**Exhibit 3**

 

**MANAGEMENT’S DISCUSSION ANDANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

This discussion andanalysis has been prepared as at March 30, 2006 unless otherwise indicated, andit should be read in conjunction with the audited consolidated financialstatements of Queenstake Resources Ltd. (“Queenstake” or the “Company”) as atDecember 31, 2005 and the notes thereto which have been prepared in accordancewith accounting principles generally accepted in Canada (“Canadian GAAP”). Differencesfrom generally accepted accounting principles in the United States (“U.S. GAAP”)and Canadian GAAP are described in Note 23, to the consolidated financialstatements. All dollar figures are in U.S. dollars, unless otherwise indicated.

 

**INTRODUCTION**

 

TheCompany engages in the mining, processing, production and sale of gold, as wellas related activities including development and exploration. The Company’sprincipal asset and only current source of revenue is its 100% owned JerrittCanyon mining operations, 50 miles north of Elko, Nevada. The Jerritt Canyonmine complex consists of four underground mines, which together with orestockpiles feed ore to an ore processing plant. Jerritt Canyon has extensiveexploration potential, comprised of an approximately 119-square mile landposition, together with a geological database compiled over the past 27 years.

 

The Company acquired theJerritt Canyon Mine on June 30, 2003; prior to that date the Company was anexploration company and did not have commercial scale gold production.

 

**OVERVIEW**

 

*Redevelopment Plan*

 

During the third quarter2005, the Company announced a redevelopment plan designed to optimizeoperations and reduce operating costs in response to development and productionshortfalls at Jerritt Canyon and rising commodity costs. The redevelopment planrepresented a re-engineering to optimize value and cash flow from the JerrittCanyon mine assets given constraints with manpower, mining equipment, andincreasing commodity costs. The plan was a substantial change in mine andprocessing practices at Jerritt Canyon to focus on accelerated undergrounddevelopment, higher grade production and reduced mill processing rate to alignmill throughput with an optimal mining rate. The average grade of ore beingprocessed was increased to approximately 0.25 ounce of gold per ton (opt),representing an approximate 20% increase from the first half of 2005. The millprocessing rate was scaled back from operating two roasters together to oneroaster at a time for an average between 2,500 and 2,700 tons per day,approximately 25% lower than the processing rate in the first half of 2005. Inaddition, daily batch crushing and grinding of mill feed was scheduled duringoff-peak hours for lower energy rates. The processing rate can be increased inthe future should Jerritt Canyon’s capacity to produce higher grade ore fromunderground mining improve or to accommodate additional mill feed fromthird-party sources.

 

Cost reductionsanticipated to be realized progressively under the redevelopment plan includedlower energy and commodities consumption, lower costs of labor, maintenance andother savings from improved operating efficiencies. However, much of theanticipated operating cost savings were absorbed by unexpected increases in energyand certain commodity prices during the fourth quarter of 2005.

 

The redevelopment planwas a substantial change from historical mining and processing practices.Comparison to operating results from previous years should be viewed in thatcontext.

 

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Fourth quarter operatingresults were essentially on track with the redevelopment plan. Ore tons minedwere 223,060, exceeding the redevelopment plan by 8% while tons milled were211,587, slightly exceeding the redevelopment plan. Ore grade processed was0.25 opt while ounces of gold produced were 45,555 for the quarter, bothessentially in line with the redevelopment plan. Moisture in the ore from wetwinter weather resulted in the settling of high-grade ore fines into the orepad, which is expected to be recovered in the spring and summer of 2006 whenthe ore pads can be scraped and the ore processed. As a result of such seasonalfactors, Jerritt Canyon had accumulated over 8,000 ounces of contained gold inore stockpile at the end of 2005. The ore stockpile at year-end is expected tobe processed in the second and third quarters of 2006. At the end of the thirdquarter 2005, there was no ore stockpile.

 

Capitalized minedevelopment of 2,412 feet was slightly ahead of the redevelopment plan duringthe fourth quarter. For the full year, capitalized mine development totaled9,412 feet, slightly exceeding the redevelopment plan. A mining contractorremains at Jerritt Canyon, dedicated to underground development.

 

Cash operating costs were$413 per ounce of gold for 2005 fourth quarter, higher than the prior guidance,attributable to rising costs faced by the North American gold mining industryin general and Jerritt Canyon, specifically including fuel, electricity,commodity and labor costs during the quarter. Cash operating costs for 2005were $386 per ounce of gold, consistent with guidance under the redevelopmentplan.

 

*Gold Prices*

 

Marketprices for gold have moved steadily upward during 2005 achieving a high of $537per ounce in December 2005. The Company has realized an average sales price of$445 per ounce for the twelve months ended December 31, 2005 reflecting theaverage closing prices for the same period.

 

*2006 Private Placement, OreProcessing and Property Lease Agreements*

 

On March 29, 2006, theCompany entered into an agreement with Newmont Canada Limited (“Newmont”)whereby Newmont will purchase 28.51 million Queenstake common shares at Cdn$0.41 per share for gross proceeds of $10.0 million through an equity privateplacement. As part of the private placement, Newmont will receive warrants thatcan be exercised to acquire up to 28.51 million common shares of Queenstake ata price of Cdn $0.55 for a four-year period, which would generate Cdn $15.7million in cash if exercised. After closing, Newmont will own approximately4.9% of Queenstake’s outstanding common shares. If Newmont were to exercise allof its warrants and maintain its holdings of Queenstake’s common shares,Newmont would hold approximately 8.5% of Queenstake’s fully diluted outstandingcommon shares. For a period of two years from closing, Newmont will have theright to participate in future equity offerings by Queenstake to preserve itsfully diluted shareholding percentage and will have certain additional rightsto participate in debt financings. The private placement, which remains subjectto certain closing conditions, including regulatory approvals, is expected toclose in the second quarter of 2006. Proceeds will be used to fund explorationand for other corporate uses.

 

An affiliate of Newmonthas also agreed to convey three of its Nevada exploration properties toQueenstake on a lease-option basis. The properties are subject to a slidingscale net smelter royalty, dependent on the gold price, of 3% to a maximum of5% if gold is at or above $500 per ounce, and Newmont retains the right to backinto a 51% joint venture interest in each of the properties.

