Queenstake's Fourth Quarter and 2006 Results



    DENVER, March 30 /CNW/ -- Queenstake Resources Ltd. (TSX: QRL, Amex:   QEE)
reported a net loss of $20.8 million for the full year 2006.  Cash flow from
operations before working capital changes totaled $5.1 million for 2006.  Cash
and cash equivalents at year-end were $6.6 million.
    Gold production was 169,851 ounces for the full-year 2006, of which
production from Jerritt Canyon mined ore was 153,581 ounces; the remaining
production was from ore purchased from Newmont.  Cash operating costs for 2006
were $533 per ounce.
    Jerritt Canyon operating costs showed improvement in the fourth quarter
of 2006 as a result of the cost reduction measures implemented in late
September 2006.  The cost initiatives completed included discontinuing the
services of a higher cost underground mining contractor; reduction by 11% of
the workforce; reorganizing and centralizing the maintenance department;
removing from service the high-hours, high-maintenance cost mining equipment;
and deferring the production of ore from below the water table at the Smith
Mine.
    During the fourth quarter of 2006, gold production was 45,776 ounces, of
which Jerritt Canyon mined ore production was 36,398 ounces; the remaining
production was from ore purchased from Newmont. Cash operating costs per ounce
for the fourth quarter of 2006 were $545 per ounce, 18% lower than the third
quarter of 2006. Compared with the year ago quarter, cash operating costs were
32% higher in the fourth quarter of 2006, due to decreased ore tons mined,
decreased ore grade, mill mechanical issues discussed under "Operations
Review" below and increasing fuel, labor and commodity prices.
    As announced on March 22, 2007, the Company and YGC Resources Ltd. (YGC)
have completed all due diligence requirements and signed a definitive
agreement to combine the companies to form Yukon-Nevada Gold Corporation,
subject to shareholder, court and regulatory approvals and certain other
conditions precedent, including a minimum Cdn$80.0 million net proceeds
financing to be completed by YGC for the benefit of Yukon-Nevada. The meetings
for the respective shareholders to consider and vote on the proposed
combination are scheduled for May 18, 2007.



    
                                                         Full Year  Full Year
                                                           Ending    Ending
    Operating Highlights                 4Q 2006  4Q 2005 12/31/06  12/31/05
    Gold ounces produced(1)               45,776   45,555  169,851    204,091
    Gold ounces sold(1)                   44,929   46,828  167,762    202,684
    Average realized gold price ($/oz)      $615     $485     $609       $445
    Cash operating costs per ounce(2)       $545     $413     $533       $386
    Ore tons mined                       199,219  223,060  777,836    959,099
    Tons processed                       253,945  211,587  973,593  1,106,937
    Grade processed (opt)(3)                0.22     0.25     0.21       0.22
    Process recovery                        85.6%    86.8%    86.2%      86.6%



