Mt Magnet

The Mt Magnet Gold Operations are located 600km north east of Perth, Western Australia and include the Hill 50, Great Fingal, Star and Big Bell Mines which have all individually produced in excess of 1 million ounces.

The province is one of the largest and most prospective advanced exploration packages in Australia, located in a region with a history of world class major projects and is complemented with significant operational infrastructure.

The project comprises a resource inventory of 28.3Mt @ 3.2g/t for 2.9 million ounces of gold, tenements covering approximately 1,100km2 and a 1.5Mtpa CIP treatment plant.

The area has excellent infrastructure with access via a main highway from Perth and via a sealed airstrip at Mount Magnet. Electricity is generated from gas power from the Dampier to Bunbury pipeline.

Gold was first discovered in the region in 1888 and over 13 million ounces have been produced since that time from surface and underground sources. This endowment is similar to a number of major mining areas in the eastern goldfields, including St Ives, Wiluna, Leonora and the Agnew Lawlers district.

Unlike the eastern goldfields, the Murhison Province is significantly underexplored and vast areas under cover remain for exploration with potential for 1 million plus ounce discoveries.

In April 2008 Monarch Gold took possession of the Mount Magnet Operations in accord with the sale agreement with Harmony Gold Australia Pty Ltd.

Current Operations

Monarch has commenced a strategic review of the Mt Magnet exploration projects and resource base, and has completed a programme and budget for 2008. The budget programme, based on expenditure of approximately $10 million per annum, including 88,000 metres of drilling with the aim to provide a resource/reserve base to enable re-commencement of operations within 2 years.

Four priority projects were identified during an exploration review held at Mt Magnet in January 2008, these being:

- Galaxy Pit (potential +200,000oz open pit resource)

- Saturn including the Hill 50 surrounds - Mars, Reno etc (potential +250,000oz resource)

- Great Fingall underground (potential +250,000oz resource) and Great Fingall open pit (potential 50,000oz resource)

- Big Bell (potential 1Moz underground and open pit resource)

Other potential "core" areas for near mine exploration and resource development include

- Star Mt Magnet (500,000oz underground resource)

- Black Swan South (Cuddingwarra) (+300,000oz open pit resource)

- Western Queen South (44,000oz open pit resource)

A preliminary review of the principal (largest) resources has been carried out on site with input from Harmony Geologists. While considerable resource evaluation and estimation has been carried out by Harmony, many of the key resource models require validation and updating prior to further optimisation and mine planning. In the case of the proposed Galaxy Superpit, new resource models are required for the Mars, Saturn West and Vegas deposits and it will be necessary to produce an amalgamated block model to test the feasibility of large open pit development in the Hill 50 area. It is likely that further exploration targets will be generated as part of this resource evaluation work.

Extensive airborne and ground geophysical data exists for the Mt Magnet project. These data including source grids, located data and processed imagery have been collated and sent to a Perth Consultancy. The aim of this work is to provide an audit of previous data and processing and identify methods to better constrain geological interpretation, 3D modeling and target generation.

It is anticipated that detailed magnetic, gravity and radiometric data will provide the means to better characterize the key stratigraphic packages, delineate structural controls and provide sub-surface information using 3D inversion data.

The operations are currently on a care and maintenance basis. It is proposed to recommence operations 2nd half 2009 with an annual production target of 100,000 ounces at a cash cost of sub AUD$600/per oz.