 

In addition, anotheraffiliate of Newmont has agreed to sell concentrates and ore from its Nevadaoperations to Queenstake for processing at its Jerritt Canyon roasting andmilling facility. The contract calls for Queenstake to purchase at least500,000 tons per year over two years. Queenstake will pay Newmont for therecoverable ounces in the purchased concentrates and ore, and Queenstake willcharge Newmont commercial terms for processing and refining. Ore purchases withNewmont may continue for up to three additional years if Queenstake has thespare processing capacity. The purchase of Newmont’s concentrates and ore forprocessing of at least 500,000 tons per

 

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year over two years willincrease the Jerritt Canyon mill throughput to approximately 95% of its pastdemonstrated capacity of approximately 1.5 million tons per year, which isexpected to reduce the Company’s unit operating costs.

 

**SELECTED ANNUAL INFORMATION**

 

The following Table 1summarizes selected financial data for the Company for each of the three mostrecent fiscal years. The information herein is prepared in accordance withCanadian generally accepted accounting principles:

 

Table 1 – Selected AnnualFinancial Data

 
| **(In millions of U.S. Dollars)**               | ** ** | **2005**   | ** ** | **2004**   | ** ** | **2003** | ** ** |
|-------------------------------------------------|------------|------------|------------|------------|------------|----------|------------|
| Gold sales                                      | ** ** | **$**      | **90.2**   | ** ** | $          | 100.4    |       | $ | 55.6 |   |
| Net earnings (loss)  from continuing operations | ** ** | **(20.5**  | **)**      | (18.0      | )          | 2.6      |       |
| Net loss                                        | ** ** | **(19.7**  | **)**      | (22.1      | )          | (8.1     | )          |
| Basic and  diluted loss per share               | ** ** | **(0.04**  | **)**      | (0.06      | )          | (0.04    | )          |
| Total assets                                    | ** ** | **93.3**   | ** ** | 87.9       |       | 97.9     |       |
| Long-term  liabilties                           | ** ** | **28.5**   | ** ** | 26.9       |       | 32.3     |       |
| Cash dividends  declared                        | ** ** | **—** | ** ** | —     |       | —   |       |
|                                                 |            |            |            |            |            |          |            |  |  |  |

 

*Duringthe reporting periods, the Company reported no discontinued operations orextraordinary items.*

 

**RESULTS OF OPERATIONS**

 

*Gold Production*

 

Gold production for theyear ended December 31, 2005 was 204,091 ounces, compared with 243,333 ounces in2004. Gold production for 2005 decreased 16% compared to 2004, but was withinguidance under the redevelopment plan. Fourth quarter 2005 production was lowerthan the same period of 2004 as anticipated under the redevelopment plan,principally due to a decrease in ore tons mined and processed compared to thefourth quarter 2004. The redevelopment plan was a substantial change fromhistorical mining and processing practices.

 

Quarterlyproduction and financial information provided as at December 31, 2005 is notindicative of future annual production or financial results. Key quarterlyproduction statistics are illustrated in Table 2.

 

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Table2 – Jerritt Canyon Quarterly Production Statistics

 
| ** **                         | ** ** | **Three  months ended** | ** ** |
|------------------------------------|------------|-------------------------|------------|
| ** **                         | ** ** | **December  31,  2005** | ** ** | **September  30,  2005** | ** ** | **June 30,  2005** | ** ** | **March  31,  2005** | ** ** | **December  31,  2004** | ** ** | **September  30,  2004** | ** ** | **June 30,  2004** | ** ** | **March  31,  2004** | ** ** |
| Gold ounces  produced              | ** ** | **45,555**              |       | 49,613 |   | 54,156 |   | 54,767 |   | 60,384 |   | 73,070 |   | 61,247 |   | 48,632 |   |
| Gold ounces sold                   | ** ** | **46,828**              |       | 54,446 |   | 50,560 |   | 50,850 |   | 64,723 |   | 71,210 |   | 63,983 |   | 45,735 |   |
|                               |       |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average sales  price per ounce     | ** ** | **$**                   | **485**    |   | $ | 442 |   | $ | 428 |   | $ | 427 |   | $ | 432 |   | $ | 402 |   | $ | 395 |   | $ | 406 |   |
| Cash operating  costs per ounce(1) | ** ** | **$**                   | **413**    |   | $ | 401 |   | $ | 372 |   | $ | 365 |   | $ | 336 |   | $ | 303 |   | $ | 337 |   | $ | 388 |   |
|                               |       |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ore tons mined                     | ** ** | **223,060**             |       | 220,779 |   | 234,625 |   | 280,635 |   | 320,505 |   | 296,474 |   | 284,737 |   | 242,498 |   |
| Tons processed                     | ** ** | **211,587**             |       | 267,116 |   | 316,800 |   | 311,434 |   | 331,619 |   | 358,600 |   | 323,782 |   | 291,832 |   |
| Grade processed  (opt)             | ** ** | **0.25**                |       | 0.21 |   | 0.21 |   | 0.21 |   | 0.21 |   | 0.22 |   | 0.21 |   | 0.21 |   |
| Process recovery                   | ** ** | **86.8**                | **%**      | 86.5 | % | 87.3 | % | 85.8 | % | 85.0 | % | 91.1 | % | 91.0 | % | 79.7 | % |

 

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(1)          The Company has adoptedthe Gold Institute Production Cost Standard (the “Standard”) to calculate andreport cash operating costs per ounce of gold produced. This is a non-GAAPmeasure, intended to complement conventional GAAP reporting; accordingly thesedata should not be considered a substitute for GAAP measures. Managementbelieves that cash operating costs per ounce is a useful indicator of a mine’sperformance. Where GAAP operating costs are adjusted to calculate per ouncedata consistent with the Standard, reconciliations to GAAP measures areprovided, see Table 7.

 

Goldproduction during the three-month period ended March 31, 2005 was 54,767 ouncesor a 13% increase over the same period in 2004.  Production was negativelyaffected by unusually wet and heavy snowfall throughout the region, whichinterrupted delivery of ore from the mines to the mill and adversely affectedmill throughput.

 

Gold production duringthe three-month period ended June 30, 2005 was 54,156 ounces, 12% less than thesame period in the previous year and, approximately 10% belowexpectations.  Mine development shortfalls through the end of the secondquarter were the result of deferring development to conserve cash in the earlypart of 2005 and the subsequent difficulty in accelerating development work dueto labor shortages.  Mined tonnage was further impacted by groundinstability in one small stope at SSX and water problems at Smith during thesecond quarter.

