40-F

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

(Check One)

oRegistration statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

ýAnnual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended  12/31/05Commission File Number1-32368

Queenstake Resources Ltd.

(Exact Name of Registrant as Specified in its Charter)

Yukon Territory, Canada

(Province or Other Jurisdiction of Incorporation or Organization)

999 - 18th Street, Suite 2940

Denver, Colorado 80202

(303) 297-1557

(Address and Telephone Number of Registrant’s Principal Executive Offices)

Susan K. Shapiro, Esq.

Burns & Levinson LLP

125 Summer Street, Boston, MA 02110

(617) 345-3000

(Name, Address and Telephone Number of Agent for Service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

	Name of Each Exchange
Title of Each Class	on Which Registered
Common Shares without Par Value	American Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

N/A

(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

ý Annual information formý Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

550,021,360 Common Shares without Par Value

Indicate by check mark whether the Registrant by filing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). If “Yes” is marked, indicate the filing number assigned to the Registrant in connection with such Rule.

YES o  NO ý

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES ý  NO o

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Annual Report on Form 40-F of Queenstake Resources Ltd. (the “Company”) and the Exhibits included herein may constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of the United States. Forward-looking statements include, but are not limited to, statements with respect to anticipated commencement dates of mining or metal production operations, projected quantities of future metal production, anticipated production rates and mine life, operating efficiencies, costs and expenditures and conversion of mineral resources to reserves. In certain cases, forward-looking statements can be identified by the use of words such as “could”, “expect”, “believe”, “will”, “estimate”, “anticipate”, “project” and similar expressions and statements relating to matters that are not historical facts. Forward-looking statements involve known and unknown risks and uncertainties and other factors, including those described under the heading “Risk Factors” in the Renewal Annual Information Form and in the Management’s Discussion and Analysis, included herein as Exhibits 1 and 3, respectively, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, gold price volatility; volatility of commodity prices; mining industry operational hazards and environment concerns; uncertainty of estimates of mineral deposits; requirements for additional financing which may not be available; government regulation and requirements for permits and licenses and competition. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RESERVE AND RESOURCE ESTIMATES

Proven and Probable Reserves. The estimates of proven and probable mineral reserves incorporated by reference in this Annual Report on Form 40-F have been prepared in accordance with National Instrument 43-101 of the Canadian Securities Administrators (NI 43-101). The definitions of proven and probable reserves used in NI 43-101 differ from the definitions in Industry Guide 7 or the U.S. Securities and Exchange Commission (SEC). Accordingly, the Company’s disclosure of mineral reserves in this Annual Report may not be comparable to information from U.S. companies subject to the SEC’s reporting and disclosure requirements.

Measured and Indicated Resources. This Annual Report uses the terms “measured and indicated resources”. The Company advises U.S. investors that while these terms are recognized and required by Canadian regulations, the SEC does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be

converted into reserves. Mineral resources that are not “mineral reserves” do not have demonstrated economic viability.

Inferred Resources:  This Annual Report uses the term “inferred resources”. The Company advises U.S. investors that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or prefeasibility studies, except in rare cases. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally mineable.

For further information, please refer to the definitions of reserves and resources and discussion under the heading “Risk Factors” in the Renewal Annual Information Form and in the Management’s Discussion and Analysis, included herein as Exhibits 1 and 3, respectively.

CURRENCY

Unless otherwise indicated, all dollar amounts in the Annual Report on Form 40-F are expressed in United States dollars.

ANNUAL INFORMATION FORM

The Renewal Annual Information Form of the Company for the year ended December 31, 2005 is included herein as Exhibit 1.

AUDITED ANNUAL FINANCIAL STATEMENTS AND
MANAGEMENT’S DISCUSSION AND ANALYSIS

Audited Annual Financial Statements

The Company’s audited consolidated financial statements for the years ended December 31, 2005 and 2004, including the auditors’ report thereon dated March 30, 2006, are included herein as Exhibit 2. Please refer to Note 23 to the audited consolidated financial statements for a reconciliation of the differences between Canadian and United States Generally Accepted Accounting Principles.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2005 is included herein as Exhibit 3.

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CONTROLS AND PROCEDURES

A.Disclosure Controls and Procedures

As of December 31, 2005, an evaluation was carried out by the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

B.Internal Control over Financial Reporting

During the fiscal year ended December 31, 2005, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

NOTICES PURSUANT TO REGULATION BTR

None.

AUDIT COMMITTEE

Identification of Audit Committee; Independence

The Company has an Audit Committee established by the Board of Directors for the purpose of overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company, in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are Peter Bojtos, Michael Smith, and Doris Meyer. Each of Mr. Bojtos and Mr. Smith is “independent” as that term is defined under the rules of the American Stock Exchange (the “AMEX”), but Ms. Meyer is not considered “independent” under AMEX rules. Please see below for a discussion of Ms. Meyer’s status under AMEX listing standards applicable to members of audit committees.

Audit Committee Financial Expert

The Board has designated Michael Smith as the “Audit Committee Financial Expert” as that term is defined under Section 407 of the Sarbanes-Oxley Act of 2002.

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Exemption from Listing Standards for Audit Committees

Doris Meyer is “independent” within the meaning of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “Exchange Act”) but is not “independent” within the meaning of Section 121A of the AMEX Company Guide because she was employed by the Company during the past three years. Until her resignation as an employee of the Company in May 2004, she was an executive officer of the Company, most recently as Vice President Finance and Corporate Secretary. With permission of the AMEX, the Company is currently relying on the exemption to AMEX Audit Committee composition requirements pursuant to Section 121B(2)(b) of the AMEX Company Guide in view of the “exceptional and limited circumstances” relating to Ms. Meyer’s service on the Audit Committee.

The Company’s Board of Directors has determined that Ms. Meyer’s membership on the Audit Committee was and is required by the best interests of the Company and its shareholders because of her qualifications as a Certified General Accountant and because she has considerable experience in the provision of financial and corporate compliance services to publicly-traded mining companies. As well, she is a member of the Associations of the Certified General Accountants of British Columbia and Canada. It is difficult to find individuals with the required skills and knowledge to serve on audit committees, and Ms. Meyer’s accounting, corporate and financial experience is very important to the Company’s Audit Committee in order to fulfill its mandate of overseeing the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements.

In accordance with the requirements for reliance on the exemption from AMEX listing standards under Section 121B(2)(b) of the AMEX Company Guide, Ms. Meyer is not a current officer or employee of the Company, nor is she an immediate family member of any officer or employee of the Company. She is not the Chairman of the Audit Committee.

The Company does not believe that reliance on the foregoing exemption has or would materially affect the ability of the Audit Committee to act independently and otherwise to satisfy the requirements of Rule 10A-3 under the Exchange Act.

CODE OF ETHICS

The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees, including its Chief Executive Officer and Chief Financial Officer. The Company will provide to any person, without charge, upon request, a copy of the Code. A person may request a copy by telephoning the Company at (303) 297-1557, or by writing to the Company at 999 - 18th Street, Suite 2940, Denver, Colorado 80202.

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate amounts billed by Staley, Okada & Partners, Chartered Accountants (“Staley Okada”) to the Company for each of the fiscal years ended December 31, 2005 and 2004 for audit fees, audit-related fees, tax fees and all other fees are set forth below:

	Year Ended December 31, 2005			Year Ended December 31, 2004
Audit Fees (1)	$	204,859		$	147,289
Audit-Related Fees (2)	-0		-	6,931
Tax Fees (3)	27,659			44,071
All Other Fees (4)	-0		-	-0		-
Totals	$	232,518		$	198,291

NOTES:

(1)  “Audit Fees” represent fees for the audit of the Company’s annual financial statements, review of the Company’s interim financial statements and review in connection with the Company’s statutory and regulatory filings.

(2)  “Audit-Related Fees” represent fees for assurance and related services that are related to the performance of the audit, principally for consultation concerning financial accounting and reporting standards.

(3)  “Tax Fees” represent fees for tax compliance and tax advice.

(4)  Except as noted above, there were no other fees billed to the Company for each of the last two fiscal years ended December 31, 2005 and 2004 by Staley Okada.

The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services. Pursuant to its Charter, the Audit Committee is required to pre-approve all auditing services and related fees and the terms thereof, including the scope of the auditors’ audit examination plan, procedures and timing of the audit, and pre-approve any non-audit services (i.e., any services provided other than in connection with the audit or review of financial statements) to be rendered by the Company’s auditors, including the terms thereof, and the fees to be paid in connection therewith. The Committee may delegate to one or more members of the Committee the authority to pre-approve services to be provided by the auditors. Any such pre-approval by one or more members of the Committee must be reported to the full Committee at the next scheduled meeting. The pre-approval of auditing and non-auditing services can be done with input from, but no delegation of authority to, management. All of the engagements and fees for 2005 were pre-approved by the Audit Committee.

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OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements required to be disclosed in this Annual Report on Form 40-F.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

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

AMEX CORPORATE GOVERNANCE

The Company’s common shares are listed on the American Stock Exchange (“AMEX”). Section 110 of the AMEX company guide permits AMEX to consider the laws, customs and practices of foreign issuers in relaxing certain AMEX listing criteria, and to grant exemptions from AMEX listing criteria based on these considerations. A company seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Company’s governance practices differ from those followed by domestic companies pursuant to AMEX standards is contained on the Company’s website at www.queenstake.com.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to:  the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B.Consent to Service of Process

Concurrently with the filing of this annual report on Form 40-F, the Registrant filed with the Commission a written irrevocable consent and power of attorney on Form F-X.

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EXHIBITS

The following exhibits are filed as part of this report:

1.Renewal Annual Information Form for the year ended December 31, 2005

2.Audited Consolidated Financial Statements for the years ended December 31, 2005 and 2004, together with the auditors’ report thereon dated March 13, 2006, except as to Note 24, which is as of March 30, 2006 (Note 23 to the audited consolidated financial statements relates to differences between Canadian and United States Generally Accepted Accounting Principles)

3.Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2005

4.Consent of Staley, Okada & Partners, Chartered Accountants

5.1Consent of SRK Consulting (U.S.), Inc.

5.2Consent of Landy Stinnet

5.3Consent of Dorian L. (Dusty) Nicol

5.4Consent of Robert Todd

5.5Consent of Donald G. Colli

31.1Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended

31.2Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended

32.1Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

		QUEENSTAKE RESOURCES LTD.
		Registrant
		By:	/s/ Dorian L. Nicol
			Name:	Dorian L. (Dusty) Nicol
			Title:	President and Chief
			Executive Officer
Date:	March 30, 2006

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EX-1

Exhibit 1

QUEENSTAKE RESOURCES LTD.

999 18^th Street, Suite 2940

Denver, Colorado, USA 80202

(303) 297-1557

March 30, 2006

RENEWAL ANNUAL INFORMATION FORM

For

the financial year ended December 31, 2005

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TABLE OF CONTENTS

PRELIMINARY NOTES	3
Incorporation of Financial Statements and Management Discussion and Analysis	3
Date of Information	3
Currency and Exchange Rates	3
Metric Equivalents	3
Forward-Looking Statements	4
GLOSSARY OF TERMS	6
CORPORATE STRUCTURE	9
Name and Incorporation	9
Intercorporate Relationships	9
GENERAL DEVELOPMENT OF THE BUSINESS	10
Three-Year History	10
Acquisitions and Dispositions	11
NARRATIVE DESCRIPTION OF THE BUSINESS	13
General	13
Principal Operating Property – Jerritt Canyon Mine	15
RISK FACTORS	32
CAPITAL STRUCTURE	37
MARKET FOR SECURITIES	37
DIRECTORS AND OFFICERS	38
Name, Address, Occupation and Security Holding	38
Corporate Cease Trade Orders and Bankruptcies	40
Conflicts of Interest	42
LEGAL PROCEEDINGS	44
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	44
TRANSFER AGENT AND REGISTRAR	44
MATERIAL CONTRACTS	44
INTEREST OF EXPERTS	44
ADDITIONAL INFORMATION	45

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PRELIMINARY NOTES

Incorporation of Financial Statements and Management Discussion and Analysis

Incorporated by reference into this Renewal Annual Information Form (“AIF”) are the consolidated financial statements of the Company for the year ended December 31, 2005, and the accompanying management’s discussion and analysis (“MD&A”) with respect to such year. All financial information in this AIF has been prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada. Copies of all materials incorporated by reference herein may be obtained from SEDAR, under the Company’s name, at www.sedar.com.

Date of Information

All information contained in this AIF is as of March 30, 2006, unless otherwise stated.

Currency and Exchange Rates

Effective December 31, 2003, the Company changed its reporting currency from Canadian dollars to U.S. dollars. Accordingly, dollar amounts in this AIF are expressed in United States dollars unless otherwise indicated. “Cdn” is used to indicate Canadian dollar values.

The following table sets forth the rate of exchange for the Canadian dollar, expressed in United States dollars in effect at the end of the periods indicated, the average of exchange rates in effect on the last day of each month during such periods, and the high and low exchange rates during such periods based on the noon rate of exchange as reported by the Bank of Canada for conversion of Canadian dollars into United States dollars.

	Year Ended December 30
Canadian Dollars to U.S. Dollars	2005		2004		2003
Rate at end of period	US$	0.85800	US$	0.83030	US$	0.77270
Average rate for period	US$	0.82622	US$	0.77014	US$	0.71629
High for period	US$	0.87480	US$	0.85320	US$	0.77470
Low for period	US$	0.78510	US$	0.71380	US$	0.63270

The noon rate of exchange on March 30, 2006 as reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars was Canadian $1.00 equals US$0.8601

Metric Equivalents

For ease of reference, the following factors for converting Imperial measurements into metric equivalents are provided:

To convert from Imperial	To metric	Multiply by
Acres	Hectares	0.404686
Feet	Metres	0.30480
Miles	Kilometres	1.609344
Tons	Tonnes	0.907185
Ounces (troy)/ton	Grams/Tonne	34.2857

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Cautionary Statement

Forward-Looking Statements:

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

Cautionary Notes to U.S. Investors Concerning Reserve and Resource Estimates:

Proven and Probable Reserves. The estimates of proven and probable mineral reserves shown in this Annual Information Form have been prepared in accordance with National Instrument 43-101 of the Canadian Securities Administrators (NI 43-101). The definitions of proven and

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probable reserves used in NI 43-101 differ from the definitions in Industry Guide 7 of the U.S. Securities and Exchange Commission (SEC). Accordingly, the Company’s disclosure of mineral reserves in this Annual Report may not be comparable to information from U.S. companies subject to the SEC’s reporting and disclosure requirements.

Measured and Indicated Resources. This Annual Information Form uses the terms “measured and indicated resources”. The Company advises U.S. investors that while these terms are recognized and required by Canadian regulations, the SEC does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. Mineral resources that are not “mineral reserves” do not have demonstrated economic viability. Disclosure of “contained ounces” is permitted under Canadian regulations; however, the SEC normally only permits the reporting of non-reserve mineralization as in-place tonnage and grade.

Inferred Resources. This Annual Report uses the term “inferred resources”. The Company advises U.S. investors that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or prefeasibility studies, except in rare cases. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally mineable.

For further information, please refer to the definitions of reserves and resources and discussion under the heading “Risk Factors” in the Annual Information Form and in the Management’s Discussion and Analysis, included herein as Exhibits 1 and 3, respectively.

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GLOSSARY OF TERMS

Except as otherwise defined, the following terms, when used herein, shall have the following meaning

“Company” or “Queenstake”	Queenstake Resources Ltd., including, unless the context otherwise requires, the Company’s subsidiaries.
“carbonaceous”	Containing carbon or coal or other rock containing small particles of carbon distributed throughout the whole mass.
“deposit”	A mineralized body which has been physically delineated by sufficient drilling, trenching, and/or underground work, and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures; such a deposit does not qualify as a commercially mineable ore body or as containing ore reserves, until final legal, technical, and economic factors have been resolved.
“development” or “mine development”	Driving openings to access the mineral reserves in an underground mine.
“diamond drill”	A type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of a long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock, which is recovered in long cylindrical sections, an inch or more in diameter.
“feasibility study”	A detailed report showing the feasibility of placing a prospective ore body or deposit of minerals within a mineral property into production, which report typically includes, inter alia, the specific portion or portions of the property that should be included in a development block, conclusions and recommendations regarding any adjustments that should be made to the boundaries of a development block, a description of the work to be performed in order to develop the mineral resources within the development block and to construct a mine or mines and related facilities on the development block, the estimated capital and operating costs thereof, a proposed schedule for the timing of development and mine construction, and an assessment of the impact of the operation and the information obtained and evaluations made in respect thereof.
“indicated mineral resource”	That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
“inferred mineral resource”	That part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings
“measured mineral resource”	That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence

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	sufficient to allow the appropriate application of technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
“mineral reserve”	The economically mineable part of a measured or indicated mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined and processed.
	The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” used in this AIF are Canadian mining terms as defined in accordance with NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”), Standards on Mineral Resource and Mineral Reserves Definitions and guidelines adopted by the CIM Council on August 20, 2000 (the “CIM Standards”).
“mineral resource”	A concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. The term “mineral resource” covers mineralization and natural material of intrinsic economic interest which has been identified and estimated through exploration and sampling and within which mineral reserves may subsequently be defined by the consideration and application of technical, economic, legal, environmental, socio-economic and governmental factors. The phrase “reasonable prospects for economic extraction” implies a judgment by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of economic extraction. A mineral resource is an inventory of mineralization that under realistically assumed and justifiable technical and economic conditions might become economically extractable. The term “mineral resource” used in this AIF is a Canadian mining term as defined in accordance with NI 43-101 — under the guidelines set out in the CIM Standards.
“mineralization”	Mineral-bearing rock; the minerals may have been either a part of the original rock unit or injected at a later time.
“mineralized”	Metallic mineral-bearing material; the minerals may have been either a part of the original rock unit or injected at a later time.
“NI 43-101”	Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Regulators.
“net smelter return royalty/NSR royalty”	A payment made by a producer of metals based on the value of the gross metal production from the property, less deduction of certain limited costs including smelting, refining, transportation and insurance costs.
“net proceeds interest”	The right to receive a portion of the net proceeds, based on gross revenues less all operating, capital and similar expenses, from the production and sale of metal from the property.
“ounces”	Troy ounces.

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“probable mineral reserve”	The economically mineable part of an indicated, and in some circumstances a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
“proven mineral reserve”	The economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.
“put option”	An option contract that gives the holder the right to sell a certain quantity of an underlying security or commodity to the writer of the option, at a specified price (strike price) up to a specified date (expiration date). Also called a “put”.
“Qualified Person”	An individual who, in accordance with NI 43-101: (a)is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; (b)has experience relevant to the subject matter of the mineral project and the technical report; and (c)is a member in good standing of a recognized professional association.
“ramp”	An inclined underground tunnel that provides access to an ore body for exploration, ventilation and/or mining purposes in an underground mine.
“refractory”	Mineralized material in which gold is not amenable to recovery by conventional cyanide methods due to either encapsulation by other minerals or the presence of elemental carbon.
“roast”	The treatment of ore by heat in order to oxidize those elements causing the ore to be refractory.
“share”	A common share without par value of the Company. Historical references to numbers of shares have been adjusted to reflect the share exchange ratio of 0.4993 to one used in the July 19, 1999 amalgamation with Santa Cruz Gold Inc.
“tailings”	Waste material from a mineral processing mill after the metals and minerals of a commercial nature have been extracted.
“ton” or “t”	A short ton (2,000 pounds).

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CORPORATE STRUCTURE

Name and Incorporation

Queenstake Resources Ltd. (the “Company”) was incorporated under the laws of the province of British Columbia on May 3, 1977 under the name “Queenstake Resources Ltd.” by registration of its Memorandum and Articles with the British Columbia Registrar of Companies. To facilitate a business combination of the Company and Santa Cruz Gold Inc. (“Santa Cruz”) on June 24, 1999, the Company continued its corporate jurisdiction from British Columbia to the Yukon Territory under the Business Corporations Act (Yukon), as amended (the “YBCA”). Effective July 19, 1999, the Company merged with Santa Cruz through an amalgamation by way of statutory plan of arrangement under the YBCA to form one continuing company with the name “Queenstake Resources Ltd.”

The registered office of the Company is located at Suite 200, 204 Lambert Street, Whitehorse, Yukon Y1A 3T2. The executive offices of the Company are located at 999 Eighteenth Street, Suite 2940, Denver, Colorado U.S.A. 80202.

Intercorporate Relationships

Unless the context otherwise requires, all references herein to the Company include the Company and its subsidiaries. The following chart illustrates the inter-corporate relationships of the Company and its principal subsidiaries and their jurisdictions of incorporation, as well as the ownership of the Company’s principal asset, the Jerritt Canyon mine.

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GENERAL DEVELOPMENT OF THE BUSINESS

Three-Year History

Effective with the Santa Cruz business combination in July, 1999 (see “Corporate Structure – Name and Incorporation”), the Company acquired Santa Cruz’s 100% interest in the Magistral gold deposit located in Sinaloa, Mexico. The Company’s activities in 2000 and 2001 concentrated on studying the feasibility of the Magistral project, performing additional exploration drilling on the project and evaluating financing alternatives. In 2001, the Company partially financed the Magistral project through the formation of a joint venture known as the Magistral Joint Venture (“MJV”) with the financing party, Midwest Mining Inc. (“Midwest”). Terms of the joint venture financing included preferential loan payback to Midwest and precluded the Company from voting on certain matters concerning the MJV, until the preferential loan amounts were repaid to Midwest. The Magistral mine was constructed through 2002 and began small-scale commercial production on January 1, 2003. Because the Company had no significant influence over the operation of the MJV, the Company’s interest in the MJV was accounted for on the cost basis, as a long-term investment, until November 2003. The accounts of the MJV were therefore not consolidated in the Company’s financial statements.

On June 30, 2003, the Company acquired 100% of the operating Jerritt Canyon gold mine, 50 miles north of Elko, Nevada, and thus transformed itself from an emerging small-scale gold producer to a mid-tier gold producer. The Jerritt Canyon mine is a large-scale underground gold mining operation with significant exploration potential. Full details of this acquisition and related financing transactions are discussed under “General Development of the Business - Acquisitions and Dispositions - Jerritt Canyon Acquisition”.

In September 2003, based on an upward trend in costs at the Magistral mine and the apparent need for significant additional capital, the Company wrote off its investment in the MJV and Magistral mine. In November 2003, based on a decision to focus its resources on the recently acquired Jerritt Canyon mine, the Company determined that it would no longer participate in the MJV. Accordingly, the Company committed to a plan to sell its interest in the MJV. In order to facilitate this sale, the Company recognized the need to eliminate the MJV preferential loan payback to Midwest, and consolidate ownership of the MJV. On December 15, 2003, the Company acquired Midwest’s entire interest in the MJV. As part of the transaction, Midwest agreed to eliminate the preferential loan repayment obligations to Midwest. On December 19, 2003, the Company agreed to arm’s-length terms proposed by Nevada Pacific Gold Ltd. (“NPG”) to sell Pangea Resources Inc. (“Pangea”), the Company’s 100% owned subsidiary that owned the Magistral mine, to NPG. On February 2, 2004, the Company completed the sale of Pangea and all related assets including the Magistral mine to NPG. Full details of these transactions are discussed under “General Development of the Business - - Acquisitions and Dispositions - Magistral Mine”.

In July 2004, the Company entered into an agreement with a syndicate of underwriters to complete a private placement of 34,254,000 special warrants at a price of Cdn $0.50 per special warrant for gross proceeds of $13.0 million (Cdn $17.1 million). Each special warrant entitled the holder to acquire one common share and one-half of one common share purchase warrant of the Company. The private placement closed on August 10, 2004 and on October 7, 2004, the Company issued 34,254,000 common shares and 17,127,000 common share purchase warrants. Each whole common share purchase warrant was exercisable at a price of Cdn $0.65 until February 10, 2006. The purchase warrants expired unexercised. The Company paid the underwriters a cash commission equal to 5.0% of the gross proceeds of the offering, or approximately $0.6 million. In addition, the Company issued the underwriters compensation warrants exercisable, without payment of additional compensation, into compensation options (the “Compensation Options”). The Compensation Options were exercisable to acquire 1,712,700 units of the Company at a price of Cdn $0.50 per unit until October 8, 2005. The Compensation Options expired unexercised. Each unit consisted of one common share and one-half of one warrant with the warrants having the same terms as the private placement warrants described above.

During December 2004, the Company’s common shares were approved for listing on the American Stock Exchange (“AMEX”) and commenced trading under the ticker symbol “QEE”.

