Queenstake Resources Ltd.
TSX : QRL
AMEX : QEE

Queenstake Resources Ltd.

September 27, 2005 20:29 ET

Queenstake Expands Resources and Increases Ore Grade at Starvation Canyon

DENVER, COLORADO--(CCNMatthews - Sept. 27, 2005) - Queenstake Resources Ltd.'s (TSX:QRL)(AMEX:QEE) internal estimate of indicated resources(1) at Starvation Canyon increased to 181,600 ounces of gold (617,800 tons at a grade of 0.294 ounce of gold per ton), based on 2005 drilling results. This represents an increase of 16% in contained ounces as well as an increase in grade of 9% compared to the year-end 2004 estimate. In addition, Queenstake's internal estimate of inferred resources at Starvation Canyon increased to 78,900 tons at a grade of 0.295 ounce per ton (opt), containing 23,300 ounces of gold.

Based on these encouraging results, Queenstake's increasing confidence in the ongoing turnaround at the Jerritt Canyon operations and the current strong gold price environment, management has authorized the resumption of exploration drilling at Starvation Canyon this year (See Appendix Map 1. All Appendix maps are available under the Investor Information/News Releases section at www.queenstake.com). An infill and step-out drilling program budgeted at $300,000 to $500,000 will be conducted through the fall, with the objective of further upgrading and expanding the Starvation Canyon resource.

The Company also announced that its near-mine drilling program(2) continues to identify high-grade gold mineralization. Positive results were obtained at the SSX, Steer, Smith and Murray mines outside the current resource boundary, and represent extensions of mineralization. Further underground drilling this fall will continue testing these and other near-mine targets, including the Mahala deposit. Mahala, which initiated gold production in August 2005, represents some of the highest ore grades in reserves(1) at Jerritt Canyon.

The data for the near-mine program reported in this news release are from underground drilling conducted from June to August 2005 (See Appendix Map 2). The drill results are outside the current resource boundary and represent additions to mineralization, which could add to resources or reserves. The results will be incorporated in new mine models that will be used in the estimation of reserves and resources at year-end 2005.

Dorian L. (Dusty) Nicol, President and Chief Executive Officer of Queenstake, said, "Our 100-square mile Jerritt Canyon district in northeastern Nevada continues to demonstrate high-grade upside and underscores the potential to continue increasing the reserves and resources. The 19-hole drill program at Starvation Canyon identified more high-grade mineralization and successfully increased the indicated resources by 16% and the grade by 9%. Around our mines, some of the best prospects for mineralization growth are at Zone 5B at SSX, Block 3 at Steer, Mahala at Smith and Zone 7 at Murray."

District Exploration - Starvation Canyon

In July and August 2005, 19 reverse-circulation drill holes totaling 11,325 feet were completed from surface at the Starvation Canyon project, located 12 miles southwest of the Jerritt Canyon mill on private land owned by Queenstake. Drilling at Starvation Canyon will resume shortly and is anticipated to continue in 2006.

The 2,000-foot long mineralized zone at Starvation Canyon lies above the water table in an area of steep topography and could be readily accessed by portal from the hillside. Mineralization remains open along both directions (northeast and southwest; northwest and southeast) of each of the two principal controlling structures. Starvation Canyon appears to be part of a mineralized trend with a strike length of approximately 4.5 miles. This trend appears comparable geographically and geochemically to the mineralized trends in the northern and central parts of the Jerritt Canyon district that have combined to produce over seven million ounces of gold since 1981.

From the recent drill data, Queenstake has estimated that the indicated resources at Starvation Canyon now total 617,800 tons at a grade of 0.294 opt containing 181,600 ounces of gold. This is compared with indicated resources at year-end 2004 of 576,900 tons at 0.271 opt, containing 156,225 ounces. The estimated grade increase from 0.271 opt in 2004 to 0.294 opt is very encouraging. In addition, Queenstake has estimated Starvation Canyon's inferred resources now total 78,900 tons at 0.295 opt containing 23,300 ounces, compared with inferred resources at year-end 2004 of 51,600 tons at 0.227 opt, containing 11,729 ounces of gold.

Of the 19 holes drilled, 13 intercepted 10 feet or more of gold mineralization above 0.15 opt; these holes are tabulated in Table 1 (See Appendix Map 1.) Of the remaining six holes, three failed to return samples at the depth interval where mineralization was targeted due to fractures or voids in the rock. These holes will be redrilled with core holes to test the target interval. The following table shows intercepts of 10 feet or more at an ore grade of 0.20 opt of higher.



