CGA Mining Limited - Management's Discussion and Analysis

PERTH, Western Australia, Oct. 31, 2012 /CNW/ - 
Management's Discussion and Analysis 
The Management's Discussion and Analysis ("MD&A") provides an analysis to 
enable readers to assess material changes in financial condition and results 
of operations for the 3 month period ended 30 September, 2012. This MD&A, 
prepared as of 31 October, 2012 is intended to complement and supplement our 
Annual Financial Statements. It should be read in conjunction with the MD&A 
for the period ended 30 June, 2012, our Interim Financial Statements for the 
period ended 30 September, 2012 and our Annual Information Form ("AIF") for 30 
June, 2012, copies of which are available on SEDAR. Our financial statements 
and this MD&A are intended to provide investors with a reasonable basis for 
assessing our results of operation and our financial performance. 
Our Interim Financial Statements are prepared in accordance with Australian 
Accounting Standards as issued by the Australian Accounting Standards Board 
and International Financial Reporting Standards ("IFRS"). All dollar amounts 
contained in this MD&A are expressed in US dollars, unless otherwise specified. 
Where we say "we", "us", "our", the "Company" "Group" or "CGA", we mean CGA 
Mining Limited and/or one or more of all of its subsidiaries, as it may apply. 
First Quarter Highlights 
 _____________________________________________________________________
|                       |  Project Operating  |Consolidated Operating |
|                       |        Results      |        Results        |
|_______________________|_____________________|_______________________|
|                       |  Sep   |% Variance  |  Sep   | % Variance   |
|                       |Quarter |to Previous |Quarter | to Previous  |
|                       |  2012  |  Quarter   |  2012  |   Quarter    |
|_______________________|________|____________|________|______________|
|Gold production (oz)   |  47,646|        (6%)|  47,646|          (6%)|
|_______________________|________|____________|________|______________|
|Gold sales             |$57.343M|       (12%)|$57.343M|         (12%)|
|_______________________|________|____________|________|______________|
|Gross profit¹          |$14.364M|       (18%)|$13.700M|         (24%)|
|_______________________|________|____________|________|______________|
|Net profit after tax   |$12.716M|       (18%)| $9.638M|          944%|
|(1)                    |        |            |        |              |
|_______________________|________|____________|________|______________|
|Exploration expenditure| $3.645M|       (16%)|     N/A|           N/A|
|(2)                    |        |            |        |              |
|_______________________|________|____________|________|______________|
|Capital expenditure (3 | $5.262M|       (21%)| $2.696M|         (35%)|
|?)                     |        |            |        |              |
|_______________________|________|____________|________|______________|
|Excise tax (4)         | $1.663M|         19%|       -|             -|
|_______________________|________|____________|________|______________|
|Cash flow from         |$23.640M|       (18%)|$12.719M|         (39%)|
|operating activities   |        |            |        |              |
|( 5)                   |        |            |        |              |
|_______________________|________|____________|________|______________|
|Operating cash flow per|    7.00|       (18%)|    3.76|         (39%)|
|share( 5 )(cents per   |        |            |        |              |
|share)                 |        |            |        |              |
|_______________________|________|____________|________|______________|
|Cash operating cost /oz|    $837|          7%|    $837|            7%|
|(5)                    |        |            |        |              |
|_______________________|________|____________|________|______________| 
¹ Net Profit after tax reflects a notional consolidation of the
operating results of PGPRC and FRC and as such, do not necessarily
match with the Group's consolidated financial statements, as FRC is
classified as an associate of the Group for accounting purposes and
therefore does not form part of the consolidated results of the Group. 
(2 )Exploration activities are undertaken by FRC, and as FRC is
classified as an associate of the Group for accounting purposes, the
exploration expenditure is not included in the Group's consolidated
financial statements. 
(3 )Capital expenditure for the Project reflects the capital
expenditure of PGPRC & FRC, while the consolidated capital expenditure
reflects the consolidated CGA group expenditure, but does not include
FRC, as outlined above. 
(4) Excise tax reflects tax paid rather than tax accrued for as there
are quarterly payments that cross over accounting periods.  Excise tax
is not reflected in the consolidated results as it is incurred by FRC,
which is not part of the consolidated group.   Excise tax is on-charged
from FRC to PGPRC as part of the cost of ore, and is included in the
consolidated results as part of ore purchases in Cost of Sales. 
(5) Masbate Project cashflow from operating activities and adjusted
cash operating cost per ounce reflects a notional consolidation of the
operating results of PGPRC and FRC and excludes changes in working
capital items, and adjusts for gold inventory and stockpile movements,
capital expenditure, all taxes, royalties and corporate costs. 
Consolidated cashflows from operating activities reflects the
consolidated CGA group results and accordingly includes a consolidation
of PGPRC but does not include the results of FRC. 
Mining Operations Results 
(In thousands of dollars, except amounts per ounce, per tonne and per share) 
 _____________________________________________________________________
|Masbate Gold Project              |       Three-month period ended   |
|__________________________________|__________________________________|
|                                  |30 September,  |30 June, |Variance|
|                                  |     2012      |  2012   |        |
|__________________________________|_______________|_________|________|
|Ore mined (tonnes)                |          1.11M|    1.60M| (0.49M)|
|__________________________________|_______________|_________|________|
|Ore processed (tonnes)            |          1.70M|    1.73M| (0.03M)|
|__________________________________|_______________|_________|________|
|Head grade (g/t) (processed)      |           1.04|     1.05|  (0.01)|
|__________________________________|_______________|_________|________|
|Recovery (%)                      |          83.3%|    83.3%|       -|
|__________________________________|_______________|_________|________|
|Gold ounces produced              |         47,646|   50,817| (3,171)|
|__________________________________|_______________|_________|________|
|Gold ounces sold                  |         40,848|   47,087| (6,239)|
|__________________________________|_______________|_________|________|
|Revenues - Gold and silver sales  |         58,035|   65,915| (7,880)|
|__________________________________|_______________|_________|________|
|Masbate Project cash operating    |         34,206|   36,908| (2,702)|
|costs                             |               |         |        |
|__________________________________|_______________|_________|________|
|Excise tax¹                       |          1,633|    1,399|     234|
|__________________________________|_______________|_________|________|
|Depreciation and amortisation     |          6,489|    7,989| (1,500)|
|__________________________________|_______________|_________|________|
|Corporate / Makati administration |            560|    1,009|   (449)|
|__________________________________|_______________|_________|________|
|Interest²                         |            926|    1,018|    (92)|
|__________________________________|_______________|_________|________|
|Masbate Project gross profit/     |         14,364|   17,619| (3,255)|
|(loss)                            |               |         |        |
|__________________________________|_______________|_________|________|
|Masbate Project net profit/(loss) |         12,716|   15,568| (2,852)|
|__________________________________|_______________|_________|________|
|Masbate Project cashflow from     |         23,640|   28,758| (5,118)|
|operating activities³             |               |         |        |
|__________________________________|_______________|_________|________|
|Mining fleet capital payments     |          1,842|    1,710|     132|
|__________________________________|_______________|_________|________|
|Total capital expenditure         |          8,907|   11,219| (2,312)|
|__________________________________|_______________|_________|________|
|Deferred mining expenditure       |              -|        -|       -|
|__________________________________|_______________|_________|________|
|Tax related payments( 4)          |          4,626|    2,803|   1,823|
|__________________________________|_______________|_________|________|
|Average realized price (per ounce)|          1,404|    1,377|      27|
|__________________________________|_______________|_________|________|
|Cash operating cost (per ounce    |            837|      784|      53|
|sold)( 2)                         |               |         |        |
|__________________________________|_______________|_________|________|
|Adjusted cash operating cost (per |          23.41|    22.76|       -|
|tonne processed) (2 )             |               |         |        |
|__________________________________|_______________|_________|________| 
¹ Excise tax reflects tax paid rather than tax accrued for as there are
quarterly payments that cross over accounting periods. 
² Interest expense includes interest payments in relation to the BNP
finance facility and the finance lease held by PGPRC for the Masbate
Project mine equipment.
³ Masbate Project cashflow from operating activities and adjusted cash
operating cost per ounce reflects a combination of the operating
results of PGPRC and FRC and excludes changes in working capital items,
and adjusts for gold inventory and stockpile movements, capital
expenditure, all taxes, royalties and corporate costs. 
(4 )Taxes includes the VAT payments which are in part recoverable, and
accordingly capitalised and not recognised in the net income figures,
and other local taxes but excludes excise tax. 
Masbate Operations 
The financial and operating results set out above for the Masbate Gold Project 
are based on a notional consolidation of the results of Filminera Resource 
Corporations ("FRC") and Philippine Gold Processing and Refining Corp. 
("PGPRC") and as such, do not necessarily match with the Group's consolidated 
financial statements, as FRC is classified as an associate of the Group for 
accounting purposes and therefore does not form part of the consolidated 
results of the Group. The specific purpose analysis set out above is to 
illustrate the operating results of the Masbate Gold Project. 
Total tonnes milled for the 3 months to September 2012 was 1.70M tonnes, with 
47,646oz of gold produced. Revenue from metal sales for the 3 month period 
was $58.035M, with 40,848oz of gold sold at an average gold sales price of 
$1,404/oz. Adjusted cash costs per tonne milled was $23/t for the 3 month 
period ended September 2012, with cash operating costs for the quarter of 
$837/oz. 
Production for the September quarter was closely in line with the previous 
quarter, with a small decrease of 6% in ounces produced from the June 2012 
quarter, due to a slightly lower grade and volume milled for the quarter. 
Revenue from metal sales for the September quarter decreased by $7.880M or 12% 
from the previous quarter to $58.035M, partially due to the 6% decrease in 
gold production and partially due to the timing of sales, with gold inventory 
on hand increasing by 7,200oz/$5.899M from June 2012. The average gold price 
achieved for the September quarter was $1,404/oz as compared to $1,377/oz for 
the June quarter, with a decreased proportion of sales at spot offset by the 
higher average spot price of $1,695/oz achieved in the September quarter 
compared to $1,602/oz achieved in the June quarter. Mill throughput for the 
quarter was 1.70M tonnes (June 2012 quarter: 1.73M tonnes) for total 
production of a 47,646 ounces (June 2012 quarter: 50,817 ounces) of gold. 
Adjusted cash costs per tonne milled were relatively steady at $23.41/t for 
the September 2012 quarter, as compared to $22.76/t for the June 2012 quarter, 
adjusted for waste deferral and ore stockpile valuation changes. Cash 
operating costs per ounce increased by 7% to US$837/oz (US$783/oz in the June 
quarter) predominantly due to accounting for the waste deferral in the 
September 2012 quarter. 
Future Outlook 
As previously announced, the Company announced it has entered into a 
definitive Merger Implementation Agreement ("Merger Agreement") to merge 
B2Gold Corp. ("B2Gold") and the Company at an agreed exchange ratio of 0.74 
B2Gold common shares for each CGA share held, which represents a purchase 
price of approximately C$3.18 per CGA share (based on the closing share prices 
on 17 September 2012, being just prior to announcement). The proposed merger 
has received strong endorsement from both sets of shareholders and the wider 
investment community. During the December quarter, the Company will be focused 
on implementing the merger which will be done by way of a Scheme of 
Arrangement under the Australian Corporations Act 2001 ("Scheme"). Upon 
completion of the Scheme, existing B2Gold shareholders and CGA shareholders 