On March 23, 2005, the Company successfully completed an equity financing at the maximum offering amount (the “Offering”) through a syndicate of agents (the “Agents”) for aggregate cash proceeds of $24.8 million (Cdn $30.0

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million). The aggregate cash proceeds included Cdn $10.0 million raised pursuant to the exercise by the Agents of an over-allotment option. The total Offering consisted of 100 million units (the “Units”), including those issued pursuant to the Agents’ over-allotment option, with each Unit consisting of one common share and one half of one common share purchase warrant at a price of Cdn $0.30 per Unit. Each whole common share purchase warrant (50 million warrants in total) can be exercised to acquire one additional common share at a price of Cdn $0.40 until March 23, 2007. If at any time after six months from the closing of this Offering, the weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”) (or such other exchange or trading market on which the Common Shares principally trade) is Cdn $0.52 or more per Common Share for a period of thirty consecutive trading days then, upon notice by the Company, the holders of such warrants must exercise their warrants within thirty days or they will expire and will no longer be valid. The Agents received a 5% commission on the gross proceeds of the offering.

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

On March 29, 2006, the Company entered into an agreement with Newmont Canada Limited (“Newmont”) whereby Newmont will purchase 28.51 million Queenstake common shares at Cdn $0.41 per share for gross proceeds of US $10.0 million through an equity private placement.  As part of the private placement, Newmont will receive warrants that can be exercised to acquire up to 28.51 million common shares of Queenstake at a price of Cdn $0.55 for a four-year period, which would generate Cdn $15.7 million in cash if exercised.  After closing, Newmont will own approximately 4.9% of Queenstake’s outstanding common shares.  If Newmont were to exercise all of its warrants and maintain its holdings of Queenstake’s common shares, Newmont would hold approximately 8.5% of Queenstake’s fully diluted outstanding common shares.  For a period of two years from closing, Newmont will have the right to participate in future equity offerings by Queenstake to preserve its fully diluted shareholding percentage and will have certain additional rights to participate in debt financings.  The private placement, which remains subject to certain closing conditions, including regulatory approvals, is expected to close in the second quarter of 2006. Gross proceeds of the private placement of US $10.0 million will be used to fund exploration and for other corporate uses.  See 2006 Private Placement, Ore Processing and Property Lease Agreements Section in this AIF.

Acquisitions and Dispositions

Jerritt Canyon Acquisition

On May 30, 2003, the Company entered into a definitive asset purchase and sale agreement (the “Purchase and Sale Agreement”) with subsidiaries of AngloGold Limited (“AngloGold”) and Meridian Gold Inc. (“Meridian”) (collectively the “Sellers”) pursuant to which the Company agreed to acquire the Sellers’ respective 70% and 30% interests in the assets comprising the operating Jerritt Canyon gold mine (“Jerritt Canyon”), located in the Independence Mountain Range of Nevada, USA, 50 miles north of Elko, Nevada. The acquisition closed on June 30, 2003.

The Jerritt Canyon mine is an operating gold property with four producing underground mines and ore stockpiles, currently feeding ore to a 1.5 million ton per year capacity processing plant. The Company acquired and integrated the Jerritt Canyon mine without interruption to mining operations.

The Jerritt Canyon acquisition was an arm’s-length transaction. Under the terms of the Purchase and Sale Agreement, the Company paid to the Sellers $1.5 million cash, together with the issuance of 32 million common shares of the Company with an estimated fair value of $4.1 million. In addition, the Company agreed to pay $6 million to the Sellers in quarterly instalments of $1 million and a deferred net smelter return royalty on Jerritt Canyon production, capped at $4.0 million, following which the royalty would convert to a 1% net proceeds interest royalty.

On August 26, 2004 the Company settled the $6.0 million of deferred quarterly instalments with a lump sum payment of $5.6 million and settled the deferred $4.0 million capped net smelter royalty with a lump sum payment of $3.5 million. This settlement excluded the 1% net proceeds interest royalty payable to AngloGold, which in management’s opinion, based on current reserve estimates and operating cost assumptions represents nominal, if any, future payments.

Under the terms of the Purchase and Sale Agreement, the Company also assumed $4.2 million of the Sellers’ operating liabilities and the Sellers’ entire Jerritt Canyon mine related reclamation and environmental liabilities. The fair value of the Jerritt Canyon mine reclamation and environmental liabilities, at the time of acquisition, was independently estimated at $25.8 million. This amount was funded through an environmental risk transfer program (the “ERTP”) underwritten by American Insurance Group Environmental (“AIG”), a division of American International Companies. Under the terms of the ERTP, the Company deposited $25.8 million into an interest-bearing account with AIG (the “Commutation Account”). The Commutation Account principal, plus interest earned, will be used to pay for mine closure and reclamation liabilities. The ERTP also includes a closure cost cap insurance policy which will serve to fund reclamation and post-closure site management by the Company. The insurance

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component provides insurance coverage in the event that reclamation costs exceed those provided for by the Commutation Account. If the ultimate reclamation costs are less than the amount in the Commutation Account, the Company would be refunded the excess cash. In the event that the reclamation cost is more than the Commutation Account balance, the insurance portion of the ERTP is activated and AIG would pay the excess costs up to a defined maximum.The ERTP also includes pollution legal liability insurance coverage for third-party damage claims against the Company for both pre-existing pollution conditions and new pollution conditions for a period of five years commencing June 30, 2003. In addition to reclamation insurance, AIG has posted a total of $35.5 million in surety bonds with the U.S. Forest Service and the Nevada Division of Environment Protection. For these services, the Company paid AIG premiums totalling $5.9 million in addition to establishing the Commutation Account. Management of the Company believes that the ERTP effectively limits the Company’s Jerritt Canyon reclamation and mine closure liabilities to the amount of the Commutation Account with respect to obligations existing at June 30, 2003.

Magistral Mine Disposition

The Magistral Joint Venture (“MJV”) was formed in 2001 to facilitate financing for the construction and development of the Magistral mine in Sinaloa, Mexico. Terms of the financing included preferential loan payback to Midwest as the funding joint venture partner, and precluded the Company from voting on certain matters concerning the MJV, until the preferential loan amounts were repaid.

The Magistral mine was constructed and developed through 2002, and began small-scale commercial production on January 1, 2003. Because the Company had no significant influence over the operation of the MJV, the Company’s interest in the MJV was accounted for on a cost basis, as a long-term investment, until November 2003. The accounts of the MJV were therefore not consolidated in the Company’s financial statements.

By September 2003, it had become evident that the upward trend in repair costs for the mining equipment at the mine together with a decreasing trend in gold production, mainly as a result of low equipment availability, required management to assess the carrying value of the investment. After considering the resulting operating deficits, the apparent need for significant additional capital, and the required preferential loan payback to Midwest, the Company concluded that its long-term investment in the MJV was impaired and wrote down its investment by $6.2 million.

In November 2003, based on a decision to focus its resources on the recently acquired Jerritt Canyon mine, the Company determined that it would no longer participate in the MJV nor provide additional capital. Accordingly, the Company committed to a plan to sell its interest in the MJV. In order to facilitate this sale, the Company recognized the need to eliminate the MJV debt, including the preferential loan payback to Midwest, and consolidate ownership of the MJV.

On December 15, 2003, the Company paid Midwest $0.9 million, issued to Midwest 11,200,000 common shares of the Company, with an estimated fair value of $6.1 million and 2,000,000 warrants exercisable over a two year period at Cdn $1.00 per share, as consideration for Midwest’s interest in the MJV and its 15% equity interest in Pangea Resources Inc. (“Pangea”). As part of the transaction, Midwest agreed to eliminate the Company’s preferential loan repayment obligations due to Midwest.

On December 19, 2003, the Company agreed to arm’s-length terms proposed by Nevada Pacific Gold Ltd. (“NPG’) to sell 100% of Pangea and all its related assets including the Magistral mine to NPG. At December 31, 2003 the Company classified the group of assets to be sold by NPG as “assets to be disposed of by sale,” a current asset.

On February 2, 2004, the Company completed the sale of Pangea and all related assets to NPG. In consideration of the sale, the Company received from NPG $4 million in cash, 2,000,000 common shares of NPG and a $3 million promissory note (the “Promissory Note”) payable on August 2, 2004, secured by a general security agreement over all of NPG’s assets. NPG has now fully paid the Promissory Note with cash payments of $2.5 million and 669,485 common shares of NPG. The Company has sold 2,644,485 of the NPG shares and as of December 31, 2005 holds 25,000 shares. The shares of NPG trade on the TSX Venture Exchange.

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NARRATIVE DESCRIPTION OF THE BUSINESS

General

The Company

Queenstake is a gold mining and exploration company. The Company’s principal asset and only current source of gold production is the 100% owned Jerritt Canyon gold mine in Nevada, U.S.A, acquired on June 30, 2003. See “General Development of the Business – Acquisitions and Disposals – Jerritt Canyon Acquisition”. Jerritt Canyon is an operating gold complex with four producing underground mines and a 1.5 million ton per year capacity processing plant. The Jerritt Canyon mine acquisition effectively transformed the Company from an emerging small-scale gold producer to a mid-tier gold producer with anticipated gold production of approximately 200,000 to 220,000 ounces in 2006. In addition, the approximately 119-square miles that comprise the Jerritt Canyon property offer a significant number of advanced, early stage and district-scale exploration targets, and potential to expand the currently defined reserves and resources proximal to the producing mines.

Uses of Gold

Product fabrication and bullion investment are the two principal uses of gold. Within the fabrication category there are a wide variety of end uses, the largest of which is the manufacture of jewellery. Other fabrication purposes include official coins, electronics, miscellaneous industrial and decorative uses, dentistry, medals and medallions.

Sales and Refining

Gold can be readily sold on numerous markets throughout the world and it is not difficult to ascertain its market price at any particular time. Since there are a large number of available gold purchasers, the Company is not dependent upon the sale of gold to any one customer.

The Company’s gold production is currently refined to market delivery standards by Johnson Matthey Inc., at a refinery in Salt Lake City, Utah. The Company believes that because of the availability of alternative refiners, no material adverse effect would result if the Company lost the services of Johnson Matthey Inc.

At December 31, 2005, the Company held 82,500 gold put options with a strike price of $400per ounce with expiry dates through the fourth quarter of 2006 and 64,500 gold put options with a strike price of $425 per ounce with expiry dates in the first and second quarters of 2007. The purchase of gold put options provides the Company with downside price protection for future gold sales and provides some assurance of future revenue and cash flows for production and planning in the future.

Employees

At December 31, 2005, the Company had approximately 424 full-time employees in the United States, of which  approximately 417were at the Jerritt Canyon mine and7at the Company’s executive offices in Denver, Colorado. None of the Company’s U.S. employees are unionized. The Company believes that labour relations at both locations are good.

Social and Environmental Policies

Queenstake’s success is firmly entrenched in the concept of multiple use of lands which integrates land use for mining, agriculture, ranching, wildlife and sustainable public development. The Company is committed to land use that strengthens and enhances the social and environmental quality of northern Nevada.

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Regulatory approvals and permits for the Jerritt Canyon mines were seamlessly transferred to Queenstake on July 1, 2003. Since that date Queenstake has continued all of the high standards of environmental performance at Jerritt Canyon.

Consistent with changing permitting strategies from mine closure planning to sustaining and increasing Jerritt Canyon production for the foreseeable future, all three major operating permits for the Jerritt Canyon mines were renewed or reissued in 2004. The Nevada mining permit which regulates water pollution control was renewed on September 17, 2004 for five years. A site wide Title V Air Quality Permit was issued on March 10, 2004 for a five year term. On April 2, 2004 a site wide Reclamation Permit was reissued to include all current activities ongoing at Jerritt Canyon. In addition to obtaining the three major operating permits Queenstake also obtained permits for the Steer mine portal and surface facilities area in January 2004 and initiated the U.S. Forest Service permitting process for the next five-year exploration plan. It was further honored by the State of Nevada when it received the 2004 Nevada Reclamation Award for closure and reclamation work at the Burns Basin surface mine area. Through 2005, work progressed on an environmental assessment for the next five year exploration plan with the U.S. Forest Service. The Company maintained active participation in the Nevada Voluntary Mercury Emission Reduction Program and actively participated with the Nevada Division of Environmental Protection and others in the development of new regulations regarding mercury air emission controls.

A large portion of the Jerritt Canyon Mine is located on public land administered by the U.S. Forest Service. The Jerritt Canyon staff maintains a proactive relationship with the U.S. Forest Service Administrators, which includes weekly site inspections and updates. A majority of the Jerritt Canyon mining district has undergone formal National Environmental Policy Act (“NEPA”) review as part of the 25-year mining and exploration history of the District. Environmental issues are well defined in this documentation and appropriate mitigation strategies are in place to support and expand operations.

Reclamation projects are scheduled annually and are completed concurrent with the completion of mining activities. To date, over 1,500 acres of mined lands have been reclaimed. Reclamation and closure activities are defined and associated costs are bonded with the Federal Government and the State of Nevada. These bonded activities are also insured by a reclamation and closure policy independently administered by AIG. As reclamation is completed, payment for completing the insured activity is paid to the Company from a pre-funded Commutation Account administered by AIG. This program has shown to be workable during the 2005 reclamation season.

The Company is committed to conducting its operations with close consideration to environmental values and ethics as well as to social issues. The Company will therefore:

•Comply with applicable laws, regulations, and permit conditions and, where appropriate, exceed their minimum requirements;

•Establish and maintain management systems to monitor all environmental aspects of its activities;

•Review these management systems regularly to evaluate their effectiveness and modify them as appropriate to optimize their effectiveness;

•Proactively pursue and evaluate engineering alternatives to best address closure and reclamation issues;

•Assure that financial resources are available to meet environmental and reclamation obligations;

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•Ensure that the Company’s employees and contractors are aware of the Company’s environmental policies and understand their relevant responsibilities;

•Participate in the ongoing public and private sector debate on environmental and social matters that relate to the mining industry.

The Company is continually striving to improve its environmental performance.

Environmental Protection Requirements

For a discussion of the current and future effects of environmental protection requirements, see “Narrative Description of the Business - Operating Property – Jerritt Canyon Mine Environmental”, below. See also “Risk Factors” below.

Principal Operating Property – Jerritt Canyon Mine

Introduction

On June 30, 2003, the Company acquired the Jerritt Canyon mine, in Nevada. See “General Development of the Business - Acquisitions and Dispositions  - Jerritt Canyon Acquisition”, The Jerritt Canyon mine is an operating gold property with four  producing underground mines and ore stockpiles, currently feeding ore to a 1.5 million ton per year capacity processing plant. Transition of the mine to Queenstake was effected without interruption to mining operations, and as a result the Company was not exposed to any start-up or project completion risks.

The Jerritt Canyon area is a large and historically prolific gold producing district, having produced over seven million ounces of gold over the past 25 years. The Jerritt Canyon acquisition effectively transformed the Company from an emerging small-scale gold producer to a mid-tier gold producer with anticipated gold production of 200,000 to 220,000 ounces in 2006.

Recent Operations

Following the closing of the acquisition on June 30, 2003, the Company integrated the Jerritt Canyon mines without interruption to mine operations. The skilled work force and mine management team at Jerritt Canyon provided the Company with sufficient operating depth. Mining during 2003 covered the first six months of Queenstake’s ownership of the Jerritt Canyon mine. Production levels were similar to previous year results achieved under the previous owners. Mined ore tonnage during 2004 began to decline in the face of insufficient development, lack of sustaining capital investment, and mature ore bodies. Mining during 2005 was derived primarily from the Murray, Smith, and SSX underground mines. Commercial production from the Mahala deposit accessed and mined through the Smith Mine began in August 2005, following commissioning of a ventilation and escape-way raise. The connection of the SSX and Steer mines was completed in October 2005 which allows for joint operation of these mines. Ore tons mined for Jerritt Canyon during 2005 were 16% lower than in 2004. Underground mining was affected by a shortage of experienced miners and mechanics, continued dewatering activities at the Smith Mine, necessitated by heavy spring runoff and rainfall in June 2005, and planned lower ore tonnage under the redevelopment plan described below.

The 2005 Redevelopment Plan

In August of 2005, the Company announced a redevelopment plan designed to optimize operations and reduce operating costs in response to development and production shortfalls at Jerritt Canyon and rising commodity costs. The redevelopment plan represented a re-engineering

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to optimize value and cash flow from the Jerritt Canyon mine assets given constraints with manpower, mining equipment, and increasing commodity costs. The plan was a substantial change in mine and processing practices at Jerritt Canyon to focus on accelerated underground development, higher grade production and reduced mill processing rate to align mill throughput with an optimal mining rate. The mill processing rate was scaled back from operating two roasters together to one roaster at a time for an average of between 2,500 and 2,700 tons per day, approximately 25% lower than the processing rate in the first half of 2005. The average grade of ore being processed was as a result increased to approximately 0.25 ounce of gold per ton (opt) in the second half of 2005, representing an approximate 20% increase from the first half 2005. In addition, daily batch crushing and grinding of mill feed was scheduled under the redevelopment plan during off-peak hours for lower energy rates. The mill processing rate can be increased in the future should Jerritt Canyon’s capacity to produce higher grade ore from underground mining improve or to accommodate additional mill feed from third-party sources.

Cost reductions anticipated to be realized progressively under the redevelopment plan include lower energy and commodities consumption, lower costs of labour, maintenance and other savings from improved operating efficiencies. However, much of the anticipated operating cost savings in 2005 were absorbed by unexpected increases in energy and certain commodity prices during the fourth quarter of 2005.

The redevelopment plan was a substantial change from historical mining and processing practices. Comparison to operating results from previous years should be viewed in that context.

Fourth quarter 2005 operating results were essentially on track with the redevelopment plan. Ore tons mined were 223,060, exceeding the redevelopment plan by 8% while tons milled were 211,587, slightly exceeding the redevelopment plan. Ore grade processed was 0.25 opt while ounces of gold produced were 45,555 for the fourth quarter, both essentially in line with the redevelopment plan. Moisture in the ore from wet winter weather resulted in the settling of high-grade ore fines into the ore pad, which is expected to be recovered in the spring and summer of 2006 when the ore pads can be scraped and the ore processed. As a result of such seasonal factors, Jerritt Canyon had accumulated over 8,000 ounces of contained gold in ore stockpile at the end of 2005. The ore stockpile at year-end is expected to be processed in the second and third quarters of 2006.

Capitalized mine development of 2,412 feet was slightly ahead of the redevelopment plan during the fourth quarter. For the full year, capitalized mine development totaled 9,412 feet, slightly exceeding the redevelopment plan. A mining contractor remains at Jerritt Canyon, dedicated to accelerating underground development.

2005 Quarterly Production Summary

Table 1 – Jerritt Canyon Quarterly Production Statistics

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

(1)The Company has adopted the Gold Institute Production Cost Standard (the “Standard”) to calculate and report cash operating costs per ounce of gold produced. This is a non-GAAP measure, intended to complement conventional GAAP reporting; accordingly these data should not be considered a substitute for GAAP measures. Management believes that cash operating costs per ounce is a useful indicator of a mine’s performance. Where GAAP operating costs are adjusted to calculate per ounce data consistent with the Standard, reconciliations to GAAP measures are provided. Where GAAP operating costs are adjusted to calculate per ounce data consistent with the Standard, reconciliations to GAAP measures are provided in the Company’s Management Discussion and Analysis for each respective period.

Gold production during the three-month period ended March 31, 2005 was 54,767 ounces or a 13% increase over the same period in 2004. Production was negatively affected by unusually wet and heavy snowfall throughout the region, which interrupted delivery of ore from the mines to the mill and adversely affected mill throughput.

Gold production during the three-month period ended June 30, 2005 was 54,156 ounces, which was essentially unchanged from the previous quarter and, 12% less than the same period in the previous year. Production for the period, however, was still approximately 10% below expectations. Mine development shortfalls through the end of the second quarter were the result of deferring development to conserve capital and the subsequent difficulty in accelerating mine development work due to labour shortages. Mined tonnage was further impacted by ground instability in one small stope at SSX and water problems at Smith during the second quarter.

Gold production for the three-month period ended September 30, 2005 was 49,613 ounces, approximately 8% less than the previous quarter, and was 32% less than the same period in the previous year. Gold production for the quarter was 4% greater than redevelopment plan targets principally due to higher grade ores from Mahala and the SSX-Steer Mine Complex. Jerritt Canyon allocated more internal resources to mine development and engaged a mining contractor in mid-August 2005 to accelerate mine development in order to maintain production capacity. The addition of two new underground haul trucks and a rock bolting machine augmented mine development. The redevelopment plan was implemented in mid-August and represented a substantial change from historical mining and processing practices.

Gold production for the three-month period ended December 31, 2005 was 45,555 ounces, a decrease of approximately 24% as compared to gold production for the same period in 2004. Gold production for the period was, however, in line with redevelopment plan targets. Mill tonnage processed was slightly less than budgeted with heavier than normal winter snows and moisture accumulation in the ore. Mined tons exceeded redevelopment plan targets resulting in a significant stockpiling of ore adjacent to the mill. Commercial production start-up of the Steer Mine commenced with the connection of Steer and SSX mines in October 2005. Cash operating costs were $413 per ounce of gold for 2005 fourth quarter, higher than budgeted, attributable to rising costs faced by the North American gold mining industry in general and Jerritt Canyon specifically, including fuel, electricity, commodity and labour costs during the quarter. Cash operating costs for 2005 were $386 per ounce of gold, consistent with the budget range under the redevelopment plan.

Historical Operations Summary

Immediately following the acquisition of the Jerritt Canyon mine, the Company began to pursue two principal priorities: (1) the expansion of underground development at Jerritt Canyon to

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provide the mines with more operating flexibility; and (2) beginning exploration focused on resource-to-reserve conversion and resource expansion as well as on district-wide target generation and follow-up on the approximately 119-square-mile Jerritt Canyon property.

Underground mine development at Jerritt Canyon had been severely curtailed for several years and through the first half of 2003 by the former owners, based on their plans to close the mine at the end of 2004, a decision made at a time when gold prices were significantly lower. The Company initiated a comprehensive analysis of resources accessible for conversion to reserves, and of areas with strong potential for extension of resources immediately after acquisition. During the latter half of 2003, the Company invested approximately $5.1 million, in underground mine development to expand the inventory of resources and reserves, which included  approximately $1.4 million  for underground drilling proximal to current workings, and was focused on expanding resources and graduating measured and indicated resources to proven and probable reserves. During 2004, the Company invested an additional $17.6 million in underground mine development and $7.2 million for sustaining capital. During 2005, the Company spent $13.9 million for underground development, major haulage-ways, ventilation raises, definition drilling, capital resource development and related activities to provide long-term infrastructure and stope access within the mines. In addition, the Company spent $5.8 million for sustaining capital.

Mine development spending reductions in 2005 were the result of deferring development in the first quarter to conserve cash and the subsequent difficulty in accelerating development due to labour shortages, ground instability at the SSX mine and water problems at Smith mine during the second quarter. Jerritt Canyon has allocated more internal resources to mine development and engaged a mining contractor since mid-August 2005 to accelerate mine development in order to maintain production capacity in 2006. The addition of two new underground haul trucks and a rock bolting machine increased internal capacity for mine development. Capitalized mine development improved in the second half of 2005 and totaled 9,412 feet for the year, slightly exceeding the redevelopment plan target and compared with 14,302 feet completed in 2004. The Mahala deposit began commercial production as an extension of the Smith Mine in August 2005 and the connection of the Steer and SSX mines was completed in October 2005.

Much of the exploration done throughout the Jerritt Canyon district in past years was in search of either shallow open pit targets or multi-million ounce targets. During the few years prior to the Company’s acquisition of Jerritt Canyon, known reserves were not aggressively expanded and advanced stage targets were not aggressively followed up. Management of the Company believes that there is potential for significant reserve and resource expansion that would essentially represent extensions of the known ore bodies. In addition, management of the Company believes that the property offers potential for discovery of significant new ore bodies resulting from systematic district scale exploration.

Through the latter six months of 2003,  extensive mine planning was performed in order to bring into the reserve category that portion of resources that had sufficient drill density to meet reserve criteria, but lacked only a mine plan. This program was continued in 2004 In 2005, exploration continued on near-mine and surface targets, with the objective of replacing and targeting near-term mineable reserves and advancing the Starvation Canyon exploration project. Surface drilling programs completed 130 holes totaling 102,816 feet in 2005. Underground drilling was completed during 2005 at the SSX-Steer Mine Complex, the Mahala, West Dash, West Coulee and B-Pit deposits at the Smith Mine and at Murray Mine and comprised 2,797 holes totaling 348,148 feet of underground drilling. Positive exploration results defined the first mineral reserves at the Starvation Canyon project and successfully replaced proven and probable reserves, net of depletion from production, at year-end 2005.

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Property Description and Location

The Jerritt Canyon mine is located in Elko County, Nevada within the Independence Mountain Range, approximately 50 miles north of the City of Elko, Nevada. Elko, has a population of approximately 34,000 and is serviced by regular scheduled air service from Reno, Nevada and Salt Lake City, Utah. All services required by the Jerritt Canyon Mine operation are readily available in the surrounding area. Access to the property is by means of State Road 225, a paved road, to the main entrance road to the mine where the administrative offices are located.

