-->In reply to your recent email, I would like to explain Kingsgate's recent share price activity. It generally relates to two issues which were contained in our May 29th announcement;

1. On May 29th we announced the first"Prospect A" Reserves. We believe this was genuinely good news: a 67% increase in Reserves representing approximately an extra 3 years of mine life.

This good news may have been offset by the fact that some analysts' expectations were for a larger number and/or higher gold grades, but the grade is consistent with the preliminary estimate released in August 2002 and we explained in the release that further infill drilling is also planned.

2. In the same release we also announced our production and cost projections for next year at 125,000 oz of gold production at a cash cost of US$145/oz. While this is a low cost by industry standards, these estimates are more negative than both the current year and the general expectation for next year.

The company remains on track to achieve its forecast profit of US$25 million after tax for this financial year (to June 30, 2003), with production of 150,000 to 155,000 oz of gold and as also announced, we are intensifying our efforts in the exploration area to test what we believe to be a"highly prospective" area for gold occurrences.

Yours sincerely,

Steve Reid
Managing Director