• process engineering, plant lay out and refurbishment costings $\bullet$
• underground dewatering testwork and studies $\bullet$
• environmental $\bullet$
• regulatory approvals $\bullet$
• geotechnical engineering and ground support design
• mining engineering and scheduling $\bullet$
• financial modelling $\bullet$

Integral to the study was the completion of 14,000m of drilling for 50 diamond drill hole intercepts in the second half of 2003 through to July 2004. This drilling was used not only for geological and assay purposes but also to provide a sound basis for geotechnical appraisal and to provide representative samples for metallurgical testwork.

The study has shown that re-opening the Tom's Gully mine to treat ore produced by underground mining at Tom's Gully is both technically and economically feasible based on the Base Case production of 1.2Mt at a diluted grade of $7.2g/t$ gold for an initial 5 year mine life to produce on average 45,000 ounces of gold per annum.

The proposed underground mining operation represents the first phase of development of Renison's Northern Territory gold assets with the objective of later expanding production to over 60,000 ounces per annum from open cut mining, existing tailings re-treatment and increased recoveries through changes to the treatment process route.

A decision to mine will be made once the financing and mining arrangements have been finalised. In the meantime, to facilitate timely development the company has already commenced initial site works and ordering of long lead time items and will commence advance mine dewatering at the end of March

ACN 003 049 714

Location, Tenure and Permitting

The Tom's Gully project is located approximately 100km to the southeast of Darwin in the Northern Territory. Access to the site from Darwin is via the sealed Stuart and Arnhem Highways. The mine is located 1.5km to the south of the Arnhem Highway with access via a well formed and maintained gravel road.

The Tom's Gully underground development is located within Mineral Lease 1058 which was granted in 1989 and is due to expire in August of 2014. The company has been granted a number of Mineral Claims that adjoin the Mineral Lease.

The Northern Territory Government Department of Business Industry and Resource Development have given authorisation to proceed with the proposed development.

Geology

The Tom's Gully deposit is hosted by the Early Proterozoic Wildman Siltstone, which is a thick unit comprising laminated shale, carbonaceous and often pyritic siltstone inter-bedded with undifferentiated volcanics and minor dolomitic sediments. The deposit occurs as a quartz reef within a mylonite zone with gold generally as free grains of electrum, associated with arsenopyrite or pyrite.

The reef has a strike extent of 800 m but has only been mined over 400 m of the eastern half of the system. The reef varies in thickness from 1 m to 4 m with an average thickness in the area to be mined of approximately 2m. The reef strikes roughly east-west and dips to the south-south-east at 30° near surface to sub-horizontal about 1500 m down dip.

The open pit mined portion of the orebody was contained primarily within two shoots within the reef. Down dip drilling beyond the pit extremities has located what is interpreted to be a series of en echelon shoots that mimic the orientation of the regional deformation, plunging along $220^{\circ}$ .

Resources

The resource estimate is tabulated below at 5m.g/t gold grade thickness-grade cut off.

Cutoff $\lfloor$ (m.g/t)	Resource Category	Топиаде IMIQ	tarato (g/t gold)	Contained TANA (mintes)
5.0	Indicated	0.69	7.6	169,000
	Inferred	1.13	83	302,000
	Fotal			71,000

Ordinary Kriging resource estimation with $5.0$ m.g/t cut off

The deposit is open down dip and there is potential for significant increases in resources with further drilling. A drilling program will be undertaken this year.

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ACN 003 049 714

Mining

Tom's Gully reef is a relatively shallow and flat lying orebody with dips ranging from 0 to 20 degrees. Mining will be undertaken employing conventional mining methods using standard mining equipment such as 2 boom and single boom jumbos. The mining methods and ground support requirements will vary to suit the different ground conditions indicated from the extensive drilling taking into account both the 50 recent drill holes and historical data. The mining methods are flexible and considered low risk due to multiple loading and numerous production areas. Dewatering of the mine in advance of mining by a number of new bores, which will supplement the existing dewatering bores, will commence this month.

The mine costings are based on recent quoted material costs and contractor operating costs.