 

Gold production for thethree-month period ended September 30, 2005 was 49,613 ounces, 32% less thanthe same period in the previous year.  Gold production for the quarter was4% greater than redevelopment plan targets principally due to higher grade oresfrom Mahala and the SSX-Steer Mine Complex.  Jerritt Canyon allocated moreinternal resources to mine development and engaged a mining contractor in mid-August2005 to accelerate mine development in order to maintain productioncapacity.  The addition of two new underground haul trucks and a rockbolting machine augmented mine development.

 

Gold production for thethree-month period ended December 31, 2005 was 45,555 ounces, a decrease ofapproximately 24% as compared to gold production for the same period in 2004. Gold production for the period was, however, in line with redevelopmentplan targets.  Mill tonnage processed was slightly less than plan withheavier than normal winter snows and moisture accumulation in ore.  Minedtons exceeded redevelopment plan targets resulting in a significant stockpilingof ore adjacent to the mill.  Commercial production start-up of the SteerMine commenced with the connection of Steer and SSX mines in October 2005.

 

Keyproduction statistics for the full-years 2005 and 2004 are illustrated in Table3.

 

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Table3 – Jerritt Canyon Annual Production Statistics

 

**For the years ended December 31**

 

| ** **                         | ** ** | **2005**      | ** ** | **2004**  | ** ** |
|------------------------------------|------------|---------------|------------|-----------|------------|
| Gold ounces  produced              | ** ** | **204,091**   |       | 243,333   |       |
| Gold ounces sold                   | ** ** | **202,684**   |       | 245,651   |       |
|                               |       |          |       |      |       |
| Average sales  price per ounce     | ** ** | **$**         | **445**    |      | $          | 398 |   |
| Cash operating  costs per ounce(1) | ** ** | **$**         | **386**    |      | $          | 336 |   |
|                               |       |          |       |      |       |
| Ore tons mined                     | ** ** | **959,099**   |       | 1,144,214 |       |
| Tons processed                     | ** ** | **1,106,937** |       | 1,305,833 |       |
| Grade processed  (opt)             | ** ** | **0.22**      |       | 0.21      |       |
| Process recovery                   | ** ** | **86.6**      | **%**      | 86.7      | %          |

 

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(1)          The Company has adoptedthe Gold Institute Production Cost Standard (the “Standard”) to calculate andreport cash operating costs per ounce of gold produced. This is a non-GAAPmeasure, intended to complement conventional GAAP reporting; accordingly thesedata should not be considered a substitute for GAAP measures. Managementbelieves that cash operating costs per ounce is a useful indicator of a mine’sperformance. Where GAAP operating costs are adjusted to calculate per ouncedata consistent with the Standard, reconciliations to GAAP measures areprovided, see Table 7.

 

Mining during 2005 wasderived primarily from the Murray, Smith, and SSX underground mines. Commercialproduction from the Mahala deposit accessed and mined through the Smith Minebegan in August 2005, following commissioning of the ventilation and escape-wayraise. Ore tons mined for Jerritt Canyon during 2005 were 16% lower than in2004. Underground mining was affected by a shortage of experienced miners andmechanics, continued dewatering activities at the Smith Mine, necessitated byheavy spring runoff and rainfall in June 2005, and planned lower ore tonnageunder the redevelopment plan. Ore tons mined during the fourth quarter of 2005were 30% lower than 2004 and 8% higher under the redevelopment plan.

 

In 2005, the grade of oreprocessed was 0.22 opt, essentially the same as 2004. Implementation of theredevelopment plan significantly reduced the amount of low grade stockpilesused to fill the mill and resulted in higher average ore grade processed in thefourth quarter 2005 of 0.25 opt compared with 0.21 opt in the year ago quarter.

 

As a result of higheroperating costs from commodity price increases and a production shortfall inthe first half of 2005, cash operating costs per ounce for the year endedDecember 31, 2005 were 15% higher than the prior year. Cash operating costs perounce for the fourth quarter 2005 were approximately 23% higher than the yearago quarter and approximately 9% higher than guidance under the redevelopmentplan. Higher than expected energy and commodity price increases largely offsetthe expected cost reductions and savings anticipated from the redevelopmentplan. A reconciliation of operating costs to cash operating costs per ounce isprovided in Table 7.

 

*Statements of Loss*

 

TheCompany reported a net loss of $19.7 million ($0.04 per share) and $22.1million ($0.06 per share), for the years ended December 31, 2005 and 2004,respectively. The principal components of the loss for the year ended December31, 2005 are: loss from operations of $20.5 million, a non-cash write down of$0.9 million in value of outstanding gold put options marked to the marketprice and $0.4 million from interest expense, which were offset by otherincome, net of expense of $1.0 million and foreign exchange gains of $0.2million. Principal components of the loss for the year ended December 31, 2004 are:loss from operations of $18.0 million, $4.9 million from interest expense, and$0.1 million from foreign exchange losses which were offset by other income,net of expense of $0.9 million.

 

Income(Loss) from operations is illustrated in Table 4.

 

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Table4 – Income (Loss) from operations

 
| **(In millions of U.S. Dollars)**                      | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|--------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Gold sales                                             |       | $        | 90.2       |     | $          | 100.4    |       | $ | 55.6 |   |
| Costs and  expenses                                    |       |     |       |     |       |     |       |
| Cost of Sales                                          |       | 80.3     |       | 85.3     |       | 40.7     |       |
| Depreciation,  depletion and amortization              |       | 17.2     |       | 19.6     |       | 9.2      |       |
| Non-hedge  derivatives                                 |       | 2.6      |       | 2.5      |       | 0.7      |       |
| Accretion of  reclamation and mine closure liabilities |       | 1.2      |       | 0.4      |       | 0.1      |       |
| Exploration                                            |       | 3.9      |       | 6.6      |       | —   |       |
| General and  administrative                            |       | 4.9      |       | 3.4      |       | 1.9      |       |
| Stock-based  compensation                              |       | 0.6      |       | 0.6      |       | 0.4      |       |
|                                                   |       | 110.7    |       | 118.4    |       | 53.0     |       |
| Income (Loss)  from operations                         |       | $        | (20.5      | )        | $          | (18.0    | )          | $ | 2.6 |   |

 

During the year endedDecember 31, 2005, revenues of $90.2 million were generated from the sale of202,684 ounces of gold at an average realized gold price of $445 per ounce. Revenuesfor the same period in 2004 were $100.4 million generated from the sale of245,651 ounces at an average realized gold price of $398 per ounce.

 

Costs of sales anddepreciation, depletion and amortization (“DD&A”) costs are substantiallyall associated with the Jerritt Canyon Mine. A reconciliation of operatingcosts to cash operating costs per ounce is provided in Table 7.

