MOGALE GOLD OPERATION

The initial Mintails operations prior to the merger with SGM centred on the Mogale Gold Plant located 70 kms west of Johannesburg. The Mogale Plant is a Carbon In Leach ("CIL") plant that was initially acquired by Mintails and recommissioned using the funds raised from the initial capital raising in December 2005.

The first half of 2006 saw Mintails complete refurbishment work on the Mogale plant which went on to produce its first commercial gold in July 2006. At full operating capacity Mogale was expected to treat up to 250,000 tonnes of tailings material per month and serve as a "proof of principle" operation for WERGO. The company experienced a number of technical difficulties with older sections of the plant which as a result gold production from Mogale was less than expected.

In November 2006, a new pipeline was completed which was expected to minimize production interruptions and provide further cost savings. The pipeline allows Mogale to exploit the currently unusable acid mine drainage water which lies in the old open pits and underground workings. Mogale has commissioned a water treatment plant which will see the operation substitute potable water with treated acid mine drainage water. Approximately one tonne of water is consumed per tonne of sand or slime which highlights the significance of a cheap water supply.

Mogale has provided a very good "proof of principle" moving towards the commissioning of the far more substantial WERGO operations.