will own approximately 62% and 38%, respectively, of the issued common shares 
of the combined company. There are a number of conditions precedent such as 
shareholder approval by both CGA and B2Gold shareholders and it is subject to 
traditional terms and conditions for transactions of this nature. B2 Gold 
intend to continue to operate the Masbate Gold Project, hence we would expect 
that the financial operating result to continue in line with current forecasts 
of CGA. As set out in the Merger Agreement, all of the Perth based employees 
of CGA will be terminated upon completion of the merger. 
The Lycopodium Optimisation Study to consider a number of alternative 
development options, which will better utilise the existing infrastructure 
(and accordingly may provide significant capital expenditure reductions 
compared to the alternative which makes the current front end redundant) is 
progressing well. Following the announced merger plans with B2Gold, 
discussions on the further direction/options of the study will be undertaken 
with B2Gold prior to the finalisation of the report. 
Exploration activities planned for the 2012 - 2013 year include resource 
definition drilling within the mine site area, exploration drilling within 
EP-10 and MPSA 219 (Vicar), geophysical surveys (EP-10), and follow up 
geochemical sampling and detail mapping (EP-10 and MPSA 219). 
As part of the planned activities for the 2012-2013 year, the December quarter 
will include continuation of resource definition drilling within the mine site 
area at Colorado, Panique - Dabu, and Main Vein North, within EP10 at Blue 
Quartz and Old Lady and within MPSA 219-2005-V (Vicar) at Pajo Hill. 
Exploration drilling is planned within EP10 at Young Lady - Water West and 
Bart -Ag, and within MPSA 219-2005-V (Vicar) at Montana NW and on Pajo Hill 
where parallel structures to the west of the main structure will be tested. 
Total drilling planned for the December quarter is 19,125m RC and 8,850m of 
diamond core. 
A geochemical soil sampling orientation program will be carried out during the 
December 2012 quarter. The aim of this program is to collect soil samples at 
several depths, along known gold mineralization, to pick up on the geochemical 
signature. After an investigation of the weathering profile, the plan is for 
approximately 1,000 to 1,500 soil samples to be collected across known, 
intact, gold vein systems at Pajo Hill, Young Lady, Water West, Bart-Ag and 
Luy-A. Soil test lines will cross over the mineralized system and continue 
across the hanging wall of the down-dip extension of the veins. An extra 100 
metres of soil line will be added on either side of the soil lines to get the 
barren background readings. This study will determine the best sampling and 
assay techniques for the area and will be used to design soil sampling 
programs to follow up the results obtained from the regional stream and rock 
sampling program completed last quarter. 
Consolidated Balance Sheet Extracts 
(In thousands of dollars) 
 ______________________________________________________________
|                             |         For the period ended   |
|_____________________________|________________________________|
|                             |30 September,|30 June,|Variation|
|                             |    2012     |  2012  |         |
|_____________________________|_____________|________|_________|
|Cash and cash equivalents(1) |       77,170|  79,671|  (2,501)|
|_____________________________|_____________|________|_________|
|Cash and liquid assets(2)    |      182,595| 151,394|   31,201|
|_____________________________|_____________|________|_________|
|Restricted cash(1)           |        9,000|   9,000|        -|
|_____________________________|_____________|________|_________|
|                             |             |        |         |
|_____________________________|_____________|________|_________|
|Current Assets               |      115,876| 113,552|    2,324|
|_____________________________|_____________|________|_________|
|                             |             |        |         |
|_____________________________|_____________|________|_________|
|Property, plant and equipment|      189,411| 191,842|  (2,431)|
|_____________________________|_____________|________|_________|
|Mining fleet finance lease   |       23,288|  23,854|    (566)|
|_____________________________|_____________|________|_________|
|Investments and other assets |       91,391|  86,413|    4,978|
|_____________________________|_____________|________|_________|
|VAT receivable               |       22,174|  21,505|      669|
|_____________________________|_____________|________|_________|
|                             |             |        |         |
|_____________________________|_____________|________|_________|
|Total Assets                 |      458,722| 453,393|    5,329|
|_____________________________|_____________|________|_________|
|                             |             |        |         |
|_____________________________|_____________|________|_________|
|BNP project finance facility |       22,914|  27,206|  (4,292)|
|_____________________________|_____________|________|_________|
|Derivative liabilities       |       56,473|  56,328|      145|
|_____________________________|_____________|________|_________|
|Mining fleet finance lease   |       22,584|  24,427|  (1,843)|
|_____________________________|_____________|________|_________|
|                             |             |        |         |
|_____________________________|_____________|________|_________|
|Total Liabilities            |      127,290| 132,129|  (4,839)|
|_____________________________|_____________|________|_________|
|                             |             |        |         |
|_____________________________|_____________|________|_________|
|Shareholders' Equity         |      331,433| 321,263|   10,170|
|_____________________________|_____________|________|_________| 
(1) Cash and cash equivalents at 30 September, 2012 include an amount
of $9,000,000 (30 June, 2012: $9,000,000) held with BNP Paribas in line
with the requirements of project financing facility agreement which
requires two quarters of principal and interest payments due on the
facility to be held on deposit. 
(2) Cash and liquid assets includes cash and cash equivalents, held by
the consolidated group, cash held by the consolidated group's
associate, FRC, investments in listed securities valued at market as at
the balance date, and gold on hand, valued at market as at the balance
date. 
Total assets of the Company increased during the quarter, mainly attributable 
to an increase in inventory of $4.124M and an increase in investments in 
associates of $4.978M, offset by a decrease in cash by $2.501M. Cash and 
cash equivalents have decreased from the prior quarter with a reduction in 
gold sales during the period contributing to the lower cash reserves at the 
end of the current quarter. Gold sales were impacted by a delay in exports 
during the current period,. The delay in exports resulted in an increase in 
gold inventory on hand at the end of the period, which has contributed to the 
increase in inventory of $4.124M. Total liabilities for the group 
decreased by $4.839M, largely due to principal repayments of $4.292M on the 
BNP finance facility during the current quarter, bringing the outstanding 
principal balance owing to $22.914M at 30 September, 2012. 
The VAT receivable reflects recoverable VAT paid in the Philippines, which 
represents an estimate of proceeds expected to be refunded or offset against 
other future tax payments. 
Consolidated Profit and Loss
(In thousands of dollars) 
 _____________________________________________________________________
|                             |            For the 3 months ended     |
|_____________________________|_______________________________________|
|                             |September 2012|September 2011|Variation|
|_____________________________|______________|______________|_________|
|Revenue from continuing      |        58,684|        17,048|   41,636|
|operations                   |              |              |         |
|_____________________________|______________|______________|_________|
|Cost of sales                |      (44,984)|      (23,541)| (21,443)|
|_____________________________|______________|______________|_________|
|                             |              |              |         |
|_____________________________|______________|______________|_________|
|Gross Profit                 |        13,700|       (6,493)|   20,193|
|_____________________________|______________|______________|_________|
|                             |              |              |         |
|_____________________________|______________|______________|_________|
|Administrative expenses      |         (994)|       (1,180)|      186|
|_____________________________|______________|______________|_________|
|Finance costs                |       (1,017)|         (781)|    (236)|
|_____________________________|______________|______________|_________|
|Movement in fair value of    |            91|         (471)|      562|
|derivative financial         |              |              |         |
|instruments                  |              |              |         |
|_____________________________|______________|______________|_________|
|Share of loss of associate   |         (440)|         (949)|      509|
|_____________________________|______________|______________|_________|
|Other expenses               |       (1,702)|       (2,061)|      359|
|_____________________________|______________|______________|_________|
|                             |              |              |         |
|_____________________________|______________|______________|_________|
|(Loss)/profit from continuing|         9,638|      (11,935)|   21,573|
|operations before income tax |              |              |         |
|expense                      |              |              |         |
|_____________________________|______________|______________|_________|
|                             |              |              |         |
|_____________________________|______________|______________|_________|
|Income tax benefit/(expense) |             -|             -|        -|
|_____________________________|______________|______________|_________|
|                             |              |              |         |
|_____________________________|______________|______________|_________|
|Net (Loss)/profit for the    |         9,638|      (11,935)|   21,573|
|period from continuing       |              |              |         |
|operations for the period    |              |              |         |
|_____________________________|______________|______________|_________| 
For the three month period ended 30 September 30, 2012, the Company earned 
$58.684M in revenue as compared with $17.048M in the three month period ended 
30 September, 2011, an increase of $41.636M or 244%. The results for the 
September 2011 quarter were impacted by the SAG Mill incident, and reflect the 
limited operating capacity of the plant during that period. 
Cost of sales for the three month period ended 30 September, 2012 was $44.984M 
as compared to $23.541M for the three month period ended 30 September, 2011, 
an increase of $21.443M or 91%. The increase in cost of sales is due to the 
increased operations in the current quarter as compared to the prior 
comparative quarter when production was reduced as a result of the breakdown 
of the SAG Mill. 
Gross profit for the three months to 30 September, 2012 was $13.700M as 
compared to a gross loss of $6.492M for the prior year period, an increase of 
$20.192M or 311%. As discussed above, gold production for the first half of 
the prior financial year was impacted by the breakdown of the SAG Mill. 
A gain of $0.091M on the movement in fair value of financial derivatives was 
recognised during the three months period ended 30 September, 2012 as compared 
to a loss of $0.471M in the three months period ended 30 September, 2011. 
The 2011 gain related largely to the movement in the fair value of the 
Company's fuel hedges, which expired in April 2012. 
Other expenses of $1.702M were incurred during the three month period ended 30 
September, 2012 as compared to $2.061M incurred during the three month period 
ended September 30, 2011, a decrease of $0.359M or 17%. The decrease is due 
largely to reduced consultancy fees & travel costs incurred during the three 
months to 30 September, 2012 compared to the 30 September, 2011 quarter. 
The Company recorded a net profit of $9.638M for the three month period ended 
30 September, 2012 as compared to a net loss of $11.935M in the 30 September, 
2011 period, an increase of $21.573M, which is attributable to the increased 
mining operations subsequent to the re-commencement of full operations 
resulting from the repair of the SAG Mill. The results for the prior year 
comparative quarter were adversely impacted by the failure in July 2011 of the 
SAG Mill at the Company's operation at the Masbate Gold Project. 
Reconciliation of Masbate cashflows from operations to Consolidated cashflows 
from operations 
(In thousands of dollars) 
 _____________________________________________________________________
|                          |Three month period ended|   Year to date  |
|__________________________|________________________|_________________|
|                          |Sep 2012|     Jun 2012  |Sep 2012|Sep 2011|
|__________________________|________|_______________|________|________|
|                          |        |               |        |        |