 

Costs of sales for theyear ended December 31, 2005 and 2004 were $80.3 million and $85.3 million,respectively. Throughout 2005, labor, electricity and commodity costs continuedto increase as compared to 2004. Costs of sales were lower in 2005 reflecting ascale back in mining and processing under the redevelopment plan implemented inmid-August 2005.

 

DD&A was $17.2million for the year ended December 31, 2005 compared with $19.6 million for2004 as a result of lower production partially offset by the higherunit-of-production depletion rate in 2005 reflecting additions to capitaldevelopment.

 

Non-hedge derivativefinancial instruments, or gold put option contracts, are purchased to protectagainst the risk of falling gold prices. The Company does not use gold forwardsales contracts to fix future gold prices realized. During the year endedDecember 31, 2005, costs associated with the purchased gold put optioncontracts were $2.6 million, which included $0.9 million in a write-down ofnon-hedge derivatives to fair market value. In comparison the costs associatedwith the purchased gold put option contracts were $2.5 million during the sameperiod ending in 2004.

 

Accretion expenseconsists of fair value increases recognized for future reclamation and mineclosure costs. Accretion expense for the years ended December 31, 2005 and 2004were $1.2 million and $0.4 million, respectively. The increase in accretionexpense from the prior year can be primarily attributed to an increase in theestimate of reclamation and mine closure costs. During the year, the Companyretained the services of an environmental consultant to review and assist inupdating cost estimates for reclamation and mine closure.

 

Explorationexpense for the years ended December 31, 2005 and 2004 were $3.9 million and$6.6 million, respectively, all associated with the Jerritt Canyon District. Explorationexpense decreased from the prior year as the result of a delayed start for the2005 exploration program as the Company conserved cash in the early part of theyear.

 

Generaland administrative costs are associated with the Company’s corporate offices. Duringthe year ending December 31, 2005, general and administrative costs wereapproximately $1.5 million higher than the same period in the prior year. Thesignificant increase from the prior year is primarily due to a one-time corporaterestructuring cost of $1.0 million paid during the first quarter of 2005 and,$0.5 million in increased use of consultants in specialized operations andcorporate advisory engagements related to implementation of the redevelopmentplan. The ongoing general and administrative costs are essentially unchangedfrom the previous years’ levels.

 

Theprincipal remaining components of the Company’s net loss are illustrated inTable 5.

 

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Table5 – Other Net Loss Components

 
| **(In millions of U.S. Dollars)**                    | ** ** | **2005**   | ** ** | **2004**   | ** ** | **2003** | ** ** |
|------------------------------------------------------|------------|------------|------------|------------|------------|----------|------------|
| Other income,  net of other expense                  |       | $          | (1.0       | )          | $          | (0.9     | )          | $ | (0.2 | ) |
| Interest expense                                     |       | 0.4        |       | 4.9        |       | 4.9      |       |
| Foreign exchange  (gain) loss                        |       | (0.2       | )          | 0.1        |       | (0.2     | )          |
| Provision for  impairment of Magistral Joint Venture | ** ** | **—** | ** ** | **—** |       | 6.2      |       |
|                                                 |       | $          | (0.8       | )          | $          | 4.1      |       | $ | 10.7 |   |

 

Other income, net of other expense of $1.0million is primarily the result of interest earned during 2005 on surplus cashbalances. Other income, net of other expense of $0.9 million during the sameperiod in 2004 includes a one-time gain of $0.6 million from the disposition ofthe Company’s wholly owned subsidiary Pangea Resources Inc., which owned 100% of the Magistral gold minein Sinaloa, Mexico and $0.3 million in interest income.

 

Interestexpense reflects capital lease financing costs during the year ended December31, 2005. Interest costs of $4.9 million for 2004 resulted principally from anon-cash component of $4.4 million from the amortization of costs incurred inarranging the term loan used to complete the acquisition of the Jerritt Canyonmine, as well as interest on other notes and capital leases.

 

Foreignexchange gains of $0.2 million for the year ended December 31, 2005 as comparedto a loss of $0.1 million in 2004, reflect the strengthening of the Canadiandollar against the United States dollar as applied to the Company’s Canadiandollar cash reserves.

 

Thetrend in quarterly revenues and net loss is illustrated in Table 6.

 

Table6 - Summary of Quarterly Results

 

**Three months ended (Unaudited)**

 
| **(In millions of U.S. Dollars,  except per share data)** | ** ** | **Dec-31-05** | ** ** | **Sep-30-05** | ** ** | **Jun-30-05** | ** ** | **Mar-31-05** | ** ** | **Dec-31-04** | ** ** | **Sep-30-04** | ** ** | **Jun-30-04** | ** ** | **Mar-31-04** | ** ** | **Dec-31-03** | ** ** | **Sep-30-03** | ** ** |
|-----------------------------------------------------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|---------------|------------|
| Total revenues                                            | ** ** | **$**         | **22.7**   |          | $          | 24.1          |       | $             | 21.7       |          | $          | 21.7          |       | $             | 27.9       |          | $          | 28.6          |       | $             | 25.3       |   | $ | 18.6 |   | $ | 28.6 |   | $ | 26.9 |   |
| Net loss                                                  | ** ** | **(2.6**      | **)**      | (4.3          | )          | (5.7          | )          | (7.1          | )          | (4.6          | )          | (5.4          | )          | (5.6          | )          | (6.6          | )          | 1.3           |       | (6.0          | )          |
| Net loss per share - basic                                | ** ** | **(0.01**     | **)**      | (0.01         | )          | (0.01         | )          | (0.02         | )          | (0.01         | )          | (0.01         | )          | (0.02         | )          | (0.02         | )          | 0.00          |       | (0.02         | )          |
|                                                           |            |               |            |               |            |               |            |               |            |               |            |               |            |               |            |               |            |               |            |               |            |  |  |  |  |  |  |  |  |  |  |

 

*During the reporting periods, the Company reported nodiscontinued operations or extraordinary items.*

 

The trend in totalquarterly revenues illustrated above correlates with gold ounces sold andaverage sales price per ounce sold illustrated in Table 2.

 

Gold prices have trendedupward during the past five years, achieving a high for the year of $537 perounce in December 2005. The increase from the former high of $455 per ounce inDecember of 2004 can be attributed to a decrease in the value of the US dollarduring 2005 in comparison to other major foreign currencies, a continuedincrease in global demand for commodities, including gold, and a bullishsentiment in the precious metals market. The Company realized an average salesprice in 2005 of $445 per ounce consistent with the average spot price for2005, and an average realized gold price during 2004 of $398. The Company sellsits gold production at the spot price and has no forward sales commitments.

