Queenstake Resources Ltd.
TSX : QRL
AMEX : QEE

Queenstake Resources Ltd.

November 14, 2005 09:00 ET

Queenstake's Third Quarter 2005 Results in Line with Redevelopment Plan; Full Year 2005 Estimates Reaffirmed

DENVER, COLORADO--(CCNMatthews - Nov. 14, 2005) - Queenstake Resources Ltd. (TSX:QRL)(AMEX:QEE) reported gold sales of 54,446 ounces at cash operating costs of $401 per ounce for the third quarter of 2005, in line with the redevelopment plan as previously announced. (Refer to news releases of August 11 and September 26, 2005.) Third quarter gold production of 49,613 ounces slightly exceeded the redevelopment plan as the Jerritt Canyon operations made good progress in execution of the new plan.

Under the redevelopment plan implemented in mid-August 2005, Jerritt Canyon production was scaled back from operating two roasters to one roaster at a time to match mill processing with optimal mining rate. Highlights from operating and financial results included:

- Positive key indicators showed the redevelopment plan was on track in ounces produced, cash operating costs, mill ore grade and capitalized development footage;

- Cash generated from operating activities increased 80% to $5.4 million from the third quarter of 2004;

- Cash and cash equivalents on September 30, 2005 totaled approximately $14.0 million, compared with $16.9 million at the end of the second quarter of 2005 and $6.1 million at the end of 2004; and

- Commercial production commenced at the new Steer Mine in early October 2005 and from the Mahala deposit, one of the highest grade reserves at Jerritt Canyon and mined as part of the Smith Mine, in August 2005. The SSX Mine produced its millionth ounce in October 2005 since the mine commenced production in 1997, becoming the fifth mine to exceed a million ounces of production at Jerritt Canyon.

For the third quarter of 2005, the Company reported a net loss of $4.3 million, compared with net losses of $5.7 million in the second quarter of 2005 and $5.4 million in the year ago quarter.

Commenting on the results, Queenstake President and Chief Executive Officer Dorian L. (Dusty) Nicol said, "Jerritt Canyon has made significant progress in optimizing the operations under the redevelopment plan over the last seven weeks of the third quarter. Based on the quarter results and steady operating performance in October 2005, we remain confident in our full year 2005 production estimate of 200,000 to 220,000 ounces at cash operating costs of $380 to $390 per ounce."



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Operating Highlights 3Q 2005 3Q 2004 YTD 2005 YTD 2004
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Gold ounces produced 49,613 73,070 157,356 182,949
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Gold ounces sold 54,446 71,210 155,856 180,928
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Average realized
gold price ($/oz) $ 442 $ 402 $ 433 $ 401
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Cash operating costs
per ounce $ 401 $ 303 $ 382 $ 337
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Financial Review

Third quarter revenue from gold sales totaled $23.7 million compared with $28.0 million for the year ago quarter. This was due to less gold ounces sold, as was expected under the redevelopment plan, partially offset by a higher realized gold price of $442 per ounce in the third quarter of 2005 compared with $402 a year ago. Third quarter 2005 operating costs were $22.4 million as expected under the redevelopment plan. Cash operating costs at $401 per ounce for the third quarter were in line with the redevelopment plan as ounces produced and ore tons processed were better than expected, offsetting higher energy and commodity costs.

Depreciation, depletion and amortization decreased 34% from the 2004 quarter to $3.5 million in the third quarter of 2005 as a result of lower production. General and administrative costs of $890,000 were 25% lower than the year ago quarter as a result of the reduction of staff at the corporate office during 2005. Queenstake has one of the lowest corporate overhead costs among emerging gold producers.

Cash generated from operating activities improved to $5.4 million compared to the second quarter of 2005 of negative $3.3 million and was 80% higher than the $3.0 million generated in the third quarter of 2004. Cash from operating activities includes cash provided by working capital assets, which during the third quarter was primarily due to a draw down of finished goods inventory. Working capital assets in the 2004 quarter were augmented by a temporary increase in accounts payable.

The Company's balance sheet remains strong with cash and cash equivalents of approximately $14.0 million at the end of the third quarter, compared with $16.9 million at the end of the second quarter of 2005 and $6.1 million at the end of 2004. The Company has no long-term debt other than capital leases for mining equipment.

Operations Review & Redevelopment Plan Update



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Operating Statistics 3Q 2005 3Q 2004 YTD 2005 YTD 2004
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Ore tons mined 220,779 296,474 736,039 823,709
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Tons processed 267,116 358,600 895,350 974,214
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Grade processed (opt) 0.21 0.22 0.21 0.21
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Process recovery 86.5% 91.1% 86.5% 86.8%
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The Jerritt Canyon operations improved during the quarter on several key indicators gauging the implementation of the redevelopment plan. Jerritt Canyon produced 49,613 ounces, slightly better than expected, at cash operating costs of $401 per ounce in line with the redevelopment plan. Jerritt Canyon mined 220,779 ore tons, slightly lower than expected in the redevelopment plan.