    Financial Review
    

    All amounts in this news release are in US dollars, unless otherwise
stated. The Company reported a net loss of $20.8 million for 2006 compared
with a net loss of $19.7 million for 2005. For 2006, revenues of $102.2
million were generated from the sale of 167,762 ounces of gold at an average
realized gold price of $609 per ounce. Also during 2006, the Company generated
$0.7 million in revenue from the processing of loaded carbon for Newmont. 
Revenues for 2005 were $90.2 million generated from the sale of 202,684 ounces
at an average realized gold price of $445 per ounce.
    Cash operating costs of $533 per ounce for 2006 reflected production
shortfalls as well as increases in basic commodity prices. During 2006, cash
operating costs were negatively impacted by $3.2 million in increased
commodity costs, including fuel, electric power, commodities and freight, $2.1
million in higher labor costs from wage increases and higher than anticipated
overtime, and $3.1 million from increased contractor costs.  These factors
accounted for increases in cash operating costs per ounce totaling $48 for
2006.
    Depreciation and accretion charges were $19.0 million for 2006, compared
with $17.2 million in 2005. Exploration expenses for 2006 and 2005 were $4.9
million and $3.9 million, respectively. General and administrative costs were
$4.4 million for 2006 compared to $4.9 million in 2005.  The Company invested
$31.9 million in the Jerritt Canyon mines during 2006, compared with $19.7
million in 2005.  Significant capital investments during 2006 included $8.4
million spent for a state-mandated new evaporation pond, underground mine
development, and in purchasing and refurbishing plant and equipment.
    At December 31, 2006, the Company had a working capital deficit of $12.4
million, compared to positive working capital of $4.8 million at December 31,
2005.  The year-end 2006 working capital deficit was primarily due to the
liability related to purchased ore stockpile inventories, increased trade
payables and decreased cash and cash equivalents.  At December 31, 2006, there
were approximately $8 million of trade payables incurred for the evaporation
pond, which were paid down during the first quarter of 2007 using proceeds of
a bridge loan financing facility.  Jerritt Canyon finished the year with an
estimated 11,900 contained gold ounces in Jerritt Canyon ore and an estimated
37,000 contained gold ounces in ore purchased from Newmont in stockpiles
adjacent to the mill.
    As stated in the January 15, 2007 news release, the Company closed the
secured convertible bridge loan financing facility of $8 million with Auramet
Trading LLC.  Auramet and the Company have recently reached agreement to
extend the payment date of the facility by one month to May 31, 2007.  The
borrowed funds, less costs of the transaction, primarily paid the costs of the
new evaporation pond at the Jerritt Canyon operations which was mandated by
the Nevada Department of Environmental Protection (NDEP).  The Company is
pursuing reimbursement for such costs under its reclamation insurance policy
with American International Specialty Lines Insurance Company, a subsidiary of
AIG (the Insurer), but the timing and receipt of such reimbursement is
uncertain.  (Also refer to the Company's news release of January 22, 2007
pertaining to the Company's lawsuit against the Insurer.)
    For the year ended December 31, 2006, the Company's net loss of $20.8
million, the accumulated deficit of $103.7 million and the working capital
deficit of $12.4 million led to a going concern disclosure under Canadian and
US generally accepted accounting principles, as described in Note 1 of the
Notes to the Company's Consolidated Financial Statements for such year, as
filed with the Canadian securities commissions and the US Securities and
Exchange Commission.  The Company's ability to discharge its liabilities and
realize the carrying value of its assets in the normal course of operations is
dependent upon, among other things, the resumption of full mill processing
capacity during the second quarter of 2007, further extension, payment or
conversion of the Auramet loan facility and either successful completion of
the proposed merger with YGC or the raising of additional financing.

    
    Operations Review
    
    Full-year 2006 gold production from Jerritt Canyon mined ore was 153,581
ounces, excluding production from ore purchased from Newmont, as compared to
204,091 ounces produced in 2005.
    Lower production in 2006 was due to ongoing mechanical issues at the mill
and declining ore tons mined, caused by delays in accessing ore from the Smith
Mine and Zone 1 of the SSX Mine.  The Smith Mine was adversely affected by
water inflows in excess of the capacity of the pumping system to dewater.  The
SSX Mine experienced grade declines from higher mining dilution as a result of
the mining of smaller, less contiguous ore blocks.  Production from below the
water table at the Smith Mine and from Zone 1 of the SSX Mine has been
deferred and is not planned during 2007. The Murray Mine was shut down in the
second quarter of 2006.
    Total ore tons processed in 2006 were 973,593, a decline of 12% from
2005. The reduction in tonnage is due to a combination of fewer ore tons
mined, ongoing mill mechanical issues and the Company's original plan to
scale-back roaster operations in early 2006.  The grade of Queenstake ore
milled increased to 0.23 ounce of gold per ton, a 5% improvement from 2005.

    The table below summarizes production results for both Jerritt Canyon
mined ore and ore purchased from Newmont.



    
                                    Year ended December 31, 2006
                                   Jerritt      Newmont
                                  Canyon ore      ore        Total
    Tons processed                 792,959     180,634     973,593
    Grade processed (opt)             0.23        0.10        0.21
    Process recovery                  85.8%       90.4%       86.2%
    Gold ounces produced           153,581      16,270     169,851
    

    Processed ore tonnage and gold production for the full-year 2006 were
unfavorably impacted as the Company made the decision to run the mill at a
reduced capacity in order to minimize the risk of further mill pinion and bull
gear mechanical issues.  A new mill pinion gear was installed in April 2006
and the bull gear was turned over and several cracked teeth repaired at that
time.  However, through the third quarter of 2006, the new pinion gear
exhibited a high degree of wear and pitting and elevated gear surface
temperatures, posing risk of failure and potential collateral damage if the
mill had continued to run at full capacity. As a result, the mill ran at 75%
capacity through most of the second half of 2006 in order to avoid potential
damage to the pinion and bull gears.  A replacement new bull gear has been
completed and is being shipped from Australia for delivery early in the second
quarter. The estimated schedule to complete the annual mill maintenance and
bull gear change in the second quarter will require a 10-day shutdown of the
mill. During the scheduled mill down-time, the mines will continue to produce
ore and accumulate the ore in stockpiles adjacent to the mill that will then
be processed during the remainder of 2007.
    Capitalized mine development of 7,083 feet during the year was
essentially on 2006 plan, as the mining emphasis shifted to short-term
production.  Two mining contractors that had been dedicated to development
were phased-out during the year and internal crews were assigned to those
headings.
    During the fourth quarter of 2006, the Jerritt Canyon mining operations
completed 2.8 million man hours without a lost time accident, while the mill
achieved a million man hours without a lost time accident.