 

Net loss variationsrecognized from quarter to quarter during 2005 can primarily be attributed toincreased general and administrative costs, including approximately $1.0million in restructuring charges during the first quarter, $0.5

 

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million in increasedconsulting and advisory services related to the redevelopment plan, a $0.9million non-cash write down in the value of outstanding gold puts, which wereclassified as non-derivative financial instruments, and other non-operatingexpense items.

 

The non-hedge derivativefinancial instruments, or gold put options, with a strike price of $330, whichwere purchased in 2003 as a condition of the term loan related to the JerrittCanyon acquisition, expired at June 30, 2005. In 2005, the Company purchased147,000 gold put options with strike prices ranging from $400 to $425 thatexpire monthly through the first quarter of 2007. Put options expire andrelated premiums are paid in accordance with the number of put optionspurchased and the assigned strike price for each respective month. During thefourth quarter of 2005, the Company wrote down $0.9 million in value ofoutstanding gold put options marked to the market price. The cost of gold putoptions totaled $2.6 million and $2.5 million during the years ended December31, 2005 and December 31, 2004, respectively. The purchase of gold put optionsprovides the Company with downside price protection for future gold sales andprovides some assurance of future revenue cash flows for future production andplanning.

 

*Development andExploration*

 

Mine developmentshortfalls in most of 2005 were the result of deferring development in thefirst quarter to conserve cash and the difficulty in accelerating developmentdue to labor shortages, ground instability at the SSX mine and water problemsat Smith mine during the second quarter. Jerritt Canyon has allocated moreinternal resources to mine development and engaged a mining contractor sincemid-August 2005 to accelerate mine development in order to maintain productioncapacity in 2006. The addition of two new underground haul trucks and a rockbolting machine augmented mine development and has facilitated mine development.Capitalized mine development improved in the second half of 2005 and totaled9,412 feet for the year, slightly exceeding the redevelopment plan target andcompares with 14,302 feet completed in 2004. The Mahala deposit begancommercial production as an extension of the Smith Mine in August 2005 and theconnection of the Steer and SSX mines was completed in October 2005.

 

In 2005, exploration continued on near-mine and surface targets, with theobjective of replacing and targeting near-term mineable reserves and advancingthe Starvation Canyon project. Surface drilling programs completed 130 holestotaling 102,816 feet in 2005. Underground drilling was completed during 2005at the SSX-Steer Mine Complex, the Mahala, West Dash, West Coulee and B-Pitdeposits at the Smith Mine and at Murray Mine and comprised 2,797 holestotaling 348,148 feet of underground drilling. Positive exploration resultsdefined the first gold reserves at Starvation Canyon and successfully replacedproven and probable reserves, net of depletion from production, at year-end2005.

 

*Reserves and Resources*

 

Proven and probablereserves totaled 877,900 ounces of gold contained in 3.7 million tons at anaverage grade of 0.24 opt at December 31, 2005, based on a three-year averagegold price of $410 per ounce. Measured and indicated resources, includingreserves, were estimated at 2.1 million ounces of gold contained in 8.8 milliontons at an average grade of 0.24 opt. The Company also estimated inferredresources of 2.7 million tons at 0.23 opt for 605,600 ounces. The Company’sproven and probable reserves, and measured and indicated resources were auditedand verified by SRK Consulting (U.S.), Inc. as satisfying the standards ofCanadian National Instrument 43-101.

 

At the Starvation Canyonproject, the Company, defined 121,100 ounces contained in 400,500 tons at anaverage grade of 0.30 opt into probable reserves. In addition, measured andindicated resources at Starvation Canyon increased 22% from year-end 2004 to190,700 ounces (contained in 676,400 tons), while the grade improved 4% to 0.28opt. The improvement of continuity, grade and size of the resource in 2005enhances the overall confidence in resources and mineralization is open inseveral directions.

 

The new reserves atStarvation Canyon and reserve additions at the Murray and Smith mines offsetreserve depletion from production. Mineralization remains open at SSX and Steermines with new targets in the greater SSX area to be drilled in 2006. Theimprovement in the Smith Mine reserves was attributable to the expansion of thehigh-grade Mahala and West Dash deposits. Mahala, which began commercialproduction in August 2005, had 223,600 tons at 0.33 opt for approximately73,300 contained ounces in reserves. West Dash added 37,800 contained ounces to

 

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reserves and increasedits measured and indicated resources, including reserves, to 70,300 ounces in2005. A drift being developed from the main decline for the Smith Mine isanticipated to reach West Dash for initial production by mid 2006.

 

Measured and indicatedresources at December 31, 2005 were lower than in 2004 largely due to atightening of the geologic models used in the redevelopment initiative. Theapplication of smaller, narrower blocks in mine planning enhanced the overallquality of the resources and reserves. In fact, the proven reserve component oftotal proven and probable reserves improved from 24% to 36% in 2005. Expendituresfor district exploration and surface drilling were $3.9 million in 2005,compared to $6.6 million in 2004. There was also $2.6 million of capitalizedresource conversion drilling for near-mine exploration in 2005, which isreflected in the $13.5 million deferred development expenditures for theCompany.

 

*Risks and Uncertainties*

 

TheCompany is subject to various financial and operational risks due to variousfactors outside of the control of the Company. Gold prices are affected byfactors such as global supply and demand, expectations of the future rate ofinflation, the strength of, and confidence in, the US dollar relative to othercurrencies, interest rates, and geopolitical events. Should the price of golddrop and the prices realized by the Company on gold sales were to decreasesignificantly and remain at such a level for any substantial period, theCompany’s profitability and cash flow would be negatively affected.

 

Althoughthe Company has carefully prepared its gold reserve and resource estimates, noassurance can be given that the indicated mining and processing recoveries ofgold from the estimated reserves will be realized over the life of the mine.

 

Thebusiness of mining is generally subject to a number of risks includingequipment failure, operational accidents, unstable ground conditions and severeweather.

 

TheCompany is subject to inflationary cost pressures related to commodities usedin operating activities, including but not limited to, gasoline, propane,diesel, crude oil products, cement, cyanide and other various commodities usedin mining activities. The Company actively seeks to mitigate these costpressures through continuous improvement in supply chain relationships and otheroperational initiatives.