The average processed ore grade progressively improved to 0.25 ounce of gold per ton (opt) in September from 0.18 opt in July in line with the redevelopment plan. Mill performance in the changeover to operating one roaster at a time was on track with the redevelopment plan with an average processed ore grade of 0.21 opt and a mill recovery rate of 86.5% for the quarter. Both the average grade processed and mill recovery rate are expected to improve under the plan in the fourth quarter. For October 2005, the average mill ore grade was 0.25 opt at an 87.0% recovery rate.

During the third quarter, capitalized mine development completed increased 20% from 2,150 feet in the second quarter of 2005 to 2,570. Jerritt Canyon allocated more internal resources to development and engaged a mining contractor to accelerate capitalized mine development.

Exploration Update

District exploration expenses for the third quarter were $1.5 million, primarily for the drilling program at the Starvation Canyon project, 12 miles southwest of the Jerritt Canyon mill on private land owned by Queenstake.

As announced on September 27, 2005, the Company estimated its 19-hole drilling program had increased the Starvation Canyon's indicated resources(1) by 16% to approximately 181,600 contained ounces (617,800 tons at a grade of 0.294 ounce of gold per ton) from year-end 2004. Significantly, the grade improved to 0.29 opt from 0.27 opt in 2004. The Company estimated inferred resources(1) at Starvation Canyon increased to 78,900 tons at almost 0.30 opt containing 23,300 ounces, compared with 51,600 tons at 0.23 opt, containing 11,729 ounces, at year-end 2004. An infill and step-out drilling program resumed at Starvation Canyon in October and is expected to continue through the fall, with the objective of further upgrading and expanding this resource.

A near-mine surface and underground drilling program continues, targeting resource conversion and discovery of new resources and reserves. Results announced in the news release of November 8, 2005 for the Mahala and West Dash deposits could extend the life of the Smith Mine. The Company currently has two surface drill rigs at Mahala and West Dash and another three surface rigs at Starvation Canyon.

Guidance

Based on Queenstake's confidence in the ongoing turnaround at the Jerritt Canyon operations, the Company reaffirmed its production estimate of 200,000 to 220,000 ounces of gold at cash operating costs of $380 to $390 per ounce for the full year 2005. Fourth quarter of 2005 estimated cash operating costs are also unchanged at between $370 and $380 per ounce, which would be a 5% to 8% improvement over the third quarter.



INTERIM CONSOLIDATED STATEMENTS OF LOSS
UNAUDITED
--------------------------- ------------------ --------------------
For the Three For the Nine
Months Ended Months Ended
September 30 September 30
--------------------------- ------------------ --------------------
(In Thousands of U.S. Dollars,
except per share amounts) 2005 2004 2005 2004
--------------------------- ------------------ --------------------

Gold sales $ 23,688 $ 27,969 $ 65,923 $ 70,635
--------------------------- -------- -------- --------------------
Costs and expenses
Operating 22,465 22,560 62,046 62,335
Depreciation, depletion and
amortization 3,500 5,313 13,411 13,813
Accrection 179 139 448 268
Exploration 1,474 3,156 2,859 4,948
General and administrative 890 1,192 4,090 2,540
--------------------------- -------- -------- --------- ---------
28,508 32,360 82,854 83,904
--------------------------- -------- -------- --------- ---------
Loss from operations (4,820) (4,391) (16,931) (13,269)
--------------------------- -------- -------- --------- ---------

Interest expense 47 961 372 4,911
Other (income) expense, net (287) (124) (685) (962)
Stock-based compensation 146 182 571 266
Foreign exchange (gain) loss (424) (60) (165) 72
--------------------------- -------- -------- --------- ---------
(518) 959 93 4,287
--------------------------- -------- -------- --------- ---------
Net loss $ (4,302) $ (5,350) $ (17,024) $ (17,556)
--------------------------- -------- -------- --------- ---------
--------------------------- -------- -------- --------- ---------

Net loss per share -
basic and diluted $ (0.01) $ (0.01) $ (0.03) $ (0.05)
--------------------------- -------- -------- --------- ---------
--------------------------- -------- -------- --------- ---------
Weighted average number
of shares outstanding
(000's) - basic 549,842 372,008 495,545 367,836


INTERIM CONSOLIDATED STATEMENTS OF DEFICIT
UNAUDITED
------------------------- -------------------- --------------------
For the Three For the Nine
Months Ended Months Ended
September 30 September 30
------------------------- -------------------- --------------------
(In Thousands of
U.S. Dollars) 2005 2004 2005 2004
------------------------- --------- --------- --------- ---------

Deficit, beginning of
period - as previously
reported $ (75,911) $ (53,269) $ (63,189) $ (40,623)
Cumulative restatement
for stock-based
compensation - - - (440)
------------------------- --------- --------- --------- ---------
Deficit, beginning of
period - as restated (75,911) (53,269) (63,189) (41,063)
Net loss (4,302) (5,350) (17,024) (17,556)
------------------------- --------- --------- --------- ---------
Deficit, end of period $ (80,213) $ (58,619) $ (80,213) $ (58,619)
------------------------- --------- --------- --------- ---------
------------------------- --------- --------- --------- ---------

