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MINTAILS OWNS THE RIGHTS TO PROCESS AND EXTRACT GOLD AND URANIUM FROM OVER 330 MILLION TONNES OF SLIMES, SANDS AND ROCK TAILINGS MATERIALS MAINLY LOCATED ON SOUTH AFRICA'S HISTORIC WEST RAND.

COMPANY HISTORY

Mintails completed its initial capital raising of $12 million on 19 December 2005 and subsequently re-listed on the Australian Stock Exchange on 23 December 2005. The Company is an Australian listed public company with management and operations in South Africa.

The initial funds were raised for the purchase of the West Rand Gold Project, a gold tailings processing project with significant tailings resources approximately 70 kms outside Johannesburg, South Africa. The funds were applied to financing the refurbishment of the Mogale gold plant which allowed for re-commencement of gold recovery from the tailings dumps located on the West Rand goldfield.

The West Rand Gold Project is a regional gold and potential uranium play. It was planned that once production was established the Company would significantly increase the scale of activities through a Stage 2 upgrade and expansion of the Mogale operations. This was to be accomplished by raising additional funds (estimated at $50million) to construct a second leach circuit and beneficiation plant to substantially boost both production and gold recoveries as well as to pursue other projects in South Africa of a similar size and nature.

In August 2006 the Mintails management entered discussions with Skeat Gold Mining (Pty) Ltd (SGM). SGM owned and operated one of the largest fleets of mining and earthmoving plant and equipment in Africa. SGM also owned and operated the HVH Gold (Proprietary) Ltd (HVH) heap leach operation on the East Rand and had acquired a gold plant on the East Rand named East Daggafontein. SGM also and secured an option to purchase another far more substantial plant, Brakpan. Together these two plants formed the largest tailings treatment operation in the world; the former Anglogold-Ashanti owned ERGO (East Rand Gold and Uranium Operation

SGM secured very substantial assets and infrastructure but a relatively small hard rock gold resource, whilst Mintails had a very substantial resource but only a limited capacity gold plant, so there was a natural fit for the two companies to merge.

On 11 December 2006, shareholders of Mintails approved the board's recommendation to complete a merger with SGM.

Major benefits arising from the merger included;

• the Company's existing plans to upgrade capacity on the West Rand Gold Project would now be achieved through the utilisation of the two ERGO plants together with the SGM equipment and fleet assets;
• the Company could immediately increase production as well as diversifying its revenue base through the acquisition of the heap leaching operation operated by HVH;
• the Company acquired the experience and expertise of SGM's personnel which it anticipated would be invaluable in the development of WERGO (the upgrade in capacity on the West Rand);
• the Company acquired land and equipment assets surplus to the needs of the combined operations, which could be available in the longer term for realisation and this could provide significant cashflow during the construction and build up phase.

History of West Rand Gold Project

On 21 September 2005 Mintails shareholders approved the acquisition of the West Rand Gold Project.

The proposal comprised a number of factors including:

• requirement for Mintails to pay out judicial management creditors of approximately AUD 2 million. Pre-judicial management creditors accepted a payout representing 10 cents in the dollar (i.e. 10%) of their pre-judicial management debt;
• allotment of 35 million new shares and 20 million Performance Shares to Mintails Investments Pty Ltd and Atomaer Holdings Pty Ltd (17.5m shares and 10 million Performance Shares respectively);
• allotment of 17.5 million new shares to the South Africa Export Development Fund ("SAEDF");
• assumption by Mintails of certain obligations under a guarantee by SAEDF to DRD Gold Limited of approximately AUD 1 million;
• assumption by Mintails of a deferred liability loan to SAEDF of R30 million (approximately AUD 5.4 million). This deferred liability was subject to the project company and Mogale Gold having first repaid all loans outstanding to Mintails and any other third party financier and then payable only when Mogale gold commences repayment of the SAEDF loan to the project company. It was estimated that no amount would be paid under this loan agreement for at least six years.