    
    Outlook
    
    The Company expects to close the Queenstake-YGC business combination in
the second quarter of 2007.  Upon completion of the merger, the new Board of
Directors and management of Yukon-Nevada Gold Corporation will determine the
production outlook, and exploration and capital investment expenditures, in
order to deliver maximum value from the Jerritt Canyon operation and assets.

    Queenstake Resources Ltd. is a gold mining and exploration company based
in Denver, Colorado.  Its principal asset is the wholly owned Jerritt Canyon
gold operations in Nevada, which has produced over 7.5 million ounces of gold
from open pit and underground mines since 1981. Current production at the
property is from two underground mines.  The Jerritt Canyon District, which
comprises 119 square miles (308 square kilometers) of geologically prospective
ground controlled by Queenstake, represents one of the largest contiguous
exploration properties in Nevada. In addition, Jerritt Canyon also has one of
only three permitted roasting facilities in Nevada.

    
    (1)  The Company's production and sales for the fourth quarter of 2006
         included 9,378 ounces of gold from ore purchased from Newmont.
    (2)  Cash operating costs per ounce is a non-GAAP measure intended to
         complement conventional GAAP reporting. Management believes that cash
         operating costs per ounce is a useful indicator of a mine's
         performance. Please refer to the Company's Management Discussion and
         Analysis on file at www.sedar.com and www.sec.gov for further
         information.
    (3)  The average grade of ore processed was impacted by the lower grade of
         ore purchased from Newmont. Refer to the table on page 3 of this news
         release for a production summary of Jerritt Canyon ore and ore
         purchased from Newmont.
    (4)  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.


    For further information call:
    Wendy Yang 303-297-1557 ext. 105
    800-276-6070
    Email - info@queenstake.com    web - www.queenstake.com
    

    Cautionary Statement - This news release contains "Forward-Looking
Statements" within the meaning of applicable Canadian securities law
requirements and 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 regarding Queenstake's future plans are forward-looking
statements that involve various risks and uncertainties. Such forward-looking
statements include, without limitation, (i) projections of future gold
production, investments in exploration and capital and operational
improvements, (ii) estimates of mill shut down and refurbishment, and (iii)
statements relating to the pending combination of the Company and YGC.
Forward-looking statements are subject to risks, uncertainties and other
factors, including gold and other commodity price volatility, operational
risks, mine development, production and cost estimate risks, risks relating to
the completion of the pending combination with YGC and other risks which are
described in the Company's most recent Annual Information Form filed on SEDAR
(www.sedar.com) and Annual Report on Form 40-F on file with the Securities and
Exchange Commission (SEC; www.sec.gov) as well as the Company's other
regulatory 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.



    
      CONSOLIDATED STATEMENTS OF OPERATIONS
      FOR THE YEARS ENDED DECEMBER 31, 2006 and 2005


      (In Thousands of U.S. Dollars,    For the Years Ended December 31,
      except per share amounts)              2006           2005

      Revenues                            $102,910         $90,174
      Costs and expenses
        Cost of sales                       93,389          80,268
        Depreciation, depletion and
         amortization                       19,016          17,194
        Non-hedge derivatives                  207           2,647
        Exploration                          4,899           3,880
        General and administrative           4,418           4,915
        Accretion of reclamation and mine
         closure liability                   1,192           1,174
        Stock-based compensation             1,176             579
                                           124,297         110,657
        Loss from operations               (21,387)        (20,483)

        Interest expense                       368             413
        Other income, net                     (897)           (937)
        Foreign exchange (gain) loss          (109)           (213)
        Gain on disposal of assets            (102)            (75)
        Write down of assets                   197              --
                                              (543)           (812)
        Net loss                          $(20,844)       $(19,671)

        Net loss per share - basic and
         diluted                            ($0.04)         ($0.04)

      Weighted average number of shares
       outstanding (000's) - basic         573,152         509,274