Jerritt Canyon operations are conducted on a combination of public and private lands, with the mines and mining related surface facilities located primarily on public lands and the process plant, administrative facilities and tailings impoundment located on private lands. The Company’s 100% owned Jerritt Canyon property interests cover an area of approximately 100 square miles, containing a total of 2,975 owned and leased mineral claims, 12,433 acres of fee surface lands,  1,011 acres of patented mineral claims and 10,671 acres of leased fee land with mineral rights.

The climate is characterized by winters with temperatures between 0 and 40 degrees Fahrenheit and summer temperatures between 35 and 85 degrees Fahrenheit. Average annual precipitation at the tailings impoundment area is estimated at 14 inches per year with an estimated annual average evaporation of 43 inches. A significant amount of the total precipitation falls as snow and increases with elevation to the mining areas. The administration offices, process plant and tailings impoundment are located at an elevation of approximately 6,400 feet; the mines are located at elevations up to 8,000 feet.

The primary regulatory oversight of the Jerritt Canyon Mine is by the U.S. Forest Service (“USFS”), due to the mining activity being located on a combination of public and private lands, and by the Nevada Division of Environmental Protection (“NDEP”).

Since the initial Plan of Operations was approved in 1980, there have been at least 45 submittals to the USFS, including three subsequent Plans of Operation and Amendments or Modifications to approved Plans of Operation. Development of identified ore bodies from the existing underground mine surface facilities is expected to require only administrative approval.

The NDEP regulates the approval of the Jerritt Canyon’s Water Pollution Control Permit, Air Quality Permit, Stormwater Discharge Permit, Underground Injection Control Permit, Dams Safety Permit and Reclamation Permit. All permits are current and in good standing.

Sierra Pacific Power Company, the only electric public utility in the area, provides electric power to the mine.

Government Regulation

Mining operations and exploration activities are subject to various federal and state laws and regulations in the United States which govern prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. The Company has obtained those licenses, permits or other authorizations currently required to conduct its exploration and other programs. The Company believes that it is in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed there under in jurisdictions in which the Company operates. There are no current orders or directions relating to the Company with respect to the foregoing laws and regulations.

Environmental Laws

As is common for mining operations in Nevada, there are numerous environmental obligations associated with Jerritt Canyon that are related to ongoing operations as well as mine closure and reclamation. Environmental management systems are in place and there are qualified environmental staff onsite at Jerritt Canyon. Various mitigation programs are in place as required under the various plans of operations that have been filed and approved for the project. No unusual costs associated with any of these programs have been identified. Approved reclamation plans

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are in place and Jerritt Canyon is progressing with concurrent reclamation in an orderly manner. Final reclamation obligations for the project include closure of the tailings impoundment and waste rock dumps, reclamation of pits by partially backfilling the pits with mine waste from underground operations, sealing of underground portals and dismantling of buildings and structures. Current geochemical characterization of the waste rock produced from mining operations has demonstrated the waste rock to be generally non-acid generating.

U.S. Federal Laws

The U.S. Forest Service requires that mining operations on lands subject to its regulation obtain an approved plan of operations subject to environmental impact evaluation under the National Environmental Policy Act. Any significant modifications to the plan of operations may require the completion of an environmental assessment or Environmental Impact Statement prior to approval. Mining companies must post a bond or other surety to guarantee the cost of post-mining reclamation. These requirements could add significant additional cost and delays to any mining project undertaken by the Company.

Under the U.S. Resource Conservation and Recovery Act, mining companies may incur costs for generating, transporting, treating, storing, or disposing of hazardous waste, as well as for closure and post-closure maintenance once they have completed mining activities on a property. The Company’s mining operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment which are subject to review, monitoring and/or control requirements under the Federal Clean Air Act and state air quality laws. Permitting rules may impose limitations on the Company’s production levels or create additional capital expenditures for pollution control in order to comply with the rules.

The U.S. Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, (“CERCLA”) imposes strict joint and several liability on parties associated with releases or threats of releases of hazardous substances. Those liable groups include, among others, the current owners and operators of facilities which release hazardous substances into the environment and past owners and operators of properties who owned such properties at the time the disposal of the hazardous substances occurred. This liability could include the cost of removal or remediation of the release and damages for injury to the surrounding property. The Company cannot predict the potential for future CERCLA liability with respect to its Nevada property or surrounding areas.

Nevada laws

At the state level, mining operations in Nevada are also regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection. Nevada state law requires the Jerritt Canyon Mine to hold Nevada Water Pollution Control Permits, which dictate operating controls and closure and post-closure requirements directed at protecting surface and ground water. In addition, the Company is required to hold Nevada Reclamation Permits required under NRS 519A.010 through 519A.170. These permits mandate concurrent and post-mining reclamation of mines and require the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations could have an adverse impact on the Company’s financial performance and results of operations by, for example, required changes to operating constraints, technical criteria, fees or surety requirements.

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ERTP

An integral element of the Jerritt Canyon Mine acquisition was the ERTP, an innovative insurance/assurance product purchased from AIG. The Company believes the ERTP effectively limits financial exposure for environmental and reclamation liabilities and risks associated with the Jerritt Canyon mine assumed on its acquisition in June 2003 to the amount in the Commutation Account. The fair value of the total reclamation liability at Jerritt Canyon was independently estimated by AIG at $25.8 million as at June 30, 2003. This amount was fully funded by the Company by means of a cash Commutation Account in the amount of $25.8 million deposited with AIG. The cash plus interest earned in the Commutation Account will be used to pay for Jerritt Canyon’s reclamation and mine closure liabilities. In addition, the ERTP provides to government regulators the surety bonds, totalling $35.5 million, which allow the Company to operate the Jerritt Canyon mine under the existing operating permits. The ERTP also includes a reclamation and mine closure cost cap insurance policy which will serve to fund reclamation and post-closure site management by the Company. This cost cap insurance provides coverage for future reclamation costs if they exceed those provided for by the Commutation Account. If the ultimate reclamation costs are less than the amount in the Commutation Account, the Company would be refunded the excess cash. If the reclamation cost is more than the Commutation Account balance, the cost cap insurance, provided by AIG, will pay the excess costs up to a defined maximum. The Company does not currently anticipate that the covered reclamation costs will be in excess of the defined maximum.

History

In 1972, FMC Gold (renamed Meridian Gold Inc. in 1996) discovered a disseminated gold deposit in the Jerritt Canyon area. In 1976, FMC Gold formed a joint venture with Freeport McMoRan Inc., to explore and develop the area, and mining at Jerritt Canyon commenced in 1981. In 1990, Freeport McMoRan Inc. sold its interest in Jerritt Canyon to a predecessor of AngloGold. Since inception, mining has continued uninterrupted at Jerritt Canyon, producing over 7 million ounces of gold to date. Open pit mining occurred from 1981 through 1999; underground mining started in 1993. Annual production, prior to the Company’s acquisition, had historically averaged between 300,000 and 350,000 ounces of gold, at historical cash operating costs ranging from $245 to $270 per ounce. The previous owners of the Jerritt Canyon mine had planned to shut the operation down by the end of 2004.

Pursuant to the Purchase and Sale Agreement, the Company acquired the Jerritt Canyon Mine from the Sellers. See “General Development of the Business – Acquisitions and Dispositions – Jerritt Canyon Acquisition”.

Geology

The Jerritt Canyon district deposits are hosted by a Paleozoic sedimentary sequence that underlies the Independence Mountain range and consists of four distinct assemblages:  (1) the western facies (upper plate of the Roberts Mountain thrust fault), (2) the eastern facies (lower plate of the Roberts Mountain thrust fault), (3) the Schoonover sequence, and (4) the Antler overlap sequence. The western facies consists of chert, argillite, siltstone, shale, quartzite, and limestone-greenstone complex and is considered to be a deep-water sequence. The eastern sequence is a Cambrian to Silurian continental shelf carbonate sequence that includes the Hanson Creek Formation, and the Roberts Mountains Formation, which are the main hosts to the gold mineralization in the district.

Within the Jerritt Canyon area, gold can locally occur within all sedimentary formations, but is preferentially hosted by the Roberts Mountains and Hanson Creek Formations of the eastern facies. The Roberts Mountains Formation consists of calcareous to dolomitic siltstones and silty limestones. The Hanson Creek Formation is divided into five members and consists of medium-grained limestone, dolomitic limestone, carbonaceous micrites, and chert beds.

Gold mineralization at Jerritt Canyon is preferentially found within the base of the Roberts Mountains Formation and the Upper Hanson Creek Formation. Gold mineralization is structurally controlled by high angle northwest and northeast trending structures that acted as conduits for mineralizing fluids. Much of the higher grade, more continuous gold mineralization occurs where two sets of high angle structures intersect and cut the favourable stratigraphic intervals that contain high proportions of clay-sized materials. The deposits are considered to be Carlin-type, sediment-hosted, replacement fine-grained gold in carbonaceous sediments. Gold occurs as very fine-grained micron size particles deposited in carbonates and fine-grained, calcareous, clastic sedimentary rocks.

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Mineral Reserve and Resource Estimates

Proven and probable mineral reserves totalled 877,900 ounces of gold contained in 3.7 million tons at an average grade of 0.24 opt at December 31, 2005, based on a three-year average gold price of $410 per ounce. Measured and indicated resources, including reserves, were estimated at 2.1 million ounces of gold contained in 8.8 million tons at an average grade of 0.24 opt. The Company also estimated inferred resources of 2.7 million tons at 0.23 opt for 605,600 ounces of gold. The Company’s proven and probable reserves and measured and indicated resources were audited and verified by SRK Consulting (U.S.), Inc. as satisfying the standards of Canadian National Instrument 43-101.

At the Starvation Canyon project, the Company defined first time probable reserves of 121,100 ounces of gold contained in 400,500 tons at an average grade of 0.30 opt. In addition, measured and indicated resources at Starvation Canyon increased 22% from year-end 2004 to 190,700 ounces of gold (contained in 676,400 tons), while the grade improved 4% to 0.28 opt. The improvement of continuity, grade and size of the resource in 2005 enhances the overall confidence in resources and mineralization remains open in several directions.

The new reserves at Starvation Canyon and reserve additions at the Murray and Smith mines offset reserve depletion from production. Mineralization remains open at SSX and Steer mines with new targets in the greater SSX area to be drilled in 2006. The improvement in the Smith Mine reserves was attributable to the expansion of the high-grade Mahala and West Dash deposits. Mahala, which began commercial production in August 2005, had 223,600 tons at 0.33 opt for approximately 73,300 contained ounces of gold in reserves. West Dash added 37,800 contained gold ounces to reserves and increased its measured and indicated resources, including reserves, to 70,300 ounces in 2005. A drift being developed from the main decline for the Smith Mine is anticipated to reach West Dash for initial production by mid 2006.

Measured and indicated resources at December 31, 2005 were lower than in 2004 largely due to a tightening of the geologic models used in the redevelopment plan initiative. The application of smaller, narrower blocks in mine planning enhanced the overall quality of the resources and reserves. In fact, the proven reserve component of total proven and probable reserves improved from 24% to 36% in 2005. Expenditures for district exploration and surface drilling were $3.9 million in 2005, compared to $6.6 million in 2004. There was also $2.6 million of capitalized resource conversion drilling for near-mine exploration in 2005.

Reserve and resource estimates have been developed from extensive surface and underground drilling data using geology-constrained standard kriging and polygonal methods using MineSight modeling and planning software. Mineral resources are contained in about 20 mineral deposits in the Jerritt Canyon area. Block modeling techniques supported by relatively small block sizes are used. Cutoff grades have been calculated for each of the mines using cost estimates and plant recovery estimates derived from December 2005 actual year-to-date values. Factors for mining dilution were included.

Most of the assays on which these estimates are based were performed by independent assay labs for surface drilling using standard fire assay techniques and subject to internal Quality Assurance/Quality Control (“QA/QC”) procedures; samples from underground drilling are

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analyzed by Jerritt Canyon’s laboratory using standard fire assay techniques and industry accepted QA/QC procedures.

As a result of the Company’s success in adding to existing reserves during its first 30 months of operation of Jerritt Canyon, management considers that a minimum mine life of five years may be expected from existing reserves and a reasonable and consistent continuation of converting resources to reserves, with potential extension if additional resources are defined and converted to reserves. In order to continue to operate the Jerritt Canyon mine efficiently and to provide the mill with approximately 0.9 million tons of ore per year, additional capital expenditures are required in order to develop new areas of mineralization for mining and to replace some of the equipment fleet.

Table 2 (1),(2),(3),(4),(5)

JERRITT CANYON PROVEN & PROBABLE GOLD RESERVES - December 2005

	PROVEN			PROBABLE			TOTAL
Deposit	Tons (000)	oz/st	Oz (000)	Tons (000)	oz/st	Oz (000)	Tons (000)	oz/st	Oz (000)
Murray	108.7	0.24	26.5	134.7	0.27	36.8	243.3	0.26	63.3
Smith Upper	142.2	0.30	42.9	479.0	0.25	122.2	621.2	0.27	165.0
Smith Lower	68.1	0.36	24.3	259.7	0.32	83.3	327.8	0.33	107.7
SSX	824.9	0.25	206.3	508.5	0.24	121.0	1,333.3	0.25	327.3
Saval IV	—	—	—	104.4	0.23	24.3	104.4	0.23	24.3
Starvation Canyon	—	—	—	400.5	0.30	121.1	400.5	0.30	121.1
Wright Window	—	—	—	32.6	0.23	7.4	32.6	0.23	7.4
Sub Total	1,143.8	0.26	300.0	1,919.5	0.27	516.1	3,063.3	0.27	816.1
Stockpiles	67.5	0.17	11.7	592.2	0.08	50.0	659.7	0.09	61.8
TOTAL	1,211.3	0.26	311.7	2,511.7	0.23	566.2	3,723.0	0.24	877.9

Table 3, below, summarizes the estimated measured, indicated and inferred resources, calculated in accordance with National Instrument 43-101. Mineral reserves, as shown in Table 2 above, are included in measured and indicated resources. Underground resources are calculated using a cut-off grade of 0.150 ounces of gold per ton (“opt”); open pittable resources are calculated using a cut-off grade of 0.075 opt.

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Table 3 (1),(2),(3),(4),(5)

JERRITT CANYON GOLD MINERAL RESOURCES - December 2005

( includes Proven and Probable Reserves)

	MEASURED			INDICATED			MEASURED + INDICATED			INFERRED
DEPOSIT	Tons (000)	oz/st	Oz (000)	Tons (000)	oz/st	Oz (000)	Tons (000)	oz/st	Oz (000)	Tons (000)	oz/st	Oz (000)
Murray (incl. Zone 9)	560.2	0.29	164.7	229.0	0.28	64.3	789.2	0.29	229.1	167.2	0.22	36.8
SSX-Steer Complex	1,830.4	0.28	508.6	767.1	0.27	205.0	2,597.5	0.28	713.6	1,052.2	0.23	244.1
Smith	636.5	0.29	184.7	1,226.9	0.28	342.8	1,863.4	0.28	527.5	677.0	0.24	161.2
Saval	—	—	—	460.5	0.25	112.9	460.5	0.25	112.9	270.0	0.25	66.2
Starvation Canyon	—	—	—	676.4	0.28	190.7	676.4	0.28	190.7	51.4	0.31	15.8
Wright Window	—	—	—	97.8	0.16	15.2	97.8	0.16	15.2	19.0	0.23	4.3
Subtotal	3,027.1	0.28	858.0	3,457.7	0.27	931.0	6,484.9	0.28	1,789.1	2,236.8	0.24	528.4
Stockpiles	67.5	0.17	11.7	1,175.3	0.06	69.2	1,242.7	0.07	80.9	—	—	—
Pit Resources
Burns Basin	—	—	—	29.7	0.13	3.9	29.7	0.13	3.9	—	—	—
California Mtn.	—	—	—	8.0	0.11	0.9	8.0	0.11	0.9	—	—	—
Coyote	—	—	—	—	—	—	—	—	—	20.1	0.10	2.0
Pie Creek	—	—	—	190.2	0.16	29.9	190.2	0.16	29.9	28.3	0.14	4.0
Road Canyon	—	—	—	148.6	0.14	21.2	148.6	0.14	21.2	74.3	0.13	9.7
Mill Creek	—	—	—	78.4	0.12	9.7	78.4	0.12	9.7	—	—	—
U/G Resources
Burns Basin	—	—	—	30.7	0.19	5.9	30.7	0.19	5.9	50.6	0.23	11.5
California Mtn.	—	—	—	32.1	0.38	12.1	32.1	0.38	12.1	9.4	0.33	3.1
Coyote Zone 10	—	—	—	45.2	0.21	9.6	45.2	0.21	9.6	2.7	0.18	0.5
MCE	—	—	—	4.4	0.20	0.9	4.4	0.20	0.9	7.8	0.19	1.5
Waterpipe II	—	—	—	—	—	—	—	—	—	37.4	0.21	7.7
West Mahala	—	—	—	368.1	0.22	82.4	368.1	0.22	82.4	141.9	0.21	29.7
Winters Creek	—	—	—	148.9	0.22	32.5	148.9	0.22	32.5	37.2	0.20	7.4
Total	3,094.6	0.28	869.7	5,717.4	0.21	1,209.4	8,812.0	0.24	2,079.1	2,646.5	0.23	605.6

(1)  Based on a gold price of $410 per ounce.

(2)  Contained metal estimates are subject to recovery losses. “Resources” or “resource” used in this Annual Information Form are as defined in National Instrument 43-101 of the Canadian Securities Administrators and are not terms recognized or defined by the U.S. Securities and Exchange Commission (SEC). Mineral resources are not reserves and do not have demonstrated economic viability. For further information, please refer to the risk factors and definitions of reserves and resources in the Company’s filings on SEDAR and with the SEC as filed on the SEC’s EDGAR database, which can also be accessed through the Company’s website, www.queenstake.com. Refer also to the Cautionary Statement on page four on this document. Key assumptions and methods used in deriving proven and probable reserves, and measured and indicated resources are as described in this document and the Company’s 2005 Annual Report on Form 40-F filed on EDGAR and its National Instrument 43-101 Report.

(3)  U.S. investors are advised to read the Cautionary Statement on page four in this document. It cannot be assumed that part or all of the mineral deposits termed “resources” may ever demonstrate economic viability to become reserves and the term “inferred resources” is not recognized by the SEC and it cannot be assumed that part or all of an inferred resource will ever be upgraded to a higher category.

(4) For Queenstake, the Qualified Persons for the technical information contained in this Annual Information Form are Messrs. Dorian L. (Dusty) Nicol, President and Chief Executive Officer, Robert Todd, Manager of Technical Services, and Donald G. Colli, Manager of Mineral Resources.

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(5)  For SRK Consulting (U.S.), Inc., in preparation of Queenstake’s National Information 43-101 report, the Qualified Person is Mr. Landy Stinnet, Associate Mining Engineer.

Although the Company has carefully prepared and verified the mineral resource and reserve figures above (and elsewhere in this document), such figures are estimates, and there can be no assurance given that the indicated amount of gold will actually be mined and processed. See also “Risk Factors”.

The net change in reserves relative to the previously estimated reserves at December 31, 2004 is comprised of depletion due to production, additions due to increased definition drilling and inclusion of some blocks of resource which previously met reserve drill density criteria but which were not included in the December 31, 2004 reserve estimate because they were not included in the mine plan.

The rate of reserve depletion was lower than that of the production amount as some resource material and some material that was neither resource nor reserve was mined during the period. Historically, some 20% or more of gold production at Jerritt Canyon comes from mineralization that has never been formally classified as proven or probable reserves. This is because it is discovered by underground drilling and frequently developed and mined before being included in annual reserve estimates.

Except for ore stockpiles, substantially all the current reserves at Jerritt Canyon are contained in deposits being developed, or to be developed, and mined by underground methods. Once the mineralized envelopes and gold grades are estimated the mine geologists draw grade envelopes (based on cutoff grade), using the block model values, existing adjacent development and the cutoff grades provided by engineers for each mine. In order to determine the portion of the measured and indicated resource that would qualify for proven and probable mineable ore reserve status, it is necessary to configure the measured and indicated resource into mineable shapes for the selected mining method, and then apply tests for economic viability and include factors for mining dilution and recovery.

Resources at Jerritt Canyon have been developed from the extensive drilling data, using geology-constrained standard kriging and polygonal methods and using a mine modeling and planning software package. Mineral resources are contained in 16 mineral deposits in the Jerritt Canyon area. The operation employs block modeling techniques supported by relatively small block sizes.

Exploration drilling programs at Jerritt Canyon are predominantly reverse circulation surface drilling and occasionally, surface core drilling, followed by underground drilling with core holes. Underground production sample drilling consists of reverse circulation and rotary percussion drilling.

All assaying at Jerritt Canyon follows accepted industry standards using industry practices at recognized laboratories. Samples from surface drilling both core and reverse circulation are sent to an outside laboratory for assaying. Blanks or standards are routinely submitted with these samples. Underground drill samples are sent to the Jerritt Canyon laboratory (the “JC Laboratory”) on site. The JC Laboratory has all the normal sample preparation equipment and facilities. The JC Laboratory operates continually with a crew of 16 and does about 500 fire assays per day with a 24-hour turnaround from receipt of sample to reporting of assays. Several programs are followed to track assay quality including internal checks, check samples sent in by the mine department, weekly dispatch of samples to other laboratories, and participation in a round-robin program with other mining laboratories in the area where random samples are sent out and others received. Blanks, standards, and/or pulps are routinely submitted with the sample stream. Check samples of core holes (pulps) are sent to outside laboratories for analysis. Pulps and coarse rejects form one outside laboratory are routinely submitted to another outside laboratory for analysis.

The vast majority of drill holes (except rotary percussion holes) are measured for downhole deviations and recorded in the database. Very few exploration holes do not get measured for deviation. This may occur in shallow vertical holes, when holes collapse or when logistics are such that timely measurement is not permitted.

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The geological data is normally maintained in MineSight software for interpretation and mine plan modeling at each mine.

Mining

The Jerritt Canyon mine currently consists of the Murray, Smith, and SSX-Steer Complex underground mines, all located several miles west of an ore processing plant and administration complex. Access to all underground mines is by inclined ramp. Typical openings underground are 15 feet x 15 feet in cross-section, with ramps of 12% to 15% inclination. All openings underground must be supported with rockbolts and wire mesh, and shotcrete where conditions are more severe, or where traffic is concentrated. Generally, the mines are relatively dry, except for the Smith mine which has underground water inflows of about 850 gallons per minute (gpm). A dewatering system with the capacity to handle 1,500 gpm has been installed and the water table in the Smith mine is being lowered. Interior development includes haulage levels, stope access ramps, crosscutting, and drifting alongside the ore. Ventilation boreholes connect the underground mine workings with the surface.

Mechanized, trackless underground mining is employed together with cemented backfill for ground control and to increase ore recovery. Almost half the ore is mined by long-hole benching, the remainder is mined by drift-and-fill methods. Underground trucks deliver ore to windrows on the surface at each mine portal, where the ore is sampled before being delivered by 150-ton haul trucks to the processing plant. Good, wide, haul roads connect the individual mines to the processing plants and to the administration area next to the plant. All of the mines feed the same processing plant, with the four mines typically producing and trucking about 3,200 tons per day to the plant.

Mine drilling, mucking, and hauling equipment maintenance is typically performed in small surface shops located at each mine, or at the central shop located adjacent to the processing plant.

Processing

The ore processing facility at Jerritt Canyon, as originally built, processed oxide and mildly refractory ores by conventional cyanide leaching in conjunction with chlorine-gas pre-oxidation of the mildly refractory fraction. This process continued to operate until 1997. With ores becoming more carbonaceous and refractory, and with the introduction of higher-grade ore from underground operations, a dry mill with dual ore roasting circuits was added in 1989 and is currently in operation. Mill feed is subjected to primary and secondary crushing before being dried, milled and roasted to prepare the refractory ores for gold recovery in a carbon-in-leach circuit. Gold is recovered using a Merrill-Crowe process, is smelted on site and shipped to the refinery as high quality doré bars. The plant has a processing capacity of 1.5 million tons per year.

Capital Costs

The level of capital expenditures made by the former owners at Jerritt Canyon in the immediate period prior to the sale of the mine reflected that the mines were scheduled to shut down at the end of 2004. Underground development and reserve expansion drilling, critical to the long-term sustainability of the operation, had been curtailed. Consequently, the Company began an aggressive underground development and reserve and resource expansion program. Drilling and mine development into highly prospective resource areas has been given highest priority. Primary targets for conversion of resources to reserves include areas immediately adjacent to current operations primarily at the SSX, Smith and Murray mines.

During fiscal 2005, the Company spent $13.9 million for underground development, major haulage-ways, ventilation raises, definition drilling, capital resource development and related activities to provide long-term infrastructure and stope access within the mines. In addition, the Company spent $5.8 million for sustaining capital. This compares to capital investments during 2004 of $17.6 million for development and $7.2 million for sustaining capital. The Company anticipates investing approximately $11.0 million in additional capital for mine development and capitalized resource development in 2006. In addition, the Company anticipates investing approximately $6.0 million in sustaining capital during 2006. The Company expects to fund these programs from cash generated from operating activities and existing working capital.

