Kingsrose Mining Limited (ASX:KRM) Quarterly Report For The Period Ended 31 December 2009

Perth, Feb 1, 2010 AEST (ABN Newswire) - Kingsrose Mining Limited (ASX:KRM) is pleased to provide the Quarterly Activities Report for the period ended 31 December 2009.

WAY LINGGO PROJECT

During the December Quarter 2009 Kingsrose Mining (ASX "KRM") continued making very good progress on preparations to bring its Way Linggo high grade gold/silver project in southern Sumatra, Indonesia into production.

The expansion of the underground mine infrastructure to accommodate the planned 400 tonne per day ore production target was completed and construction of the process plant is on schedule to start commissioning in April 2010.

Face channel sampling in sublevel development drives continues to confirm significantly higher gold and silver grades than predicted from the feasibility drill data resource model.

Exploration activities continued with diamond drilling from surface and from underground as well as regional exploration following up over 20 targets developed from interpretation of airborne geophysical programme completed during September.

An updated financial budget was prepared, indicating a cash cost of US$150 per gold ounce (after payment of royalties and inclusive of silver credits) once a steady-state production rate is achieved.

PROCESS PLANT CONSTRUCTION

Construction of the 140,000 tonnes per annum Merrill-Crowe processing plant was well advanced during the quarter. Construction of the leach tanks, other ancillary tankage and CCD thickener sections neared completion as shown in Plate 1.
All major large equipment items including ball mills, crushers, conveyors, feeders and hoppers have been moved to site in preparation for installation and concrete foundation construction for all these sections is progressing.

Construction of the gold room, on-site laboratory, and 3 MW powerhouse is underway.

A concerted effort is underway for recruitment of key Indonesian managers, staff and labour for all sectors of the project and experienced people have already been successfully hired for most critical positions.

MINE DEVELOPMENT

The upgrading of underground and surface infrastructure to accommodate the proposed 400 tpd production rate was completed during the Quarter. These works have included:-

- Installation of a larger hoist winder on the ROM Pad incline

- Commissioning of four electric underground locomotives for ore haulage

- Commencement of construction of the underground inclined shaft to access the 970 level from the main haulage level

- Commencement of raises and sublevels in parts of the A and B ore bodies in preparation for stoping.

Face channel sampling along the strike of the A Ore Body in sublevels above 1020 Level continues to return encouragingly high gold and silver grades. Sampling within the sublevels developed in the A ore body in preparation for production stoping returned:

62 metres grading 34.2 g Au/t and 452 g Ag/t

and

62 metres grading 21.2 g Au/t and 330 g Ag/t

Channel sampling in an Alimak rise on the northern end of this area has returned:

50 m grading 24.7 g Au/t and 371 g Ag/t

Similar sampling in the first B Ore Body sublevel has returned:

57 m grading 27.0 g Au/t and 369 g Ag/t

These results from within both North Vein ore bodies continues to confirm the positive reconciliation observed between the higher production grades and the drill data based resource model. Once full sub level development sampling is completed between the 1020 and 1065 levels, during the next quarter, the potential upside of this reconciliation will be quantified.

As much of this development has been in high grade ore approximately

8,650 tonnes of ore grading 21.9 g/t Gold and 293 g/t Silver

has been stockpiled at the surface. This represents significantly higher grades of both metals than was predicted for these development areas from the feasibility drill based resource estimate. Further development in ore is scheduled for the coming quarter which will continue to increase the stockpile tonnage up to the mill start up.

GEOLOGY AND EXPLORATION

During the previous quarter (September) a helicopter magnetic and radiometrics geophysical survey of the entire 10,540 ha tenement was undertaken. The data from this survey was processed and interpreted by leading geophysical and structural geological consultants to identify other regional targets within the Contract area. This work has led to the identification of 22 new target areas based on structural lineaments, intersection zones and alteration systems.

Diamond drilling from surface continued with 3,340 m completed in 17 drill holes up to end December (Drill holes DDH-103 to DDH-120). Drilling has continued up to time of reporting and the locations of exploration drill holes completed to date (20 drill holes totalling 4,527m).

Drill holes in the Quarry Vein (11 drill holes for 1,660m) intersected sporadically developed epithermal quartzrhodocrosite bearing epithermal veins up to 1.2 m with patchy gold grades up to a maximum of 7 g/t gold and with high silver to gold ratios. At this stage no further work is warranted on this near mine site target.

Three drill holes targeted the "Mercury Zone", a previously reported linear zone of clay alteration previously reported shedding high grade quartz float. Broad (6 m wide) zones of silicification in dacite intrusive were intersected carrying weakly anomalous gold (0.3 - 0.5 g/t Gold) however in a couple of drill holes the core contained fragments of banded epithermal quartz, interpreted as being entrained from some depth to the current level.