 

TheCompany’s exploration work involves many risks and may be unsuccessful. Substantialexpenditures are required to establish proven and probable reserves and tocomplete the related mine development. It may take several years from theinitial phases of drilling until production is possible. As a result of theseuncertainties, there is no assurance that current or future explorationprograms will be successful and result in the expansion or replacement ofcurrent production with new reserves.

 

Thevalidity of mining claims, which constitute most of the Company’s propertyholdings, can be uncertain and may be contested. Although the Company hasattempted to acquire satisfactory title to its properties, some risk existsthat some titles may be defective.

 

TheCompany seeks to minimize risks through the use of non-hedge derivativefinancial instruments, or gold put options, to provide a minimum pricerealizable for a substantial portion of its near-term gold production, throughindependent reviews of its gold reserve and resource estimates, carefuloperational planning, and transferring some of the risk through the purchase ofinsurance.

 

The Company’s revenuesand most of its expenditures are incurred in U.S. dollars. However, equityfinancing completed by the Company is primarily in Canadian dollars. Consequently,the Company is at risk to foreign exchange movements between these twocurrencies subject to the extent of cash reserves held in Canadian dollars.

 

*Reconciliation of Non-GAAPMeasures*

 

Table 7 provides areconciliation of cash operating costs per ounce, a non-GAAP measure, to Costsof sales as reported in the Consolidated Statements of Loss.

 

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Table 7 – Cash OperatingCosts per Ounce

 
| **(In millions of U.S. Dollars)**                          | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Cost of sales  per Consolidated Statements of Loss         |       | $        | 80.3       |     | $          | 85.3     |       | $ | 40.7 |   |
| Less: Royalty  expense and production taxes included above |       | (2.6     | )          | (2.6     | )          | (0.8     | )          |
| Effects of  inventory and other adjustments                |       | 0.8      |       | (0.1     | )          | (0.1     | )          |
| Cash operating  costs associated with ounces sold          |       | $        | 78.5       |     | $          | 82.6     |       | $ | 39.8 |   |
|                                                       |       |     |       |     |       |     |       |
| Ounces produced                                            |       | 204,091  |       | 245,651  |       | 146,823  |       |
|                                                       |       |     |       |     |       |     |       |
| Cash operating  costs per ounce                            |       | $        | 386        |     | $          | 336      |       | $ | 270 |   |

 

**LIQUIDITY AND CAPITALRESOURCES**

 

At December 31, 2005, theCompany had positive working capital of $4.8 million compared to a workingcapital deficiency of $9.4 million at December 31, 2004. The Company’s workingcapital at December 31, 2005, together with expected cash flow from operations,is expected to be sufficient to satisfy currently planned mining operations,capital expenditures, property obligations and general and administrativeactivities.

 

During the year endedDecember 31, 2005, the Company’s current assets increased $5.4 million to $18.7million from $13.3 million as at December 31, 2004. The cash component of theincrease resulted primarily from completion of equity financings completed onMarch 23 and June 22, 2005 providing cash proceeds, net of financing costs, of$28.7 million, described in more detail below, and issuance of common sharesthrough the exercise of share purchase warrants and stock options for proceedsof $1.7 million. The increases from equity issuances of $30.4 million have beenoffset by aggregate cash used in operations and for capital additions of $26.7million and $2.5 million for the payments due on capital leases. Cash was alsoused to pay down accounts payable balances by $8.8 million to bring certainaccounts in line with normal payment terms.

 

For the year endedDecember 31, 2005, net cash provided by operating activities, before changes innon-cash working capital, was $3.7 million, compared with net cash provided of$7.2 million in 2004. Less cash was provided from operations due to an 18%decrease in gold ounces sold, partially offset by higher average realized priceper ounce during 2005. Also, while gold production decreased in 2005, averagecosts of mining and processing increased on a per ton basis in 2005 as comparedto 2004 as described previously.

 

The Company invested$19.7 million in the Jerritt Canyon Mine during 2005, principally inunderground mine development and in purchasing and refurbishing plant andequipment. The Company anticipates investing additional capital in minedevelopment, new mining equipment and reserve expansion programs referred tounder *Development and exploration* above. TheCompany anticipates funding these programs from cash generated from operatingactivities and cash balances on hand.

 

Net cash provided byfinancing activities during 2005 was $32.9 million compared to net cash used of$3.1 million during 2004. During 2004, the Company received cash from an equityprivate placement and the exercise of warrants described above, offset by thefull repayment of the term loan and other obligations related to theacquisition of Jerritt Canyon.

 

On October 7, 2004, theCompany issued 34,254,000 common shares and 17,127,000 common share purchasewarrants in an equity offering for gross proceeds of $13.0 million. Each commonshare purchase warrant entitled the holder to purchase one common share at anexercise price of Cdn $0.65 at any time until February 10, 2006. The Companypaid the underwriters a cash commission equal to 5.0% of the gross proceeds ofthe offering million and issued 1,712,700 Compensation Options to theunderwriters. Each Compensation Option entitled the holder to purchase one unitof the Company at an exercise price of Cdn $0.50, at any time before October 8,2005; each unit purchased consisted of one common share and one-half of onecommon share purchase warrant; one whole common share purchase warrant entitledthe holder to purchase one additional common share at a price of Cdn $0.65until February 10, 2006. The common share purchase warrant and the CompensationOptions expired unexercised on February 10, 2006 and October 8, 2005,respectively.

 

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On March 23, 2005 theCompany issued 100,000,000 common shares pursuant to an equity financing forgross proceeds of $24.8 million. The equity financing consisted of 100,000,000units, with each Unit consisting of one common share and one half of one commonshare purchase warrant at a price of Cdn $0.30 per Unit. Each whole commonshare purchase warrant (50,000,000 warrants in total) can be exercised toacquire one additional common share at a price of Cdn $0.40 for a period of 24months. The common share purchase warrants are subject to mandatory exercisewith thirty days notice by the Company, or they will expire and no longer bevalid, should the weighted average trading price exceed a specified threshold. TheCompany paid the underwriters a cash commission of 5% of the gross proceeds.

 

On June 22, 2005 theCompany issued 25,987,200 common shares pursuant to an equity financing for$5.9 million through a syndicate of underwriters (“Underwriters”). The offeringwas priced at Cdn $0.28 per share. The Underwriters received a 4% commission onthe gross proceeds of the offering.

 

The Company’s materialcontractual obligations at December 31, 2005 are illustrated in Table 8.

