profit announcement

SMC GOLD LIMITED                              2002-12-20  ASX-SIGNAL-G

HOMEX - Brisbane                                                      

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Welcome to the sixth AGM since SMC Gold became a public company.

2001/2002 was another very challenging year for your company. The 
bottom line result was a loss of $2.058 million. This included a 
write down in the carrying value of our Far Fanning mine so the cash 
deficit was $720,000 ($550,000 operating cash flow deficit). We also 
suffered a significant tragedy during the year when Shane Prowse, a 
young miner, was killed in an accident in the Hadleigh Castle mine. 
We continue to play enormous attention to safety and believe that 
over a period our safety record will be the equal of any mining 
company in the industry.

Since the year-end, our long awaited return to profitability has 
been achieved. You will have noticed in our recent quarterly report 
that we made a profit of $268,000 in the first quarter (and positive 
cash flow of 624,000) and we confidently expect to be profitable in 
the December quarter. In fact in October and November we have 
already reached our first quarter profit. The Far Fanning mine which 
will cease open cut operation in January and February has been 
contributing well and we continue to improve our performance at 
Hadleigh Castle. The ore body is improving in both size and grade as 
we go lower. The current level, which is 815, has more than 3 times 
the quantity of gold that contained on the 890 level 75 metres 
above. This is leading to a much more profitable operation in what 
has been a frustrating mine.

We plan to begin a small underground mine at Far Fanning when the 
open cut runs out. This should take 14 months to complete which will 
give us time to put other orebodies in place. We are hoping our open 
cut team can move on to the Christian Kruck mine, which has ore very 
close to the surface. Once again a very short-term mine, but should 
be very profitable.

We have also just completed a significant toll treatment job for the 
now closed Mt Leyshon gold mine. When we listed we expected to win 
quite a bit of this work but there has not been much because of the 
low activity in the area caused by a low gold price drying up most of 
the exploration activity.

Earlier this year we completed a ground mag survey of the prospective 
mine corridor area on our ground. This has thrown up some quite 
exciting data, which is starting to attract some attention. We do 
not have the free cash to undertake extensive exploration drilling so 
we hope to enter a joint venture with someone to allow them to spend 
money and earn a percentage of any ore body that is discovered. One 
major gold company and one smaller have approach us to look at the 
data and both are keen to strike a deal.

On a negative note, the placement, which was sanctioned by 
shareholders at an AGM in may, did not proceed. Despite numerous 
assurances from Equity 1, the money did not arrive. To this day we 
do not know why. Don't be too concerned by that because the money 
was to repay debt not to keep us afloat. We hope to do that more 
slowly by profitable operations, which will give us the platform to 
raise capital in the reasonably short term.

In summary, while conditions are still tough, we have considerable 
cause for optimism that our loss making years are behind us and we 
can grow the business profitably from this point forward, while 
tapping into some of the undoubtedly exciting exploration potential 
of out tenements.

This announcement has been made in the interest of keeping all 
parties informed as to the company's current operations.

RG Kidd 
MANAGING DIRECTOR