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Targets R100 Million South African Earnings Base

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    Targets R100 Million South African Earnings Base


    HOMEX - Perth

    Golden Valley Mines Limited ("Golden Valley") has today announced
    strategic plans to acquire a suite of South African resource based
    interests with total earnings in excess R100 million (A$18 million)
    with an initial target of delivering pre tax earnings of R20 million
    ($A3.6 million) for calendar 2003.

    Additional to Golden Valley's previously announced (15 August 2002)
    acquisition of 34.6% of South African Mineral Resources Corporation
    Ltd ("SAMROC"), Golden Valley has today announced its intention to
    acquire NiMag, a group of companies which have won a South African
    Presidential Award for Export Achievement.

    Golden Valley, SAMROC and NiMag have reached an agreement in
    principle, in terms of which, subject to certain conditions
    precedent, Golden Valley and SAMROC will jointly acquire 100% of
    the equity NiMag Limited ("NiMag") for a consideration of R60
    million (AU$10.9 million), to be settled in Golden Valley and SAMROC
    shares, cash and deferred payments.

    SAMROC, which will purchase 50% of the shares in NiMag, with Golden
    Valley purchasing the other 50%, is a Company registered in South
    Africa and listed on the Johannesburg Stock Exchange. Golden Valley
    owns 34.6% of SAMROC's issued shares.

    NiMag, which developed from a former subsidiary of Impala Platinum
    Limited, controls a major portion of the world's supply of nickel
    magnesium alloys with the bulk of its customers coming from the
    steel and foundry industry.

    NiMag is engaged principally in the manufacture and distribution of
    nickel and magnesium alloys and of metal fibres. Its last audited
    accounts for the year ended 30 April 2002 disclosed revenue of R103
    million (AU$18.7 million) and net profit before tax of R12.7 million
    (AU$2.3 million). The major part of its revenue is export based.

    The acquisition is subject to a number of conditions precedent, inter

    - The satisfactory completion by the purchasers of a due diligence
    investigation into NiMag;

    - The completion and signing of a formal written agreement of sale;

    - Regulatory approvals, including those of the Australian Stock
    Exchange ("ASX"), the JSE Securities Exchange South Africa ("JSE"),
    the Exchange Control Authorities of South Africa, the Competition
    Commission and the Securities Regulation Panel and
    - Board, and if required, shareholder approvals of the companies

    Golden Valley Executive Director, Mr Simon Farrell, said South
    African businesses provide secure earnings at far lower price
    multiples than those available in most other developed markets. He
    said the company was benefiting from the experience and advice being
    provided by Golden Valley Chairman, Mr Richard Linnell.

    Along with his Golden Valley duties, Mr Linnell is currently a
    non-executive director of the Business Map Foundation and BHP
    Billiton SA Ltd, a trustee of the New Africa Mining Fund and has
    recently completed a period as a member of the Electricity Council of
    South Africa (Eskom).

    "We have identified and targeted businesses which either mine or
    process minerals and have a significant part of their revenue based
    in US dollars, which protects capital values against a declining
    Rand," Mr Farrell said. The key managers have indicated a willingness
    to enter into three-year management contracts which will be
    structured to ensure sustained motivation.

    "Our initial SAMROC investment has provided us the platform to make
    further South African investments and secure a solid earnings base.
    There are significant management and production synergies between
    each of the acquisition targets which will further add to bolster
    efficiencies and profits."

    Mr Farrell said the principal criteria used in the evaluation process
    have been:

    1. The business currently generates positive cash flows
    2. The business is well established and uses conventional technology
    3. Revenues are predominantly US$ based
    4. Management is sound
    5. Ongoing capital commitments are low
    6. The business has significant share of a concentrated market
    7. The acquisition price represents modest earnings multiples

    Golden Valley has entered into preliminary discussions with the
    vendors of a similar, but larger, company to NiMag. It is hoped that
    these discussions will result in an outcome before the end of the
    first half of 2003.

    Mr Farrell said the South African focus presented sustainable and
    long term earnings growth for Golden Valley. In addition, Golden
    Valley's east Kimberley PGM targets continue to produce exciting
    exploration results which have attracted the attention of several
    major industry players.

    "Golden Valley is creating shareholder value by building a solid
    income stream from operating businesses whilst maintaining a
    substantial interest in the blue sky potential of the East



    SAMROC has the current capacity to produce 850 tons of manganese
    sulphate a month. This product is used in the production of
    fungicides for the agricultural and horticultural markets and its
    largest customer, Dow Chemical in South Africa, currently offtakes
    about 40% of the capacity.

    With the commissioning of a prilling plant it is intended to develop
    export markets for 40% of production. At current capacity this
    business will generate an EBITDA of approximately R8 million (A$1.4
    million) for year 2003.

    An opportunity exists to build a new plant to supply, on a global
    basis, a greater proportion of the worldwide manganese sulphate
    market. It is believed that this requirement could total
    approximately 30,000 tonnes per annum and would require construction
    of a greenfield facility, probably located at Port Elizabeth in the
    new Coega industrial complex.

    Port Elizabeth is the export port for all SA's manganese ore and it
    is the source of a low-cost long life feedstock. Management at SAMROC
    believe that the SA Development Agencies would contribute
    significantly to the cost of new facility.

    Sustainable net cash flow of between R25 and R50 million (A$4.4 and
    A$8.8 million) is believed to be achievable out of this plant when it
    is built.


    The business is well established (started in the 70's), and a strong
    cash generator (R12.7 million pretax ye 30 April 2002 - forecast
    R15 million for 2003). It has a decade of profit growth behind it
    which is expected to grow at the rate of 20% per year.

    The various product lines use conventional technology and off the
    shelf plant equipment. Revenues are largely $US based. Highly
    competent management is in place and has the capacity to provide the
    core of the future management of the developing South African
    interests. NiMag has won a Presidential Award for Export Achievement.

    The existing plant is sound and the facility generally reflects house
    keeping of a high level. No significant new product lines are
    contemplated at present.

    B Sergeant

    For more information, please contact:

    Mr Simon Farrell Mr Paul Downie
    Golden Valley Mines Limited (08) 9386 1233
    (08) 9322 6776 0414 947 129

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