CHALLENGER 30° 140° 135° 130° VIC QLD NSW NT WA Adelaide 20 Operations Report Challenger Gold Mine Summary South Australia The Challenger Mine produced 66,216 ounces of gold for the year with an average milled grade  of 3.91 grams per tonne (g/t), and a total cash  cost of $1,107 per ounce. The grade was low due  to a shortfall in ore supply from the mine that was  supplemented by low grade ore from stockpiles.  Higher dilution in stopes at the base of the mine  and depletion on those levels due to the addi- tional displacement of the ore horizons following  the identification of the ‘215 Shear’, contributed  to the lower than expected production from the  lower levels. A shortfall in underground develop- ment also limited access to ore sources. Development and mining commenced at the  higher grade Challenger West orebody during  the year but was insufficient to offset the short- fall from the base of the mine. Because of the poor ore recovery from the  bottom of the mine and the drop in the gold  price, a strategic review of the mine operation  was carried out. This resulted in a new plan that  focuses on the higher grade Challenger West as  the main ore supply. Ongoing improvements in site communications  continued with the installation of a dedicated  microwave link to the site. This greatly improves  www.kingsgate.com.au