 

Table8 – Material Contractual Obligations

 
| ** **                                  | ** ** | **Payments due by period** | ** ** |
|---------------------------------------------|------------|----------------------------|------------|
| **(In millions of U.S. dollars)**           | ** ** | **Total**                  | ** ** | **Less than 1  year** | ** ** | **1 - 3 years** | ** ** | **4 - 5 years** | ** ** | **More than  5 years** | ** ** |
| Capital lease  obligations                  | ** ** | **$**                      | **3.5**    |   | $ | 1.4 |   | $ | 2.1 |   | $ | — |   | $ | — |   |
| Operating leases                            | ** ** | **0.6**                    |       | 0.2 |   | 0.4 |   | — |   | — |   |
| Non-hedge  derivative financial instruments | ** ** | **1.1**                    |       | 1.0 |   | 0.1 |   | — |   | — |   |
| Total Material  Contractual Obligations     | ** ** | **$**                      | **5.2**    |   | $ | 2.6 |   | $ | 2.6 |   | $ | — |   | $ | — |   |

 

**2005 FOURTHQUARTER OVERVIEW**

 

Gold production for thethree month period ended December 31, 2005 was 45,555 ounces, 25% lower thanthe 60,384 ounces produced in the fourth quarter 2004. The lower goldproduction, which was principally due to decrease in ore tons mined andprocessed, was in line with guidance in the redevelopment plan.

 

Cash operating costs perounce during the fourth quarter of 2005 were 23% higher than the prior yearperiod and 9% higher than expected under the redevelopment plan. The increased cashoperating cost per ounce was the result of higher energy and commodity costsexperienced during the fourth quarter 2005. Of the increase in the fourthquarter 2005, approximately $25 per ounce was due directly to increased pricesin electricity, propane, diesel and cement.

 

The Company had a netloss of $2.6 million ($0.01 per share) for the three month period endedDecember 31, 2005. The principal components of the loss during the three monthperiod ended December 31, 2005 are: loss from operations of $3.0 million, whichwas offset by other income, net of expense of $0.4 million.

 

During the three monthsended December 31, 2005, revenues of $22.7 million were generated from the saleof 46,828 ounces at an average gold price realized of $485 per ounce. Revenuesgenerated during the same three month period in 2004 were $27.9 milliongenerated from the sale of 64,723 ounces at an average gold price of $432 perounce.

 

**OUTLOOK**

 

*First Quarter of 2006*

 

During the first quarterof 2006, the Jerritt Canyon mill unexpectedly had two failures of a piniongear, requiring temporary shutdowns of the mill. In the first event, the piniongear breakdown was due to a lubrication failure, requiring a mill shutdown forrepair and gear replacement. Following the repair, the mill resumed normalprocessing. In the second event, the replacement pinion gear broke one tooth;this was caused by rapidly accelerated

 

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wear on a new pinion gearagainst the older worn bull gear. After evaluation by mill gear experts, aspare pinion was installed and the mill has resumed operations with closemonitoring to avoid further issues. During the planned eight- to 10-day annualmill maintenance shutdown scheduled for April, the bull gear will be turnedover to more closely match the new pinion gear to ensure continuous operation.

 

During the 2006 firstquarter, the mines continued to produce ore in line with the redevelopmentplan, with mined ore being accumulated in an ore stockpile adjacent to the mill.The overall impact of the temporary mill interruptions will be in reschedulingprocessing of stockpiled ore to later periods of the year. Jerritt Canyonestimates it will accumulate at least 16,000 ounces contained in the orestockpile at the mill at the end of the 2006 first quarter. The second andthird quarters of 2006 are expected to have progressively and significantlyhigher production than the first quarter as the mill processes through the orestockpile.

 

Gold production for thefirst quarter of 2006 will be approximately one-third lower than the 2005fourth quarter due to the delays in processing. Costs of the gear replacementsand accelerated annual mill maintenance will impact results for the 2006 firstquarter, with cash operating costs for the 2006 first quarter expected to beconsiderably higher than the 2005 fourth quarter.

 

*Full Year 2006*

 

For 2006, the Companyexpects to produce between 200,000 and 220,000 ounces of gold, unchanged fromprior guidance. Cash operating costs per ounce for 2006 are estimated to bewithin five percent, above or below the 2005 fourth quarter cash operatingcosts of $413 per ounce. The operating cost per ounce estimate excludes thebenefit estimated at an approximately $15-$20 reduction in cash operating costsper ounce by reducing fixed costs per ounce as a result of the contract topurchase ore and concentrates from Newmont’s Nevada operations. This isexpected to begin in the second quarter of 2006, subject to certain closingconditions. (See separate news release of March 30, 2006.)

 

Capital expenditures in2006 are expected to be approximately $17 million, 14% lower than 2005. Generaland administrative costs are estimated at $3.5 million-$4 million in 2006.District exploration and surface drilling expenditures are estimated at aminimum of $6 million during 2006. Royalties paid to certain land owners in theJerritt Canyon District are expected to be approximately $1 per ounce at a goldprice assumption of $500 to $525 per ounce.

 

It is expected that totaldrifting footage will be 40,000-45,000 feet in 2006 to achieve the 2006production estimates and to prepare for mining in 2007. Capitalized minedevelopment is expected to be 7,000-7,500 feet in 2006.

 

**CRITICAL ACCOUNTING ESTIMATES**

 

The preparation of itsconsolidated financial statements requires the Company to use estimates andassumptions that affect the reported amounts of assets, liabilities, revenuesand expenses. The Company’s critical accounting estimates relate to theestimate of gold reserves and asset retirement obligations. The Companyintroduced many of these critical estimates in its December 31, 2003consolidated financial statements, in conjunction with the acquisition of theJerritt Canyon gold mine.

 

The Company capitalizedthe Jerritt Canyon acquisition costs, valuing the related non-cashconsideration at fair value. The Company’s policy is to capitalize long-termmine development and reserve expansion program costs incurred within, orcontiguous to, known gold ore reserves. These costs constitute a significantportion of the Jerritt Canyon property, plant and equipment and are amortizedon a units-of-production basis over estimated gold reserves. Under this method,depletion cost, and therefore net book values of mining property and capitalizeddevelopment is directly affected by the Company’s estimate of proven andprobable gold reserves at Jerritt Canyon. In addition, the useful lives ofplant and equipment may be limited by the expected mine life which is dependenton mineral reserves. The Company engaged SRK Consulting (U.S.), Inc., anindependent consulting firm, to review the Company’s reserve and resourceestimates, and to prepare a technical report in conformance with CanadianNational Instrument 43-101, which will be filed shortly on SEDAR. If thisestimate proves inaccurate, or if the Company revises its mine

 

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plan at Jerritt Canyondue to changes in the market price of gold or significant changes in mineoperating costs, and as a result the estimate of gold reserves is reduced, theCompany could be required to write-down the book value of the Jerritt Canyonproperty, plant and equipment, and/or to increase the amount of depreciationand depletion expense, both of which would reduce the Company’s earnings andnet assets. The Company does not currently anticipate a material reduction inthe Jerritt Canyon reserve estimate.

