Vatukoula Gold Mines plc (VGM) – Operational Update

Vatukoula Gold Mines plc (VGM) – Operational Update

Operational Update for the period 1 October - 30 November 2008

HIGHLIGHTS
• 43,571 tonnes of ore mined (up from 39,143 tonnes in previous two months)
• 10,529 ounces gold mined (10,828 ounces in previous two months)
• 37,332 tonnes of ore milled (up from 34,683 tonnes in previous two months)
• 8,399 ounces of gold milled (up from 6,925 ounces in previous two months)
• October 2008 was the mine’s first profitable month since VGM acquired the Vatukoula mine. Operating profit for October was F$2.74 million (inclusive of exchange rate fluctuations).

As announced on 1 October 2008, today’s announcement is for a shortened period of two months. This is in order to align all future quarterly operational updates with the Company’s financial reporting cycle. As such, the next operational update will be for the period December 2008 - February 2009 or the second quarter, with that update being announced by the end of March 2009.

Operations Update: Since the last update on 11 November 2008, production at the Vatukoula Gold mine has continued to steadily ramp up with an increase in gold production of 20% compared to the previous two months production.

Underground Operations: Underground production for the period (1 October – 30 November) increased to 43,571 tonnes, with an average mine grade of 7.75 grams of gold per tonne, producing 10,529 ounces from mining operations. The gold mined is marginally lower than the preceding two months which can be attributed to lower mining grades. As mentioned in the release of 11 November 2008, the overhaul of the underground fleet is continuing and in addition to the overhaul programme, a need to acquire additional underground earthmoving equipment has been identified, to increase the volume of material mined.

Milling Operations: The Vatukoula Treatment Plant is now operating satisfactorily, with gold recoveries at 86%, which is consistent with historic gold recoveries at Vatukoula. The ore milled has increased from 34,683 tonnes for the previous two months to 37,332 tonnes in October and November. This, in addition to a higher head grade delivered to the plant, has increased the gold milled to 8,399 ounces for October and November.

Financial Results:
The Company is pleased to report the mine’s first profits since the Company acquired it in April 2008 and began processing gold in May 2008. Unaudited operating profit for October was F$2.74 million inclusive of exchange rate fluctuations.

David Paxton, CEO of VGM commented,
“I am very pleased with the progress we have seen at the mine. The heavy vehicle fleet overhaul is underway and progressing at a steady state, and each vehicle re-entering the mine, increases production. We are in a situation where the combination of a bank debt-free balance sheet, a strong gold price, a lower oil price and the benefit of the Fijian Dollar exchange rate, is providing us with a unique opportunity to establish a steady operating base. Our progress towards our goal of producing 117,000 ounces per year is encouraging, whilst we also remain focused on what more needs to be done to sustain and accelerate that progress.”

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