|__________________________|________|_______________|________|________|
|Masbate Project revenue   |  57,847|         65,666|  57,847|  16,203|
|__________________________|________|_______________|________|________|
|Less: Masbate Project cash|(34,207)|       (36,908)|(34,207)|(19,387)|
|costs                     |        |               |        |        |
|__________________________|________|_______________|________|________|
|Masbate Project operating |  23,640|         28,758|  23,640| (3,184)|
|cashflow                  |        |               |        |        |
|__________________________|________|_______________|________|________|
|Less: Masbate non-cash    |        |               |        |        |
|costs:                    |        |               |        |        |
|__________________________|________|_______________|________|________|
|Depreciation,             | (9,326)|       (10,103)| (9,326)| (3,800)|
|amortisation. taxes,      |        |               |        |        |
|accruals                  |        |               |        |        |
|__________________________|________|_______________|________|________|
|Ore sales margin          | (1,451)|        (1,475)| (1,451)|   (354)|
|__________________________|________|_______________|________|________|
|Masbate Project non cash  |(10,777)|       (11,578)|(10,777)| (4,154)|
|costs                     |        |               |        |        |
|__________________________|________|_______________|________|________|
|Gross profit from Masbate |  12,863|         17,179|  12,863| (7,337)|
|Project operations        |        |               |        |        |
|__________________________|________|_______________|________|________|
|Add: revenue from other   |     837|            858|     837|     845|
|operations                |        |               |        |        |
|__________________________|________|_______________|________|________|
|Gross profit from         |  13,700|         18,037|  13,700| (6,492)|
|operations                |        |               |        |        |
|__________________________|________|_______________|________|________|
|Other Income              |       -|        (2,363)|       -|       -|
|__________________________|________|_______________|________|________|
|Less: Other expenses      |        |               |        |        |
|__________________________|________|_______________|________|________|
|Administrative expenses   |   (994)|        (1,038)|   (994)| (1,180)|
|__________________________|________|_______________|________|________|
|Finance costs             | (1,017)|        (1,137)| (1,017)|   (781)|
|__________________________|________|_______________|________|________|
|Impairment of investments |       -|        (6,870)|       -|       -|
|__________________________|________|_______________|________|________|
|Movement in fair value of |      91|             45|      91|   (471)|
|derivatives               |        |               |        |        |
|__________________________|________|_______________|________|________|
|Share of loss of          |   (440)|        (1,570)|   (440)|   (949)|
|associates                |        |               |        |        |
|__________________________|________|_______________|________|________|
|SAG Mill expenses         |       -|        (6,213)|       -|       -|
|__________________________|________|_______________|________|________|
|Other expenses            | (1,703)|          (170)| (1,703)| (2,061)|
|__________________________|________|_______________|________|________|
|Total other expenses      | (4,062)|       (16,953)| (4,062)| (5,442)|
|__________________________|________|_______________|________|________|
|Net Profit/(Loss) from    |   9,638|        (1,280)|   9,638|(11,935)|
|continuing operations     |        |               |        |        |
|__________________________|________|_______________|________|________|
|Income Tax                |       -|            138|       -|       -|
|__________________________|________|_______________|________|________|
|Net Profit/(Loss) after   |   9,638|        (1,142)|   9,638|(11,935)|
|income tax                |        |               |        |        |
|__________________________|________|_______________|________|________|
|Adjustments for non-cash  |        |               |        |        |
|items:                    |        |               |        |        |
|__________________________|________|_______________|________|________|
|Depreciation and          |   5,584|          6,180|   5,584|   1,953|
|amortisation              |        |               |        |        |
|__________________________|________|_______________|________|________|
|Proceeds from sale of     |       -|            385|       -|       -|
|asset                     |        |               |        |        |
|__________________________|________|_______________|________|________|
|Foreign exchange loss     |     169|            195|     169|    (19)|
|__________________________|________|_______________|________|________|
|Share based payments      |       -|              -|       -|     460|
|__________________________|________|_______________|________|________|
|Impairment of investments |       -|          6,870|       -|       -|
|__________________________|________|_______________|________|________|
|Share of loss of          |     440|          1,570|     440|     949|
|associates                |        |               |        |        |
|__________________________|________|_______________|________|________|
|Interest Income on        |   (807)|          (728)|   (807)|   (728)|
|receivable from associate |        |               |        |        |
|__________________________|________|_______________|________|________|
|Borrowing costs           |   1,107|          1,206|   1,107|     962|
|__________________________|________|_______________|________|________|
|Movement in fair value of |    (91)|           (45)|    (91)|     471|
|derivatives               |        |               |        |        |
|__________________________|________|_______________|________|________|
|Movement in working       | (3,322)|          6,417| (3,322)| (5,816)|
|capital                   |        |               |        |        |
|__________________________|________|_______________|________|________|
|Net cashflow from         |  12,719|         20,907|  12,719|(13,703)|
|consolidated operating    |        |               |        |        |
|activities                |        |               |        |        |
|__________________________|________|_______________|________|________|
|Masbate cash costs        |(34,207)|       (36,908)|(34,207)|(19,387)|
|__________________________|________|_______________|________|________|
|Masbate non-cash costs    |(10,777)|       (11,578)|(10,777)| (4,154)|
|__________________________|________|_______________|________|________|
|Cost of Sales             |(44,984)|       (48,486)|(44,984)|(23,541)|
|__________________________|________|_______________|________|________| 
Liquidity and Capital Resources 
As at 30 September, 2012, the Company had cash and cash equivalents of 
$77.620M as compared to $79.671M at 30 June, 2012, and $83.2M at 30 September, 
2011. Cash and liquid assets of the Company were $182.594M at 30 September, 
2012 (30 June, 2012: $151.394M). The increase in cash and liquid assets from 
the prior quarter is primarily due to an increase in the market value of the 
Company's listed investments, predominantly SAU, by $17.835M and the market 
value of bullion on hand by $14.689M. The increase in market value of 
bullion on hand is due to the increase in ounces on hand at 30 September, 2012 
due to production and timing of sales, together with the impact of the 
increase in the gold spot price from $1,599/oz at 30 June, 2012 to $1,776/oz 
at 30 September, 2012. The Company's forecast working capital needs can likely 
be met through cash on hand and short and long-term borrowings, subject to 
current forecast operating parameters being met. 
During the quarter, 50,000 outstanding options due to expire on 30 September, 
2012 and 40,000 options due to expire on 17 November, 2013 were exercised for 
total gross proceeds of A$91,000. 150,000 unexercised options expired and 
250,000 unexercised out of the money options issued to employees now resigned 
were cancelled, per the terms of the Employee Option Scheme. 
During the current quarter, the Company has repaid $4.3M in principal and 
$0.3M in interest on the financing facility with BNP Paribas, reducing the 
balance owing at 30 September, 2012 to $22.9M. The repayments on this 
facility can likely be met through cash on hand, subject to current forecast 
operating parameters being met 
During the 2010 financial year the Company completed a private placement, 
issuing 39.1M ordinary shares at C$2.20 per share in February 2010, raising a 
total of C$111.020M. The net proceeds from this issue were used, amongst other 
things, to repay the $25M promissory notes and $10M loan facility from 
Meridian and Casten and were used to increase exploration activity at the 
Masbate Gold Project. 
The Company manages liquidity risk through cash reserves, credit facilities 
and equity capital raising to meet the operating requirements of the business, 
investing excess funds in highly liquid short term cash deposits. The 
Company's liquidity needs can likely be met through cash on hand and short and 
long-term borrowings, subject to current forecast operating parameters being 
met. Future cashflow forecasts are subject to a number of risks including 
commodity price movements and inflationary risks surrounding mining and 
processing costs. These risks have been accounted for in the forecasts, by 
adopting a conservative commodity price, as well as allowing for estimated 
inflationary effects in its cashflow forecasts. 
The Company currently has in place an active program of financial forecasting 
and budgeting both at a corporate and project level to manage both the 
application of funds and planning for future financial needs to ensure that 
any shortfall in revenue funds is adequately covered by cash reserves or 
planned new sources being either debt or equity based on the then most cost 
effective weighted average cost of capital. 
Credit Risk represents the loss that would be recognised if counterparties 
failed to perform as contracted. The Group's maximum exposures to credit risk 
at the reporting date in relation to each class of financial asset is the 
carrying amounts of those assets as indicated in the Balance Sheet. 
Subsequent Events 
Subsequent to 30 September, 2012, there has not been any matter or 
circumstance that has significantly affected, or may significantly affect, the 
Company's operations, results or state of affairs in future financial years. 
Information on Outstanding Shares 
As at 31 October, 2012 the Company had 337,865,726 common shares outstanding 
and 5,831,250 unlisted options on issue. Each option is exercisable into one 
common share in the capital of the Company. 
Quarterly Information 
Selected Quarterly Information
($US in thousands, except for per share information)
(unaudited, in accordance with IFRS) 
 _____________________________________________________________________________________
|          |  Q1  | 2012  |  Q4   |  Q3  |  Q2  |    Q1  | 2011  |  Q4  |  Q3  |  Q2  |
|          |Sept -|Annual |Jun -  |Mar - |Dec - |  Sep - |Annual |Jun - |Mar - |Dec - |
|          |      | Total |  12   |  12  |  11  |    11  | Total |  11  |  11  |  10  |
|          |  12  |       |       |      |      |        |       |      |      |      |
|__________|______|_______|_______|______|______|________|_______|______|______|______|
|Gold  and |57,847|184,285| 65,666|62,985|39,347|  16,287|235,314|72,942|43,483|68,539|
|silver    |      |       |       |      |      |        |       |      |      |      |
|sales     |      |       |       |      |      |        |       |      |      |      |
|__________|______|_______|_______|______|______|________|_______|______|______|______|
|Total     |58,684|187,695| 66,524|63,843|40,279|  17,049|238,481|73,625|44,272|69,542|
|revenues  |      |       |       |      |      |        |       |      |      |      |
|__________|______|_______|_______|______|______|________|_______|______|______|______|
|Net       | 9,638|  5,988|(1,142)|16,138| 2,927|(11,935)| 65,082|18,800| 7,263|26,983|
|profit/   |      |       |       |      |      |        |       |      |      |      |
|(loss)    |      |       |       |      |      |        |       |      |      |      |
|__________|______|_______|_______|______|______|________|_______|______|______|______|
|Per share |  2.85|   1.79| (0.34)|  4.83|  0.88|  (3.58)|  19.56|  5.65|  2.16|  7.93|
|(undiluted|      |       |       |      |      |        |       |      |      |      |
|US$ cents |      |       |       |      |      |        |       |      |      |      |
|per share)|      |       |       |      |      |        |       |      |      |      |
|__________|______|_______|_______|______|______|________|_______|______|______|______|
|Per share |  2.84|   1.78| (0.34)|  4.81|  0.86|  (3.52)|  19.23|  5.55|  2.14|  7.88|
|(diluted  |      |       |       |      |      |        |       |      |      |      |
|US$ cents |      |       |       |      |      |        |       |      |      |      |
|per share)|      |       |       |      |      |        |       |      |      |      |
|__________|______|_______|_______|______|______|________|_______|______|______|______| 
Fluctuations in the quarterly net loss or profit amounts over the two year 
period ended 30 September, 2012 are predominantly due to the following factors: 