Deeper drilling from the underground North vein development will be planned to follow this up at a future stage.

The company is acquiring an underground drill rig capable of 500 m holes to test these and other targets, including those below the current extent of the North Vein resource.The Way Biawak zone has been confirmed to be another fault controlled zone of epithermal silicification parallel to the North Vein. This zone will require further drilling from underground.

One of the drill holes testing the Way Biawak structure (DDH-119) was continued across the strike extent of the North Vein Fracture, the structural zone containing the A and B ore bodies. This hole intersected a 1.9 m interval of quartz/calcite veining from 395.8m located exactly on the strike projection of the North Vein Fracture approximately 360 m north of the current mine development. Assays have returned a low gold tenor (0.14 g/t Au) however anomalous silver (average 34 g/t Ag, maximum 112 g/t Ag) indicating a high silver to gold ratio for this interval. This intersection, at an elevation some 100m below the Main Haulage level in the ore body, almost doubles the known strike extent of the North Vein and remains open further to the North and at depth confirming the high potential for further epithermal gold/silver mineralisation on this structure. A programme of detailed surface geological mapping, geochemical soil sampling and prospecting is underway to identify any further surface expression of this strike extension.

COMET VALE PROJECT

Mining activities at Comet vale made good progress during the quarter with production exceeding the 100 tpd budgeted rate during December.

Mining of the Sand George Level 4 Block 1 stope was completed with 4,700 tonnes @ 19.0 g/t gold hoisted during the quarter. Broken ore remaining within the stope at end-quarter was approximately 2,500 tonnes, which will be hoisted during the January 2010.

The milling of Campaign 10 was completed with 7,319 tonnes @ 12.0 g/t Au (estimated) milled by end-December. A small parcel of ore remained at year end and will be added to the next campaign. Kingsrose' estimated share of produced gold was 1,277 ounces (after royalties) however the final mill reconciliation from this milling campaign is still pending. A total of 1,235 ounces were sold by end-December at an average price of A$1,193 per ounce, yielding A$1.474m revenue.

During the quarter there was 156m of sub-level driving (along strike) completed. Mining of the Sand George Hanging Wall Lode Block 2 (south of Block 1) is well advanced and grade control sampling from this block has indicated an average mined grade of 21.6 g/t Au. Grade control sampling from the less advanced Level 4 Sand George Foot Wall Lode indicates an average mined grade from this new block of 9.7 g/t Au.

Remnant mining of the Level 3 Sand Queen ore body is continuing with average mined grades of 9.0g/t and underground drilling of 5 drill holes for a total of 53m designed to test for parallel lodes was completed. Assay Results are pending.

At the end of the quarter ROM stockpile for the next campaign (Campaign 11) stood at 9,510 tonnes @ 11.6g/t Au.

Milling of this campaign is planned for early February 2010.

CORPORATE

- In December 2009 the Company announced that it would begin pre-feasibility work on a potentially very large scale Tailings Retreatment Project in one of the largest historic mining districts in Europe. Kingsrose reached in principle agreement with the regional government of Sardinia, Italy, to commence work on multiple Zinc-Lead tailings deposits containing a target of between 70 - 90 million tonnes of material accumulated from over 200+ years of mining.

- During the quarter:

- - 50,000 unlisted options were exercised at an exercise price of A$0.39 each;

- - 2,000,000 unlisted options issued were issued to a consultant pursuant to a consulting agreement dated July 2008. The options were issued following execution of a Letter of Intent between the Company and IGEA (as announced on 16 December 2009). The options were issued on 29 December 2009 under the Directors' 15% facility at an exercise price of A$0.20 each, exercisable on or before 29 December 2012.

- - 22,300,000 ordinary shares were released from escrow on 7 December 2009;

- - 5,000,000 unlisted options at an exercise price of A$0.25 each were released from escrow on 7 December 2009.

- Kingsrose closed the quarter with an AUD equivalent cash balance of AUD A$7 million.

Subsequent to quarter end:

The Company placed 15,000,000 ordinary shares at a price of A$0.60 each to clients of Patersons Securities Limited raising a net amount of A$8,520,000. The shares issued were within the discretionary capacity of the Board under ASX Listing Rule 7.1.

The proceeds are intended to be applied towards:

- - Additional exploration and review of the recently acquired zinc/lead tailings deposits in Sardinia.

- - Further exploration work at its Way Linggo gold/silver project in Indonesia.

- - Funding general working capital.

For the complete Kingsrose Quarterly Report for the period ended 31 December 2009, please click the link below:

http://www.abnnewswire.net/media/en/docs/62179-ASX-KRM-478366.pdf

Contact

John C. Morris Executive Chairman Tel: +61-8-9486-1149 Fax: +61-8-9486-1151 Email: info@kingsrosemining.com.au