Queenstake trimming fat at Jerritt Canyon (October 05, 2006)

Vancouver – Looking to garner greater market respect, Queenstake Resources (QRL-T, QEE-X) is moving to slash production costs at its Jerritt Canyon mining complex in northeastern Nevada and will evaluate strategies to boost realized value from its asset base.

The plan sees significant cuts at Jerritt Canyon through deferral of production from higher cost portions of the three underground mines, specifically ore zones in the Smith and SSX mines that are below the current water table.

In conjunction with production cuts, contract underground development will be reduced along with streamlining of maintenance, and use of higher cost mining equipment will cease. The operations cut-back will result in about a 10% reduction in the work force at the mine, dropping by 47 employees to a total of 370.

Queenstake anticipates the maneuver will reduce costs by about US$16 million per year. However, production will drop with this year’s estimated output now pegged at about 160,000 ozs. of gold, exclusive of the Newmont Mining (NMC-T, NEM-N) ore processed under a purchase agreement.

The company reports third quarter output of about 43,800 ozs. of gold, inclusive of ore purchased from Newmont. Fourth quarter projections foresee about 40,000 ozs. of gold production with cash operating costs in the US$420 per oz. range.

Cost savings are expected to provide ongoing exploration dollars for Queenstake’s drill programs on its large district land package, specifically at Starvation Canyon where a wide gold mineralized interval was recently intersected between two resource blocks.

The company also engaged its financial advisor, Blackmont Capital, to assist in implementing strategic options to add value to its asset base that includes its 308 sq. km land position and one of the only three permitted ore roasting facilities in Nevada.