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Production Outlook – Redevelopment Plan

During the third quarter of 2005, the Company announced a redevelopment plan designed to optimize operations and reduce operating costs in response to development and production shortfalls at Jerritt Canyon and rising commodity costs. The redevelopment plan represented a re-engineering to optimize value and cash flow from the Jerritt Canyon mine assets given constraints with manpower, mining equipment, and increasing commodity costs. The plan was a substantial change in mine and processing practices at Jerritt Canyon to focus on accelerated underground development, higher grade production and reduced mill processing rate, in order to align mill throughput with an optimal mining rate. The average grade of ore being processed was increased to approximately 0.25 ounce of gold per ton (opt), representing an approximate 20% increase from the first half of 2005. The mill processing rate was scaled back in the second half of 2005 from operating two roasters together to one roaster at a time for an average between 2,500 and 2,700 tons per day, approximately 25% lower than the processing rate in the first half. In addition, daily batch crushing and grinding of mill feed was scheduled during off-peak hours for lower energy rates. The processing rate can be increased in the future should Jerritt Canyon’s capacity to produce higher grade ore from underground mining improve or to accommodate additional mill feed from third-party sources.

Cost reductions anticipated to be realized progressively under the redevelopment plan included lower energy and commodities consumption, lower costs of labour, maintenance and other savings from improved operating efficiencies. However, much of the anticipated operating cost savings for 2005 were absorbed by unexpected increases in energy and certain commodity prices during the fourth quarter of 2005.

The redevelopment plan was a substantial change from historical mining and processing practices. Comparison to operating results from previous years should be viewed in that context.

Production Outlook First Quarter of 2006

During the first quarter of 2006, the Jerritt Canyon mill unexpectedly had two failures of a pinion gear, requiring temporary shutdowns of the mill. In the first event, the pinion gear breakdown was due to a lubrication failure, requiring a mill shutdown for repair and gear replacement. Following the repair, the mill resumed normal processing. In the second event, the replacement pinion gear broke one tooth; this was caused by rapidly accelerated wear on a new pinion gear against the older worn bull gear. After evaluation by mill gear experts, a spare pinion was installed and the mill has resumed operations with close monitoring to avoid further issues. During the planned eight- to 10-day annual mill maintenance shutdown scheduled for April, the bull gear will be turned over to more closely match the new pinion gear to ensure continuous operation.

During the 2006 first quarter, the mines continued to produce ore in line with the redevelopment plan, with mined ore being accumulated in an ore stockpile adjacent to the mill. The overall impact of the temporary mill interruptions will be in rescheduling processing of stockpiled ore to later periods of the year. Jerritt Canyon estimates it will accumulate at least 16,000 ounces contained in the ore stockpile at the mill at the end of the 2006 first quarter. The second and third quarters of 2006 are expected to have progressively and significantly higher production than the first quarter as the mill processes through the ore stockpile.

Gold production for the first quarter of 2006 will be approximately one-third lower than the 2005 fourth quarter due to the delays in processing. Costs of the gear replacements and accelerated

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annual mill maintenance will impact results for the 2006 first quarter, with cash operating costs for the 2006 first quarter expected to be considerably higher than the 2005 fourth quarter.

Production Outlook Full Year 2006

The Company expects 2006 gold production to be approximately 200,000 to 220,000 ounces with approximately 45% of the production occurring in the first half of 2006 and 55% in the latter half of 2006. The Company’s expected 2006 gold production represents a slight increase over 2005 production. Gold production in 2006 will primarily occur from the SSX Mine with additional contributions from the Smith, Mahala and Steer mines. The Murray Mine will be mined-out and is expected to be shut-down by mid-2006. Mining equipment and staff at the Murray Mine will be transferred to SSX, Smith, Mahala and Steer mines.

The Company expects to mill approximately 0.9 million tons of ore at an average grade of 0.257 opt in 2006. Under the assumptions of the redevelopment plan, the mill will maintain approximately 40% excess capacity to provide flexibility for additional ore sources, allow processing of mined ore stockpiles accumulated during the first quarter and, potential marginal-grade stockpile incremental feed. Mill capacity during the summer and fall is typically 20% to 40% higher than winter, largely because the dry mill capacity is adversely affected by high moisture in the feed, due to snowfall and ice. In an effort to minimize the seasonal impacts on mining and processing, the Company plans to continue concentrating on underground development during the winter months to ensure sufficient ore availability to maximize production in the summer months. It is expected that total development drifting footage will be 40,000-45,000 feet in 2006 to achieve the 2006 production estimates and to prepare for mining in 2007. Capitalized mine development is expected to be 7,000-7,500 feet in 2006.

On March 29, 2006, the Company entered in an agreement with an affiliate of Newmont Canada Limited (“Newmont”) whereby Newmont will sell to Queenstake concentrates and ore from its Nevada operations for processing at Queenstake’s Jerritt Canyon roasting and milling facility.  The contract calls for Queenstake to purchase at least 500,000 tons per year over two years.  Queenstake will pay Newmont for the recoverable ounces in the purchased concentrates and ore, and Queenstake will charge Newmont commercial terms for processing and refining. Ore purchases with Newmont may continue for up to three additional years if Queenstake has the spare processing capacity.  The purchase of Newmont’s concentrates and ore for processing of at least 500,000 tons per year over two years will increase the Jerritt Canyon mill throughput to approximately 95% of its past demonstrated capacity of approximately 1.5 million tons per year, which is expected to reduce the Company’s unit operating costs.  See 2006 Private Placement, Ore Processing and Property Lease Agreements Section in this AIF.

Exploration and Development

The Company intends to expand its mineral resources and reserves at Jerritt Canyon through focused exploration on its approximately 119-square mile Jerritt Canyon district landholdings. Management of the Company believes much of the exploration work done in past years under the previous owners was in search of either shallow open pit targets or multi-million ounce underground targets and that known reserves and advanced stage targets were not aggressively expanded or systematically followed-up.

In 2005, exploration continued on near-mine and surface targets, with the objective of replacing and targeting near-term mineable reserves and advancing the Starvation Canyon project.

The Company continues to pursue a district-wide evaluation and exploration process in 2006 using current target concepts and geologic understanding. The objective remains to identify and prioritize targets for follow-up drilling. Several dozen distinct targets have been identified. These targets broadly fall into 4 categories.

1.Targets where work by previous owners identified mineralization that was so clearly high priority that Queenstake began aggressive follow-up during 2004 and continued in 2005. The best example of this type of target is Starvation Canyon, where an aggressive drilling program led to the recognition of a high-grade mineralized system that remains open.

2.Targets in the southern part of the district, where drilling by prior owners identified continuous mineralization which not only remains open, but which may be controlled by vertical structures that have yet to be tested by angle holes. Some of these targets are Waterpipe Canyon, and Pie Creek.

3.Numerous areas where one or more drill holes by previous owners have identified mineralization in favorable geologic settings, such as Winters Creek Window and Mahala Creek, where there is potential to

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establish both continuity and extension by further drilling. These targets are on structural trends from orebodies that are currently in production or have previously been mined.

4.Numerous areas where surface geochemical anomalies coincide with favorable geology, or extrapolation of favorable geology. In some cases, some additional work is required to define specific drilling targets.

The near mine program was successful in slightly increasing the Company’s proven and probable reserves net of depletion during the year. Surface drilling programs completed 130 holes totaling 102,816 feet in 2005. Underground drilling was completed during 2005 at the SSX-Steer Mine Complex, the Mahala, West Dash, West Coulee and B-Pit deposits at the Smith Mine and at Murray Mine and comprised 2,797 holes totaling 348,148 feet of underground drilling.

Positive exploration results defined the first mineral reserves at Starvation Canyon and successfully replaced proven and probable reserves, net of depletion from production, at year-end 2005.

The district scale program tested a number of promising targets. The 2006 development and exploration program will continue to focus on both near-mine exploration, with the objective of short-term reserve replacement, and subject to the availability of financing, district-scale exploration with the objective of discovery of new ore bodies. A priority of district-scale exploration during 2006 will be the Starvation Canyon deposit, where the Company added the first mineral reserves during 2005. Other targets will also continue to be explored.

2006 Private Placement, Ore Processing and Property Lease Agreements

On March 29, 2006, the Company entered into an agreement with Newmont Canada Limited (“Newmont”) whereby Newmont will purchase 28.51 million Queenstake common shares at Cdn $0.41 per share for gross proceeds of US $10.0 million through an equity private placement. As part of the private placement, Newmont will receive warrants that can be exercised to acquire up to 28.51 million common shares of Queenstake at a price of Cdn $0.55 for a four-year period, which would generate Cdn $15.7 million in cash if exercised. After closing, Newmont will own approximately 4.9% of Queenstake’s outstanding common shares. If Newmont were to exercise all of its warrants and maintain its holdings of Queenstake’s common shares, Newmont would hold approximately 8.5% of Queenstake’s fully diluted outstanding common shares. For a period of two years from closing, Newmont will have the right to participate in future equity offerings by Queenstake to preserve its fully diluted shareholding percentage and will have certain additional rights to participate in debt financings. The private placement, which remains subject to certain closing conditions, including regulatory approvals, is expected to close in the second quarter of 2006. Proceeds will be used to fund exploration and for other corporate uses.

An affiliate of Newmont has also agreed to convey three of its Nevada exploration properties to Queenstake on a lease-option basis. The properties are subject to a sliding scale net smelter royalty, dependent on the gold price, of 3% to a maximum of 5% if gold is at or above $500 per ounce, and Newmont retains the right to back into a 51% joint venture interest in each of the properties.

In addition, another affiliate of Newmont has agreed to sell concentrates and ore from its Nevada operations to Queenstake for processing at its Jerritt Canyon roasting and milling facility. The contract calls for Queenstake to purchase at least 500,000 tons per year over two years. Queenstake will pay Newmont for the recoverable ounces in the purchased concentrates and ore, and Queenstake will charge Newmont commercial terms for processing and refining. Ore purchases with Newmont may continue for up to three additional years if Queenstake has the spare processing capacity. The purchase of Newmont’s concentrates and ore for processing of at

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least 500,000 tons per year over two years will increase the Jerritt Canyon mill throughput to approximately 95% of its past demonstrated capacity of approximately 1.5 million tons per year, which is expected to reduce the Company’s unit operating costs.

Location of Jerritt Canyon

The following map illustrates the Jerritt Canyon property in Elko County, Nevada.

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RISK FACTORS

The operations of the Company are speculative due to the high-risk nature of its business, which is the acquisition, financing, exploration, development and operation of mining properties. The risks below are not the only ones facing the Company. Additional risks not currently known to the Company, or that the Company currently deems immaterial may also impair the Company’s operations. The order in which the following risk factors appear does not necessarily reflect management’s opinion of their order or priority.

Gold Price Volatility

The Company’s business is affected by the world spot market price of gold. Gold prices are subject to volatile price movements over short periods of time and are affected by numerous factors, all of which are beyond the Company’s control. These include industry factors such as: industrial and jewellery demand; the level of demand for gold as an investment; central bank lending, sales and purchases of gold; speculative trading; and costs of and levels of global gold production by producers of gold. Gold prices may also be affected by macroeconomic factors, including: expectations of the future rate of inflation; the strength of, and confidence in, the US dollar, the currency in which the price of gold is generally quoted, and other currencies; interest rates; and global or regional, political or economic uncertainties. The profitability of the Company’s operations is directly related to the price of gold. If the world market price of gold were to drop and the prices realized by the Company on gold sales were to decrease significantly and remain at such a level for any substantial period, this would materially and adversely affect the Company’s profitability and cash flow.

A decline in the market price of gold may also require the Company to write-down its mineral reserves, which would have a material and adverse effect on its earnings and financial position. Should any significant write-down in reserves be required, material write-downs of the Company’s investment in the affected mining properties plus increased amortization and asset retirement obligation charges may be required. Further, if revenue from gold sales declines, the Company may experience liquidity difficulties. This may reduce its ability to invest in exploration and development, which would materially and adversely affect future production, earnings, and the Company’s financial position.

Price Volatility of Other Commodities

The Company’s profitability is also affected by the market prices of commodities, which are consumed or otherwise used in connection with operations, such as diesel fuel, natural gas electricity and cement. Prices of such commodities are also subject to volatile price movements over short periods of time and are affected by factors that are beyond the Company’s control.

Mining Risks and Insurance Risks

The operations of the Company are subject to significant risks and hazards, incidental to the exploration, development and production of gold including environmental hazards, industrial accidents, unusual or unexpected rock formations, pressures, cave-ins and flooding, some of which are beyond the Company’s control. These risks and hazards could result in: damage to, or destruction of, mineral properties or producing facilities; personal injury or death; environmental damage; delays in mining; and monetary losses and possible legal liability for such damage. Although the Company maintains and intends to continue to maintain insurance which it considers adequate to cover some of these risks and hazards to the extent available and consistent with the industry practice, no assurance can be given that such insurance will continue to be available, or that it will be available at economically feasible premiums. The Company’s property, business interruption and liability insurance may not provide sufficient coverage for losses related to these or other risks or hazards. In addition, the Company may become subject to liability for hazards which it cannot insure against or which it may elect not to insure against because of premium costs or other reasons.

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Mineral Reserves and Resources

The Company’s mineral reserves and mineral resources are estimates, and no assurance can be given that the indicated level of gold will be able to be mined and processed. Fluctuations in the price of gold may render mineral reserves containing relatively lower grades of gold mineralization uneconomic. Moreover, short-term operating factors relating to the mineral reserves, such as the need for orderly development of ore bodies or the processing of new or different ore grades, may cause mineral reserves to be reduced or the Company to be unprofitable in any particular accounting period. Estimated reserves may have to be recalculated based on actual production experience. Market price fluctuations of gold, as well as increased production costs or reduced recovery rates, may render the present proven and probable reserves unprofitable to develop at a mine or mines. This could cause the Company to reduce its reserves, which could have a negative impact on its operations and financial results. Failure to obtain necessary permits or government approvals could also cause the Company to reduce its reserves.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Due to the uncertainty of inferred mineral resources, these mineral resources may never be upgraded to proven and probable mineral reserves.

There is no assurance that the Company will obtain the estimated levels of recovery of gold or the prices assumed in determining gold reserves.

Mine Development

The Company’s ability to sustain or increase its present levels of gold production is dependent upon the successful development of new producing mines and/or identification of additional reserves at existing mining operations. If the Company is unable to develop new ore bodies, it will not be able to sustain present production levels. Reduced production could have a material and adverse impact on future cash flows, results of operations and financial condition.

Production and Cost Estimates

The Company prepares estimates of future production and cash costs of production for its operations. No assurance can be given that such estimates will be achieved. The failure by the Company to achieve production or cost estimates could have an adverse impact on any or all of the Company’s future cash flows, results of operations and financial condition. The Company’s actual production may vary from estimates for a variety of reasons, including: actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating to the ore reserves, such as the need for sequential development of ore bodies and the processing of new or different ore grades; risks and hazards associated with mining; natural phenomena, such as inclement weather conditions, floods, and earthquakes; and unexpected labour shortages. Cash costs of production may be affected by a variety of factors, including: ore grade, metallurgy, labour costs, the cost of commodities, supplies and services. Such occurrences could result in damage to mineral properties, interruptions in production, injury or death to persons, damage to property of the Company or others, monetary losses and legal liabilities. These factors may cause a mineral deposit that has been mined profitably in the past to become unprofitable, forcing the Company to cease production.

Exploration

Gold exploration is highly speculative in nature. The Company’s exploration work involves many risks and may be unsuccessful. Substantial expenditures are required to establish proven and probable reserves and to complete the related mine development. It may take several years from the initial phases of drilling until production is possible. As a result of these uncertainties, there is no assurance that current or future exploration programs will be successful

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and result in the expansion or replacement of current production with new reserves or result in the discovery of new ore bodies.

Environmental, Health and Safety Regulations

The Company’s mining operations and exploration activities are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine development and protection of endangered and protected species. Environmental legislation is evolving in a manner that may 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. There is no assurance that existing or future environmental regulation will not materially adversely affect the Company’s business, financial condition and results of operations. Environmental hazards may exist on the properties in which the Company holds interests and that are unknown to the Company at present and that have been caused by previous existing owners or operators of the properties. There may be costs and production delays associated with compliance with these laws and regulations. Bonds or other forms of financial assurances are required for security for these reclamation activities. The unknown nature of possible future additional regulatory requirements creates uncertainties related to future environmental, health and safety costs. The Company has set aside cash to fund reclamation at the Jerritt Canyon mine based on current assessments and has purchased insurance against unexpected reclamation costs beyond the current estimated amounts. There can be no assurance, however, that actual environmental and reclamation obligations will not exceed such provisions.

Bills proposing major changes to the mining laws of the United States have been considered by Congress. If these Bills, which may include royalty fees or net profits interests, are enacted in the future, they could have a significant effect on the ownership and operation of patented and unpatented mining claims in the United States, including claims that the Company owns or holds. Any amendment to current laws and regulations governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company’s financial condition and results of operations.

Employee Relations

The Company’s ability to achieve its future goals and objectives is dependent, in part, on maintaining good relations with its employees. Although the Jerritt Canyon mine employees are not unionized, production at its mining operations is dependent upon the efforts of the Company’s employees, and a prolonged labour disruption at Jerritt Canyon could have a material adverse impact on the Company’s operations as a whole.

In addition, relations between the Company and its employees may be affected by changes in the scheme of labour relations that may be introduced by the relevant government authorities in whose jurisdictions the Company carries on business. Changes in such legislation or in the relationship between the Company and its employees may have a material adverse effect on the Company’s business, results of operations and financial condition.

Title to Properties

The validity of mining claims, which constitute most of the Company’s property holdings, can be uncertain and may be contested. Although the Company has attempted to acquire satisfactory title to its properties, some risk exists that some titles, particularly title to undeveloped properties, may be subject to prior unregistered agreements or transfer or native land claims and title may be affected by other undetected defects and may be defective.

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Competition

The mineral exploration and mining business is competitive in all of its phases. The Company competes with other mining companies and individuals, including competitors with greater financial, technical and other resources than the Company for mining claims and leases on exploration properties, acquisition of gold mining assets, capital and qualified employees. The Company cannot assure that it will continue to be able to compete successfully with its competitors in acquiring such properties, capital and employees or terms it considers acceptable, if at all.

Dependence on Management

The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its management, a small group of individuals. Investors must be willing to rely to a significant extent on management’s discretion and judgment. The Company does not have in place formal programs for the succession of management and training of management. The Company does not maintain any key man insurance on any of its employees. The loss of any one member of the management group could have a material adverse effect on the Company’s business.

Conflicts of Interest

Certain of the directors and officers of Company are also directors and/or officers of other natural resource companies. Such associations may give rise to conflicts of interest from time to time. The Company’s directors are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest, which they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict must disclose his interest and abstain from voting on such matter in accordance with applicable corporate laws.

Directors and Assets outside Canada

Since certain of the Company’s directors are resident outside of Canada it may not be possible to effect service of process upon such directors and since all or a substantial portion of the assets of such directors are located outside Canada, there may be difficulties in enforcing against such directors judgments obtained in Canadian courts. Similarly, essentially all of the Company’s assets are located outside Canada and there may be difficulties in enforcing against the Company judgments obtained in Canadian courts.

Dilution

The Company frequently issues common shares to finance asset acquisitions and working capital, to settle liabilities, to acquire services and to compensate employees. As at March 27, 2006, approximately 550.0 million common shares were outstanding; approximately 50.1 million common shares were issuable upon the exercise of warrants and approximately 13.1 million common shares were issuable upon the exercise of stock options. If all of the current warrants and options are exercised, the number of outstanding shares would increase by approximately 12%to approximately 613.3 million shares. It is possible that the Company will enter into more agreements to issue common shares and warrants and options to purchase common shares. The impact of the issuance of a significant amount of common shares from these warrant and option exercises could place downward pressure on the market price of the Company’s common shares.

On March 29, 2006, the Company entered in an agreement with Newmont Canada Ltd. (“Newmont”), whereby Newmont will purchase 28.51 million Queenstake common shares. As part of the private placement, Newmont will receive warrants that can be exercised to acquire up to 28.51 million common shares of Queenstake for a four-year period. See 2006 Private Placement, Ore Processing and Property Lease Agreements Section in this AIF.

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Future Capital Requirements

The Company anticipates investing additional capital in mine development, new mining equipment and in capitalized reserve expansion programs in 2006. The Company intends to use cash on hand and cash generated from operating activities and equity and/or debt financing to fund these expenditures.

The Company may have other additional capital or exploration funding requirements to the extent it decides to develop other properties or makes additional acquisitions. The Company may also encounter significant unanticipated liabilities or expenses. The Company’s ability to continue its planned exploration and development activities depends in part on its ability to generate free cash flow from its operating mine, which is subject to certain risks and uncertainties. The Company may be required to obtain additional financing in the future to fund exploration and development activities or acquisitions of additional projects. The Company has historically raised capital primarily through equity financing and in the future may raise capital through equity or debt financing, joint ventures or other means. There can be no assurance that the Company will be able to obtain the necessary financing in a timely manner, on acceptable terms or at all.

Estimates and Assumptions Employed in the Preparation of Financial Statements

The preparation of its consolidated financial statements requires the Company to use estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The Company’s accounting policies are described in Note 2 to its December 31, 2005 consolidated financial statements. The Company’s accounting policies related to work-in-progress inventory valuation, depletion and depreciation of property, plant and equipment, capitalization of development costs and asset retirement obligations are critical accounting policies, which are subject to estimates and assumptions regarding reserves, process recoveries, future gold prices, environmental laws and regulations and future mining activities.

The assumptions used in the valuation of work-in-progress inventories include estimates of gold contained in ore stockpiles and in the recovery circuit and an assumption of the gold price expected to be realized when the gold is recovered and further costs to be incurred. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-progress inventories, which would reduce the Company’s earnings and working capital.

A significant portion of the Company’s property, plant and equipment is depleted and depreciated on a units-of- production basis, which bases its calculations on the expected amount of recoverable reserves. If these estimates of reserves prove to be inaccurate, or if the Company revises its mine plan due to reductions in the price of gold or unexpected production cost increases, and as a result the amount of reserves expected to be recovered are reduced, then the Company would be required to write-down the recorded value of its property, plant and equipment or to increase the amount of future depletion and depreciation expense, both of which would reduce the Company’s earnings and net assets.

The Company also assesses its property, plant and equipment for impairment at the end of each accounting period. If prior estimates of future cash flows prove to be inaccurate, due to reductions in the price of gold, increases in the costs of production, and/or reductions in the amount of recoverable reserves, the Company would be required to write-down the recorded value of its property, plant and equipment, which would reduce the Company’s earnings and net assets.

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The Company has an obligation to reclaim its properties after the minerals have been fully depleted, and has estimated the costs to comply with existing reclamation and accounting standards. The estimate of the fair value of these costs was based on existing environmental laws and regulations, the life of the various mines, interest rates and estimated future costs.

Payment Obligations

The Company is, or may in the future become, a party to certain contractual agreements pursuant to which the Company is or may become subject to payments and comply with other obligations. If such obligations are not complied with when due, in addition to any other remedies, which may be available to other parties, this could result in dilution or forfeiture of interests held by the Company. The Company may not have, or be able to obtain, financing for all such obligations as they arise.

Dividends

No dividends on the common shares of the Company have been paid to date. The Company anticipates that it will retain all future earnings and other cash resources for the future operation and development of its business. The Company does not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends will be at the discretion of the Company’s board of directors, after taking into account many factors, including the Company’s operating results, financial condition and current and anticipated cash needs.

CAPITAL STRUCTURE

The Company has one class of equity: common shares without par value. The Company is authorized to issue an unlimited number of common shares. Each common share is entitled to one vote and to participate equally on a distribution of assets or a winding up of the Company.

As at March 27, 2006, approximately 550.0 million common shares were issued and outstanding. An additional 50.1million common shares were issuable upon the exercise of the warrants, and 13.1 million common shares were issuable upon the exercise of stock options.

On March 29, 2006, the Company entered in an agreement with Newmont Canada Ltd. (“Newmont”), whereby Newmont will purchase 28.51 million Queenstake common shares. As part of the private placement, Newmont will receive warrants that can be exercised to acquire up to 28.51 million common shares of Queenstake for a four-year period. See 2006 Private Placement, Ore Processing and Property Lease Agreements Section in this AIF.

MARKET FOR SECURITIES

The Company’s common shares are currently listed on the Toronto Stock Exchange (the “TSX”) under the trading symbol QRL. The Company’s common shares began trading on the American Stock Exchange (the “AMEX”) under the trading symbol QEE on December 14, 2004.

