Beaconsfield Gold - Australia's Richest Gold Resource.

High Grade, Low Cost Gold Producer

September 2006 Quarterly Report

Report on Activities for the Quarter ended 30 September 2006

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1. BEACONSFIELD MINE JOINT VENTURE (BMJV)
(Beaconsfield Gold Direct Interest 48.49%)

1.1 OPERATIONS

Mining activity has been suspended since the tragic seismic event on 25 April 2006 and the operation continued on a care and maintenance basis throughout the quarter.

1,137 ounces of gold were poured from material recovered during stripping of the plant circuit early in the quarter. Beaconsfield Gold's share of this production was 551 ounces.

The care and maintenance program has been designed to ensure that a smooth and orderly start-up can be achieved when the necessary approvals are received to progressively re-open the mine. Underground, the dewatering rising main has been extended down the decline, an explosives magazine relocated, ventilation control walls constructed and maintenance work completed in the shaft. In the mill, tanks and general steelwork have been sandblasted and painted and essential off-line maintenance completed. An inoculum of bacteria is being held in a temperature-controlled tank and regular tests have confirmed that dormancy is reversible.

A core workforce in the mine and mill, with the key skills necessary for a safe restart, have been retained and the opportunity has been taken to enhance current skills with further operational and safety training.

Significant progress has been made towards completing the work necessary to seek approval from the Chief Inspector of Mines to re-open the mine. Coffey Mining was commissioned in mid May by Allstate, as Manager of the Beaconsfield Mine Joint Venture, to carry out the independent geotechnical review required by the Chief Inspector. Coffey concluded that they "do not foresee any geotechnical reasons relating to ground control that could not be managed such that they would prevent the Beaconsfield Mine recommencing operations".

Coffey further commented that "the review identified a number of operating mines in Canada that are currently experiencing seismicity of greater magnitude and frequency to that experienced at Beaconsfield and have been effectively managing this risk through the use of similar design processes and ground control techniques to those proposed by Coffey Mining for recommencement of operations at Beaconsfield."

A staged re-commencement of mining is planned with separate submissions and approvals for three discrete activities; decline development, ore development (sill driving) and ore production (stoping). A separate Case for Safety is required for each stage of re-opening incorporating a review of the geotechnical matters, actions and activities necessary to support a safe return to work. The Case for Safety for decline development was submitted to the Inspector on 20 October and following an extensive consultation program, which is underway, it is expected that the Inspector will approve re-opening of the mine and that mining will recommence in the decline during November. Work is well advanced on the remaining two Cases for Safety which share a significant common safety component with the completed decline Case for Safety. Only approval for the recommencement of ore production (stoping) will flag that commercial rates of gold production can again be achieved. Beaconsfield Gold anticipates that both sill driving and stoping activities will resume during the current quarter although it will be some time before normal levels of gold production are achieved.

The BMJV is pursuing a claim under the BMJV's business interruption insurance policy following the 25 April 2006 incident and the closure of the mine by the Chief Inspector of Mines. The policy covers costs and loss of profits.


1.2 EXPENDITURE

The non-production costs incurred during the quarter for care and maintenance activities totalled $4.6 million (BCD share $2.3 million), of which $0.54 million (BCD share $0.26 million) were non-recurring costs including rescue and redundancy payments.

The Federal Government has assisted in the safe re-opening of the mine by providing a grant of $4.9 million to the BMJV through the Beaconsfield Community Fund. When received, the grant will assist the BMJV to meet supernumerary payroll costs, to develop the decline on to access the F21 Zone and to conduct deep drilling below current reserves.

The Tasmanian State Government has also announced its intention to waive approximately $0.7 million owing to it for historic unpaid stamp duties by the BMJV if mining operations recommence.
Capital expenditure was largely placed on hold throughout the quarter, with $0.3 million incurred.


1.3 UNDERGROUND DRILLING OF THE TASMANIA REEF

There was no underground exploration drilling undertaken during the quarter. A program to test below the current F21 resource is planned by the BMJV after the mine has re-opened, commencing in the 2007 calendar year.


1.4 ORE RESERVES/RESOURCES

Allstate, as Manager of the BMJV, has reported that the Identified Mineral Resource for the Tasmania Reef at Beaconsfield, Tasmania as at 31st March 2006 was:

* Beaconsfield Gold's equity share of the above Resource is 215,000 ounces

A Reserve Statement for the Tasmania Reef, including the additional F21 Zone reserves announced by Allstate in April 2006, is expected to be released following the re-commencement of ore production.


1.5 BMJV REGIONAL EXPLORATION

During the quarter, the first hole (B52) of a program at Middle Arm Gorge, 2.5km south east of the Beaconsfield Mine, intersected a significant shear zone with mineralised wallrocks over 4.8m at a downhole depth of 588m. The structure intersected is similar in characteristics to the western end of the Tasmania Reef.