Metallurgy & Processing

There has been extensive metallurgical testwork undertaken on the Tom's Gully ore as part of the feasibility study. Sample representivity, in terms of geography and grade, was ensured by the large number of cores available from the 2003 and 2004 drilling programs.

Testwork included:-

• Diagnostic leach tests and preliminary CIL test
• CIL by grind size
• Floatation, bulk floatation and CIL on ultra fine grind concentrates
• CIL by grind size on concentrates
• Reagent optimisation $\bullet$ .

The gold mineralisation is associated with sulphides and although predominantly occurring as free gold it is also partly refractory with liberation and recovery dependent on grind size. The gold reports with high recoveries to a sulphide concentrate allowing the options of finer grinding whole of ore or concentrate.

The following processing route was determined from the testwork for the processing of the Tom's Gully underground ore:

• $\bullet$ 2 stage crushing circuit,
• an ore ground to 75 microns utilising a 1MW mill,
• float a sulphide concentrate and grind to $12-15$ microns utilising a secondary 600kw mill,
• CIL of concentrate and underflow from the float.
• Carbon stripping plant and gold room. $\bullet$

The process route provides expected recoveries of 84% at a treatment rate of 31t/hr. \$3.5m is required to upgrade the existing processing plant including engineering, procurement, construction and management.

ACN 003 049 714

Production

Based on an average of 240,000 tonnes per annum at a diluted grade of 7.2g/t gold and 84% recoveries, Base Case production is forecast at an average 45,000 ounces per annum for an initial mine life of 5 years.

Operating costs

Cash operating costs are forecast at \$370/oz including depreciation, insurance and finance costs associated with the underground mining equipment and establishment. Total costs are estimated at \$440/oz assuming depreciation of the mine capital over the Base Case mine life. No allowance has yet been made for any increases in mine life from either underground or open cut sources.

Electricity Tariffs

The Company has been in negotiations with the Power and Water Company of the Northern Territory regarding the provision of power from the electricity grid. The electricity tariffs in the Northern Territory are high compared to many other areas of the country and the Company has put in a considerable effort to endeavour to receive the lowest electricity tariff for the project. Negotiation of the main commercial terms for the power supply contract is complete with the final contract being progressed.

Financing

Renison is currently finalising a development and working capital debt funding package for the project.

Project Implementation

Initial site works and the ordering of long lead time items and re-furbishment and upgrade of the CIL gold treatment plant have already commenced and it is expected that underground mine development can commence within weeks of finalising the mining arrangements and the debt finance. The company is targeting initial gold production in mid 2005.

Project Upside

There is considerable upside with the project beyond the Base Case development. This includes:

• Increased mine life through further exploration. The underground resource is open down dip and drilling is scheduled for this year.
• Increasing gold recoveries to 94% by changing process route to leach the concentrate rather $\bullet$ . than fine grinding. Pre-feasibility testwork has been completed and the feasibility study on the process route enhancements would take less than six months.
• Re-treatment of the existing tailings processing resource 250,000t at 2.4 g/t gold.

ACN 003 049 714

• Treating open cut ores from Ouest 29 where there is a resource base of over 85,000 ounces of gold from the company's 1,060 square kilometres of exploration licenses including Steve's Hill where drilling is planned for this year.

This positive outcome to the feasibility study at Tom's Gully gold project, together with the company's ongoing exploration success at its Agate Creek gold project in North Queensland, and the recent successful ASX re-listing of Northern Energy Corporation which provides funding for the Ashford Coal project, continues the Company's rapid development as an emerging mining company.

For and on behalf of the Board

JPK Marshall Company Secretary

For further information contact:

Richard Seville or Stephen Bizzell Phone: (07) 3303 0630 $(07)$ 3303 0601 Fax: E-Mail: admin@rcm.com.au

David Waterhouse Waterhouse Investor Relations 0407880937

The information on exploration data and ore reserves and mineral resources contained in this report is based on information compiled by Mr Chris Creagh who is a member of the Australian Institute of Mining and Metallurgy. Mr Creagh has relevant experience in relation to the mineralisation being reported on to qualify as a Competent Person as defined by the Australasian Code for Reporting of Mineral Resources and Reserves. Mr Creagh is an employee of the Company and consents to the release of this information in the form and context in which it appears.