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Trading History on the TSX in 2005 is as follows:

	Sales price (Cdn$)
2005	High	Low	Average Daily Volume
January	0.48	0.33	2,513,560
February	0.46	0.37	1,395,643
March	0.43	0.25	2,702,507
April	0.28	0.21	1,509,071
May	0.30	0.21	1,463,715
June	0.33	0.25	1,498,777
July	0.29	0.25	591,287
August	0.27	0.19	1,201,862
September	0.27	0.19	1,774,216
October	0.26	0.21	450,501
November	0.25	0.21	779,388
December	0.25	0.19	1,603,203

Trading History on the AMEX in 2005 is as follows:

	Sales price (US$)
2005	High	Low	Average Daily Volume
January	0.39	0.27	544,695
February	0.38	0.29	553,663
March	0.34	0.21	590,323
April	0.23	0.17	423,005
May	0.24	0.17	267,119
June	0.27	0.20	360,886
July	0.24	0.20	328,835
August	0.23	0.15	436,617
September	0.23	0.16	537,419
October	0.22	0.18	272,338
November	0.21	0.17	436,424
December	0.21	0.17	910,375

DIRECTORS AND OFFICERS

Name, Address, Occupation and Security Holding

The names, province or state,  country of residence, positions held and principal business occupations in which each of the Company’s current directors and executive officers of the Company has been engaged during the immediately preceding five years is as follows:

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Name, Province or State and Country(1)	Position & Term of Service	Principal Occupation or Employment for Past Five Years(1)
DORIAN (DUSTY) NICOL(5) Colorado, USA	President and Chief Executive Officer since March 2005, and Director since July 1999	President and Chief Executive Officer of Queenstake, March 2005 to present; Executive Vice President of Queenstake, 2003 to 2005; Vice President Exploration of Queenstake, 1999 to 2003; and Vice President of Santa Cruz, 1998 to 1999.
ERIC EDWARDS Colorado, USA	Vice President Finance and Chief Financial Officer since March 2005	Vice President Finance and Chief Financial Officer of the Company, March 2005 to present; Manager, Administration of Kinross Gold Corporation, 2002 to 2005; and Vice President Finance of EHS Capital Partners, LLP, 2001 to 2002.
WENDY YANG Colorado, USA	Vice President of Investor Relations since December 2005	Vice President, Investor Relations, August 2005 to present; and Director, Investor Relations of Newmont Mining Corporation, 2000 to 2005.
PETER BOJTOS(2) (3) Colorado, USA	Director since June 2000	Director of the Company, June 2000 to present; a Professional Engineer, and director of several public mining companies.
MICHAEL SMITH(2) (5) British Columbia, Canada	Director since May 2004	Director of the Company, May 2004 to present; a Chartered Accountant, and Partner of PricewaterhouseCoopers LLP, 1982 to 2004.
ROBERT L. ZERGA(3) (4) Nevada, USA	Non-Executive Chairman, Director since April 2004	Director of the Company, April 2004 to present; and a retired mining executive.
DORIS MEYER(2) (3) (5) British Columbia, Canada	Director since May 2005	Director of the Company, May 2005 to present; President and Owner of Golden Oak Corporate Services Ltd., which provides financial and corporate compliance services to publicly traded mining companies; and director of several public mining companies.

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Name, Province or State and Country(1)	Position & Term of Service	Principal Occupation or Employment for Past Five Years(1)
JOHN ELLIS(4) Nevada, United States	Director since May 2005	Director of the Company, May 2005 to present; Independent Consultant with respect to mines, mills and smelters for Inco, Queenstake, and others, 2003 to present; and Founder of Ellis Consultants, a private company providing consulting services principally to the AngloGold group of companies, 2000 to present.
JOHN HICK(4) Ontario, Canada	Director since March 2006	Director of the Company, March 2006 to present; Chief Executive Officer of Rio Narcea, 2004 to 2005; Vice Chairman of Rio Narcea, 2004 to present; Director of Rio Narcea, 1997 to present; President and Chief Executive Officer of Defiance Mining Corp. and its predecessor company, 2001 to 2004; and director of several other resource companies.

(1)The information as to province or state and country of residence and principal business occupation during the past five years is not within the Company’s knowledge and has been furnished by the respective directors and officers.

(2)Denotes a member of the Audit Committee;

(3)Denotes a member of the Corporate Governance and Nominating Committee;

(4)Denotes a member of the Compensation and Management Development Committee;

(5)Denotes a member of the Disclosure Committee

As at the date of this AIF, the directors and executive officers of the Company as a group beneficially own, directly or indirectly, or exercise control or direction over approximately 0.1 million common shares, representing less than 1% of the issued common shares of the Company. In addition, such individuals hold stock options to acquire an additional 6.6 million common shares of the Company.

The term of the directors of the Company expires at each annual general meeting of the shareholders and the term of the officers expires at the discretion of the board of directors, or upon resignation from the position.

Corporate Cease Trade Orders and Bankruptcies

Other than as set out below, no director of the Company, executive officer of the Company or shareholder holding enough securities to materially affect the control of the Company, has:

(a)at the date of this AIF or has been within the 10 years before the date of the AIF, been a director or executive officer of any company (including the Company), that while that person was acting in their capacity:

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(i)was the subject of a cease trade order or similar order that denied such issuer access to any  exemption  under securities legislation for a period of more than 30 consecutive days.

(ii)was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company  being the object of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities registration for a period of more than 30 consecutive days; or

(iii)within a year of that person ceasing to act in that capacity, became bankrupt  made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement, or compromise with creditors, or had a receiver, receiver manager, or trustee appointed to hold its assets.

(b)within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, officer or shareholder.

In June 2000, the Ontario Securities Commission ordered that the management and certain insiders of Link Minerals Ventures Inc. (“Link”), be prohibited from trading in securities until Link’s annual financial statements were filed. As a director of Link at the time, Mr. Peter Bojtos, a director of Queenstake, was subject to the order.

The British Columbia Securities Commission issued a cease trade order against Link Minerals Ventures Inc. (“Link”) in August, 2001 for the failure to file annual financial statements. Mr. Peter Bojtos, a director of Queenstake, was a director of Link at the time.

Mr. Bojtos was a director of Sahelian Goldfields Inc. (“Sahelian”) when it was the subject of a proposal under the Bankruptcy and Insolvency Act (Canada), which proposal was approved by the creditors and by the courts in August 2001. Sahelian is now reorganized.

Mr. Bojtos was a director of Sahelian in May, 1999 when a cease trade order was issued by the British Columbia Securities Commission, and in June, 2000 when the Ontario Securities Commission issued a cease trade order against Sahelian for failure to file annual financial statements for its 1998 fiscal year, and first quarter interim financial statements, within the time required. Sahelian was reorganized under the Bankruptcy and Insolvency Act (Canada) in 2002, and both the cease trade orders have since been lifted.

The foregoing information, not being within the knowledge of the Company, has been furnished by the respective directors, officers and shareholders holding a sufficient number of securities of the Company to affect materially control of the Company.

No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:

(a)any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b)any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision regarding the Company.

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The foregoing information, not being within the knowledge of the Company, has been furnished by the respective directors, officers and shareholders holding a sufficient number of securities of the Company to affect materially control of the Company.

Conflicts of Interest

Certain directors and officers of the Company are also directors, officers or shareholders of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. The directors and officers of the Company, are also directors of other companies that are similarly engaged in the business of acquiring, developing and exploiting natural resource properties. These associations to other public companies in the resource sector may give rise to conflicts of interest from time to time. The directors and senior officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest which they may have in a contract or c. transaction if the contract or transaction is material to the Company, the Company has entered, or proposes to enter, into the contractor transaction, and either the director or senior officer has a material interest in the contract or transaction or the director or senior officer is a director or senior officer of, or has a material interest in, a corporation which has a material interest in the contractor transaction. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict is required to disclose his interest and abstain from voting on such matter.

AUDIT COMMITTEE

Pursuant to the provisions of section 173 of the Yukon Business Corporations Act, the Company is required to have an Audit Committee. The Company must also, pursuant to the provisions of Multilateral Instrument 52-110 Audit Committees (“MI 52-110”), which came into force on March 30, 2004, have a written charter which sets out the duties and responsibilities of its audit committee.

The Audit Committee Charter

The Audit Committee Charter is attached hereto as Schedule “A”.

Composition of the Audit Committee

The Audit Committee, at the present time, is comprised of Messrs. Bojtos and Smith and Ms. Meyer. All members of the Audit Committee are financially literate and all members are independent directors.

Relevant Education and Experience

Michael Smith, Audit Committee Chairman, is a Chartered Accountant and a retired partner from PricewaterhouseCoopers, LLP, a public accounting firm where he was employed from 1967 to 2004.

Peter Bojtos, Audit Committee Member, is aProfessional Engineer and a director of several public mining companies.

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Doris Meyer, Audit Committee Member, is a Certified General Accountant in British Columbia and the President and Owner of Golden Oak Corporate Services Ltd., which provides financial and corporate mining compliance services to publicly traded mining companies.

Reliance on Certain Exemptions

At no time since the commencement of the Company’s most recently completed fiscal year has the Company relied on the exemptions in section 2.4 (De Minimis Non-audit Services), section 3.2 (Initial Public Offerings), section 3.4 (Events Outside Control of Member), section 3.50 (Death, Disability or Resignation of Audit Committee Member) or Part 8 (Exemptions).

Reliance on the Exemption in Subsection 3.3(2) or Section 3.6

At no time since the commencement of the Company’s most recently completed fiscal year has the Company relied on the exemption in subsection 3.3(2) (Controlled Companies) or section 3.6 (Temporary Exemption for Limited and Exceptional Circumstances).

Reliance on Section 3.8

At no time since the commencement of the Company’s most recently completed fiscal year has the Company relied on section 3.8 (Acquisition of Financial Literacy).

Audit Committee Oversight

At no time since the commencement of the Company’s most recently completed fiscal year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board of Directors.

Pre-Approval Policies and Procedures

The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services. Pursuant to its Charter, the Audit Committee is required to pre-approve all auditing services and related fees and the terms thereof, including the scope of the auditors’ audit examination plan, procedures and timing of the audit, and pre-approve any non-audit services (i.e., any services provided other than in connection with the audit or review of financial statements) to be rendered by the Company’s auditors, including the terms thereof, and the fees to be paid in connection therewith. The Committee may delegate to one or more members of the Committee the authority to pre-approve services to be provided by the auditors. Any such pre-approval by one or more members of the Committee must be reported to the full Committee at the next scheduled meeting. The pre-approval of auditing and non-auditing services can be done with input from, but no delegation of authority to, management. All of the engagements and fees for 2005 were pre-approved by the Audit Committee.

External Auditor Service Fees (By Category)

Fiscal Year End	Audit Fees		Audit Related Fees(1)		Tax Fees(2)		All Other Fees(3)
2005	$	204,859	$	0	$	27,659	$	0
2004	$	147,289	$	6,931	$	44,071	$	0

(1)Fees charged for assurance and related services reasonably related to the performance of an audit, and not included under “Audit Fees”.

(2)Fees charged for tax compliance, tax advice and tax planning services.

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(3)Fees for services other than disclosed in any other column.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Company is a party to or to which any of its property is subject, and no such proceedings are known to be contemplated.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

The Company believes no director or executive officer of the Company or any person or company that is the direct or indirect beneficial owner of, or who exercise control or direction over, more than 10% of any class or series of the Company’s outstanding voting securities or any associate or affiliate of any of the persons or companies referred to above has any material interest, direct or indirect, in any transactions which materially affected or would materially affect the Company or any of its subsidiaries, occurring during the years ended December 31, 2005, 2004 and 2003 except for the fact that certain of the directors or officers of the Company are also directors and/or officers and/or securityholders of other publicly traded companies of which the Company is the largest shareholder.

transfer agent and registrar

The Company’s transfer agent and registrar is CIBC Mellon Trust Company, 1066 West Hastings Street, Suite 1600, Vancouver, British Columbia, Canada.

MATERIAL CONTRACTS

Except for contracts entered into in the ordinary course of business, the Company has not entered into any material contracts during the most recently completed financial year, or since January 1, 2002, and which are still in full force and effect, and which may reasonably be regarded as presently material.

INTERESTS OF EXPERTS

The following prepared or certified a statement, report or valuation described or included in a filing, or referenced in a filing made by the Company under National Instrument 51-102 – Continuous Disclosure Obligations prescribed by the Canadian Securities Administrators, during or relating to the Company’s most recently completed financial year ended December 31, 2005:

Name	Qualified Person with Respect to	# of Securities Held
Staley, Okada & Partners	The audit report dated March 30, 2006, relating to the financial statements of the Company for the financial year ended December 31, 2005.	0%
SRK Consulting (U.S.) Inc.	Consent to disclosure with respect to the technical report titled “Jerritt Canyon Mine, Elko County, Nevada – Technical Report” which is currently being prepared in accordance to National Instrument 43-101 (collectively, the “Technical Report”	0%

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ADDITIONAL INFORMATION

Additional information relating to the Company is available under the Company’s profile on the SEDAR website at www.sedar.com. Financial information relating to the Company is provided in the Company’s comparative financial statements and management’s discussion and analysis for the most recently completed fiscal year ended December 31, 2005.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, if applicable, is contained in the Company’s information circular dated April 25, 2005 for its annual general meeting of shareholders held on May 31, 2005, and once completed, will be available in its information circular for its upcoming annual general meeting of shareholders for 2006.

If you wish to receive a copy of the Company’s annual financial statements, interim financial statements, related management and discussion analysis, or previous copies of Annual Information Forms, please contact the Company (see the cover page for contact information) and a copy of the documents you requested will be forwarded to you without charge.

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Schedule A

Audit Committee Charter

The Board of Directors (the “Board”) of Queenstake Resources Ltd. (the “Corporation”) has established an Audit Committee (the “Committee”) comprised of at least three directors appointed by the Board. The membership qualifications, authority, responsibility and specific duties of the Committee are described below:

Membership Qualifications

To serve on the Committee, a director must be independent. To be considered independent, a director must meet the criteria for independence (a) required by the Toronto Stock Exchange and any applicable laws and regulations, and (b) established by the Board in the Corporation’s Corporate Governance Guidelines or otherwise. In addition, the director should receive no compensation from the Corporation or any of its affiliates (including fees paid directly or indirectly for any consulting or any legal, financial or other advisory services), other than director’s fees for service as a member of the Board and any committees thereof.

Committee members shall serve until their successors shall be duly designated and qualified. Any member may be removed at any time, with or without cause, by a majority of the Board then in office. Any vacancy in the Committee occurring for any cause may be filled by a majority of the Board then in office.

The Board may suggest the Committee’s chairperson, otherwise, the Committee will select the chairperson. A majority of the members of the Committee shall constitute a quorum for the transaction of business and the act of a majority of those present at any meeting at which there is a quorum shall be the act of the Committee.

The Committee may form and delegate authority to subcommittees when appropriate.

In addition, to serve on the Audit Committee, a director must be financially literate (or must become so within a reasonable period of time after being appointed to the Committee), as the Board of Directors interprets such qualification in its business judgment.

Authority

The Board of Directors has granted the Committee the authority herein provided, as well as the authority to investigate any activity of the Corporation and its subsidiaries. The Committee has been, and shall be, granted unrestricted access to all information and all employees have been, and shall be, directed to cooperate as requested by members of the Committee. The Committee has the authority to retain, at the Corporation’s expense, persons having special competencies (including, without limitation, legal, accounting or other consultants and experts) to assist the Committee in fulfilling its responsibilities.

Purpose and Responsibilities

The primary responsibility for financial and other reporting, internal controls, and compliance with laws and regulations and ethics rests with the management of the Corporation. The Committee’s primary purposes are:

46

(a)to assist the Board in its oversight of the integrity of the Corporation’s financial statements and management discussion and analysis, the Corporation’s compliance with legal and regulatory requirements and corporate policies and controls, the independent auditor’s selection, retention, qualifications and independence, and

(b)to prepare the “Report of the Audit Committee” to be included in the Corporation’s annual proxy statement. The Committee will assist the Board by reviewing the financial information that will be provided to the shareholders and others, the systems of internal controls that management and the Board of Directors have established, and the audit process.

The Committee is responsible for overseeing the integrity of the financial reporting process and that the financial statements and management discussion and analysis adequately represent the Corporation’s financial condition, results of operations and cash flows. Secondly, the Committee is responsible for overseeing the Corporation’s compliance with corporate financial policies that provide processes, procedures and standards to follow in accomplishing the Corporation’s goals and objectives. Thirdly, the Committee is responsible for understanding the Corporation’s financial reporting risks and the internal control structure.

The Committee is also responsible for confirming the independence and objectivity of the auditors.

Each of the auditors, the chief financial officer and the controller shall have direct and unrestricted access to the Committee as well as the opportunity to meet with the entire Board.

The Committee shall meet no less than four times annually. Additional or special meetings may be held at the Committee’s discretion.

Specific Duties

In discharging its responsibilities, the Committee shall have the sole authority to, and shall, do the following:

1.retain and, where appropriate, dismiss the Corporation’s auditors,

2.pre-approve all auditing services and related fees and the terms thereof, including the scope of the auditors’ audit examination plan, procedures and timing of the audit, and

3.pre-approve any non-audit services (i.e., any services provided other than in connection with the audit or review of financial statements) to be rendered by the Corporation’s auditors, including the terms thereof, and the fees to be paid in connection therewith, and

4.The Committee may delegate to one or more members of the Committee the authority to pre-approve services to be provided by the auditors. Any such

47

pre-approval by one or more members of the Committee shall be reported to the full Committee at the next scheduled meeting. The pre-approval of auditing and non-auditing services can be done with input from, but no delegation of authority to, management.

The Committee is also expected to perform the following additional duties:

5.Prior to the audit, review the experience and qualifications of the senior members of the auditors’ audit team and the quality control procedures of the independent public accountant.

6.Review with the auditors, the chief financial officer and management the Corporation’s policies and procedures relative to the adequacy of internal accounting and financial reporting controls, including controls over quarterly and annual financial reporting, computerized information systems and security.

7.Make all necessary inquiries of management and the auditors concerning compliance with established standards of corporate conduct.

8.Review with management and the auditors the accounting and reporting principles and practices applied by the Corporation in preparing its financial statements and management discussion and analysis, including:

a.major issues regarding accounting principles and financial statement presentations including any significant changes in the Corporation’s selection or application of accounting principles, and major issues as to the adequacy of the Corporation’s internal controls and any special audit steps adopted in light of material control deficiencies;

b.analyses prepared by management and/or the auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements;

c.identification of each critical accounting estimate used by the Corporation including a description of the accounting estimate, the methodology used; underlying assumptions and range of estimates from which the estimate was selected, and any known trends, commitments, events or uncertainties that may materially affect the methodology or the assumptions described;

d.the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Corporation; and earnings press releases (paying particular attention to any use of “pro forma,” or “adjusted” non-GAAP, information), as well as financial information and earnings guidance provided to analysts.

48

9.Prior to the release of each quarterly earnings press release discuss with management and the auditors the results for the quarter, including any significant transactions which occurred during the quarter, any significant adjustments, management judgments and accounting estimates, new accounting policies and any disagreements between management and the auditors.

10.Prior to submission to the Board of Directors for approval, and prior to the release of the annual financial statements, review with management and the auditors, upon completion of their audit, the financial results for the year and the results of the audit, including

a.the Corporation’s annual financial statements and related footnotes;

b.management’s discussion and analysis of the financial condition and results of operations;

c.the results of the audit, including the nature and amount of unrecorded adjustments resulting from the audit;

d.the auditors’ management recommendations;

e.any significant transactions which occurred during the year;

f.any significant adjustments;

g.management judgments and accounting estimates;

h.new accounting policies;

i.all alternative treatments of financial information within generally accepted accounting principles, ramifications of the use of alternative disclosures and treatments, and the treatment preferred by the auditors; and

j.any disagreements between management and the auditors.

11.Prior to submission to the Board of Directors for approval, and prior to the release of quarterly financial statements, review with management and the auditors, the Corporation’s quarterly financial statements for such quarter, including

a.the financial statements and related footnotes,

b.management’s discussion and analysis of the financial condition and results of operations,

49

c.the result of the quarterly review, including the nature and amount of unrecorded adjustments resulting from the review,

d.any significant transactions which occurred during the quarter,

e.any significant adjustments,

f.critical accounting policies and practices,

g.new accounting policies,

h.all alternative treatments of financial information within generally accepted accounting principles, ramifications of the use of alternative disclosures and treatments, and the treatment preferred by the auditors, and

i.any disagreements between management and the auditors.

12.At least annually,

a.obtain and review from the auditors a written statement delineating all their relationships with the Corporation, consistent with the Independence Standards Board Standard I, which is to include all non-audit services provided and related fees, and

b.discuss with the auditors any disclosed relationships or services that may impact their objectivity and independence and take appropriate action to satisfy itself as to the independence of the auditors.

13.Meet periodically and separately with each of management, the internal auditors and the auditors.

14.Review and evaluate the chief financial officer’s work throughout the year, and present the Committee’s conclusions to the full Board.

15.Determine that the Company’s hiring policies for employees or former employees of the auditors are in accordance with applicable laws and regulations.

16.Take such action as necessary to assure the rotation of the lead audit partner at least every five years or such other period as may be required under applicable law.

17.Establish procedures for processing internal complaints regarding accounting, internal controls or auditing matters, and the confidential anonymous submission

50

by employees of concerns regarding questionable accounting or operating practices.

18.Conduct an annual performance self-evaluation of the Committee.

19.Apprise the Board of Directors regularly of significant developments in the course of performing the above duties, including reviewing with the full Board any issues that arise with respect to the quality or integrity of the Corporation’s compliance with legal or regulatory requirements, the performance and independence of the company’s auditors.

20.Review and reassess the adequacy of this charter on a regular basis and submit any proposed revisions to the Board for consideration and approval.

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EX-2

Exhibit 2

Management’s Responsibility for the Consolidated Financial Statements

The accompanying consolidated financial statements of Queenstake Resources Ltd. and its subsidiaries and all information in the annual report are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements necessarily include some amounts that are based on management’s best estimates, which have been made using careful judgment.

The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. Financial and operating data elsewhere in the annual report are consistent with the information contained in the financial statements.

In fulfilling their responsibilities, management of Queenstake Resources Ltd. and its subsidiaries have developed and continue to maintain systems of internal accounting controls, and segregation of duties and responsibilities whenever possible.

Although no cost effective system of internal control will prevent or detect all errors and irregularities, these systems are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, transactions are properly recorded and the financial records are reliable for preparing the consolidated financial statements.

The Board of Directors carries out its responsibility for the consolidated financial statements in this annual report principally through its Audit Committee, consisting of non-executive directors. The Audit Committee meets periodically with management and with the external auditors to discuss the results of audit examinations with respect to the adequacy of internal accounting controls, and to review and discuss the consolidated financial statements and financial reporting matters.

The consolidated financial statements have been audited by Staley, Okada & Partners, Chartered Accountants, who have full access to the Audit Committee, with and without the presence of management. Their report follows.

Dorian L. (Dusty) Nicol

President and Chief Executive Officer

Eric H. Edwards

Vice President, Finance and Chief Financial Officer

1

To the Shareholders of Queenstake Resources Ltd.:

We have audited the accompanying consolidated balance sheets of Queenstake Resources Ltd. (the “Company”) as at December 31, 2005 and 2004 and the related consolidated statements of loss, deficit and cash flows for each of the years in the three-year period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2005 and 2004, and the results of its operations and its cash flows for each of each of the years in the three-year period ended December 31, 2005, in accordance with Canadian generally accepted accounting principles.