    --  the recognition of fair value mark to mark movements of the
        Company's derivative instruments which do not qualify for hedge
        account, or the ineffective portion of those that do;
    --  a notional gain of $2.929M arising from the deconsolidation of
        Ratel Gold from the Group in the September 2011 quarter;
    --  decreased gold production during the first half of the 2012
        financial year, resulting from the breakdown of the SAG Mill in
        July 2011, which has resulted in lower gold sales and higher
        costs per ounce due to the fixed cost component of operations. 
        Repairs to the SAG Mill were completed during the December 2011
        quarter with full production re-commencing in January 2012;
    --  the recognition of an impairment loss of $6.9M in the June 2012
        quarter to write down the investment in St. Augustine Gold &
        Copper Limited to its market value as at 30 June, 2012. The
        investment is carried at historical cost, hence any future
        increases to its value are not recorded in the profit and loss;
    --  the recognition of expenses of $6.2M in the June 2012 quarter
        related to repairs to the SAG Mill.  An insurance claim has
        been lodged to compensate for costs incurred to repair the SAG
        Mill, however the Company has not yet received indemnity under
        its insurance policy, hence all costs have been fully
        expensed.  Any insurance proceeds subsequently received will be
        disclosed as income in the period received.

Quarterly Results 
Three Months Ended 30 September, 2012 Compared to the Three Months Ended 30 
June, 2012 and the Three Months Ended 30 September, 2011

The Company's result for the three months ended 30 September, 2012 was a net 
profit of $9.638M or 2.85 cents per share (undiluted) as compared to a net 
loss of $1.142M or 0.34 cents per share (undiluted) for the June 2012 quarter 
and a net loss of $11.935M or 3.58 cents per share (undiluted) for the 
September 2011 quarter. The overall result for the June 2012 comparative 
quarter were impacted by the expensing of $6.2M related to repairs costs for 
the SAG mill as the Company has not yet received indemnity under its insurance 
claim on this matter, as well as an impairment expense of $6.9M to write the 
Company investment in SAU down to its market value at 30 June, 2012. The 
investment in SAU is carried at historical cost, and as such any subsequent 
increases to its market value are not recorded on the balance sheet or profit 
and loss statement. Before allowing for the non-recurring SAG Mill 
expenses and impairment of investments, the net profit for the June 2012 
quarter was $11.441M or 3.39 cents per share. The September 2011 comparative 
period results were adversely impacted by the failure in July 2011 of the SAG 
Mill at the Masbate Gold Project operations, which resulted in significantly 
decreased production during that quarter.

Revenue from metal sales for the current quarter was $57.847M as compared to 
$65.666M for the June 2012 quarter, a decrease of $7.819M or 12%, and $17.049M 
for the September 2011 quarter, an increase of $40.798M or 239%. The 
decrease in revenue from the June 2012 quarter is due largely to the timing of 
sales, with gold inventory on hand at 30 September, 2012 increasing by 7,200oz 
from the previous quarter, along with a decrease in production from the June 
2012 quarter (47,646oz for September 2012 compared to 50,817oz for June 2012). 
These factors were partially offset by a strengthening gold price during the 
September 2012 quarter, with the average realised gold sales price increasing 
from $1,377/oz in June 2012 to $1,404/oz in September 2012 (inclusive of 
hedged sales). Revenue from metals sales for the September 2011 prior year 
quarter was $17.049M (a decrease of $40.798M or 239% from the current quarter) 
and reflects the limited production capacity of the plant during that period 
due to the SAG mill incident. Cost of sales for the current quarter was 
$44.984M as compared to $48.486M in the previous quarter (including 
depreciation, amortisation and tax expenses), a decrease of $3.502M or 7%. The 
decrease in cost of sales from the previous quarter was predominantly due to 
less ore purchased in the current quarter, due to decreased throughput and 
production levels in the current quarter. The September 2011 results reflect 
the limited processing capacity during that period due to the SAG mill 
incident. The cost of sales includes a mark-up charged to PGPRC by FRC on 
the ore sales which totalled $1.451M for the September 2012 quarter, (June 
2012 qtr: $1.475M and Sep 2011 qtr: $0.354M), as FRC is an associate of the 
group and is therefore not consolidated for accounting purposes.

As previously mentioned, the Mkushi Copper Project and Segilola Projects that 
were previously operated by the Company were spun out and the interests are 
now held by the Ratel Group, a 19.1% associate of the Company. The market 
value of the investment in Ratel Group Limited ("Ratel Group") at 30 
September, 2012 was $3.649M ($2.241M June 2012). The Company has taken up 
its proportional share of their loss for the period, along with its other 
associates being SAU, Masminero Resources ("Masminero"), Aroroy Resources 
("Aroroy") and FRC. The total loss from associates taken up by the Company 
during the current period is $0.440M ($1.570M: June 2012 quarter and $0.949M: 
September 2011 quarter).

Revenues

The Company earned $58.684M in revenue for the September 2012 quarter as 
compared to $66.524M in revenue for the prior quarter and $17.049M in revenue 
for the September 2011 quarter. The decrease in revenues by $7.840M or 12% 
from the prior quarter is a result of an decrease in gold ounces sold of 
6,239oz or 13% for the September 2012 quarter, together with the increase of 
bullion on hand of 7,200oz or 86% at the end of the September 2012 quarter 
from the June 2012 quarter, however the decrease in revenue resulting from 
lower gold sales was slightly offset by an increase in the average gold sales 
price of $1,404/oz for the September 2012 quarter compared with $1,377/oz for 
the June 2012 quarter, an increase of $27/oz or 2%. The average gold sales 
price for the September 2011 quarter was $960/oz. The lower gold production 
in the September 2012 quarter resulted in decreased levels of gold sales at 
spot prices. In the September 2012 quarter, 26,234oz gold was sold at an 
average unhedged gold sales price of $1,696/oz compared to 32,630oz of gold 
sold at an average unhedged sales price of $1,602/oz in the June 2012 quarter 
and 2,133oz of gold sold at an average unhedged sales price of $1,752/oz in 
the September 2011 quarter. Gold production for the September 2012 quarter 
of 47,646oz was 6% lower than the June 2012 quarter production of 50,817oz due 
to the lower throughput in the September 2012 quarter. Gold production of 
47,646oz for the September 2012 quarter was 219% higher than the gold 
production of 14,935oz for the September 2011 quarter as a result in the 
increased throughput capacity resulting from the commissioning of the 
supplementary crusher in September 2011, together with the 6.5Mtpa plant 
upgrade completed in December 2011 and re-commencement of full production in 
January 2012 following completion of repairs to the SAG Mill.

In addition, as a result of the acquisition of the Masbate Gold Project in 
late March 2007, the Company has recognised a receivable from its associate, 
FRC. The acquisition accounting for the business combination through which the 
Masbate Gold Project was acquired requires the accretion of the interest on 
the discounted receivable to be recognised as revenue during each period. As 
FRC is an associate, it is required to be equity accounted by the group, with 
the Company recognizing its ownership portion of the FRC loss in the Company's 
accounts. As the notional interest accretion gain is recognised as income in 
the consolidated group and recognised as an expense in Filminera's accounts, 
the amounts are largely offset. The notional interest accretion recognised for 
the 3 months ended September 30, 2012 was $0.806M (June 2012: $0.728M and 
September 2011$0.728M).

Cost of Sales

Cost of sales for the September 2012 quarter was $44.984M as compared to 
$48.486M for the June 2012 quarter and $23.541M for the September 2011 
quarter. Cost of sales decreased from the June 2012 quarter predominantly as a 
result of the decrease in ore purchases of $1.972M or 11% in the September 
2012 quarter together with a decrease in depreciation and amortisation of 
$0.585M or 10%, a result of the decreased throughput and production in the 
current quarter. The prior year quarter result reflects the limited processing 
capacity of the plant due to the SAG Mill failure.

Cash operating costs for the project (based on a combination of the results of 
FRC and PGPRC before depreciation, amortisation and taxes) were $837/oz as 
compared to $784/oz in the June 2012 quarter, with the increase attributable 
to the reduced feed grade to the mill, together with an increase in mining and 
processing costs. Consumables and supplies expense was $15.015M for the 
September 2012 quarter as compared to $14.741M for the June 2012 quarter, an 
increase of $0.274M or 2%. The cost of cyanide has continued to increase, 
and additional cyanide was also required in the current quarter. Additional 
reagents were also introduced in the current period, which have not been used 
in prior quarters. Total project cash operating costs for the current 
quarter decreased by $2.702M or 7%. Insurance premium costs relating to the 
premium funding have decreased to $1.523M in the September 2012 quarter from 
$2.400M in the June 2012 quarter, a reduction of $0.873M or 36%. 
Depreciation and amortisation of $5.571M was incurred in the September 2012 
quarter, compared to $6.155M in the June 2012 quarter, a decrease of $0.585M 
or 10%. The reduction in depreciation is due to the adoption in the current 
period of the new resources model which has an extended life of mine compared 
to the previous resource model. The increase in the life of mine effectively 
reduces the depreciation rate applied, compared to the depreciation rate 
applied in previous years based on the earlier resource model. The revised 
depreciation rates will be applied on an ongoing basis.

Production costs disclosed in the annual financial statements also include 
costs which are not included in the cash cost calculation, such as 
depreciation, amortisation, refining and treatment charges and tax expenses, 
along with the cost mark up on purchases of ore from its associate, FRC, of 
$1.451M for September 2012 quarter ($1.475MJune 2012 quarter and 
$0.354MSeptember 2011 quarter).

Other Expenses

Net other expenses (after cost of sales) for the September 2012 quarter were 
$4.062M as compared to $16.953M for the June 2012 quarter and $5.442M in the 
prior year comparative quarter, a decrease of $1.380M or 25%. The variance 
of $12.891M or 76% from the June 2012 quarter relates largely to additional 
SAG Mill repairs & maintenance costs of $3.351M, $6.870M impairment of 
investments and a provision for taxes of $1.027M that were expensed In the 
June 2012 quarter, together with a decrease in share of loss of associates of 
$1.130M incurred in the September 2012 quarter.

Specific Items Contributing to Changes

Impairment of investments
An impairment of investments of $6.870M was recognised in the June 2012 
quarter (September 2012 quarter: nil) for the mark to market of the investment 
in St. Augustine Gold & Copper Limited. This is a non-cash non-recurring 
expense.

Finance costs
The Company incurred finance costs of $1.017M during the period compared to 
the $1.137M incurred during the June 2012 quarter, a decrease of $0.120M or 
10%, and $0.781M in the September 2011 quarter, an increase of $0.236M or 
30%. These comprise predominantly interest expenses of $0.863M for September 
2012 ($0.946M for June 2012 and $0.730M for September 2011) on borrowings on 
the $80.3M project finance facility with BNP Paribas and finance lease 
obligations, together with $0.153M for amortisation of capitalised borrowing 
costs for June 2012 ($0.155M for June 2012, $0.051M for September 2011).

Share of loss of associates
In the September 2012 quarter, the Company has recognised a loss of $0.440M in 
from its share of its associates losses, including its interests in FRC, Ratel 
Group, SAU, Aroroy Resources, Inc. and Masminero Resources Corporation, a 
decrease of $1.129M or 720% from the previous quarter loss of $1.569M. In 
the September 2011 quarter, the Company recognised a loss of $0.949M, which 
related to FRC, Ratel Gold (now SAU), Ratel Group, Aroroy and Masminero. The 
variance from the June 2012 quarter is mainly due to the decreased share of 
loss from FRC in the September 2012 quarter.

SAG Mill expenses
All expenses in relation to the SAG Mill repair were fully expensed in the 
2012 financial year, with $5.713M expensed in the June 2012 quarter (September 
2012 quarter: nil). Additionally, other operating income that was recognised 
in the December 2011 quarter for insurance compensation of $2.363M relating to 
the insurance claim lodged for repairs to the SAG Mill was reclassified as 
part of the SAG Mill expenses in the June 2012 quarter.

Administration and other costs
In the current quarter the Company incurred costs of $2.697M as compared to 
$1.208M for the previous quarter, an increase of $1.489M or 123% and $3.241M 
in September 2011, a decrease of $0.544M or 17%. The variance from the 
previous quarter is predominantly due to repairs & maintenance costs of 
$2.863M relating to the repair of the SAG Mill incurred during the December 
2011 quarter being reclassified to a separate line item in the June 2012 
quarter, therefore reducing administration & other costs in the June 2012 
quarter, partially offset by the recognition of documentary stamp taxes of 
$1.027M in the June 2012 quarter. The variance from the September 2011 
quarter is predominantly due to the recognition of a notional value of $0.460M 
relating to employee share option expenses in the September 2011 quarter, 
which has not been incurred in later periods.