      CONSOLIDATED STATEMENTS OF DEFICIT

                                         For the Years Ended December 31,
      (In Thousands of U.S. Dollars)         2006            2005

      Deficit, beginning of year          $(82,860)       $(63,189)
      Net Income (loss)                    (20,844)        (19,671)
      Deficit, end of year               $(103,704)       $(82,860)



      CONSOLIDATED BALANCE SHEETS
      AS AT DECEMBER 31, 2006 and 2005
                                          December 31,   December 31,
      (In Thousands of U.S. Dollars)         2006           2005
      ASSETS
      Current assets
      Cash and cash equivalents             $6,580         $10,225
      Trade and other receivables              726             463
      Inventories                           34,196           6,519
      Marketable securities                     13              13
      Prepaid expenses                       1,896           1,499
      Total current assets                  43,411          18,719

      Restricted cash                       27,035          27,165
      Mineral property, plant and
       equipment, net                       51,491          45,692
      Other assets                           1,254           1,763
      Total assets                        $123,191         $93,339

      LIABILITIES AND SHAREHOLDERS'
       EQUITY
      Current liabilities
      Accounts payable and accrued
       liabilities                         $52,386         $11,063
      Other current liabilities              3,381           2,846
      Total current liabilities             55,767          13,909

      Other long-term obligations            1,997           2,117
      Reclamation and mine closure          22,606          26,382
      Total liabilities                     80,370          42,408

      Shareholders' equity
      Common shares, no par value,
       unlimited number authorized
      Issued and outstanding 583,706,489
       (2005 - 550,021,360)                143,442         131,804
      Contributed surplus                    3,069           1,973
      Warrants                                  14              14
      Deficit                             (103,704)        (82,860)
      Total shareholders' equity            42,821          50,931
      Total liabilities and shareholders'
       equity                             $123,191         $93,339



      CONSOLIDATED STATEMENTS OF CASH FLOWS
      FOR THE YEARS ENDED DECEMBER 31, 2006 and 2005

                                        For the Years Ended December 31,
      (In Thousands of U.S. Dollars)         2006         2005

      OPERATING ACTIVITIES
       Net loss                           $(20,844)       $(19,671)
       Non-cash items:
        Depreciation, depletion and
         amortization                       19,016          17,194
        Interest accretion and deferred
         financing costs                        --              --
        Write down of mineral property,
         plant and equipment                   197              --
        Gain on disposal of assets            (102)            (75)
        Inventory valuation adjustments      3,575              --
        Amortization of deferred charges        --           1,903
        Accretion of reclamation and mine
         closure liability                   1,192           1,174
        Write down of non-hedge
         derivatives                           207           2,647
        Stock-based compensation             1,176             579
        Foreign exchange (gain) loss          (109)           (213)
        Loss on sale of marketable
         securities                             --              45
        Warrants issued for services            --              14
                                             4,308           3,597

       Reclamation costs incurred             (968)           (558)
       Deferred revenue                      1,731              --
       Changes in non-cash working capital:
        Inventories                        (30,317)         (1,435)
        Accounts receivable and prepaid
         accounts                              461          (1,178)
        Accounts payable and accruals       43,124          (8,098)
       Cash provided by (used in)
        operating activities                18,339          (7,672)

      INVESTING ACTIVITIES
       Mineral property, plant and
        equipment expenditures             (31,916)        (19,662)
       Purchase of non-hedge derivatives        --          (1,242)
       Environmental risk transfer program      --              --
       Proceeds from sale of assets            121              93
       Notes receivable                         --              --
       Sale of marketable securities            --             442
       Restricted cash                         130            (786)
       Other, net                               --              --
       Cash used in investing activities   (31,665)        (21,155)

      FINANCING ACTIVITIES
       Common shares issued, net of costs   11,559          30,393
       Term loan                                --              --
       Notes payable and leases             (1,794)          2,527
       Other                                   (84)             --

       Cash provided by (used in)
        financing activities                 9,681          32,920

       Net increase (decrease) in cash
        and cash equivalents                (3,645)          4,093
       Cash and cash equivalents,
        beginning of year                   10,225           6,132
       Cash and cash equivalents, end of
        year                                $6,580         $10,225

      Cash paid for interest                  $322            $413

    




For further information:

For further information: Wendy Yang of Queenstake Resources Ltd., 
+1-303-297-1557, ext. 105, or +1-800-276-6070, info@queenstake.com Web Site:
http://www.queenstake.com

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QUEENSTAKE RESOURCES LTD.

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