INTERIM CONSOLIDATED BALANCE SHEETS
------------------------------------ ------------ -------------
September 30, December 31,
(In Thousands of U.S. Dollars) 2005 2004
------------------------------------ ------------ -------------
ASSETS Unaudited
Current assets
Cash and cash equivalents $ 13,984 $ 6,132
Trade and other receivables 136 117
Inventories 5,061 5,084
Marketable securities 13 500
Prepaid expenses 3,101 4,965
------------------------------------ ------------ -------------
Total current assets 22,295 16,798

Restricted cash 26,752 26,379
Mineral property, plant and
equipment, net 43,459 42,514
Other assets 1,834 2,240
------------------------------------ ------------ -------------
Total assets $ 94,340 $ 87,931
------------------------------------ ------------ -------------
------------------------------------ ------------ -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 9,543 $ 20,580
Other current liabilities 4,113 2,126
------------------------------------ ------------ -------------
Total current liabilities 13,656 22,706

Other long-term obligations 1,388 1,093
Reclamation and mine closure 25,726 25,766
------------------------------------ ------------ -------------
Total liabilities 40,770 49,565
------------------------------------ ------------ -------------

Shareholders' equity
Common shares, no par value,
unlimited number authorized
Issued and outstanding
549,946,360 (2004 - 410,404,627) 131,782 100,139
Contributed surplus 1,624 1,053
Convertible securities 377 363
Deficit (80,213) (63,189)
------------------------------------ ------------ -------------
Total shareholders' equity 53,570 38,366
------------------------------------ ------------ -------------
Total liabilities and
shareholders' equity $ 94,340 $ 87,931
------------------------------------ ------------ -------------
------------------------------------ ------------ -------------


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------- -------------------- --------------------
For the Three For the Nine
Months Ended Months Ended
September 30 September 30
------------------------- -------------------- --------------------
(In Thousands of
U.S. Dollars) 2005 2004 2005 2004
------------------------- --------- --------- --------- ---------
OPERATING ACTIVITIES
Net loss $(4,302) $(5,350) $(17,024) $(17,556)
Non-cash items:
Depreciation, depletion
and amortization 3,500 5,313 13,411 13,813
Interest accretion and
deferred financing costs - 906 - 4,440
Accretion of long-term
liability 194 278 460 401
Gain on disposal of
assets to be disposed
of by sale - - - (661)
Stock-based compensation 147 182 571 266
Foreign exchange loss (424) (60) (165) 72
Loss on sale of marketable
securities - 53 38 53
Write down of marketable
securities 3 - 7 -
--------- --------- --------- ---------
(882) 1,322 (2,702) 828
--------- --------- --------- ---------
Changes in non-cash
working capital:
Inventories 2,372 (65) 23 (898)
Accounts receivable and
prepaid accounts 975 (3,203) 2,251 (2,605)
Accounts payable and
accruals 2,935 5,076 (5,484) 8,417
------------------------- --------- --------- --------- ---------
Cash provided by
(used in) operating
activities 5,400 3,130 (5,912) 5,742
------------------------- --------- --------- --------- ---------

INVESTING ACTIVITIES
Property, plant and
equipment expenditures (6,702) (9,836) (14,806) (16,835)
Proceeds from sale of
assets to be disposed
of by sale - - - 4,252
Notes receivable - 1,050 - 1,050
Insurance premium tax
reimbursement - - - 1,031
Sale of marketable
securities - 744 442 744
Reclamation costs
incurred (431) (184) (500) (423)
Restricted cash (191) (94) (373) 22
------------------------- --------- --------- --------- ---------
Cash (used in) investing
activities (7,324) (8,320) (15,237) (10,159)
------------------------- --------- --------- --------- ---------

FINANCING ACTIVITIES
Common shares issued,
net of costs 44 12,790 30,393 14,391
Term loan - (1,055) - (9,952)
Notes payable and leases (1,002) (6,164) (1,392) (7,105)
------------------------- --------- --------- --------- ---------
Cash provided by (used
in) financing
activities (958) 5,571 29,001 (2,666)
------------------------- --------- --------- --------- ---------

Net increase (decrease)
in cash and cash
equivalents (2,882) 381 7,852 (7,083)
Cash and cash
equivalents, beginning
of period 16,866 2,072 6,132 9,536
------------------------- --------- --------- --------- ---------
Cash and cash
equivalents, end of
period $13,984 $ 2,453 $ 13,984 $ 2,453
------------------------- --------- --------- --------- ---------
------------------------- --------- --------- --------- ---------


(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). Mineral resources are not reserves and do not have 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 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.

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 statements regarding Queenstake's future plans are forward-looking statements that involve various known and unknown 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 and (iii) estimates related to financial performance, including cash flow. Forward-looking statements are subject to risks, uncertainties and other factors, including gold and other commodity price volatility, political and operational risks, mine development, production and cost estimate risks and other risks which are described in the Company's most recent Annual Report on Form 40-F on file with the Securities and Exchange Commission (SEC), as it may be updated in subsequent filings. 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.

SEC file number 0-24096

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