Movement in fair value of derivative financial instruments
A gain of $0.091M was recognised in the profit and loss statement in September 
2012 for the movement in the fair value of the Company's hedges, being a gain 
of $0.091M on interest rate swap contracts. A gain of $0.045M was recognised 
for the 30 June, 2012 quarter, being a gain of $0.119M on interest rate swap 
contracts and a gain related to the movement in the value of ineffective gold 
forward hedges at 30 June, 2012 of $0.343M, offset by losses on its HFO & 
diesel fuel swap contracts of $0.417M. The HFO & diesel fuel swap contracts 
expired in April 2012. In the September 2011 quarter, a loss of $0.471M was 
recognised. The movements relate to the fair value of the Company's hedged 
instruments, and as such are determined by the prevailing market values at 
each balance date.

Summary of gold forward sales contracts

 __________________________________________________________________
|Expiry Date     |Settlement Date |Total Ounces|Average Price (US$)|
|________________|________________|____________|___________________|
|29 Oct 2012 - 31|31 Oct 2012 - 31|    14,618  |         889.42    |
|Dec 2012        |        Dec 2012|            |                   |
|________________|________________|____________|___________________|
|29 Jan 2013 - 27|31 Jan 2013 - 31|    50,225  |         912.67    |
|Dec 2013        |        Dec 2013|            |                   |
|________________|________________|____________|___________________|

Summary of interest rate swap contract

 ___________________________________________________________________
|Start Date |End Date   |Total Loan Amount (US$)|Fixed interest rate|
|___________|___________|_______________________|___________________|
|           |           |                       |                   |
|___________|___________|_______________________|___________________|
|30 Sep 2012|31 Dec 2012|          5,710,000    |          2.41%    |
|___________|___________|_______________________|___________________|
|31 Dec 2012|31 Mar 2013|          4,600,000    |          2.41%    |
|___________|___________|_______________________|___________________|
|31 Mar 2013|30 Jun 2013|          3,500,000    |          2.41%    |
|___________|___________|_______________________|___________________|
|30 Jun 2013|30 Sep 2013|          2,350,000    |          2.41%    |
|___________|___________|_______________________|___________________|
|30 Sep 2013|31 Dec 2013|          1,200,000    |          2.41%    |
|___________|___________|_______________________|___________________|

Summary of HFO fuel and diesel swap contracts

HFO fuel and diesel swap contracts expired 30 April, 2012

Commitments and Contingencies

 ___________________________________________________________________
|                                             |      Consolidated   |
|_____________________________________________|_____________________|
|                                             | Sep 2012 | Jun 2012 |
|_____________________________________________|__________|__________|
|                                             |     US$  |     US$  |
|_____________________________________________|__________|__________|
|Operating lease commitments - Group as lessee|          |          |
|_____________________________________________|__________|__________|
|Due within one year                          |   389,653|   381,498|
|_____________________________________________|__________|__________|
|After one year but no more than five years   |   454,595|   540,456|
|_____________________________________________|__________|__________|
|Aggregate lease expenditure contracted for at|   844,248|   921,954|
|balance date                                 |          |          |
|_____________________________________________|__________|__________|
|                                             |          |          |
|Finance lease commitments - Group as lessee  |          |          |
|_____________________________________________|__________|__________|
|Due within one year                          | 7,041,158| 8,813,833|
|_____________________________________________|__________|__________|
|After one year but no more than five years   |19,686,568|20,235,822|
|_____________________________________________|__________|__________|
|Aggregate lease expenditure contracted for at|26,727,727|29,049,656|
|balance date                                 |          |          |
|_____________________________________________|__________|__________|

Other Commitments

 _______________________________________________________________
|(a)     Mining services commitments        |3,658,000|3,658,000|
|___________________________________________|_________|_________|
|(b)     Power services contract commitments|  455,722|  428,483|
|___________________________________________|_________|_________|
|(c)     Laboratory services commitments    |  205,431|  205,431|
|___________________________________________|_________|_________|
|(d)     Other capital commitments          |7,349,773|5,081,482|
|___________________________________________|_________|_________|

The Company is party to a mining services contract between Leighton 
Contractors (Philippines) Limited and FRC which has been determined to contain 
a finance lease. The contract for mining services previously had a 6 month 
termination period (3 months at 31 December, 2011), however the term of the 
contract ended at 31 March, 2012, and the mining services contract is now on a 
month by month term and can be terminated at any time without the requirement 
to pay an extended termination notice period. Under the Ore Purchase 
Agreement, PGPRC is contracted to purchasing ore from FRC at cost plus a 
profit margin. The Company is also party to a contract for the operation of 
the power station at the Masbate Gold Project. The contract has a 3 month 
termination notice period. Laboratory services agreements relate to a 3 month 
termination notice period on the laboratory services contract.

 ____________________________________________________________________
|BNP project finance debt facility         | |30 Sep 2012|30 Jun 2012|
|__________________________________________|_|___________|___________|
|Due within one year                       | | 13,456,110| 17,748,210|
|__________________________________________|_|___________|___________|
|After one year but no more than five years| |  9,457,680|  9,457,680|
|__________________________________________|_|___________|___________|
|                                          | | 22,913,790| 27,205,890|
|__________________________________________|_|___________|___________|

 ____________________________________________________________________
|Insurance Premium Funding facility        | |30 Sep 2012|30 Jun 2012|
|__________________________________________|_|___________|___________|
|Due within one year                       | |          -|  2,431,697|
|__________________________________________|_|___________|___________|
|After one year but no more than five years| |          -|          -|
|__________________________________________|_|___________|___________|
|                                          | |          -|  2,431,697|
|__________________________________________|_|___________|___________|

 _____________________________________________________________________
|             |                        Payments due by period         |
|_____________|_______________________________________________________|
|Contractual  |          |Less than 1 |           |           |After  |
|Obligations  |Total     |year        |1 - 3 years|4 - 5 years|5 years|
|_____________|__________|____________|___________|___________|_______|
|Debt         |          |            |           |           |       |
|_____________|__________|____________|___________|___________|_______|
|Finance Lease|26,727,727|   7,041,158| 10,893,696|  8,792,873|      -|
|Obligations  |          |            |           |           |       |
|_____________|__________|____________|___________|___________|_______|
|Operating    |   844,248|     389,653|    454,595|          -|      -|
|Leases       |          |            |           |           |       |
|_____________|__________|____________|___________|___________|_______|
|Purchase     |11,668,926|  11,668,926|          -|          -|      -|
|Obligations  |          |            |           |           |       |
|_____________|__________|____________|___________|___________|_______|
|Other        |         -|           -|          -|          -|      -|
|Obligations  |          |            |           |           |       |
|_____________|__________|____________|___________|___________|_______|
|Total        |39,240,901|  19,099,737| 11,348,291|  8,792,873|      -|
|Contractual  |          |            |           |           |       |
|Obligations  |          |            |           |           |       |
|_____________|__________|____________|___________|___________|_______|

Background and Review of Operations

CGA is incorporated and domiciled in Australia. The Company has been listed 
on the Australian Stock Exchange ("ASX") since April 1991 and on the Toronto 
Stock Exchange ("TSX") since February 2005.

During the 2007 year, the Company entered into agreements to acquire interests 
in the Masbate Gold Project in the Philippines, the Mkushi Copper Project in 
Zambia, and the Segilola Gold Project in Nigeria.

The Company executed a joint venture agreement on 30 May, 2007 between Seringa 
Mining Limited ("SML"), a then wholly owned subsidiary of the Company, African 
Eagle Resources plc ("AFE") and Katanga Resources Limited ("Katanga"), a 
wholly owned subsidiary of AFE whereby CGA acquired a 51% interest in the 
Mkushi Copper Project in Zambia, with AFE retaining a 49% interest.

On 27 May, 2007, the Company through its then wholly owned subsidiary, 
Segilola Gold Limited ("SGL"), entered into a joint venture agreement ("the JV 
Agreement") with Tropical Mines Limited ("TML"), to earn a 51% interest in the 
Segilola Gold Project in Nigeria, considered to be the most advanced gold 
exploration project in the country. TML is a Nigerian company owned in joint 
venture by local investors and the Government.

On 31 January, 2007, the Company entered into a Sale and Purchase Agreement 
("SPA") for the acquisition of 100% of Thistle Mining Inc.'s interest in the 
Masbate Gold Project located in the Republic of the Philippines. The agreed 
purchase consideration was $51M, and the transaction was completed on 19 
March, 2007 through an issue of 40,985,538 shares and cash payments of $25M.

During the 2009 year, the Company's focus was the development and 
commissioning of the Masbate Gold Project with the construction of the 
processing plant completed in the 2009 March quarter and the power plant in 
the 2009 June quarter. The Masbate Gold Project achieved its first gold pour 
on 12 May, 2009. Prior to commencement of commercial production, most costs 
were capitalised as development costs.

On 30 October, 2009 the Company completed a private placement of 14,705,000 
ordinary shares in the capital of the Company at C$1.70 per share for a total 
capital raising of C$24,998,500. The net proceeds, after costs of the issue, 
in combination with existing cash reserves, were utilised to fund further 
enhancements in the plant and exploration activities at the Masbate Gold Mine.

A further private placement was completed on 5 February, 2010 on a bought deal 
basis, of 39.1M ordinary shares in the capital of the Company at C$2.20 per 
share for total gross proceeds of C$86M. The net proceeds from the sale of the 
shares were used to repay indebtedness, including the early repayment of the 
loan facility with Meridian and Casten, the $25M Senior Promissory Notes, to 
increase exploration activity at the Masbate Gold Project and for general 
corporate purposes.

In 2010, the Company entered into a strategic alliance with Sierra Mining 
Limited ("Sierra"), which holds prospective gold exploration interests in the 
Philippines. Projects include the property immediately adjacent to Medusa 
Mining Limited's (TSX:MLL) rich Co-0 gold mine (December 2010 quarter - 
average grade 13.09g/t and cash costs of $185/oz) and other properties to the 
south of the King-king gold and copper deposit. This will leverage CGA's 
exploration expenditure and further capitalise on the success to date in the 
Philippines. In November 2010, the Company purchased a further 4M shares in 
Sierra, increasing its holding to 19.7M shares or approximately 8.5%.

In 2010, the Company incorporated a new entity, Ratel Gold Limited, now called 
St. Augustine Gold and Copper Limited which acquired the Company's African 
assets. During the 2010 year, the Company announced a proposed spin-off of 
Ratel from the Company, with Ratel undertaking an initial public offering of 
common shares (the "Offering") in Ratel. The Offering closed successfully on 6 
August, 2010, with Ratel issuing 70M common shares at a price of C$0.20 per 
common share, for aggregate gross proceeds of C$14M. The Offering, along 
with a subsequent issue of 2.5M shares by Ratel, diluted the Company's holding 
in Ratel to 19.4%. Accordingly the African assets, being the Segilola Gold 
Project and the Mkushi Copper Project, are no longer controlled by the Company 
or consolidated into its financial statements.

In October 2010, the Company entered into a strategic alliance with Ratel 
(now called SAU) in connection with Ratel's agreement to acquire the interests 
held by Russell Mining & Minerals, Inc. and their subsidiaries (the "RMMI 
Group"), in the 20.7M equivalent gold ounce King-king Copper-Gold Project in 
the Philippines ('the King-king Interests"). As part of the acquisition, the 
Company agreed to provide a loan facility to the RMMI Group to fund the 
initial settlement payments to Benguet Corporation ("Benguet") and debt 
holders of Benguet, together with working capital, which was fully secured 
against the King-king Interests. The total amount loaned was $14,489,202, 
which was fully repaid to the Company on 7 January, 2011, along with interest 
of $336,705. The acquisition was conditional on the successful completion of a 
C$25M capital raising at C$0.30 ('the Ratel Placement") per share and securing 
all necessary shareholder and TSX approval for the acquisition, share issue to 
the RMMI Group and the Ratel Placement. The Company subscribed for a total of 
50M additional shares in the Ratel Placement, increasing its interest in Ratel 
Gold Limited (now called SAU) to its current interest of 20.7%. The Ratel 
Placement along with the acquisition of the King-king interests was 
successfully closed on 7 January, 2011.