Subsequent to the end of the 2006 financial year the Company reached agreement with SAEDF to cancel the outstanding deferred liability loan and the requirement to allot 17.5 million shares to SAEDF in exchange for:

• a cash payment of R 10 million (approx. AUD .8m);
• 10 million non-transferable options exercisable at 30 cents each within three years;
• 7.5 million non-transferable options exercisable at 50 cents each within three years.

In exchange for this consideration Mintails assumed operating control of the West Rand Gold Project including ownership of the existing Mogale Gold Plant and the rights to treat approximately 135 million tonnes of tailings materials (predominantly slimes and sands materials) containing gold and uranium.

On 14 March 2004 Mintails SA (Pty) Ltd ("Project Company"), wholly owned a subsidiary of Mintails, holds an agreement with DRD Gold, Rilianz Consulting Limited and Acorn Mining which provided the Project Company with an option to acquire shares in Durban Roodepoort Deep (Pty) Ltd which upon exercise would vest the Project Company with rights to an additional 170 million tonnes of tailings materials.

The Project Company has exercised its option to acquire shares in Durban Roodepoort Deep (Pty) Ltd and is in the process of finalising the settlement of the option consideration.

Acorn Mining is recognised under the South African Mining Charter as a historically disadvantaged person and as such its holding of 26% in the aforementioned project enabled this project to satisfy an important component of the Mining Charter requirements which include 26% ownership by Black Economic Empowerment ("BEE") parties.

Mogale Gold Plant

The Mogale Gold Plant was established in 1991/2 to treat 100,000 tonnes per month of ore from open pits and 20,000 tonnes per month of ore from underground mining to produce around 6,000 ounces of gold per month. The plant was subsequently upgraded and modified to increase capacity for the processing of tailings.

After securing agreement from SAEDF and the judicial manager Mintails commenced its upgrade and recommissioning of the plant during mid January 2006 and by late April 2006 had commenced minerals processing of slimes. The Company announced its first commercial gold production for the month of July 2006.

The Mogale Gold Plant is located approximately 4 to 6 kilometres west of the sands and slimes targeted for production feed of Phase 1 of the West Rand Gold Project.

History of ERGO

Brakpan, the first operational and producing ERGO plant, was constructed in 1976 (east of Johannesburg) and began producing by 1978. The concept of treating the old slimes dams at a rate of 1.5mtpm (18mtpa) in the mid-1970's was revolutionary. The process at that stage involved slurry pumping the slime to the plant, floating of the pyrite, transporting the pyrite to the uranium plant for uranium production and leaching pyrite passing through an acid plant to produce sulphuric acid, and a calcine that went to the gold plant.

In 1981 ERGO entered into a 50/50 JV with a small gold operation called Simmer & Jack (on Johannesburg's eastern edge). ERGO paid for the construction of Simmergo which was a ~2mtpa plant to treat nearby sand dumps and underground ore from the old mine's workings, and started producing gold in 1983.

ERGO formed another 50/50 JV in 1983, this time with East Daggafontein Mines to treat the slimes dams of East Dagga's operations. Construction of the Daggafontein plant (~15 km east of Brakpan) began in 1985 using the new CIL technology of the time and was producing by 1987.

With pressure from falling gold prices, the Simmergo plant closed in June 1992, and the Dagga plant in December 2000. The original Brakpan plant closed in January 2005, as it became uneconomic to run, at cash costs of about US$400/oz.

Because ERGO constructed both the Brakpan and Dagga plants it used commonality between the plants (which enables parts to be substituted between the plants, and means there are "almost new" spares).

ERGO treated ~914mt of sand and slime and produced ~8.3moz gold and possibly ~2,500t of uranium in its 26-year operational life. In its peak years (not all the same year) it treated 51mt of slime (1998), and produced over 460,000oz gold (1986), and ~300t of uranium (1981)

During December 2005 SGM concluded a transaction with Anglogold Ashanti to acquire the East Daggafontein Gold Plant and 150ha of the land adjacent thereto. The SGM group also entered into negotiations to acquire the Brakplan plant, with this transaction concluding in September 2006. Upon completing the merger with Mintails, Mintails provided the funding to exercise the Brakpan option.