Staley, Okada & Partners

Chartered Accountants

Vancouver, British Columbia, Canada

March 13, 2006 except as to Note 24, which is as of March 30, 2006

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CONSOLIDATED BALANCE SHEETS

(In Thousands of U.S. Dollars)	December 31, 2005			December 31, 2004
ASSETS
Current assets
Cash and cash equivalents	$	10,225		$	6,132
Trade and other receivables	463			117
Inventories - Note 3	6,519			5,084
Marketable securities - Note 4	13			500
Prepaid expenses - Note 5	1,499			1,450
Total current assets	18,719			13,283
Restricted cash - Note 6	27,165			26,379
Mineral property, plant and equipment, net - Note 7	45,692			42,514
Other assets - Note 8	1,763			5,755
Total assets	$	93,339		$	87,931
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	11,063		$	20,580
Other current liabilities - Note 9	2,846			2,126
Total current liabilities	13,909			22,706
Other long-term obligations - Note 10	2,117			1,093
Reclamation and mine closure - Note 11	26,382			25,766
Total liabilities	42,408			49,565
Shareholders’ equity
Common shares, no par value, unlimited number authorized
Issued and outstanding 550,021,360 (2004 - 410,404,627) - Note 12	131,804			100,139
Contributed surplus - Note 13	1,973			1,053
Convertible securities - Note 15	14			363
Deficit	(82,860		)	(63,189		)
Total shareholders’ equity	50,931			38,366
Total liabilities and shareholders’ equity	$	93,339		$	87,931

Commitments and contingencies - Note 20

Approved on behalf of the Board:
/s/ Michael Smith	/s/ Dorian Nicol
Audit Committee Chairman and Director	Director

The accompanying notes form an integral part of these consolidated financial statements

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CONSOLIDATED STATEMENTS OF LOSS

	For the Years Ended December 31
(In Thousands of U.S. Dollars, except per share amounts)	2005			2004			2003
Gold sales	$	90,174		$	100,394		$	55,576
Costs and expenses
Cost of sales	80,268			85,346			40,667
Depreciation, depletion and amortization	17,194			19,568			9,240
Non-hedge derivatives - Note 8	2,647			2,530			664
Exploration	3,880			6,629			-
General and administrative	4,915			3,381			1,936
Accretion of reclamation and mine closure liability	1,174			421			131
Stock-based compensation - Note 14	579			537			350
	110,657			118,412			52,988
Loss from operations	(20,483		)	(18,018		)	2,588
Interest expense - Note 16	413			4,917			4,936
Other income, net	(1,012		)	(892		)	(282		)
Foreign exchange (gain) loss	(213		)	83			(172		)
Provision for impairment of Magistral Joint Venture	—			—			6,248
	(813		)	4,108			10,730
Net loss	$	(19,671	)	$	(22,126	)	$	(8,142	)
Net loss per share - basic and diluted	$	(0.04	)	$	(0.06	)	$	(0.04	)
Weighted average number of shares outstanding (000’s) - basic	509,274			377,609			185,866

CONSOLIDATED STATEMENTS OF DEFICIT

	For the Years Ended December 31
(In Thousands of U.S. Dollars)	2005			2004			2003
							Restated - Note 2k
Deficit, beginning of period - as previously reported	$	(63,189	)	$	(41,063	)	$	(32,828	)
Cumulative restatement for stock-based compensation - Note 2k	—			—			(93		)
Deficit, beginning of period - as restated	(63,189		)	(41,063		)	(32,921		)
Net loss	(19,671		)	(22,126		)	(8,142		)
Deficit, end of period	$	(82,860	)	$	(63,189	)	$	(41,063	)

The accompanying notes form an integral part of these consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31
(In Thousands of U.S. Dollars)	2005			2004			2003
OPERATING ACTIVITIES
Net loss	$	(19,671	)	$	(22,126	)	$	(8,142	)
Non-cash items:
Depreciation, depletion and amortization	17,194			19,568			9,240
Interest accretion and deferred financing costs	—			4,484			3,738
Gain on disposal of assets to be disposed of by sale	—			(661		)	(504		)
Inventory obsolescence	—			575			—
Amortization of deferred charges	1,903			1,590			—
Accretion of reclamation and mine closure liability	1,174			421			131
Amortization of non-hedge derivatives	1,792			2,530			664
Write down of non-hedge derivatives	855			—			—
Stock-based compensation	579			537			350
Foreign exchange loss	(213		)	83			(172		)
Loss on marketable securities	45			23			—
Provision for doubtful accounts	—			—			768
Provision for impairment of Magistral Joint Venture	—			—			6,248
Warrants issued for services	14			137			—
	3,672			7,161			12,321
Changes in non-cash working capital:
Inventories	(1,435		)	(801		)	(378		)
Accounts receivable and prepaid accounts	(1,178		)	3			(2,261		)
Accounts payable and accruals	(8,098		)	10,354			4,017
Cash provided by (used in) operating activities	(7,039		)	16,716			13,699
INVESTING ACTIVITIES
Property, plant and equipment expenditures	(19,644		)	(21,547		)	(8,960		)
Purchase of non-hedge derivatives	(1,242		)	(717		)	(4,088		)
Environmental risk transfer program	—			1,031			(6,892		)
Proceeds from sale of assets to be disposed of by sale	—			4,252			—
Notes receivable	—			2,500			—
Sale of marketable securities - Note 4	442			1,460			—
Reclamation costs incurred	(558		)	(426		)	(127		)
Restricted cash	(786		)	(41		)	(26,342		)
Other, net	—			(3,493		)	1,192
Cash (used in) investing activities	(21,788		)	(16,981		)	(45,217		)
FINANCING ACTIVITIES
Common shares issued, net of costs - Note 12	30,393			15,030			32,346
Term loan	—			(9,952		)	9,952
Notes payable and leases	2,527			(8,218		)	—
Other	—			—			(1,356		)
Cash provided by (used in) financing activities	32,920			(3,140		)	40,942
Net increase (decrease) in cash and cash equivalents	4,093			(3,404		)	9,424
Cash and cash equivalents, beginning of period	6,132			9,536			112
Cash and cash equivalents, end of period	$	10,225		$	6,132		$	9,536

Supplemental cash flow information - Note 18

The accompanying notes form an integral part of these consolidated financial statements

5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005, 2004 AND 2003

(In thousands of U.S. dollars, except per share amounts)

1.Nature of operations

Queenstake Resources Ltd. (“Queenstake”) engages in the mining, processing, production and sale of gold, as well as related activities including development and exploration. The Company’s principal asset and only current source of revenue is its 100% owned Jerritt Canyon Mine, located 50 miles north of Elko, Nevada, acquired on June 30, 2003.

2.Summary of significant accounting policies

(a)Basis of presentation

The consolidated financial statements of Queenstake and its subsidiaries (collectively, unless the context requires otherwise, referred to as the “Company”) and accompanying notes have been prepared in accordance with accounting principles generally accepted in Canada (“Canadian GAAP”). For the purposes of these financial statements these principles conform, in all material respects, with generally accepted accounting principles in the United States, except as described in Note 23.

(b)Basis of consolidation

These consolidated financial statements include the accounts of Queenstake and its subsidiaries. All material intercompany transactions and balances have been eliminated. The subsidiaries and percentage of ownership at December 31, 2005, are as follows:

•Queenstake Resources U.S.A. Inc. (Delaware) – 100%

•Castle Exploration Inc. (Colorado) – 100%

(c)Use of estimates

The preparation of financial statements in conformity with Canadian GAAP requires the Company to make estimates and assumptions that affect the amounts of assets, liabilities, shareholders’ equity, revenue and expenses reported in these consolidated financial statements. The most significant of these estimates and assumptions are those that use estimates of gold reserves and resources. Such estimates and assumptions affect the carrying value of assets, decisions as to when exploration and development costs should be capitalized or expensed, the rate at which amortization of long-term assets is charged to earnings, and the estimation of the asset retirement obligation. The Company regularly reviews its estimates and assumptions; however, actual results could differ from these estimates.

(d)Foreign currency translation

The activities of Queenstake, the Canadian parent company, are conducted and accounted for in Canadian dollars. Accordingly, the temporal rate method is used for the conversion of related Canadian dollar denominated accounts. Monetary assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the balance sheet date, non-monetary assets (including depreciation) and liabilities at the exchange rates in effect at the time of acquisition or issue, and revenues and other expenses at average rates approximating exchange rates in effect during the prescribed time of the transactions. Exchange gains or losses are included in the statement of loss.

6

(e)Cash and cash equivalents

Cash and cash equivalents is considered to include cash on hand, demand balances held with banks, money market funds, certificates of deposit and highly liquid deposits with maturities of three months or less from the date of inception.

(f)Inventories

Work-in-process inventories, including ore stockpiles, are valued at the lower of average production cost and net realizable value, after a reasonable allowance for further processing and sales costs.

Finished goods inventories are valued at the lower of cost and net realizable value. Cost valuations are based on the related three-month period’s average costs. Net realizable value is after a reasonable allowance for sales costs.

Materials and supplies inventories are valued at the lower of average cost and replacement cost, net of a provision for obsolescence with respect to identified inventory items.

(g)Marketable securities

Short-term investments in publicly traded marketable securities are valued at the lower of cost and quoted market value.

(h)Mineral property, plant and equipment

Mineral property, plant and equipment are carried at cost less accumulated depreciation and depletion. Cost includes acquisition and related costs, capitalized asset retirement costs, long-term development costs incurred on existing ore bodies, and development costs incurred to further define reserves deemed capable of subsequent commercial production. Depletion of mineral properties including deferred development costs is charged on a units-of-production basis over proven and probable reserves. Depreciation for plant and equipment commences when they are placed in service. Depreciation of plant and equipment is calculated using the straight-line method, based on estimated useful lives ranging from three to six years. Projects and assets considered to be Construction in Progress are not depreciated until the projects are complete and placed in service.

Long-lived assets are evaluated for impairment at the end of each reporting period or more frequently when changes in circumstances indicate that those carrying values may not be recoverable. Estimated undiscounted future net cash flows for the Jerritt Canyon mine are subject to risks and uncertainties and are calculated using estimated production, expected gold sales prices (considering current and historical prices, price trends and related factors), operating costs, capital costs, and reclamation and closure costs and estimates of asset recovery values. It is reasonable that changes in estimates could occur, which may affect the expected recoverability of these assets. If it is determined that the carrying value exceeds estimated undiscounted future net cash flows, then a write-down to fair value would be recorded, with a charge to operations.

(i)Asset retirement obligations

The recommendations of CICA Handbook Section 3110, Asset Retirement Obligations, became effective on January 1, 2004. This section requires the recognition of a liability for legal obligations relating to the retirement of property, plant and equipment and obligations arising from the acquisition, construction, development, or normal operation of those assets. Such asset retirement costs must be recognized at fair value, when a reasonable estimate of fair value can be made, in the period in which the liability is incurred. A corresponding increase to the carrying amount of the related asset, where one is identifiable, is recorded and amortized over the life of the asset. Where a related asset is not easily identifiable with a liability, the change in fair value over the course of the year is expensed. The amount of the liability is subject to re-measurement at each reporting period. The estimates are based principally on legal and regulatory requirements. It is possible that the Company’s estimate of its ultimate reclamation liabilities could change as a result of changes in regulations, the extent of environmental remediation required or completed, the means of reclamation or changes in cost estimates. Changes in estimates are accounted for prospectively commencing in the period the estimate is revised.

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(j)Obligations under capital leases

Leases are classified as either capital or operating. Leases that transfer substantially all of the benefits and risks of ownership of property to the Company are accounted for as capital leases. At the time a capital lease is entered into, an asset is recorded along with its related long-term financing obligation, net of interest. Interest on capital lease financing is expensed as financing payments are made. Payments made under operating leases are expensed as incurred.

(k)Stock-based compensation

On January 1, 2004, the Company retroactively adopted the transitional rules of CICA Handbook section 3870, Stock-based Compensation and Other Stock-based Payments (“CICA 3870”). This requires the Company to: (a) for fiscal years beginning after January 1, 2004, commence recording in the accounts the cost of stock-based compensation, estimated using the fair-value method prescribed in CICA 3870; and (b) restate prior period financial statements to record the fair value of stock-based compensation for the years 2002 and 2003. The effect of the change in accounting policy was a $93 thousand increase in the opening deficit as at January 1, 2003.

Compensation expense for stock options granted is determined based on the estimated fair values of the stock options at the time of the grant, the cost of which is recognized over the vesting periods of the respective options. The estimated fair values of stock options granted is determined by using the Black-Sholes option pricing model. The estimated fair value of stock options is credited to contributed surplus as the options vest and is subsequently transferred to share capital upon exercise of the related option.

Consideration paid by directors, officers, employees and non-employees on exercise of stock options is credited to common shares.

(l)Convertible securities

Warrants issued as consideration for goods and services are recorded at fair value and classified as Convertible Securities. Fair value is transferred to common shares upon exercise of the related warrants; proceeds from the exercise of these warrants are accounted for as an increase to common shares. The value of equity units, consisting of common shares and warrants, issued in cash financings is assumed to be substantially attributable to the value of the common shares; accordingly no portion of the cash received for the units is assigned to the warrants.

(m)Revenue recognition

Revenue from the sale of gold is recognized when there is pervasive evidence that an arrangement exists, the selling price is fixed and determinable, collectibility is reasonably assured, and when title and the risks and rewards of ownership pass to the buyer.

(n)Commodity contracts

The Company may purchase gold put option contracts to protect against the risk of falling gold prices. Purchased gold put options allow the Company to exercise on a designated forward date, the option to sell a specified quantity of gold at the contract price (“strike price”) to the counterparty. If the gold price is lower than the strike price of the respective purchased put option contract on the expiry date, gold is sold at the strike price of the put option. If the market gold price is higher that the strike price of the put option, the option expires without exercise. The put option premium payments related to the contracts are recognized as a deferred charge and liability on acquisition and expensed and paid, respectively, in the period in which the contracts expire. Put options are considered non-hedge derivative financial instruments and thus, are marked to fair market value. Changes in the fair market value of the put options are recorded in current earnings or losses.

The Company does not use gold forward sales contracts to fix future gold prices to be realized.

(o)Future income taxes

The future income tax asset and liability method of accounting for income taxes is used, whereby future income tax assets and liabilities are recorded based on temporary differences between the carrying amounts of balance sheet items and their

8

corresponding tax bases. Future income tax assets also arise from unused tax losses, subject to a valuation allowance, to the extent that it is more likely than not such losses ultimately will be utilized. This method also requires that the future income tax assets and liabilities be measured using the enacted rates and laws that are expected to apply when these assets and liabilities are either to be realized or settled.

(p)Earnings/loss per share

Basic earnings/loss per share is calculated by dividing the net earnings/loss for the year by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated using the treasury stock method which, for outstanding stock options and warrants, assumes that the proceeds to be received on the exercise of the stock options and warrants are applied to repurchase common shares at the average market price for the period, for purposes of determining the weighted average number of shares outstanding. Basic and diluted loss per share are the same as the inclusion of common share equivalents would be anti-dilutive.

(q)Comparative figures

Certain of the comparative figures have been reclassified to conform with the current year’s presentation.

9

3.Inventories

	December 31, 2005		December 31, 2004
Finished goods	$	1,083	$	59
Stockpiled ore	1,768		1,889
Work-in-process	352		286
Materials and supplies	3,316		2,850
	$	6,519	$	5,084

All inventories are associated with the Jerritt Canyon mine.

4.Marketable securities

	Shares		Amount
Balance - December 31, 2003	—		$		—
Marketable securities received on sale of assets	2,000,000		1,483
Marketable securities received in lieu of note payment	669,485		500
Proceeds from sale of marketable securities	(2,000,000	)	(1,460			)
Loss on sale of marketable securities	—		(23			)
Balance - December 31, 2004	669,485		500
Proceeds from sale of marketable securities	(644,485	)	(442			)
Loss on sale of marketable securities	—		(45			)
Balance - December 31, 2005	25,000		$	13

5.Prepaid expenses

	December 31, 2005		December 31, 2004
	Total		Total
Prepaid insurance	$	783	$	794
Prepaid federal land fees	540		502
Other	176		154
	$	1,499	$	1,450

6.Restricted cash

	December 31, 2005			December 31, 2004
Commutation Account	$	25,766		$	25,771
Interest earned	706			421
Reclamation costs incurred by Company	(558		)	(426		)
	25,915			25,766
Workman’s compensation self-insurance	522			510
Other restricted cash	729			103
	$	27,165		$	26,379

On June 30, 2003, the Company purchased from American Insurance Group (“AIG”) an environmental risk transfer program (the “ERTP”) (See Note 8). As part of the ERTP, $25.8 million was deposited in an interest-bearing account with AIG (the “Commutation Account”). The Commutation Account principal plus interest earned on the principal is used to fund Jerritt Canyon mine’s ongoing reclamation and mine closure obligations identified as at June 30, 2003.

The Company has assigned to Division of Insurance, State of Nevada a letter of credit for $0.5 million secured by a cash deposit of $0.5 million in connection with the State’s Workers Compensation program. Interest is earned on the deposit.

The Company has assigned two letters of credit totaling $0.7 million secured by a cash deposit of $0.7 million in connection with the purchase of mining equipment. Interest is earned on this deposit.

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7.Mineral property, plant and equipment

	December 31, 2005							December 31, 2004
			Accumulated							Accumulated
			depletion &							depletion &
	Cost		depreciation			Net		Cost		depreciation			Net
Mineral properties and deferred costs
Jerritt Canyon	$	59,047	$	(29,398	)	$	29,649	$	45,538	$	(19,044	)	$	26,494
Plant and equipment
Jerritt Canyon	28,276		(12,274		)	16,002		22,117		(6,128		)	15,989
Subtotal Jerritt Canyon(1)	87,323		(41,672		)	45,651		67,655		(25,172		)	42,483
Office equipment	74		(33		)	41		54		(23		)	31
	$	87,397	$	(41,705	)	$	45,692	$	67,709	$	(25,195	)	$	42,514

(1)Jerritt Canyon cost basis

	Original cost		2003 additions		2004 additions		2005 additions		Cost basis
Mineral properties and deferred costs(2)	$	22,888	$	5,088	$	17,562	$	13,509	$	59,047
Plant and equipment	14,100		785		7,232		6,159		28,276
	$	36,988	$	5,873	$	24,794	$	19,668	$	87,323

(2)The original cost of the mineral properties and deferred costs includes the $25,767 of capitalized asset retirement costs (Note 11) less negative goodwill on the acquistion of Jerritt Canyon.

8.Other assets

	December 31, 2005
	Beginning														Ending
	Balance			Additions			Amortization				Write-down				Balance
Non-hedge derivatives	$	1,612		$	1,242		$	(1,792		)	$	(855		)	$	207
Deferred royalty charges	1,903			—			(1,903			)	—				—
Environmental risk transfer program	2,240			—			(684			)	—				1,556
	$		5,755	$		1,242	$		(4,379	)	$		(855	)	$		1,763
	December 31, 2004
	Beginning														Ending
	Balance			Additions			Amortization				Recovery				Balance
Non-hedge derivatives	$	3,425		$	717		$	(2,530		)	$	—			$	1,612
Deferred royalty charges	—			3,493			(1,590			)	—				1,903
Deferred financing cost	3,345			—			(3,345			)	—				—
Environmental risk transfer program	5,275			—			(2,004			)	(1,031			)	2,240
	$		12,045	$		4,210	$		(9,469	)	$		(1,031	)	$		5,755

As a condition of the Jerritt Canyon term loan, the lender required the Company to purchase a total of 394,591 gold put options, with a carrying value of approximately $4.1 million, with a series of monthly expiries from July 2003 through June 2005, inclusive. On June 30, 2005 the remaining balance of the prepaid put options required by the conditions of the term loan expired in full.

The Company purchased gold put options in the fourth quarter of 2004 at a cost of $0.7 million with expiry dates through 2005. These gold put options have expired in full as of December 31, 2005.

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During 2005, the Company purchased 147,000 gold put options as non-hedge derivatives at a cost of $1.2 million with a series of monthly expiries from January 2006 through March 2007, inclusive. The carrying value of $0.2 million is net of realized and unrealized losses of $0.9 million resulting from decreases in the fair value of the gold put option contracts. The put options each have a strike price ranging from $400 to $425 per ounce. Payments of the premiums for these put options are being deferred and will be settled each month based upon the respective number of put options expiring or exercised in that month. See Note 19 – Commodity Risk Management for further discussion regarding put option contract valuation and a summary of outstanding put options at December 31, 2005.

Reclamation cost cap insurance

The ERTP that the Company purchased from AIG (See Note 11) also includes a reclamation and mine closure cost cap insurance policy. The insurance provides coverage for future reclamation and mine closure costs in existence at June 30, 2003, if they exceed those funded by the Commutation Account (Note 6). If these ultimate reclamation costs are less than the amount in the Commutation Account, the Company would be refunded the excess cash. In the event that these ultimate reclamation costs are more than the Commutation Account balance, the cost cap insurance, will pay the excess costs up to a defined maximum.

The insurance premium paid for the ERTP in June 2003 is being depleted over the estimated proven and probable reserve estimated at the inception of the policy. Depletion of the insurance premium is calculated based on each respective periods ounce production with respect to the estimated proven and probable reserves.

Pollution legal liability

The ERTP also includes a pollution legal liability insurance coverage for third-party damage claims against the Company for both pre-existing pollution conditions and new pollution conditions, for a period of five years commencing June 30, 2003.

9.Other current liabilities

	December 31, 2005		December 31, 2004
Insurance policy premium payable	$	423	$	425
Current portion of non-hedge derivative premiums payable (Note 10)	994		732
Current portion of capital leases (Note 10)	1,429		969
	$	2,846	$	2,126

10.Other long-term liabilities

	December 31, 2005			December 31, 2004
Non-hedge derivative premiums payable	$	1,062		$	732
Capital leases	3,478			2,062
	4,540			2,794
Less current portion:
- Non-hedge derivative premiums payable	(994		)	(732		)
- Capital leases	(1,429		)	(969		)
	$	2,117		$	1,093

During 2005, the Company entered into a 5 year capital lease with a mining equipment company with a total payment price of $1.4 million. The delivered sales price for the equipment is $1.1 million with a deferred finance charge of $0.3 million calculated at 8.35%.

During 2005, the Company entered into a 5 year capital lease with a mining equipment company with a total payment of $2.0 million. The delivered sales price for the equipment is $1.6 million with a deferred finance charge of $0.4 million calculated at 7.25%.

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During 2005, the Company entered into a two year capital lease with a software company with a total payment of $44 thousand. The delivered sales price for the equipment is $41 thousand with a deferred finance charge of $3 thousand calculated at 7.00%.

During 2004, the Company entered into a 28 month capital lease with a mining equipment company with a total payment of $539 thousand. The delivered sales price for the equipment is $476 thousand with a deferred finance charge of $63 thousand calculated at 7.95%.

During 2005, the Company received mining equipment from a mining equipment company with a purchase price of $0.7 million. The Company is in the process negotiating lease terms for the mining equipment which will be completed in 2006.

Capital lease obligations through the completion of current lease terms are as follows:

(In thousands of dollars)	2006		2007		2008		2009		2010		Total
Mining equipment	$	287	$	281	$	281	$	281	$	258	$	1,388
Mining equipment	194		194		194		194		354		1,130
Mining software	20		12		—		—		—		32
Mining equipment	255		—		—		—		—		255
Mining equipment	673		—		—		—		—		673
	$	1,429	$	487	$	475	$	475	$	612	$	3,478

11.Reclamation and mine closure

Federal, state and local laws and regulations concerning environmental protection affect the Company’s operations. Under current regulations, the Company is required to meet performance standards to minimize environmental impact from operations and to perform site restoration and other closure activities. The Company’s provisions for future site closure and reclamation costs are based on known requirements. It is not currently possible to estimate the impact on operating results, if any, of future legislative or regulatory developments. The Company’s estimate of the present value of the obligation to reclaim the Jerritt Canyon property is based upon existing reclamation standards at December 31, 2005 and Canadian GAAP.

As part of the consideration for the Jerritt Canyon mine acquisition, the Company assumed the liability for final reclamation and closure of the mine. On June 30, 2003, the Company purchased from American Insurance Group (“AIG”) an environmental risk transfer program (the “ERTP”) (Note 8). The ERTP includes several components: a Commutation Account (Note 6), reclamation cost cap insurance, pollution liability insurance, and surety bonds.

The following table sets out the activity for the Company’s reclamation and mine closure liabilities for the years ending December 31, 2005 and 2004:

	December 31, 2005			December 31, 2004
Opening balance	$	25,766		$	25,771
Accretion	1,174			421
Reclamation activities paid by Company	(558		)	(426		)
Ending balance	$	26,382		$	25,766

Surety bonds

AIG has posted a total of $35.5 million in surety bonds with the U.S. Forest Service and the Nevada Division of Environment Protection, to provide these agencies assurance that the Company will meet its reclamation obligations.

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12.Common Shares

	Shares (000’s)	$ 000’s
Balance, December 31, 2003	360,313	$	84,817
Issued for cash	34,254	12,997
Issued for cash on exercise of warrants	15,313	2,905
Issued for cash on exercise of incentive stock options	525	110
Fair value of broker’s warrants exercised	—	257
Fair value of stock options exercised (Note 13)	—	35
Equity issuance costs	—	(982		)
Activity for the year	50,092	15,322
Balance, December 31, 2004	410,405	100,139
Issued for cash	125,978	30,716
Issued for cash on exercise of warrants	7,843	1,591
Issued for cash on exercise of incentive stock options	360	60
Common shares issued in payment of liabilities	5,435	1,250
Fair value of stock options exercised (Note 13)	—	22
Equity issuance costs	—	(1,974		)
Activity for the year	139,616	31,665
Balance, December 31, 2005	550,021	$	131,804

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

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

On May 16, 2005, the Company issued 5,434,783 common shares to settle outstanding liabilities and accrued interest of $1.3 million.