Table 1: Starvation Canyon Results Highlights(4, 5)
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From To Length Grade Drill
Hole # Dip (feet) (feet) (feet) Opt Type
------------------------------------------------------------
TJ-183 -90 550 595 45 0.294 RC
------------------------------------------------------------
TJ-184 -90 585 625 40 0.326 RC
------------------------------------------------------------
TJ-185 -90 625 635 10 0.180 RC
------------------------------------------------------------
TJ-186 -90 620 635 15 0.228 RC
------------------------------------------------------------
TJ-188A -80 430 445 15 0.276 RC
------------------------------------------------------------
and -80 515 530 15 0.220 RC
------------------------------------------------------------
TJ-189 -90 560 580 20 0.410 RC
------------------------------------------------------------
TJ-190 -90 555 570 15 0.218 RC
------------------------------------------------------------
TJ-197 -90 365 425 60 0.327 RC
------------------------------------------------------------
and -90 435 450 15 0.203 RC
------------------------------------------------------------
TJ-199 -90 455 480 25 0.355 RC
------------------------------------------------------------
TJ-200 -90 415 485 70 0.307 RC
------------------------------------------------------------
TJ-201 -90 410 450 40 0.396 RC
------------------------------------------------------------
TJ-205 -90 305 320 15 0.220 RC
------------------------------------------------------------
TJ-206 -90 225 250 25 0.334 RC
------------------------------------------------------------


Near-Mine Exploration - SSX Mine

At the SSX Mine, 16 underground core drill holes were completed totaling 7,293 feet in the prospective Zone 5B in June 2005. The following table shows intercepts of 10 feet or more at an ore grade of 0.20 opt or higher.



Table 2: SSX - Zone 5B Results Highlights (4, 5)
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From To Length Grade Drill
Hole # (feet) (feet) (feet) Opt Type(3)
---------------------------------------------------
SX-944 365 385 20 0.251 Core
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SX-945 275 310 35 0.310 Core
---------------------------------------------------
SX-946 245 260 15 0.469 Core
---------------------------------------------------
and 270 305 35 0.289 Core
---------------------------------------------------
SX-948 206 230 24 0.235 Core
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and 290 310 20 0.211 Core
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and 310 352 42 0.212 Core
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SX-952 225 236.5 11.5 0.618 Core
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SX-953 238.5 253 14.5 0.267 Core
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Near-Mine Exploration - Steer Mine

At the Steer Mine, the 1,800-foot drift to connect with the SSX Mine is nearing completion. When completed, the connection will provide secondary access for the Steer Mine and also lead to greater operational efficiency in a combined SSX-Steer complex. SSX-Steer production is expected to ramp up from 1,140 ore tons per day in the third quarter to steady state rate of 1,950 ore tons per day in the first quarter of 2006. Drilling of 14 underground core holes totaling 5,300 feet was conducted from June to August 2005. The following table shows intercepts of 10 feet or more at an ore grade of 0.20 opt or higher.



Table 3: Steer - Block 3 Results Highlights (4, 5)
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From To Length Grade Drill
Hole # (feet) (feet) (feet) Opt Type(3)
---------------------------------------------------
SR-43 160 170 10 0.361 Core
---------------------------------------------------
SR-44 210 230 20 0.214 Core
---------------------------------------------------
with 220 230 10 0.258 Core
---------------------------------------------------
with 345 375 30 0.702 Core
---------------------------------------------------
and 480 520 40 0.219 Core
---------------------------------------------------
with 480 490 10 0.307 Core
---------------------------------------------------
with 505 520 15 0.288 Core
---------------------------------------------------
and 565 585 20 0.650 Core
---------------------------------------------------
SR-45 345 380 35 0.478 Core
---------------------------------------------------
and 555 585 30 0.780 Core
---------------------------------------------------
SR-59 5 15 10 0.208 Core
---------------------------------------------------
SR-60 55 170 115 0.301 Core
---------------------------------------------------


Near-Mine Exploration - Smith Mine

At the Smith Mine, 17 underground core drill holes were completed totaling 5,500 feet in the B-Pit area. These holes, targeting additions to reserves and resources, were drilled west of the main drift from July to August 2005. A 30 to 50-hole drill program will be conducted at the Mahala deposit this fall targeting resource and reserve additions. The following table shows intercepts of 10 feet or more at an ore grade of 0.20 opt or higher.