A follow-up hole (B53), designed to intersect the predicted position of the shear zone structure some 150m to the east of B52, had reached a depth of 83m at the end of the quarter.


1.6 CLAIM AGAINST ALLSTATE'S PREVIOUS LEGAL ADVISOR

Allstate, on its own behalf and as Manager of the BMJV, has been seeking damages for professional negligence arising from legal services provided to Allstate in relation to certain insurance and risk management issues associated with the contract for construction of the treatment plant at the Beaconsfield Mine in 1998/1999. No significant developments occurred in relation to the claim during the quarter.

2. EXPLORATION OF BEACONSFIELD GOLD'S 100% INTEREST TENEMENTS

2.1 STAVELY PROJECT, WESTERN VICTORIA

Beaconsfield Gold is exploring a large landholding in Western Victoria, to the south-east of the Grampians, collectively known as the Stavely Project, comprising 1,180 square kilometres of contiguous tenements. This gives the Company control over a region stretching up to 30km east-west and 60km north-south with a number of excellent prospects.


2.1.1 Fair View Gold Prospect

Soil sampling has previously defined a strong, very coherent gold-in-soil anomaly over the full 4.8 km length tested. The previously reported initial drilling has confirmed that gold mineralisation is present in both the shallow oxide zone and in the deeper primary rocks. A geophysics program is now planned to refine the geological/structural model and help in the design of a follow-up drilling program. A contractor has been engaged to fly low-level, detailed aeromagnetics, with the program planned to commence during November.


2.1.2 Thursday's Gossan

Thursday's Gossan, located approximately 5km NNW of the Fair View Prospect, contains one of Australia's largest copper anomalies. Previous explorers, including most recently Newcrest, drilled a number of holes in the area targeting a large porphyry copper system, similar to Cadia/Ridgeway or North Parkes in NSW. Some encouraging intersections were recorded including VICT1D4 (229m at 0.22% copper) and DD96WL10 (186m at 0.15% copper) but it appears that the necessary deep diamond drilling required to fully test the prospect was not attractive at the significantly lower copper prices prevailing at the time.

Beaconsfield Gold's current focus is on the potential for near-surface copper mineralisation that would support a heap leach operation. A drilling program commenced on 25 October to follow up previous shallow intersections of copper-gold mineralisation associated with a secondary (supergene) chalcocite blanket and to determine the zone's metallurgical properties (refer attached figure).

The holes will be drilled along a "spine" of mineralisation around 800m in length. At the north, VSTD01 intersected 14m at 1.8% copper (including 6m at 3.0% copper and 1.1g/t gold from 22m depth, equivalent to approximately 13g/t gold at current prices). Some 700m to the south, STAVRA417 recorded 36m at 1.1% copper including 6m at 2.9% copper from 48m depth.


2.1.3 Balbeggie

A soil sampling program was conducted at the Balbeggie Prospect, 5km west of Fair View, during the quarter. Samples were taken using a similar technique to that used at Fair View over an area of approximately 800m by 2km. Whilst some anomalous gold results were encountered, the overall tenor fell well short of the results seen at Fair View and no immediate follow-up is planned.


2.2 BEACONSFIELD PROJECT, TASMANIA (100% Beaconsfield Gold)

2.2.1 North Pease Creek Gold Prospect

There was again no significant activity during the quarter on the North Pease Creek property around 4 km northwest of the Beaconsfield Mine. Whilst the property remains a good exploration target, priorities will be reassessed in light of the encouraging results emerging from the BMJV drilling at Middle Arm Gorge. Beaconsfield Gold has 100% of the exploration licence immediately to the east of Middle Arm Gorge and geophysics carried out in the area indicates that the Middle Arm Gorge faulting extends north-east into Beaconsfield Gold's licence.


2.3 EXPLORATION EXPENDITURE

Expenditure on the Stavely Project totalled $45,000 during the quarter. A further $6,000 was spent on Beaconsfield Gold's 100% owned tenements at Beaconsfield.

3. BEACONSFIELD GOLD NL CORPORATE

3.1 GOLD HEDGING AND GOLD PROCEEDS

At 30 September 2006, the Company's hedge book was down to 24,000 ounces (30 June 2006: 30,000 ounces) of flat forwards and spot deferreds, with deliveries out to April 2007, at an average price of A$614 per ounce (30 June 2006: A$608 per ounce). This level of hedging represents only approximately 12% of Beaconsfield Gold's current gold resources.

The marked-to-market value of the hedge book at 30 September 2006, when the spot price of gold was A$801 per ounce (30 June 2006: A$810 per ounce), was negative $4.8 million (30 June 2006: negative $6.5 million).
Following the Anzac Day incident and consequent cessation of mining production at the Beaconsfield mine, Beaconsfield Gold's gold forward sales contracts no longer meet the strict criteria of effective hedging under AIFRS. As a result, movements in the Company's hedge book marked-to-market value are now required to be brought to account through the income statement.