With the closure of the Ratel Placement, Ratel (now called SAU) completed a 
spin-off of its existing African assets, by way of an entitlement issue back 
to shareholders of shares in Ratel Group Limited, a TSX-listed company trading 
under the symbol "RTG". Under the terms of the reorganization, the Company was 
issued a further 9,722,222 Ratel Group shares. The Company also participated 
in a capital raising of Ratel Group, taking up 19M shares at C$0.10 each. As a 
result the Company now holds a 19.1% interest in Ratel Group.

In June 2011, the Company successfully achieved Project Completion for the 
project finance facility for the Masbate Gold Project. Having now satisfied 
Project Completion, the following additional benefits apply to the facility:
    --  the margin has reduced from LIBOR plus 3.65% to LIBOR plus
        3.15%;
    --  any guarantees from CGA have been released and the project is
        non-recourse to CGA;
    --  the Project is able to flow all excess funds (above and beyond
        the Debt Service Reserve Account) to any other entity within
        the CGA group, with any payment out of the security structure
        to be applied as to 25% to a further prepayment of the
        principal outstanding under the facility, subject to the
        satisfaction of normal financial ratios.

Operations at the Masbate Gold Project progressed well through the 2010-11 
year. Mill throughput continued to improve with a ninth consecutive quarterly 
record set in the June 2011 quarter along with the commissioning of a fourth 
mining fleet to support further throughput improvements including the 6.5Mtpa 
plant upgrade which was completed during the December 2011 quarter.

On 10 July, 2011, cracks were detected in the SAG mill at the Masbate Gold 
Project. The SAG mill was shut down to be repaired, although interim 
production was re-established on 21 July, 2011 with a reconfiguration of the 
grinding circuit and ore being fed directly into the ball mills. Repairs to 
the SAG mill were completed on 25 December, 2011 with recommissioning 
occurring over the ensuing days. Initially production was set at 300-350tph 
to bed the mill in and make final mechanical checks. Production rates were 
subsequently lifted to 700tph with all mechanical checks showing that the 
circuit had settled in and was running smoothly and back at full operating 
capacity. Following the repairs to the SAG mill, throughput was 1,728,751 
tonnes for the June 2012 quarter, compared to 866,140 tonnes for the December 
2011 quarter - a 100% increase in throughput from the December quarter when 
the repairs were completed. The milling circuit is performing consistently at 
levels at or above 6.5Mtpa. All repairs were conducted under the supervision 
of mill specialists, Metso Minerals, who have repaired similar issues on this 
type of mill on a number of previous occasions. All repair work was 
subjected to extensive Non Destructive Testing which showed that 100% of the 
weld was within specification. Further engineering work in the form of the 
addition of gussets which "knit" the rotating element to the mill heads were 
also implemented to ensure improved structural integrity to the mill shell. 
The purchase of a new rotating element is also in the process giving extra 
security against any chance of another prolonged shutdown.

Following the successful recommissioning of the SAG mill in December 2011, 
production has remained strong with throughput rates in excess of 6.5mtpa 
(annualised) in each subsequent quarter since recommissioning. Production 
continues to improve with a record 100,019 ounces produced in the 6 month 
period January to June 2012, and the project pouring its 500,000(th) ounce of 
gold in August 2012, and a total 47,646 ounces produced in the September 2012 
quarter.

The Lycopodium Optimisation Study to determine the options for upgrading plant 
capacity via stepped increases in capital expenditure is currently being 
finalised, with capital and operating estimates under final consultant review. 
The Company is reviewing the various options available with B2 before making 
any further commitments

The Company has continued with its aggressive drilling program to realise the 
significant exploration potential of the Masbate Gold Project. During the 2012 
year, the Company announced an increase in total measured mineral resources 
to 0.16M ounces and indicated mineral resources to 4.97M ounces (including 
stockpiles of 0.13M ounces) increasing total contained gold to 5.13M ounces, 
and inferred resources of 2.83M ounces, as reported in the last release of a 
NI 43-101 compliant resource. After allowing for the ounces depleted from 
mining since we commenced production, this represents an increase of 1.06M 
measured and indicated ounces of contained gold from the previous NI 43-101 
compliant resource or 23.3%.] The full details of the announcement can be 
found on sedar.com. The updated mineral resource estimates are based on 
drilling completed to the end of June 2011, which represents only the addition 
of approximately 42,000 metres (US$4M) of new drilling or a discovery cost of 
approximately $3.77/ounce. During the 2012 year, the aggressive exploration 
program continued, with a total spend in the order of $14.4M including 
drilling on new near mine targets, more regional exploration programmes, 
reserve definition, inferred resource ounce conversion and sterilisation 
programs. Given the success of the project to date, the Company is well 
positioned to capitalise on further exploration success with the mining fleet 
already expanded, the initial scoping study of a 10mtpa expansion completed 
and the optimisation study to determine the options for upgrading plant 
capacity via stepped increases in capital expenditure nearing completion.

Results from recent drilling at "near mine" targets have resulted in some 
excellent intercepts. Programs targeting immediately north and south of the 
Main Vein Pit have intercepted broad widths of high grade mineralisation.

During the September 2012 quarter, drilling was split between resource infill 
and step out work within the mining area on both Filminera Resources and Vicar 
Mining leases; drilling along strike into the EP10 exploration lease and 
initial drilling of six holes into a series of geophysical targets at the 
Baleno gold-copper porphyry prospect. Drilling totalled 5,834.9m of reverse 
circulation, 12,138.4m of diamond core and 3,448.3m of RC / core tail. The 
best results for the quarter were returned from Libra East where infill 
drilling has extended the mineralisation below the planned pit floor. HMBNW 
and Main Vein North Split and Blue Quartz North holes also returned 
encouraging results. The contract regional mapping and sampling crew completed 
the mapping program within the Vicar Mining Properties near Pajo Hill and 
demobilised during the quarter. Their mapping has indicated an extension to 
the Grandview structure within the Vicar Mining lease, west of the Pajo Hill 
Prospect. At the Baleno gold-copper porphyry prospect, drilling was completed 
during the quarter. Further ground work is anticipated including soil 
geochemical sampling program in the near future.

During the quarter, 50,000 outstanding options due to expire on 30 September, 
2012 and 40,000 options due to expire on 17 November, 2013 were exercised for 
total gross proceeds of A$91,000. 150,000 unexercised options expired and 
250,000 unexercised out of the money options issued to employees now resigned 
were cancelled, per the terms of the Employee Option Scheme.

During the current quarter, 40,000 A$1.15 options issued in November 2008, 
together with 50,000 A$0.90 options issued in September 2007, were exercised 
raising a total of A$91,000.

On 4 September, 2012, the Company entered into a loan facility agreement with 
Ratel Group Limited ("Borrower") to provide a funding facility of up to $2.5M 
to Ratel Group Limited. The term is for 24 months at an interest rate of 9% 
per annum.

On 19 September, 2012, the Company announced it had entered into a definitive 
Merger Implementation Agreement to merge B2Gold and the Company at an agreed 
exchange ratio of 0.74 B2Gold common shares for each CGA share held, which 
represents a purchase price of approximately C$3.18 per CGA share (based on 
the closing share prices on 17 September, 2012, being just prior to 
announcement). The proposed merger has received strong endorsement from both 
shareholders and the wider investment community. It will be implemented by way 
of a Scheme of Arrangement under the Australian Corporations Act 2001 
("Scheme"). Upon completion of the Scheme, existing B2Gold shareholders and 
CGA shareholders will own approximately 62% and 38%, respectively, of the 
issued common shares of the combined company. There are a number of 
conditions precedent such as shareholder approval by both CGA and B2Gold 
shareholders and it is subject to traditional terms and conditions for 
transactions of this nature.

A Scheme Booklet setting out the terms of the Scheme and anIndependent 
Expert's Reportwill be circulated to all CGA shareholders in connection with 
ameeting of CGA shareholders expected totake placelater in the year. 
The Scheme requires approval by 75% of the number of votes cast, and 50% of 
the number of CGA shareholders present and voting, at the meeting of CGA 
shareholders. If the Scheme is implemented, CGA will become a subsidiary of 
B2Gold and cease to be a reporting issuer in Canada and will de-list from the 
ASX and TSX.

The business of the Company and its shares should be considered speculative 
given the volatility in world stock markets (particularly with respect to 
mining and exploration companies) and the uncertain nature of mining and 
exploration activities generally. Amongst other things, some of the key risk 
factors faced by CGA include:
    --  foreign exchange movements;
    --  movements in commodity prices (in particular the gold price and
        costs of production);
    --  access to new capital (both debt and equity) and meeting
        liquidity requirements;
    --  meeting forecast operating parameters, including grade,
        operating costs,  throughput and reliability of mechanical
        components;
    --  the uncertain nature of exploration and development activities;
    --  commissioning risks in new development projects including the
        use of second hand equipment;
    --  satisfying banking requirements and covenants;
    --  increases in capital expenditures necessary to advance the
        Company's projects;
    --  the ability to profitably exploit new development projects;
    --  political, security and sovereign risks of the Philippines;
    --  permitting, local community  and small scale miners support;
    --  environmental obligations; and
    --  weather conditions.

For further information on these and other risks inherent in the Company's 
business, we direct readers to Appendix A of this MD&A and the Company's 
Annual Information Form for the most recently completed financial year lodged 
on SEDAR at sedar.com.

Disclosure Controls and Procedures

In accordance with Multilateral Instrument 52-109 - Certification of 
Disclosure in Issuers' Annual and Interim Filings, an evaluation of the 
effectiveness of the Company's disclosure controls and procedures ("DC&P") and 
its internal control over financial reporting ("ICFR") was conducted. Based on 
this evaluation, the Chief Executive Officer and the Chief Financial Officer 
have concluded that DC&P and ICFR were effective as of the three-month period 
ended 30 September, 2012, and that, as a result, ICFR design provides 
reasonable assurance that material information relating to the Company, is 
made known to them by others within those entities, particularly during the 
period in which the annual filings are being prepared, and the information 
that the Company must present in its annual documents, its interim documents 
or in other documents it files or submits under securities regulations is 
recorded, processed, condensed and presented within the times frames 
prescribed by this legislation. Furthermore, ICFR design provides reasonable 
assurance that the Company's financial information is reliable and that its 
financial statements have been prepared, for the purpose of publishing 
financial information, in accordance with the Company's GAAP. Lastly, no 
changes to the ICFR that have had or are likely to have a significant effect 
on this control mechanism were identified by management during the accounting 
period commencing on 1 July, 2012 and ending on 30 September, 2012.