Table 4: Smith - B-Pit Results Highlights (4, 5)
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From To Length Grade Drill
Hole # (feet) (feet) (feet) Opt Type(3)
---------------------------------------------------
LX-595 455 530 75 0.344 Core
---------------------------------------------------
LX-596 50 65 15 0.236 Core
---------------------------------------------------
LX-599 90 110 20 0.240 Core
---------------------------------------------------
LX-602 205 215 10 0.217 Core
---------------------------------------------------
LX-603 120 140 20 0.214 Core
---------------------------------------------------
LX-605 145 195 50 0.286 Core
---------------------------------------------------
LX-610 360 375 15 0.468 Core
---------------------------------------------------
LX-611 370 390 20 0.254 Core
---------------------------------------------------


At the West Dash area, approximately 700 feet west of the main Smith drift, surface drilling from 10 reverse circulation holes totaling 7,860 feet was completed. Encouraging results were received from four of these holes, including intercepts of 40 feet at 0.30 opt and 65 feet of 0.29 opt. The drill results are outside the current resource boundary and represent additions to mineralization, which could add to resources or reserves (See Appendix Map 3).

Near-Mine Exploration: Murray Mine

At the Murray mine, currently planned for closure in April 2006, 16 underground reverse circulation drill holes were completed totaling 3,655 feet at the Zone 7 target in June 2005. Ongoing drilling targets expansion of the edges of the remaining deposit. The following table shows intercepts of 10 feet or more at an ore grade of 0.20 opt or higher.



Table 5: Murray - Zone 7 Results Highlight (4, 5)
---------------------------------------------------
From To Length Grade Drill
Hole # (feet) (feet) (feet) Opt Type(3)
---------------------------------------------------
C70029 140 160 20 0.338 RC
---------------------------------------------------
C70030 50 110 60 0.359 RC
---------------------------------------------------
C70031 80 95 15 0.293 RC
---------------------------------------------------


Queenstake Resources Ltd. is a gold mining and exploration company based in Denver, Colorado. Its principal asset is the wholly owned Jerritt Canyon district in Nevada. Jerritt Canyon has produced over seven million ounces of gold since 1981. Current production at the property is from underground mines. The Jerritt Canyon district comprises over 100 square miles of geologically prospective ground and represents one of the largest contiguous exploration properties in Nevada.

Notes:

(1) "Resources" or "resource" used in this news release 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). 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 on the Company's website, www.queenstake.com. The Qualified Person for the technical information contained in this news release is Mr. Dorian L. (Dusty) Nicol, President and Chief Executive Officer of Queenstake.

The Starvation Canyon gold resource block model is constrained within an interpreted 3-dimensional geologic wireframe boundary and uses an Inverse-Distance to the third power interpolation algorithm. This methodology is the same as was used for the EOY 2004 resource calculation. However, the new drilling data has allowed for adjustments to the wireframe boundaries and refinement of the search ellipse orientation, resulting in greater continuity of high-grade mineralization.

(2) A complete data set, from which the drill results highlighted in this news release were derived, is available as an Appendix to this news release under the Investor Information/News section on the Company's website, www.queenstake.com. Intercepts are reported as drilled and are not necessarily "true width".

(3) Surface and underground drilling use either core or reverse circulation methods for near-mine and surface exploration programs at Jerritt Canyon. Underground reverse circulation drilling has demonstrated accuracy in ore control definition drilling and for resource conversion at Jerritt Canyon's mines. However, reverse circulation drilling can result in a lower degree of confidence and less geologic information than core drilling.

(4) Samples from surface and underground drilling are analyzed using standard fire assay techniques at the Jerritt Canyon laboratory. Intercepts are reported as drilled and are not necessarily "true width".

(5) A description of the geology, sampling procedures and the Company's laboratory Quality Assurance/Quality Control procedures are described in the Company's National Instrument 43-101 Technical Report filed on Sedar on February 23, 2005. This report is available under Investor Information/Financial Information/Sedar Filings at www.queenstake.com.

Cautionary Statement - This news release contains "Forward-Looking Statements" within the meaning of 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, included in this release, and Queenstake's future plans are forward-looking statements that involve various risks and uncertainties. Such forward-looking statements include, without limitation, (i) estimates and projections of reserves and resources, (ii) estimates and opinions regarding geologic and mineralization interpretation and (ii) estimates of exploration investment and scope of exploration programs. 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 that could occur in future. 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 in the Company's 2004 Annual Report on Form 40-F on file with the Securities and Exchange Commission as well as the Company's other SEC filings.

SEC file number 0-24096

APPENDIX

Map 1: Starvation Canyon Project

To view map click on the following link: http://www.ccnmatthews.com/docs/QRL0928a.gif

Map 2: Near Mine Resource Conversion Drilling

To view map click on the following link: http://www.ccnmatthews.com/docs/QRL0928b.gif

Map 3: West Dash Surface Drilling Results Highlights

To view map click on the following link: http://www.ccnmatthews.com/docs/QRL0928c.gif

The Toronto Stock Exchange has neither reviewed nor accepts responsibility for the adequacy or accuracy of this release.

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