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

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13.Contributed surplus

	December 31, 2005			December 31, 2004
Balance, beginning of year	$	1,053		$	551
Fair value of stock-based compensation	579			537
Fair value of expired warrants (Note 15)	363			—
Fair value of stock options exercised - transferred to share capital (Note 12)	(22		)	(35		)
Balance, end of year	$	1,973		$	1,053

14.Stock options

The following table sets out the activity in Company’s incentive stock option plans for the years ending December 31, 2005, 2004 and 2003:

			Weighted average
	Number		price per option
	(000’s)		Cdn $
Outstanding, December 31, 2002	5,120		$	0.41
Granted	3,900		0.39
Exercised	(1,752	)	0.22
Cancelled or expired	(493	)	0.25
Outstanding, December 31, 2003	6,775		0.43
Granted	5,050		0.57
Exercised	(525	)	0.26
Cancelled or expired	(155	)	2.65
Outstanding, December 31, 2004	11,145		0.47
Granted	7050		0.22
Exercised	(360	)	0.20
Cancelled or expired	(4,665	)	0.50
Outstanding, December 31, 2005	13,170		$	0.33

Options outstanding at December 31, 2005 are exercisable in the following amounts and exercise prices:

Options outstanding					Options exercisable
Exercise price per		Weighted average		Weighted average		Weighted average
option	Number of options	price per option		remaining life	Number of options	price per option
Cdn $	(000’s)	Cdn $		(years)	(000’s)	Cdn $
0.09	150	$	0.09	1.0	150	$	0.09
0.32	1,600	0.32		1.4	1,600	0.32
0.22	50	0.22		1.8	50	0.22
0.39	1,850	0.39		2.6	1,850	0.39
0.57	1,385	0.57		3.5	1,385	0.57
0.57	1,505	0.57		3.8	1,505	0.57
0.23	550	0.23		4.3	275	0.23
0.22	5,065	0.22		4.4	2,533	0.22
0.22	500	0.22		4.4	250	0.22
0.22	300	0.22		4.6	150	0.22
0.22	200	0.22		4.6	100	0.22
0.22	15	0.22		4.9	8	0.22
	13,170	$	0.33		9,855	$	0.36

At December 31, 2005 the Company had only one stock option plan, the 1995 Plan. The 1995 Plan was established on May 17, 1995, amended most recently on May 12, 2004 and is the Company’s only active incentive stock option plan. A maximum of 30,000,000 five-year options may be granted under the 1995 Plan at an exercise price based on market value on the day before granting. Shareholder approval is required to increase the number of options available for grant under the 1995 Plan. Full vesting

15

of stock options granted under the 1995 plan is completed after one year where 50% of the granted options vest immediately upon the date of grant and the remaining 50% vest one year from the date of grant.

On May 2, 2005, the Company granted 575,000 stock options to a non-director officer and certain employees of the Company with a strike price of Cdn $0.23 expiring on May 2, 2010.

On May 11, 2005, the Company granted 5,460,000 stock options to directors, a non-director officer and certain employees of the Company with a strike price of Cdn $0.22 expiring on May 11, 2010.

On May 31, 2005, the Company granted 500,000 stock options to newly appointed directors of the Company with a strike price of Cdn $0.22 expiring on May 31, 2010.

On August 15, 2005, the Company granted 300,000 stock options to a non-director officer and certain employees of the Company with a strike price of Cdn $0.22 expiring on August 15, 2010.

On August 23, 2005, the Company granted 200,000 stock options to certain employees of the Company with a strike price of Cdn $0.22 expiring on August 23, 2010.

On November 22, 2005, the Company granted 15,000 stock options to certain employees of the Company with a strike price of Cdn $0.22 expiring on November 22, 2010.

The fair value of stock options granted to directors, officers and employees were estimated at the grant date based on the Black-Scholes option pricing model. From the specific assumptions applied at each respective grant date, the weighted average assumptions for stock options granted are as follows:

	Weighted Average Assumptions
	2005			2004			2003
Expected volatility	74.7		%	50.0		%	29.7		%
Risk-free interest rate	3.79		%	3.47		%	4.33		%
Expected lives	3 years			2 years			2 years
Dividend yield	0		%	0		%	0		%
Weighted average fair value per stock option granted	$	0.09		$	0.14		$	0.07

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable measure of the fair value of the Company’s stock options.

The Company recognized $579,000, $537,000 and $350,000 in stock-based compensation expense for the years ended 2005, 2004 and 2003, respectively.

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15.Convertible securities

Outstanding at
December 31,	Issued in	Exercised in		Expired in		Outstanding at
2004	2005	2005		2005		December 31, 2005	Exercise price	Expiry
(000’s)	(000’s)	(000’s)		(000’s)		(000’s)	Cdn $
10,534	—	(7,843	)	(2,691	)	—	0.25	06/25/05
2,000	—	—		(2,000	)	—	1.00	12/15/05
17,127	—	—		—		17,127	0.65	02/10/06
1,713	—	—		(1,713	)	—	0.50	08/10/05
—	50,000	—		—		50,000	0.40	03/23/07
—	100	—		—		100	0.40	03/23/07
31,374	50,100	(7,843	)	(6,404	)	67,227

								Fair value of		Fair value of			Fair value of			Fair value of
	Warrants	Warrants		Warrants		Warrants		warrants		warrants			warrants			warrants
	issued	exercised		expired		outstanding		issued		exercised			expired			outstanding
	(000’s)	(000’s)		(000’s)		(000’s)
Balance, December 31, 2004	148,779	(117,405	)	—		31,374		$	5,420	$	(5,057	)	$	—		$	363
Warrants issued in financings (Note 13)	50,000	(7,843	)	(2,691	)	39,466		—		—			—			—
Warrants issued for services	100	—		—		100		14		—			—			14
Warrants expired	—	—		(3,713	)	(3,713	)	—		—			(363		)	(363		)
Balance, December 31, 2005	198,879	(125,248	)	(6,404	)	67,227		$	5,434	$	(5,057	)	$	(363	)	$	14

On April 29, 2005, 100,000 warrants were issued under an agreement for financial advisory and investment banking services. The warrants issued have the same stipulations as warrants issued in the March 23, 2005 equity financing (Note 12). The warrants were issued at a strike price of Cdn $0.40 and the estimated fair value of the warrants was calculated using the Black-Scholes option pricing model. The estimate of the fair value of the warrants of $14 thousand was based upon a volatility of 75.0%, a risk free interest rate of 3.9% and an expected life of 2 years.

On February 16, 2006, 17.1 million warrants with an exercise price of Cdn $0.65 expired.

16.Interest expense

	December 31, 2005		December 31, 2004		December 31, 2003
Amortization of deferred financing costs, related to term loan	$	—	$	3,345	$	3,344
Amortization of deferred financing costs, related to put options financed	—		257		50
Accretion of production payment owing to Jerritt Canyon sellers	—		788		256
Oxygen plant note	—		94		88
Non-cash interest expense	—		4,484		3,738
Term loan	—		322		978
Capital leases	413		80		83
Other	—		31		137
	$	413	$	4,917	$	4,936

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17.Income taxes

The Company’s provision for income taxes differs from the amounts computed by applying the combined Canadian federal and provincial income tax rates to the net loss as a result of the following:

	2005			2004			2003
Provision for recovery of taxes at stautory rates	$	(6,885	)	$	(7,877	)	$	(2,932	)
Tax benefit not recognized on current year losses	3,624			1,491			1,222
Differences in foreign tax rates	154			(57		)	85
Non-deductible items and other	3,107			6,443			1,625
	$	—		$	—		$	—

Future income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s future tax assets as at December 31, 2005 are as follows:

	2005			2004			2003
Non-capital loss carry forwards	$	10,552		$	7,322		$	7,776
Net capital loss carry forwards	7,851			6,088			—
Unutilized exploration expenditures	7,620			5,990			2,619
Capital assets	1,044			(330		)	(204		)
Total gross future income tax assets	27,067			19,070			10,191
Less: Valuation allowance	(27,067		)	(19,070		)	(10,191		)
Net future income tax allowance	$	—		$	—		$	—

The Company has income tax loss carry forwards of approximately $6.6 million in Canada, which may be used to reduce future income taxes otherwise payable and which expire in the years 2006 to 2009.

The Company has income tax loss carry forwards of approximately $20.5 million in the United States, which may be used to reduce future income taxes otherwise payable and which expire in the years 2006 to 2025.

The tax benefit of the above noted tax assets have been offset by recognition of a valuation allowance in these financial statements.

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18.Supplemental cash flow disclosure

	For the years ended December 31
	2005		2004		2003
Non-cash financing and investing activities
Property, plant and equipment expenditures accrued	$	3,309	$	3,265	$	—
Common shares issued in payment of liabilities	1,250		—		6,353
Finance of prepaid insurance	783		—		—
Contributed surplus arising on fair value of convertible securities expired	363		—		—
Fair value of stock options exercised and transferred from contributed surplus to share capital	22		35		43
Marketable securities received in sale of assets disposed of by sale	—		4,483		—
Marketable securities received in lieu of note payment	—		500		—
Fair value of broker’s warrants issued for services	—		—		5,283
Fair value of lender’s and broker’s warrants exercised and transferred to share capital	—		257		4,802
Issued shares to satisfy the loan payable by the Magistral Joint Venture	—		—		562
Acquisition of the Jerritt Canyon mine:
Shares issued to sellers	—		—		4,089
Deferred production payment owing to sellers	—		—		4,506
Reclamation liability assumed	—		—		25,767
Other liabilities assumed	—		—		4,159
Warrants issued to lenders	—		—		4,565
Operating activities including interest paid in cash	413		433		1,286

19.Financial instruments

Fair value

The fair value of the Company’s current financial assets and liabilities, excluding marketable securities, approximates their carrying values, due to their short-term maturities. Marketable securities are carried at the lower of cost and fair market value and were reduced to fair market value at December 31, 2005.

Foreign currency risk management

All revenues and substantially all of the Company’s expenses are incurred in U.S. dollars. The Company’s equity capital is raised in Canadian dollars. Potential currency fluctuations could affect the amount of U.S. dollars that can be purchased with Canadian dollars. The Company believes that the risk of material loss as a result of an adverse prolonged change in Canadian / U.S. dollar exchange rates is managed by its policy for the conversion of Canadian funds into U.S. funds as necessary with consultation from foreign currency exchange specialists, and currently does not use foreign currency exchange contracts to fix exchange rates.

Commodity risk management

The profitability of the Company is directly related to the market price of gold. Accordingly, the Company may purchase non-hedge derivative financial instruments, such as gold put option contracts, to protect against the risk of falling gold prices. The Company pays a premium to acquire the contracts which is settled in the period the option is exercised or allowed to expire. If the gold price is lower than the strike price of the respective purchased put option on the expiry date, gold is sold at the strike price of the put option. If the market gold price is higher that the strike price of the put option, the option expires without exercise.

The Company does not use gold forward sales contracts to fix future gold prices realized.

The Company has purchased gold put option contracts starting in late 2004 and 2005 with expiry dates extending into 2007. These put option contracts are considered non-hedge derivative financial instruments and thus, are marked to fair market value each reporting period and changes in the fair market value are recorded in current earnings or losses.

In 2005, the Company purchased 147,000 gold put options as non-hedge derivatives with a series of monthly expiries from January 2006 through March 2007, inclusive. The put options each have a strike price ranging from $400 to $425 per ounce.

Put options remaining for 2006 and 2007 are as follows:

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	2006								2007
	Q1		Q2		Q3		Q4		Q1
Ounces	15,000		—		37,500		30,000		—
Strike price/ounce	$	400	$	—	$	400	$	400	$	—
Ounces	15,000		37,500		—		—		12,000
Strike price/ounce	$	425	$	425	$	—	$	—	$	425

20.Commitments and contingencies

(a)Commitments

The Company has certain contracted commitments and obligations under capital leases, operating leases and non-hedge derivative financial instrument contracts. Future payments for these contracted commitments and obligations with initial or remaining terms in excess of one year at December 31, 2005 are as follows:

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

The Company has certain operating leases for corporate office space and equipment with payments of $0.6 million due over the next three years. These leases range from 1 to 3 years with payment obligations of $0.2 million in 2006, $0.2 million in 2007 and $0.2 million in 2008.

(b)Legal

The Company may be involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Company does not believe that adverse decisions in any pending or threatened proceedings related to any matter, or any amount which the Company may be required to pay by reason thereof, will have a material effect on the future conditions or future results of operations for the Company.

(c)Environmental

The Company engages in mining, development and exploration activities, which are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and may become more restrictive. The Company conducts its operations in a manner to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations.

21.Retirement plans

Upon completion of the Jerritt Canyon acquisition, the Company assumed sponsorship, from the prior owners of the Jerritt Canyon mine, of a qualified tax-deferred savings plan in accordance with the provisions of Section 401(k) of the U.S. Internal Revenue Code, which is available to permanent U.S. employees. The Company makes defined contributions of up to 7.5% of eligible employees’ salaries and is not responsible for the performance of investment vehicles selected by employees. The Company

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contributed $1,347,879 for the twelve-month period ended December 31, 2005 and contributed $1,372,206 during the twelve-month period ended December 31, 2004.

22.Segment information

The Company operates only in the gold sector within the United States. Currently, revenues are earned exclusively at the Company’s Jerritt Canyon mine in Nevada.

23.Differences between Canadian and United States generally accepted accounting principles

These consolidated financial statements have been prepared in accordance with Canadian GAAP. For the purposes of these financial statements these principles differ in certain material respects from generally accepted accounting principles in the United States (“U.S. GAAP”).

The adjustments to comply with U.S. GAAP, with respect to the consolidated balance sheets for the years ended December 31, 2005 and 2004 would be as follows:

	December 31, 2005								December 31, 2004
	Canadian								Canadian
(In Thousands of Dollars)	GAAP			Differences		U.S. GAAP			GAAP			Differences			U.S. GAAP
ASSETS
Total current assets	$	18,719		$	—	$	18,719		$	13,283		$	—		$	13,283
Other assets (b)	74,620			—		74,620			74,648			(878		)	73,770
Total assets	$	93,339		$	—	$	93,339		$	87,931		$	(878	)	$	87,053
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Total current liabilities	$	13,909		$	—	$	13,909		$	22,706		$	—		$	22,706
Other long-term liabilities	28,499			—		28,499			26,859			—			26,859
Total liabilities	42,408			—		42,408			49,565			—			49,565
Shareholders’ equity
Common shares, contributed surplus, and convertible securities	133,791			—		133,791			101,555			—			101,555
Deficit (b)	(82,860		)	—		(82,860		)	(63,189		)	(878		)	(64,067		)
Total shareholders’ equity	50,931			—		50,931			38,366			(878		)	37,488
Total liabilities and shareholders’ equity	$	93,339		$	—	$	93,339		$	87,931		$	(878	)	$	87,053

The adjustments to comply with U.S. GAAP, with respect to the consolidated statements of loss for the years ended December 31, 2005, 2004 and 2003 would be as follows:

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	For the Years Ended December 31
(In Thousands of Dollars, except per share amounts)	2005			2004			2003
Income (Loss) from operations Canadian GAAP	$	(20,483	)	$	(18,018	)	$	2,588
Interest expense (a)	(413		)	(4,917		)	(4,936		)
Other income, net (a)	1,012			892			282
Foreign exchange gain (loss) (a)	213			(83		)	172
Provision for impairment of Magistral Joint Venture (a)	—			—			(6,248		)
Realized non-hedge derivative loss (b)	878			2,994			—
Unrealized non-hedge derivative loss (b)	—			(878		)	(2,994		)
Loss from operations and Net loss under U.S. GAAP	(18,793		)	(20,010		)	(11,136		)
Other comprehensive income - unrealized gain on marketable securities in 2002; realized in 2003 (c)	—			—			(198		)
Comprehensive loss under U.S. GAAP	$	(18,793	)	$	(20,010	)	$	(11,334	)
Net loss per share - basic and diluted	$	(0.04	)	$	(0.05	)	$	(0.06	)
Weighted average number of shares outstanding (000’s) - basic	509,274			377,609			185,866

The adjustments to comply with U.S. GAAP, with respect to the consolidated statements of cash flows for the years ended December 31, 2005, 2004 and 2003 would have no material effect on net cash provided by / (used in) operations, cash used in investing activities and cash provided by / (used in) financing activities.

The significant differences between generally accepted accounting principles (“GAAP”) in Canada and in the United States, as they relate to these financial statements are as follows:

(a)Certain income and expense items may be disclosed after income (loss) from operations for Canadian GAAP. These items are included in income (loss) from operations for U.S. GAAP.

(b)The Company purchased gold put options as required by the Jerritt Canyon term loan to establish a minimum price, which the Company would receive for a significant portion of its gold production during the amortization period of the term loan. These gold put options expired in June 2005. These contracts do not qualify as designated hedges under FAS 133 and FAS 137 and accordingly for U.S. GAAP, changes in the fair value of the outstanding puts are recognized as a component of net loss. Canadian GAAP would not have required a measurement of fair value as these contracts were purchased pursuant to a borrowing arrangement.

(c)Under U.S. GAAP, unrealized gains and losses on investments held for re-sale are shown separately in the derivation of comprehensive income. After the investment is sold, the related gain and loss amounts in comprehensive income are reclassified to the statement of loss.

(d)Recent U.S. GAAP  accounting pronouncements

Stock Based Compensation

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment,” which revised SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123R will supersede APB Opinion 25, “Accounting for Stock Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows.”  The significant differences in accounting from Canadian GAAP under SFAS No. 123R include the requirement to measure and record to the financial statements the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award. SFAS 123R also requires forfeitures of unvested instruments such as stock options be estimated at the grant date to determine the total compensation to be recognized. Under Canadian GAAP, the Company recognizes the fair value of an employee’s services award over the vesting period and accounts for forfeitures only as they occur. SFAS No. 123R is effective January 1, 2006. The Company is currently assessing the impact of these and other differences arising from the application of SFAS 123R.

In March 2005, the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 107, “Share-Based Payment,” which provides guidance on the interaction between SFAS No. 123R and certain SEC rules and regulations, as well as on

22

the valuation of share-based payments. SAB No. 107 provides interpretive guidance related to valuation methods (including assumptions such as expected volatility and expected term), first time adoption of SFAS No. 123R in an interim period, the classification of compensation expense and disclosures subsequent to adoption of SFAS No. 123R. The Company is currently evaluating the impact of SAB No. 107 on our consolidated financial statements.

Asset Retirement Obligations

In March 2005, the FASB issued Interpretation 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations”—an interpretation of FASB No. 143. FIN 47 clarifies that the term “conditional asset retirement obligation” as used in SFAS No. 143 refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. FIN 47 requires a liability to be recognized for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 was effective for fiscal years ending after December 15, 2005. The adoption of FIN 47 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Accounting Changes and Error Corrections

In May 2005 the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.”  SFAS No. 154 established new standards on accounting for changes in accounting principles. SFAS No. 154 requires all such changes to be accounted for by retrospective application to the financial statements of prior periods unless it is impracticable to do so. SFAS No. 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. Adoption of SFAS No. 154 is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

Other-Than-Temporary Impairment

In June 2005, the FASB issued FASB Staff Position Paper (“FSP”) 115-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments,” superseding EITF 03-1. FSP 115-1 will replace the accounting guidance on the determination of whether an investment is other-than-temporarily impaired as set forth in EITF 03-1 with references to existing other-than-temporary impairment guidance. FSP 115-1 is effective for reporting periods beginning after December 15, 2005. Adoption of FSP 115-1 is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

24.Subsequent Events

On March 29, 2006, the Company entered into an agreement with Newmont Canada Limited (“Newmont”) whereby Newmont will purchase 28.51 million Queenstake common shares at Cdn $0.41 per share for gross proceeds of US $10.0 million through an equity private placement. As part of the private placement, Newmont will receive warrants that can be exercised to acquire up to 28.51 million common shares of Queenstake at a price of Cdn$0.55 for a four-year period, which would generate Cdn $15.7 million in cash if exercised. After closing, Newmont will own approximately 4.9% of Queenstake’s outstanding common shares. If Newmont were to exercise all of its warrants and maintain its holdings of Queenstake’s common shares, Newmont would hold approximately 8.5% of Queenstake’s fully diluted outstanding common shares. For a period of two years from closing, Newmont will have the right to participate in future equity offerings by Queenstake to preserve its fully diluted shareholding percentage and will have certain additional rights to participate in debt financings. The private placement, which remains subject to certain closing conditions, including regulatory approvals, is expected to close in the second quarter of 2006. Proceeds will be used to fund exploration and for other corporate uses.

An affiliate of Newmont has also agreed to convey three of its Nevada exploration properties to Queenstake on a lease-option basis. The properties are subject to a sliding scale net smelter royalty, dependent on the gold price, of 3% to a maximum of 5% if gold is at or above $500 per ounce, and Newmont retains the right to back into a 51% joint venture interest in each of the properties.

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In addition, another affiliate of Newmont has agreed to sell concentrates and ore from its Nevada operations to Queenstake for processing at its Jerritt Canyon roasting and milling facility. The contract calls for Queenstake to purchase at least 500,000 tons per year over two years. Queenstake will pay Newmont for the recoverable ounces in the purchased concentrates and ore, and Queenstake will charge Newmont commercial terms for processing and refining. Ore purchases with Newmont may continue for up to three additional years if Queenstake has the spare processing capacity. The purchase of Newmont’s concentrates and ore for processing of at least 500,000 tons per year over two years will increase the Jerritt Canyon mill throughput to approximately 95% of its past demonstrated capacity of approximately 1.5 million tons per year, which is expected to reduce the Company’s unit operating costs.

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Form 52-109F1 - - Certification of Annual Filings

I, Dorian Nicol, Queenstake Resources Ltd., Chief Executive Officer, certify that:

1.I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of Queenstake Resources Ltd. (the issuer) for the period ending December 31, 2005;

2.Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;

3.Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings;

4.The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the issuer, and we have:

a.designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared;

b.evaluated the effectiveness of the issuer’s disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the issuer to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.

Date:  March 23, 2006

/s/ Dorian Nicol

Chief Executive Officer

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Form 52-109F1 - - Certification of Annual Filings

I, Eric Edwards, Queenstake Resources Ltd., Chief Financial Officer, certify that:

1.I have reviewed the annual filings (as this term is defined in Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) of Queenstake Resources Ltd. (the issuer) for the period ending December 31, 2005;

2.Based on my knowledge, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the annual filings;

3.Based on my knowledge, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date and for the periods presented in the annual filings;

4.The issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures for the issuer, and we have:

c.designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the annual filings are being prepared;

d.evaluated the effectiveness of the issuer’s disclosure controls and procedures as of the end of the period covered by the annual filings and have caused the issuer to disclose in the annual MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the annual filings based on such evaluation.

Date:  March 23, 2006

/s/ Eric Edwards

Chief Financial Officer

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EX-3

Exhibit 3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

INTRODUCTION

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

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

OVERVIEW

Redevelopment Plan

During the third quarter 2005, the Company announced a redevelopment plan designed to optimize operations and reduce operating costs in response to development and production shortfalls at Jerritt Canyon and rising commodity costs. The redevelopment plan represented a re-engineering to optimize value and cash flow from the Jerritt Canyon mine assets given constraints with manpower, mining equipment, and increasing commodity costs. The plan was a substantial change in mine and processing practices at Jerritt Canyon to focus on accelerated underground development, higher grade production and reduced mill processing rate to align mill throughput with an optimal mining rate. The average grade of ore being processed was increased to approximately 0.25 ounce of gold per ton (opt), representing an approximate 20% increase from the first half of 2005. The mill processing rate was scaled back from operating two roasters together to one roaster at a time for an average between 2,500 and 2,700 tons per day, approximately 25% lower than the processing rate in the first half of 2005. In addition, daily batch crushing and grinding of mill feed was scheduled during off-peak hours for lower energy rates. The processing rate can be increased in the future should Jerritt Canyon’s capacity to produce higher grade ore from underground mining improve or to accommodate additional mill feed from third-party sources.

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

The redevelopment plan was a substantial change from historical mining and processing practices. Comparison to operating results from previous years should be viewed in that context.

1

Fourth quarter operating results were essentially on track with the redevelopment plan. Ore tons mined were 223,060, exceeding the redevelopment plan by 8% while tons milled were 211,587, slightly exceeding the redevelopment plan. Ore grade processed was 0.25 opt while ounces of gold produced were 45,555 for the quarter, both essentially in line with the redevelopment plan. Moisture in the ore from wet winter weather resulted in the settling of high-grade ore fines into the ore pad, which is expected to be recovered in the spring and summer of 2006 when the ore pads can be scraped and the ore processed. As a result of such seasonal factors, Jerritt Canyon had accumulated over 8,000 ounces of contained gold in ore stockpile at the end of 2005. The ore stockpile at year-end is expected to be processed in the second and third quarters of 2006. At the end of the third quarter 2005, there was no ore stockpile.

Capitalized mine development of 2,412 feet was slightly ahead of the redevelopment plan during the fourth quarter. For the full year, capitalized mine development totaled 9,412 feet, slightly exceeding the redevelopment plan. A mining contractor remains at Jerritt Canyon, dedicated to underground development.