Critical Accounting Estimates

The significant accounting policies including the critical accounting 
estimates and assumptions used by CGA are disclosed in Note 2 to the annual 
financial statements for the year ended 30 June, 2012. Certain accounting 
policies require that management make appropriate decisions with respect to 
the formulation of estimates and assumptions that affect the reported amounts 
of assets, liabilities, revenues and expenses. Management reviews its 
estimates on a regular basis. The emergence of new information and changed 
circumstances may result in actual results or changes to estimated amounts 
that differ materially from current estimates. The critical accounting 
estimates and assumptions used in the preparation of the 30 June, 2012 annual 
financial statements have been applied consistently from the previous 
financial year. The critical accounting estimates and assumptions used are 
as follows:

(i)Significant accounting judgments
    --  Mineral reserve estimates

(ii)Significant accounting estimates and assumptions
    --  Share based payment transactions
    --  Impairment of intangibles
    --  Carrying value of exploration and evaluation
    --  Deferred tax assets and liabilities
    --  Impairment of plant and equipment
    --  Estimating costs of environment rehabilitation
    --  Loan to associate
    --  Finance leases
    --  Derivative financial instruments

Further details regarding the critical accounting estimates and assumptions 
can be found in the 30 June, 2012 annual financial statements. There have been 
no changes to the critical accounting estimates of the Group over the past two 
years.

Transactions between the group and its related parties

During the quarter ended 30 September, 2012, the Company entered into 
transactions with related parties in the wholly-owned group:
    --  loans were advanced and repayments received on short term
        inter-company accounts; and
    --  loans were received from controlled entities on short term
        inter-company accounts.

During the quarter ended 30 September, 2012 the Company entered into loan 
advances totalling $4.456M on short term intercompany accounts with its 40% 
associate, Filminera.

These transactions were undertaken on commercial terms and conditions except 
that:
    --  there is no fixed repayment of loans between the related
        parties; and
    --  no interest is payable on the loans at present.

During the financial year, the Company entered into the following transactions 
with related parties:
    --  Ore was purchased from its 40% associate Filminera, pursuant to
        an Ore Sales and Purchases Agreement, which requires the
        Company to purchase ore mined from the associate's facility on
        a cost plus basis.  In the current quarter, $19.588M of ore was
        purchased from Filminera.
    --  On 4 September, 2012 the Company entered a Loan Facility
        Agreement with Ratel Group Limited for the sum of $2.5M.  The
        facility is for a term of 24 months and the drawn portion of
        the facility incurs interest at a rate 9% p.a.  As at 30
        September, 2012 $0.824M had been drawn down on the loan.

Additional Information and Continuous Disclosure

This MD&A has been prepared as of 31 October, 2012. Additional information on 
the Company is available through regular filings of press releases, financial 
statements and its Annual Information Form on SEDAR (sedar.com). You may also 
find these documents and other information about CGA on our website at 
www.cgamining.com.

Forward-Looking Statements

This MD&A contains forward-looking statements. These forward-looking 
statements include, but are not limited to, statements regarding expectations 
of the Company as to the market price of gold, strategic plans, future 
commercial production, production targets, timetables, mining operating 
expenses, capital expenditures, and mineral reserve and resource estimates. 
Forward-looking statements involve known and unknown risks and uncertainties 
and accordingly, actual results and future events could differ materially from 
those anticipated in such statements. Factors that could cause future results 
or events to differ materially from current expectations expressed or implied 
by the forward-looking statements include, but are not limited to, 
fluctuations in the market price of precious metals, mining industry risks, 
uncertainty as to calculation of mineral reserves and resources, risks related 
to hedging strategies, risks of delays in construction, requirements of 
additional financing, increase in tax or royalty rates or adoption of new 
interpretations related thereto and other risks described in this MD&A and in 
the Company's other documents filed from time to time with Canadian securities 
regulatory authorities. Although the Company is of the opinion that these 
forward-looking statements are based on reasonable assumptions, those 
assumptions may prove to be incorrect. Accordingly, readers should not place 
undue reliance on forward-looking statements. Readers can find further 
information with respect to risks in the Annual Information Form of the 
Company and other filings of the Company with Canadian securities regulatory 
authorities available at sedar.com. The Company disclaims any obligation to 
update or revise these forward-looking statements, except as required by 
applicable law.

RISK FACTORS

APPENDIX A

RISKS AND UNCERTAINTIES

As a mining company, the Company faces the financial, operational, political 
and environmental risks inherent to the nature of its activities. These risks 
may affect the Company's profitability and level of operating cash flow. The 
Company also faces risks stemming from other factors, such as fluctuations in 
gold prices, oil prices, interest rates, exchange rates, tax or royalty rates 
or the adoption of new interpretation relating thereto and financial market 
conditions in general. As a result, the securities of the Company must be 
considered speculative, and in evaluating the securities of the Company, the 
following factors, amongst other things, should be considered.

Fluctuation in Gold Prices

The profitability of CGA's operations will be significantly affected by 
changes in the market price of gold. Gold production from mining operations 
and the willingness of third parties, such as central banks, to sell or lease 
gold affects the gold supply. Demand for gold can be influenced by economic 
conditions, gold's attractiveness as an investment vehicle and the strength of 
the US dollar and local investment currencies. Other factors include the level 
of interest rates, exchange rates, inflation and political stability. The 
aggregate effect of these factors is impossible to predict with accuracy. 
Gold prices are also affected by worldwide production levels. In addition, 
the price of gold has on occasion been subject to very rapid short-term 
changes because of speculative activities. Fluctuations in gold prices may 
adversely affect CGA's financial performance and results of operations.

Uncertainty of Reserve and Resource Estimates

The figures for reserves and resources presented are estimates based on 
limited information acquired through drilling and other sampling methods. No 
assurance can be given that the anticipated tonnages and grades will be 
achieved or that the indicated level of recovery will be realized. The ore 
grade actually recovered may differ from the estimated grades of the reserves 
and resources. Such figures have been determined based upon assumed gold 
prices and operating costs. Future production could differ dramatically from 
reserve estimates for, among others, the following reasons:
    --  mineralization or formations could be different from those
        predicted by drilling, sampling and similar examinations;
    --  increases in operating mining costs and processing costs could
        adversely affect reserves;
    --  the grade of the reserves may vary significantly from time to
        time and there is no assurance that any particular level of
        gold may be recovered from the reserves; and
    --  declines in the market price of gold may render the mining of
        some or all of the reserves uneconomic.

Any of these factors may require CGA to reduce its reserves estimates or 
increase its costs. Short-term factors, such as the need for the additional 
development of a deposit or the processing of new different grades, may impair 
CGA's profitability. Should the market price of gold fall, CGA could be 
required to materially write down its investment in mining properties or delay 
or discontinue production or the development of any new projects.

Production

No assurance can be given that the intended or expected production schedules 
or the estimated direct operating cash costs will be achieved in respect of 
the operating gold mine in which CGA has an interest. Many factors may cause 
delays or cost increases, including, without limitation, labour issues, 
disruptions in power, transportation or supplies, and mechanical failure. 
The revenues of CGA from the operating gold mine will depend on the extent to 
which expected operating costs in respect thereof are achieved. In addition, 
short-term operating factors, such as the need for the orderly development of 
ore bodies or the processing of new or different ore grades, may cause a 
mining operation to be unprofitable in any particular period.

Depletion of the Company's Mineral Reserves

CGA must continually replace mining reserves depleted by production to 
maintain production levels over the long term. This is done by expanding 
known mineral reserves or by locating or acquiring new mineral deposits. There 
is, however, a risk that depletion of reserves will not be offset by future 
discoveries of mineral reserves. Exploration for minerals is highly 
speculative in nature and involves many risks. Many projects are 
unsuccessful and there are no assurances that current or future exploration 
programs will be successful. Further, significant costs are incurred to 
establish mineral reserves, open new pits and construct mining and processing 
facilities. Development projects have no operating history upon which to 
base estimates of future cash flow and are subject to the successful 
completion of feasibility studies, obtaining necessary government permits, 
obtaining title or other land rights and the availability of financing. In 
addition, assuming discovery of an economic mine or pit, depending on the type 
of mining operation involved, many years may elapse before commercial 
operations commence. Accordingly, there can be no assurances that CGA's 
current programs will result in any new commercial mining operations or yield 
new reserves to replace and/or expand current reserves.

Uncertainty Relating to Inferred Mineral Resources

Inferred mineral resources that are not mineral reserves do not have 
demonstrated economic viability. Due to the uncertainty which may attach to 
inferred mineral resources, there is no assurance that Inferred mineral 
resources will be upgraded to mineral resources with sufficient geological 
continuity to constitute proven and probable mineral reserves as a result of 
continued exploration.

Fluctuation in Oil Prices

Because CGA uses diesel and heavy fuel oil to power its mining equipment and 
power stations to supply its mining operations, CGA's operating results and 
financial results may be adversely affected by rising petroleum prices. A 
portion of the costs until April 2012 were the subject of fuel hedges.

Exchange Rate Fluctuations

The operations of CGA in the Philippines are subject to currency fluctuations 
and such fluctuations may materially affect the financial position and results 
of CGA. Gold is currently sold in US dollars and although the majority of the 
costs of CGA are also in US dollars, certain costs are incurred in other 
currencies. The appreciation of non-US dollar currencies against the US dollar 
can increase the cost of exploration and production in US dollar terms, which 
could materially and adversely affect CGA's profitability, results of 
operations and financial condition.

Access to Capital Markets

To fund its growth, CGA is often dependent on securing the necessary capital 
through loans or permanent capital. The availability of this capital is 
subject to general economic conditions and lender and investor interest in 
CGA's projects.

Nature of Mineral Exploration and Mining

CGA's profitability is significantly affected by CGA's exploration and 
development programs. The exploration and development of mineral deposits 
involves significant financial risks over a significant period of time, which 
even a combination of careful evaluation, experience and knowledge may not 
eliminate. While the discovery of a gold-bearing structure may result in 
substantial rewards, few properties explored are ultimately developed into 
mines. Major expenses may be required to establish and replace reserves by 
drilling, and to construct mining and processing facilities at a site. It is 
impossible to ensure that the current or proposed exploration programs on 
CGA's exploration properties will result in profitable commercial mining 
operations.

CGA's operations are, and will continue to be, subject to all of the hazards 
and risks normally associated with the exploration, development and production 
of gold, any of which could result in damage to life or property, 
environmental damage and possible legal liability for any or all damage. 
CGA's activities may be subject to prolonged disruptions due to weather 
conditions depending on the location of operations in which CGA has interests. 
Hazards, such as unusual or unexpected formations, rock bursts, pressures, 
cave-ins, flooding or other conditions may be encountered in the drilling and 
removal of material. While CGA may obtain insurance against certain risks in 
such amounts as it considers adequate, the nature of these risks are such that 
liabilities could exceed policy limits or could be excluded from coverage. 
There are also risks against which CGA cannot insure or against which it may 
elect not to insure. The potential costs which may be associated with any 
liabilities not covered by insurance or in excess of insurance coverage or 
compliance with applicable laws and regulations may cause substantial delays 
and require significant capital outlays, adversely affecting CGA's earnings 
and competitive position in the future and, potentially, its financial 
position and results of operations.

Whether a gold deposit will be commercially viable depends on a number of 
factors, some of which are the particular attributes of the deposit, such as 
its size and grade, proximity to infrastructure, financing costs and 
governmental regulations, including regulations relating to prices, taxes, 
royalties, infrastructure, land use, importing and exporting of gold, revenue 
repatriation and environmental protection. The effects of these factors cannot 
be accurately predicted, but the combination of these factors may result in 
CGA not receiving an adequate return on invested capital.

Licences and Permits

CGA requires licences and permits from various governmental authorities. CGA 
believes that it holds all necessary licences and permits under applicable 
laws and regulations in respect of its properties and that it is presently 
complying in all material respects with the terms of such licences and 
permits. Such licences and permits, however, are subject to change in various 
circumstances and regularly expire and need to be renewed. There can be no 
guarantee that CGA will be able to obtain or maintain all necessary licences 
and permits that may be required to explore and develop its properties, 
commence construction or operation of mining facilities and properties under 
exploration or development or to maintain continued operations that 
economically justify the cost.