 

The Company also assessesJerritt Canyon property, plant and equipment for impairment at the end of eachaccounting period. If prior estimates of future cash flows prove to beinaccurate, due to reductions in the price of gold, increases in the costs ofproduction, and/or reductions in the amount of recoverable reserves, theCompany would be required to write-down the recorded value of Jerritt Canyonproperty, plant and equipment, which could reduce the Company’s earnings andnet assets.

 

The Company has anobligation to reclaim the Jerritt Canyon property after the minerals have beenfully depleted, and has estimated the present value of the costs to comply withexisting reclamation standards. As at December 31, 2005, management hasadjusted the estimated reclamation and mine closure liability to an estimatedpresent fair value of $26.4 million, net of ongoing reclamation activitiesduring the year of $0.6 million. It is possible that the Company’s estimate ofits ultimate reclamation liabilities could change as a result of changes inregulations; the extent of environmental remediation required or completed, themeans of reclamation or changes in cost estimates. Reclamation and closureobligations are currently funded by the Company by means of the restricted cashaccount established with AIG.

 

### *The current asset retirement obligationestimate has been and will continue to be funded by the Company by means of therestricted cash account established with AIG. The cash plus interest earned inthis Commutation Account will be used to fund Jerritt Canyon’s reclamation andmine closure obligations.*

### * *

**FINANCIAL INSTRUMENTS AND OTHERINSTRUMENTS**

 

The fair value of the Company’s current financial assets, excluding marketable securities, and current financial liabilities approximate their carrying values due to their short-term maturities.

 

The profitability of theCompany is directly related to the market price of gold. The Company purchasesnon-hedge derivative financial instruments, or gold put option contracts, toprotect against the risk of falling gold prices. The put option premiumsrelated to the put option contracts are recognized as a deferred charge andliability on acquisition and expensed to operations and paid, respectively, inthe period in which the contracts expire. If the gold price is lower than thestrike price of the respective purchased put option on the expiry date, gold issold at the strike price of the put option. If the market gold price is higherthat the strike price of the put option, the option expires without exercise. Thesederivate financial instruments are fair valued at each reporting date and changesin fair value are recorded in operating expenses. The Company does not use goldforward sales contracts to fix future gold prices realized.

 

Marketable securities,consisting of 25,000 shares of Nevada Pacific Gold, Ltd. a TSX Venture Exchangelisted gold company, are carried at the lower of cost or market value.

 

**OUTSTANDING SHARE DATA**

 

The Company is authorizedto issue an unlimited number of common shares without par value. Outstandingshare data are illustrated in Table 9.

 

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Table 9 – OutstandingShare Data

 
| **Units in thousands**      | ** ** | **Common shares  issued and  outstanding** | ** ** | **Common share  purchase warrants** | ** ** | **Common share  purchase options** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|-------------------------------------|------------|------------------------------------|------------|
| Balance,  December 31, 2005 |       | 550,021                                    |       | 67,227                              |       | 13,170                             |       |
| Canceled shares             |       | (247                                       | )          | —                              |       | —                             |       |
| Warrants expired            |       | —                                     |       | (17,127                             | )          | —                             |       |
| Options  exercised          |       | 40                                         |       | —                              |       | (40                                | )          |
| Balance, March  30, 2006    |       | 549,814                                    |       | 50,100                              |       | 13,130                             |       |

 

**DISCLOSURE CONTROLS AND PROCEDURES**

 

The Company’s management,with the participation of the Company’s Chief Executive Officer and ChiefFinancial Officer, evaluated the effectiveness of the Company’s disclosurecontrols and procedures as of December 31, 2005. Based upon this evaluation,the Chief Executive Officer and the Chief Financial Officer concluded that asof December 31, 2005, the Company’s disclosure controls and procedures were effectivein timely alerting them to the material information relating to the Company,including its consolidated subsidiaries, required to be included in reportsthat the Company files.

 

**ADDITIONAL INFORMATION**

 

Additional informationrelating to the Company, including the Company’s Annual Information Form andannual audited financial statements are on SEDAR at www.sedar.com and on EDGARat www.sec.gov. The Company’s technical report on reserves and resources,Canadian National Instrument 43-101, will be filed on SEDAR in the secondquarter.

 

*Cautionary Statement RegardingForward-Looking Statements*

 

This document contains “forward-lookingstatements” within the meaning of applicable Canadian securities regulationsand Section 21E of the United States Securities Exchange Act of 1934, asamended and the Private Securities Litigation Reform Act of 1995. Allstatements other than statements of historical fact herein including, without limitation,statements regarding potential resources and reserves, exploration results,production rates and future plans and objectives of Queenstake, areforward-looking statements that involve various risks and uncertainties. Suchforward-looking statements include, without limitation, (i) estimates andprojections of future gold production and cash operating costs, (ii) estimatesof savings or cost reductions, (iii) estimates related to financialperformance, including cash flow and capital expenditures,  (iv) estimates and projections of reservesand resources, (v) estimates and opinions regarding geologic and mineralizationinterpretation, (vi) estimates of exploration investment and scope ofexploration programs and (vii) estimates of reclamation and closure costs.There can be no assurance that such statements will prove to be accurate, andactual results and future events could differ materially from those anticipatedin such statements, in particular the estimates do not include input costincreases or gold price variations that could occur in future. Importantfactors that could cause actual results to differ materially from Queenstake’sexpectations are disclosed in Queenstake documents filed from time to time withCanadian Regulatory authorities on SEDAR, the U.S. Securities and ExchangeCommission (SEC) and other regulatory authorities. Forward-looking statementsare based on the estimates and opinions of management on the date thestatements are made, and Queenstake does not undertake any obligation to updateforward-looking statements should conditions or management’s estimates oropinions change. Forward-looking statements are subject to risks, uncertaintiesand other factors, including gold and other commodity price volatility,political and operational risks, which are described in the Company’s 2005Annual Information Form filed on SEDAR (www.sedar.com) and 2005 Annual Reporton Form 40-F on file with the SEC (www.sec.gov) as well as in the Company’sother regulatory filings.

 

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