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

Gold Prices

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

2006 Private Placement, Ore Processing and Property Lease Agreements

On March 29, 2006, the Company entered into an agreement with Newmont Canada Limited (“Newmont”) whereby Newmont will purchase 28.51 million Queenstake common shares at Cdn $0.41 per share for gross proceeds of $10.0 million through an equity private placement. As part of the private placement, Newmont will receive warrants that can be exercised to acquire up to 28.51 million common shares of Queenstake at a price of Cdn $0.55 for a four-year period, which would generate Cdn $15.7 million in cash if exercised. After closing, Newmont will own approximately 4.9% of Queenstake’s outstanding common shares. If Newmont were to exercise all of its warrants and maintain its holdings of Queenstake’s common shares, Newmont would hold approximately 8.5% of Queenstake’s fully diluted outstanding common shares. For a period of two years from closing, Newmont will have the right to participate in future equity offerings by Queenstake to preserve its fully diluted shareholding percentage and will have certain additional rights to participate in debt financings. The private placement, which remains subject to certain closing conditions, including regulatory approvals, is expected to close in the second quarter of 2006. Proceeds will be used to fund exploration and for other corporate uses.

An affiliate of Newmont has also agreed to convey three of its Nevada exploration properties to Queenstake on a lease-option basis. The properties are subject to a sliding scale net smelter royalty, dependent on the gold price, of 3% to a maximum of 5% if gold is at or above $500 per ounce, and Newmont retains the right to back into a 51% joint venture interest in each of the properties.

In addition, another affiliate of Newmont has agreed to sell concentrates and ore from its Nevada operations to Queenstake for processing at its Jerritt Canyon roasting and milling facility. The contract calls for Queenstake to purchase at least 500,000 tons per year over two years. Queenstake will pay Newmont for the recoverable ounces in the purchased concentrates and ore, and Queenstake will charge Newmont commercial terms for processing and refining. Ore purchases with Newmont may continue for up to three additional years if Queenstake has the spare processing capacity. The purchase of Newmont’s concentrates and ore for processing of at least 500,000 tons per

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year over two years will increase the Jerritt Canyon mill throughput to approximately 95% of its past demonstrated capacity of approximately 1.5 million tons per year, which is expected to reduce the Company’s unit operating costs.

SELECTED ANNUAL INFORMATION

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

Table 1 – Selected Annual Financial Data

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

During the reporting periods, the Company reported no discontinued operations or extraordinary items.

RESULTS OF OPERATIONS

Gold Production

Gold production for the year ended December 31, 2005 was 204,091 ounces, compared with 243,333 ounces in 2004. Gold production for 2005 decreased 16% compared to 2004, but was within guidance under the redevelopment plan. Fourth quarter 2005 production was lower than the same period of 2004 as anticipated under the redevelopment plan, principally due to a decrease in ore tons mined and processed compared to the fourth quarter 2004. The redevelopment plan was a substantial change from historical mining and processing practices.

Quarterly production and financial information provided as at December 31, 2005 is not indicative of future annual production or financial results. Key quarterly production statistics are illustrated in Table 2.

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Table 2 – Jerritt Canyon Quarterly Production Statistics

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

(1)The Company has adopted the Gold Institute Production Cost Standard (the “Standard”) to calculate and report cash operating costs per ounce of gold produced. This is a non-GAAP measure, intended to complement conventional GAAP reporting; accordingly these data should not be considered a substitute for GAAP measures. Management believes that cash operating costs per ounce is a useful indicator of a mine’s performance. Where GAAP operating costs are adjusted to calculate per ounce data consistent with the Standard, reconciliations to GAAP measures are provided, see Table 7.

Gold production during the three-month period ended March 31, 2005 was 54,767 ounces or a 13% increase over the same period in 2004.  Production was negatively affected by unusually wet and heavy snowfall throughout the region, which interrupted delivery of ore from the mines to the mill and adversely affected mill throughput.

Gold production during the three-month period ended June 30, 2005 was 54,156 ounces, 12% less than the same period in the previous year and, approximately 10% below expectations.  Mine development shortfalls through the end of the second quarter were the result of deferring development to conserve cash in the early part of 2005 and the subsequent difficulty in accelerating development work due to labor shortages.  Mined tonnage was further impacted by ground instability in one small stope at SSX and water problems at Smith during the second quarter.

Gold production for the three-month period ended September 30, 2005 was 49,613 ounces, 32% less than the same period in the previous year.  Gold production for the quarter was 4% greater than redevelopment plan targets principally due to higher grade ores from Mahala and the SSX-Steer Mine Complex.  Jerritt Canyon allocated more internal resources to mine development and engaged a mining contractor in mid-August 2005 to accelerate mine development in order to maintain production capacity.  The addition of two new underground haul trucks and a rock bolting machine augmented mine development.

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

Key production statistics for the full-years 2005 and 2004 are illustrated in Table 3.

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Table 3 – Jerritt Canyon Annual Production Statistics

For the years ended December 31

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

(1)The Company has adopted the Gold Institute Production Cost Standard (the “Standard”) to calculate and report cash operating costs per ounce of gold produced. This is a non-GAAP measure, intended to complement conventional GAAP reporting; accordingly these data should not be considered a substitute for GAAP measures. Management believes that cash operating costs per ounce is a useful indicator of a mine’s performance. Where GAAP operating costs are adjusted to calculate per ounce data consistent with the Standard, reconciliations to GAAP measures are provided, see Table 7.

Mining during 2005 was derived primarily from the Murray, Smith, and SSX underground mines. Commercial production from the Mahala deposit accessed and mined through the Smith Mine began in August 2005, following commissioning of the ventilation and escape-way raise. Ore tons mined for Jerritt Canyon during 2005 were 16% lower than in 2004. Underground mining was affected by a shortage of experienced miners and mechanics, continued dewatering activities at the Smith Mine, necessitated by heavy spring runoff and rainfall in June 2005, and planned lower ore tonnage under the redevelopment plan. Ore tons mined during the fourth quarter of 2005 were 30% lower than 2004 and 8% higher under the redevelopment plan.

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

As a result of higher operating costs from commodity price increases and a production shortfall in the first half of 2005, cash operating costs per ounce for the year ended December 31, 2005 were 15% higher than the prior year. Cash operating costs per ounce for the fourth quarter 2005 were approximately 23% higher than the year ago quarter and approximately 9% higher than guidance under the redevelopment plan. Higher than expected energy and commodity price increases largely offset the expected cost reductions and savings anticipated from the redevelopment plan. A reconciliation of operating costs to cash operating costs per ounce is provided in Table 7.

Statements of Loss

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

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

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Table 4 – Income (Loss) from operations

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

During the year ended December 31, 2005, revenues of $90.2 million were generated from the sale of 202,684 ounces of gold at an average realized gold price of $445 per ounce. Revenues for the same period in 2004 were $100.4 million generated from the sale of 245,651 ounces at an average realized gold price of $398 per ounce.

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

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

DD&A was $17.2 million for the year ended December 31, 2005 compared with $19.6 million for 2004 as a result of lower production partially offset by the higher unit-of-production depletion rate in 2005 reflecting additions to capital development.

Non-hedge derivative financial instruments, or gold put option contracts, are purchased to protect against the risk of falling gold prices. The Company does not use gold forward sales contracts to fix future gold prices realized. During the year ended December 31, 2005, costs associated with the purchased gold put option contracts were $2.6 million, which included $0.9 million in a write-down of non-hedge derivatives to fair market value. In comparison the costs associated with the purchased gold put option contracts were $2.5 million during the same period ending in 2004.

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

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

General and administrative costs are associated with the Company’s corporate offices. During the year ending December 31, 2005, general and administrative costs were approximately $1.5 million higher than the same period in the prior year. The significant increase from the prior year is primarily due to a one-time corporate restructuring cost of $1.0 million paid during the first quarter of 2005 and, $0.5 million in increased use of consultants in specialized operations and corporate advisory engagements related to implementation of the redevelopment plan. The ongoing general and administrative costs are essentially unchanged from the previous years’ levels.

The principal remaining components of the Company’s net loss are illustrated in Table 5.

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Table 5 – Other Net Loss Components

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

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

Interest expense reflects capital lease financing costs during the year ended December 31, 2005. Interest costs of $4.9 million for 2004 resulted principally from a non-cash component of $4.4 million from the amortization of costs incurred in arranging the term loan used to complete the acquisition of the Jerritt Canyon mine, as well as interest on other notes and capital leases.

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

The trend in quarterly revenues and net loss is illustrated in Table 6.

Table 6 - Summary of Quarterly Results

Three months ended (Unaudited)

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

During the reporting periods, the Company reported no discontinued operations or extraordinary items.

The trend in total quarterly revenues illustrated above correlates with gold ounces sold and average sales price per ounce sold illustrated in Table 2.

Gold prices have trended upward during the past five years, achieving a high for the year of $537 per ounce in December 2005. The increase from the former high of $455 per ounce in December of 2004 can be attributed to a decrease in the value of the US dollar during 2005 in comparison to other major foreign currencies, a continued increase in global demand for commodities, including gold, and a bullish sentiment in the precious metals market. The Company realized an average sales price in 2005 of $445 per ounce consistent with the average spot price for 2005, and an average realized gold price during 2004 of $398. The Company sells its gold production at the spot price and has no forward sales commitments.

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

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million in increased consulting and advisory services related to the redevelopment plan, a $0.9 million non-cash write down in the value of outstanding gold puts, which were classified as non-derivative financial instruments, and other non-operating expense items.

The non-hedge derivative financial instruments, or gold put options, with a strike price of $330, which were purchased in 2003 as a condition of the term loan related to the Jerritt Canyon acquisition, expired at June 30, 2005. In 2005, the Company purchased 147,000 gold put options with strike prices ranging from $400 to $425 that expire monthly through the first quarter of 2007. Put options expire and related premiums are paid in accordance with the number of put options purchased and the assigned strike price for each respective month. During the fourth quarter of 2005, the Company wrote down $0.9 million in value of outstanding gold put options marked to the market price. The cost of gold put options totaled $2.6 million and $2.5 million during the years ended December 31, 2005 and December 31, 2004, respectively. The purchase of gold put options provides the Company with downside price protection for future gold sales and provides some assurance of future revenue cash flows for future production and planning.

Development and Exploration

Mine development shortfalls in most of 2005 were the result of deferring development in the first quarter to conserve cash and the difficulty in accelerating development due to labor shortages, ground instability at the SSX mine and water problems at Smith mine during the second quarter. Jerritt Canyon has allocated more internal resources to mine development and engaged a mining contractor since mid-August 2005 to accelerate mine development in order to maintain production capacity in 2006. The addition of two new underground haul trucks and a rock bolting machine augmented mine development and has facilitated mine development. Capitalized mine development improved in the second half of 2005 and totaled 9,412 feet for the year, slightly exceeding the redevelopment plan target and compares with 14,302 feet completed in 2004. The Mahala deposit began commercial production as an extension of the Smith Mine in August 2005 and the connection of the Steer and SSX mines was completed in October 2005.

In 2005, exploration continued on near-mine and surface targets, with the objective of replacing and targeting near-term mineable reserves and advancing the Starvation Canyon project. Surface drilling programs completed 130 holes totaling 102,816 feet in 2005. Underground drilling was completed during 2005 at the SSX-Steer Mine Complex, the Mahala, West Dash, West Coulee and B-Pit deposits at the Smith Mine and at Murray Mine and comprised 2,797 holes totaling 348,148 feet of underground drilling. Positive exploration results defined the first gold reserves at Starvation Canyon and successfully replaced proven and probable reserves, net of depletion from production, at year-end 2005.

Reserves and Resources

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

At the Starvation Canyon project, the Company, defined 121,100 ounces contained in 400,500 tons at an average grade of 0.30 opt into probable reserves. In addition, measured and indicated resources at Starvation Canyon increased 22% from year-end 2004 to 190,700 ounces (contained in 676,400 tons), while the grade improved 4% to 0.28 opt. The improvement of continuity, grade and size of the resource in 2005 enhances the overall confidence in resources and mineralization is open in several directions.

The new reserves at Starvation Canyon and reserve additions at the Murray and Smith mines offset reserve depletion from production. Mineralization remains open at SSX and Steer mines with new targets in the greater SSX area to be drilled in 2006. The improvement in the Smith Mine reserves was attributable to the expansion of the high-grade Mahala and West Dash deposits. Mahala, which began commercial production in August 2005, had 223,600 tons at 0.33 opt for approximately 73,300 contained ounces in reserves. West Dash added 37,800 contained ounces to

8

reserves and increased its measured and indicated resources, including reserves, to 70,300 ounces in 2005. A drift being developed from the main decline for the Smith Mine is anticipated to reach West Dash for initial production by mid 2006.

Measured and indicated resources at December 31, 2005 were lower than in 2004 largely due to a tightening of the geologic models used in the redevelopment initiative. The application of smaller, narrower blocks in mine planning enhanced the overall quality of the resources and reserves. In fact, the proven reserve component of total proven and probable reserves improved from 24% to 36% in 2005. Expenditures for district exploration and surface drilling were $3.9 million in 2005, compared to $6.6 million in 2004. There was also $2.6 million of capitalized resource conversion drilling for near-mine exploration in 2005, which is reflected in the $13.5 million deferred development expenditures for the Company.

Risks and Uncertainties

The Company is subject to various financial and operational risks due to various factors outside of the control of the Company. Gold prices are affected by factors such as global supply and demand, expectations of the future rate of inflation, the strength of, and confidence in, the US dollar relative to other currencies, interest rates, and geopolitical events. Should the price of gold drop and the prices realized by the Company on gold sales were to decrease significantly and remain at such a level for any substantial period, the Company’s profitability and cash flow would be negatively affected.

Although the Company has carefully prepared its gold reserve and resource estimates, no assurance can be given that the indicated mining and processing recoveries of gold from the estimated reserves will be realized over the life of the mine.

The business of mining is generally subject to a number of risks including equipment failure, operational accidents, unstable ground conditions and severe weather.

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

The Company’s exploration work involves many risks and may be unsuccessful. Substantial expenditures are required to establish proven and probable reserves and to complete the related mine development. It may take several years from the initial phases of drilling until production is possible. As a result of these uncertainties, there is no assurance that current or future exploration programs will be successful and result in the expansion or replacement of current production with new reserves.

The validity of mining claims, which constitute most of the Company’s property holdings, can be uncertain and may be contested. Although the Company has attempted to acquire satisfactory title to its properties, some risk exists that some titles may be defective.

The Company seeks to minimize risks through the use of non-hedge derivative financial instruments, or gold put options, to provide a minimum price realizable for a substantial portion of its near-term gold production, through independent reviews of its gold reserve and resource estimates, careful operational planning, and transferring some of the risk through the purchase of insurance.

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

Reconciliation of Non-GAAP Measures

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

9

Table 7 – Cash Operating Costs per Ounce

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

The Company invested $19.7 million in the Jerritt Canyon Mine during 2005, principally in underground mine development and in purchasing and refurbishing plant and equipment. The Company anticipates investing additional capital in mine development, new mining equipment and reserve expansion programs referred to under Development and exploration above. The Company anticipates funding these programs from cash generated from operating activities and cash balances on hand.

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

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

10

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

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

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

Table 8 – Material Contractual Obligations

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

2005 FOURTH QUARTER OVERVIEW

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

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

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

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

OUTLOOK

First Quarter of 2006

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

11

wear on a new pinion gear against the older worn bull gear. After evaluation by mill gear experts, a spare pinion was installed and the mill has resumed operations with close monitoring to avoid further issues. During the planned eight- to 10-day annual mill maintenance shutdown scheduled for April, the bull gear will be turned over to more closely match the new pinion gear to ensure continuous operation.

During the 2006 first quarter, the mines continued to produce ore in line with the redevelopment plan, with mined ore being accumulated in an ore stockpile adjacent to the mill. The overall impact of the temporary mill interruptions will be in rescheduling processing of stockpiled ore to later periods of the year. Jerritt Canyon estimates it will accumulate at least 16,000 ounces contained in the ore stockpile at the mill at the end of the 2006 first quarter. The second and third quarters of 2006 are expected to have progressively and significantly higher production than the first quarter as the mill processes through the ore stockpile.

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

Full Year 2006

For 2006, the Company expects to produce between 200,000 and 220,000 ounces of gold, unchanged from prior guidance. Cash operating costs per ounce for 2006 are estimated to be within five percent, above or below the 2005 fourth quarter cash operating costs of $413 per ounce. The operating cost per ounce estimate excludes the benefit estimated at an approximately $15-$20 reduction in cash operating costs per ounce by reducing fixed costs per ounce as a result of the contract to purchase ore and concentrates from Newmont’s Nevada operations. This is expected to begin in the second quarter of 2006, subject to certain closing conditions. (See separate news release of March 30, 2006.)

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

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

CRITICAL ACCOUNTING ESTIMATES

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

The Company capitalized the Jerritt Canyon acquisition costs, valuing the related non-cash consideration at fair value. The Company’s policy is to capitalize long-term mine development and reserve expansion program costs incurred within, or contiguous to, known gold ore reserves. These costs constitute a significant portion of the Jerritt Canyon property, plant and equipment and are amortized on a units-of-production basis over estimated gold reserves. Under this method, depletion cost, and therefore net book values of mining property and capitalized development is directly affected by the Company’s estimate of proven and probable gold reserves at Jerritt Canyon. In addition, the useful lives of plant and equipment may be limited by the expected mine life which is dependent on mineral reserves. The Company engaged SRK Consulting (U.S.), Inc., an independent consulting firm, to review the Company’s reserve and resource estimates, and to prepare a technical report in conformance with Canadian National Instrument 43-101, which will be filed shortly on SEDAR. If this estimate proves inaccurate, or if the Company revises its mine

12

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

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

The Company has an obligation to reclaim the Jerritt Canyon property after the minerals have been fully depleted, and has estimated the present value of the costs to comply with existing reclamation standards. As at December 31, 2005, management has adjusted the estimated reclamation and mine closure liability to an estimated present fair value of $26.4 million, net of ongoing reclamation activities during the year of $0.6 million. It is possible that the Company’s estimate of its ultimate reclamation liabilities could change as a result of changes in regulations; the extent of environmental remediation required or completed, the means of reclamation or changes in cost estimates. Reclamation and closure obligations are currently funded by the Company by means of the restricted cash account established with AIG.

The current asset retirement obligation estimate has been and will continue to be funded by the Company by means of the restricted cash account established with AIG. The cash plus interest earned in this Commutation Account will be used to fund Jerritt Canyon’s reclamation and mine closure obligations.

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

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

The profitability of the Company is directly related to the market price of gold. The Company purchases non-hedge derivative financial instruments, or gold put option contracts, to protect against the risk of falling gold prices. The put option premiums related to the put option contracts are recognized as a deferred charge and liability on acquisition and expensed to operations and paid, respectively, in the period in which the contracts expire. If the gold price is lower than the strike price of the respective purchased put option on the expiry date, gold is sold at the strike price of the put option. If the market gold price is higher that the strike price of the put option, the option expires without exercise. These derivate financial instruments are fair valued at each reporting date and changes in fair value are recorded in operating expenses. The Company does not use gold forward sales contracts to fix future gold prices realized.

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

OUTSTANDING SHARE DATA

The Company is authorized to issue an unlimited number of common shares without par value. Outstanding share data are illustrated in Table 9.

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Table 9 – Outstanding Share Data

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

DISCLOSURE CONTROLS AND PROCEDURES

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

ADDITIONAL INFORMATION

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

Cautionary Statement Regarding Forward-Looking Statements

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

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EX-4

Exhibit 4

CONSENT OF INDEPENDENT AUDITORS

We consent to the use of our report dated March 30, 2006, with respect to the consolidated financial statements of Queenstake Resources Ltd. included in this Annual Report on Form 40-F for the year ended December 31, 2005, filed with the U.S. Securities and Exchange Commission.

/s/ Staley, Okada & Partners

Staley, Okada & Partners

Chartered Accountants

Vancouver, British Columbia, Canada

March 30, 2006

EX-5.1

Exhibit 5.1

Consent of SRK Consulting (U.S.), Inc.

Reference is made to the Annual Report on Form 40-F for the year ended December 31, 2005 (the “Annual Report”) of Queenstake Resources Ltd. (the “Company”), filed with the U.S. Securities and Exchange Commission.

We hereby consent to the references to our name under the heading “Narrative Description of the Business — Principal Operating Property — Jerritt Canyon Mine — Mineral Reserve and Resource Estimates” in the Company’s Annual Information Form and to all other references to our name included or incorporated by reference in the Annual Report and in the Company’s Registration Statement on Form S-8 (No. 333-119779) (the “Registration Statement”) and we further consent to the disclosure in the Annual Report with respect to our technical report titled “Jerritt Canyon Mine, Elko County, Nevada — Technical Report” which is currently being prepared in accordance to National Instrument 43-101 of the Canada Securities Administrators, which the Company used, or directly quoted from, in preparing summaries concerning the Jerritt Canyon Mine, which appear in such Annual Report and are accordingly incorporated by reference in the Registration Statement.

SRK Consulting (U.S.), Inc.

By:	/s/ Landy Stinnet
		Name:	Landy Stinnet
		Title:	Associate Mining Engineer
March 30, 2006

EX-5.2

Exhibit 5.2

Consent of Landy Stinnet

Reference is made to the Annual Report on Form 40-F for the year ended December 31, 2005 (the “Annual Report”) of Queenstake Resources Ltd. (the “Company”), filed with the U.S. Securities and Exchange Commission.

I hereby consent to the references to my name under the heading “Narrative Description of the Business — Principal Operating Property — Jerritt Canyon Mine — Mineral Reserve and Resource Estimates” in the Company’s Annual Information Form and to all other references to my name included or incorporated by reference in the Annual Report and in the Company’s Registration Statement on Form S-8 (No. 333-119779), which incorporates by reference the Annual Report.

Very truly yours

/s/ Landy Stinnet
Name:	Landy Stinnet
Title:	Associate Mining Engineer,
	SRK Consulting (U.S.), Inc.
March 30, 2006

EX-5.3

Exhibit 5.3

Consent of Dorian L. (Dusty) Nicol

Reference is made to the Annual Report on Form 40-F for the year ended December 31, 2005 (the “Annual Report”) of Queenstake Resources Ltd. (the “Company”), filed with the U.S. Securities and Exchange Commission.

I hereby consent to the references to my name under the heading “Narrative Description of the Business — Principal Operating Property — Jerritt Canyon Mine — Mineral Reserve and Resource Estimates” in the Company’s Annual Information Form and to all other references to my name included or incorporated by reference in the Annual Report and in the Company’s Registration Statement on Form S-8 (No. 333-119779), which incorporates by reference the Annual Report.

Very truly yours

/s/ Dorian L. Nicol
Name:	Dorian L. Nicol
Title:	President and Chief Executive Officer,
	Queenstake Resources Ltd.
March 30, 2006

EX-5.4

Exhibit 5.4

Consent of Robert Todd

Reference is made to the Annual Report on Form 40-F for the year ended December 31, 2005 (the “Annual Report”) of Queenstake Resources Ltd. (the “Company”), filed with the U.S. Securities and Exchange Commission.

I hereby consent to the references to my name under the heading “Narrative Description of the Business — Principal Operating Property — Jerritt Canyon Mine — Mineral Reserve and Resource Estimates” in the Company’s Annual Information Form and to all other references to my name included or incorporated by reference in the Annual Report and in the Company’s Registration Statement on Form S-8 (No. 333-119779), which incorporates by reference the Annual Report.

Very truly yours

/s/ Robert Todd
Name:	Robert Todd
Title:	Manager of Technical Services,
	Queenstake Resources Ltd.
March 30, 2006

EX-5.5

Exhibit 5.5

Consent of Donald G. Colli

Reference is made to the Annual Report on Form 40-F for the year ended December 31, 2005 (the “Annual Report”) of Queenstake Resources Ltd. (the “Company”), filed with the U.S. Securities and Exchange Commission.

I hereby consent to the references to my name under the heading “Narrative Description of the Business — Principal Operating Property — Jerritt Canyon Mine — Mineral Reserve and Resource Estimates” in the Company’s Annual Information Form and to all other references to my name included or incorporated by reference in the Annual Report and in the Company’s Registration Statement on Form S-8 (No. 333-119779), which incorporates by reference the Annual Report.

Very truly yours

/s/ Donald G. Colli
Name:	Donald G. Colli
Title:	Manager of Mineral Resources,
	Queenstake Resources Ltd.
March 30, 2006

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Dorian L. Nicol, certify that:

1. I have reviewed this annual report on Form 40-F of Queenstake Resources Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:  March  30, 2006

/s/ Dorian L. Nicol

Dorian L. Nicol, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Eric H. Edwards, certify that:

1. I have reviewed this annual report on Form 40-F of Queenstake Resources Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:  March 30, 2006

/s/ Eric H. Edwards

Eric H. Edwards, Vice President Finance and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 40-F of Queenstake Resources Ltd. for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof, I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The annual report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date:  March 30, 2006

/s/ Dorian L. Nicol

Dorian L. Nicol, President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report on Form 40-F of Queenstake Resources Ltd. for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof, I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The annual report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date:  March 30, 2006

/s/ Eric H. Edwards

Eric H. Edwards

Vice President Finance and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.