Competition

The mineral exploration and mining business is competitive in all of its 
phases. CGA competes with numerous other companies and individuals, including 
competitors with greater financial, technical and other resources than CGA, in 
the search for and the acquisition of attractive mineral properties and, 
increasingly, human resources. There is no assurance that CGA will continue to 
be able to compete successfully with its competitors in acquiring properties 
or prospects and in attracting and retaining human resources.

Cash Cost of Gold Production

CGA's cash operating cost to produce an ounce of gold is dependent on a number 
of factors, including the grade of reserves, recovery and plant throughput. 
In the future, the actual performance of CGA may differ from the estimated 
performance. As these factors are beyond CGA's control, there can be no 
assurance that CGA's cash operating cost will continue at historical levels or 
perform as forecast.

Title Matters

While CGA has no reason to believe that the existence and extent of any mining 
property in which it has a participating interest is in doubt, title to mining 
properties is subject to potential claims by third parties. The failure to 
comply with all applicable laws and regulations, including failure to pay 
taxes and carry out and file assessment work, may invalidate title to portions 
of the properties where the mineral rights are held by CGA.

Outside Contractor Risk

The mining and exploration activities are conducted by outside contractors. As 
a result, CGA's operations at these sites will be subject to a number of 
risks, some of which will be outside CGA's control, including:
    --  negotiating agreements with contractors on acceptable terms;
    --  the inability to replace a contractor and its operating
        equipment in the event that either party terminates the
        agreement;
    --  reduced control over such aspects of operations that are the
        responsibility of the contractor;
    --  failure of a contractor to perform under its agreement with
        CGA;
    --  interruption of operations in the event that a contractor
        ceases its business due to insolvency or other unforeseen
        events;
    --  failure of a contractor to comply with applicable legal and
        regulatory requirements, to the extent that it is responsible
        for such compliance; and
    --  problems of a contractor with managing its workforce, labour
        unrest or other employment issues.

In addition, CGA may incur liability to third parties as a result of the 
actions of a contractor. The occurrence of one or more of these risks could 
have a material adverse effect on CGA's business, results of operations and 
financial condition.

Safety and Other Hazards

The mining industry is characterised by significant safety risks. To 
minimize these risks, the Company has established an Occupational Health 
Safety & Environment Management Plan ("OHS&E"). The Company provides OHS&E 
training and awareness programs to its employees and contractors to 
continuously improve work practices and the work environment. However there 
are no guarantees that this will prevent safety issues, accidents or other 
hazards.

Political Risks

CGA currently holds interests in gold projects in the Philippines, which may 
be considered to have high political and sovereign risk. The Company also has 
its head office operations located in Australia. Any material adverse changes 
in government policies or legislation of Australia, Nigeria, the Republic of 
Zambia (given the investment in Ratel Group) or the Philippines or any other 
country that the Company has economic interests in that affect mineral 
exploration activities, may affect the viability and profitability of the 
Company.

While the government in the Philippines has historically supported the 
development of its natural resources by foreign companies, there is no 
assurance that the government will not in the future adopt different policies 
or interpretations respecting foreign ownership of mineral resources, 
royalties rates, taxation, rates of exchange, environmental protection, labour 
relations, repatriation of income or return of capital or the obligations of 
CGA under its respective mining codes. The possibility that the government may 
adopt substantially different policies or interpretations, which might extend 
to the expropriation of assets, may have a material adverse effect on CGA. 
Political risk also includes the possibility of civil disturbances and 
political instability.

Environmental Risks and Hazards

All phases of CGA's operations are subject to environmental regulation. 
Environmental legislation is evolving in a manner which will require stricter 
standards and enforcement, increased fines and penalties for non-compliance, 
more stringent environmental assessments of proposed projects, and a 
heightened degree of responsibility for companies and their officers, 
directors and employees. Environmental hazards which are unknown to CGA at 
present and which have been caused by previous or existing owners or 
operations of the properties may exist on CGA's properties. Failure to comply 
with applicable environmental laws and regulations may result in enforcement 
actions thereunder and may include corrective measures that require capital 
expenditures or remedial actions. There is no assurance that future changes in 
environmental laws and regulations and permits governing operations and 
activities of mining companies, if any, will not materially adversely affect 
CGA's operations or result in substantial costs and liabilities to CGA in the 
future.

Production at CGA's mine involves the use of sodium cyanide which is a toxic 
material. Should sodium cyanide leak or otherwise be discharged from the 
containment system, CGA may become subject to liability for clean up work that 
may not be insured. While all steps have been taken to prevent discharges of 
pollutants into ground water and the environment, CGA may become subject to 
liability for hazards that it may not be insured against.

Hedging Risk

The Company is exposed to movements in the gold price, other commodities and 
interest rates. As part of the risk management policy of the Company and in 
compliance with the conditions required by the Company's financiers, a variety 
of financial instruments (such as gold forward sales contracts and gold put 
options) are used from time to time to reduce exposure to unpredictable 
fluctuations in the project life revenue streams. Within this context, the 
hedging programs undertaken are structured with the objective of retaining as 
much upside to the gold price as possible, but in any event, by limiting 
hedging commitments to no more than 50% of the group gold reserves. The 
Company has alsoentered into a number of other derivative instruments 
includinginterest rate swaps and fuel hedging contracts. In the event 
thatthe Companycannot deliver into these contracts due 
toinsufficientgold production at the Masbate Gold Project, an early 
repayment of the loans, the Company could be exposed to material mark to 
market adjustments which could cause material liquidity requirements which may 
not be able to be funded from the cashflow from operations.

Small Scale Miners

Small scale miners have been operating in Aroroy, Masbate since the time Atlas 
Consolidated Mining and Development Corporation ("Atlas") operated in the 
area. While their processing operations are not on FRC's property, there has 
been evidence of contamination from tailing and effluent discharges within the 
Company's boundary. Although FRC is not liable for their contamination, the 
Company has been diligent in attempting to limit the activities of these 
miners and informing the public about the risk of contamination. In line with 
attempts to limit and control their activities the Company, in coordination 
with local and National government, is endeavouring to enter into agreements 
with small scale miners. The agreements will form local cooperatives to 
legally work on some areas of the Company's mineral tenements outside of its 
operations that are not suitable for large scale mining. There is also a 
natural conflict in objectives between small scale miners and the Company and 
FRC, as the small scale miners have no legal rights to mine and are keen to 
access as much ore as possible. In contrast, the Company and FRC have a 
stated position of allowing some level of activity; however, they require it 
to be contained to nominated areas only. Accordingly, there are risks that 
conflict can arise which could materially adversely affect the operations of 
CGA and/or FRC.

Dependence on Key Management Personnel and Executives

The Company will be dependent upon the continued support and involvement of a 
number of key management personnel. The loss of the services of one or more of 
such personnel could have a material adverse effect on the Company. The 
Company's ability to manage its exploration and development activities and, 
hence, its success, will depend in large part on the efforts of these 
individuals. The Company faces intense competition for qualified personnel and 
there can be no assurances that the Company will be able to attract and retain 
personnel.

Land Holdings

In general, FRC has valid title to or preferential rights to use and possess 
the parcels of land needed for its mining operations at the Masbate Gold 
Project. The following are outstanding issues:

(i)titles to three parcels of land are being judicially confirmed by 
applying for registration under the Land Registration Act; and

(ii)three claimants have filed an action contesting the title of FRC 
to three parcels of land.

While FRC anticipates that these land issues will be resolved, no assurance 
can be given that the matters will be resolved in FRC's favour in a timely 
manner, or at all.

Community Relations

At the Masbate Gold Project, community support is critical to the continued 
successful operation of the project, including equitable and sensible 
co-operation with local small scale mining activities. The Philippines 
operates on a relatively decentralised system and accordingly, all 
constituents potentially have an impact on the operations of the project and 
may have interests that conflict with those of the project, which may have a 
material adverse effect on the project and the Company.

Banking Covenants

Construction of the Masbate Gold Project has in part been financed by project 
finance from commercial banks which have representations, financial 
commitments, banking ratios and other covenants which must be satisfied at all 
times. Given the risks to operating cashflow as described above, the Company 
is exposed to potential events of default which could make all amounts due and 
payable immediately or expose CGA to working capital needs which may not be 
able to be funded by proceeds from operations. Such exposures can also cause 
cross-defaults on other debt facilities, making those also due and payable 
immediately, and which may not be able to be funded from cash reserves.

Concentration of Share Ownership

Majority or significant shareholders may be able to exercise significant 
influence over all matters requiring shareholder approval, including the 
election of directors and approval of significant corporate transactions, and 
such parties may not act in the best interests of the Company.

Thistle, PGO Loan and Inter-Company Loans

Some of the Philippine Gold Limited ("PGO") (which was acquired from Thistle) 
loans and inter-company loans have been in place for a number of years. In 
2005 and 2006, PGO, FRC and PGPRC undertook a restructuring of the 
inter-company loans on the advice of tax consultants. Some inter-company loans 
were converted into interest-bearing loans, and a portion of the inter-company 
loans were converted into "additional paid-in capital".

There is a risk that the past and current structure of the inter-company loans 
may have adverse tax consequences.

Regulations in the Philippines

The Philippines Constitution provides that all natural resources are owned by 
the State which may enter into a co-production, joint venture or production 
sharing agreement with citizens of the Philippines or corporations or 
associations whose capital is at least 60% owned by Philippine citizens.

Commonwealth Act No. 108, as amended (the "Anti-Dummy Act"), provides 
penalties for, amongst others: (a) Filipinos who permit aliens to use them as 
nominees or dummies so that the aliens could enjoy privileges otherwise 
reserved for Filipinos or Filipino corporations, and (b) aliens or foreigners 
who profit from the adoption of these dummy relationships. It also penalises 
the act of falsely simulating the existence of minimum stock or capital as 
owned by citizens of the Philippines or any other country in cases in which a 
constitutional or legal provision requires that, before a corporation or 
association may exercise or enjoy a right, franchise or privilege, not less 
than a certain percentage of its capital must be owned by such citizens.

The Anti-Dummy Act likewise prohibits aliens from intervening in the 
management, operation, administration or control of nationalised business or 
enterprises, whether as officers, employees or labourers, with or without 
remuneration, except that aliens may take part in technical aspects only, 
provided (a) no Filipino can do such technical work, and (b) it is with 
express authority from the Secretary of Justice. The Anti-Dummy Act also 
allows the election of aliens as members of the boards of directors or 
governing bodies of corporations or associations engaged in partially 
nationalised activities in proportion to their allowable participation or 
share in the capital of such entities. Although CGA believes its structure 
complies with all Philippine regulations, there is a risk that, given the 
limited precedents to date in the country, it could be changed or challenged.

Non completion of the merger with B2 Gold
If the Scheme is not implemented, CGA will remain an independent company and 
will continue to mine, explore and advance the Masbate Project. Should this 
occur, the Directors expect that the CGA Share price will trade below its 
current trading levels in the near term (although it is difficult to predict 
the CGA Share price movement with any certainty).



CGA Mining Limited Level 5, BGC Centre 28 The Esplanade Perth Western 
Australia 6000

Tel: +61 8 9263 4000 Fax: +61 8 9263 4020 Email:info@cgamining.com

www.cgamining.com

SOURCE: CGA Mining Limited

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CO: CGA Mining Limited
NI: MNG ERN 

-0- Oct/31/2012 13:00 GMT