3.2 CASH POSITION

At 30 September 2006, the total effective cash position of the Company was approximately $6.7 million, including $1.7 million of cash held by Allstate, as Manager of the BMJV, on behalf of Beaconsfield Gold.


3.3 BEACONSFIELD GOLD ISSUED SECURITIES AT 30 SEPTEMBER 2006

3.4 POTENTIAL RESTRUCTURING OF THE BMJV

Beaconsfield Gold remains committed to the objective of rationalising the ownership of the BMJV, having consistently maintained that the current ownership structure hinders optimal mine operation and regional exploration at Beaconsfield.

Management of the mine and joint venture on a long term and ongoing basis (over five years now) by a company in administration, as Allstate Explorations NL is, is both unprecedented in the Australian mining industry and counterproductive as far as redevelopment is concerned. In terms of the day-to-day operations and decision making at the mine, Beaconsfield Gold has been concerned for some time that the Mine Manager has reported only to the Deed Administrator, an accountant based in Perth. In a normal situation, there would typically be two levels of technical supervision and oversight provided by an experienced Chief Executive Officer and a board that would contain directors with extensive, relevant experience in the mining industry.

Additionally, Allstate's financial position going forward is uncertain. The ramp-up to commercial production and the ongoing required investment in development and exploration mean that Allstate may need additional funding during the mine re-opening phase.

The Deed Administrators for Allstate released the Allstate group's financial statements for the 2005/06 year on 30 October 2006. The financial statements showed net assets, as at 30 June 2006, of negative $43.2 million. In their report, the Deed Administrators said "...the [Allstate group] is in a very difficult financial position. Basically the problems are of a cash flow nature rather than debt." Consistent with previous years, the Deed Administrators' declaration said, in part: "There is a possibility that, if the BMJV does not trade cash flow positive and further funds are not sourced, [the Allstate subsidiaries'] interests in the BMJV assets will be required to be sold and/or the Allstate Group companies wound up."

If the Allstate group is unable to fund its interest in the mine going forward, Beaconsfield Gold is ideally positioned to acquire the Allstate interest as Beaconsfield Gold:

• understands the gold mining business;
• has comprehensive pre-emptive rights under the BMJV Agreement and is the obvious, natural purchaser of the Allstate interest;
• has the management capability to install the appropriate operational, reporting and oversight regime necessary to run the mine; and
• has appropriate current funding together with the necessary approval to raise additional funds as required.

3.4.1 Pre-emptive rights

On 8 September 2006, the Supreme Court of Victoria confirmed Beaconsfield Gold's comprehensive pre-emptive rights under Clause 20.5 of the BMJV Agreement. Beaconsfield Gold was subsequently awarded costs against Allstate.

Beaconsfield Gold sought the ruling after Allstate and the Joint Deed Administrator had sought expressions of interest in a possible transaction to restructure the ownership of the Beaconsfield Gold Mine, with a stated preference for a large share placement in Allstate.

The relevant pre-emptive rights clause of the BMJV Agreement states, in effect, that where a joint venturer is, at any time, a subsidiary of another company and, by reason of any transaction or event (such as a placement of shares), ceases to be a subsidiary of that company, pre-emptive rights over that joint venturer's interest in the BMJV are triggered. In that circumstance, the cash consideration for that BMJV interest is to be determined by an expert to be fair consideration as between a willing seller and a willing purchaser. The Supreme Court of Victoria has confirmed this position.

Justice Hargrave found: "....the provisions of Cl. 20.5 have an obvious anti-avoidance purpose; to prevent devices designed to transfer effective ownership or control of a joint venture interest to a new owner without triggering pre-emptive rights in the other joint venturers".

Allstate has appealed the decision but the appeal is not likely to be heard for some considerable time. Beaconsfield Gold is extremely confident of its legal position.

The BMJV Agreement also provides Beaconsfield Gold with strong pre-emptive rights in the event that Allstate disposes of the Allstate group's interest in the BMJV or the Allstate subsidiaries that hold the group's interest. These rights have been agreed by Allstate.


3.4.2 Beaconsfield Gold funding for a potential transaction

On 28 June 2006, the Company received shareholder approval for the placement of up to 60 million new shares within three months at not less than 34 cents to sophisticated and professional investors. At a general meeting held on 4 October 2006 to refresh the placement ability, shareholders approved the issue of 60 million new shares at the lower of 34 cents or 80% of market value, dependent on whether the shares are trading at the time.

This approval positions the Company so that it can acquire, at short notice, the Allstate group's 51.51% interest in the Beaconsfield Mine, if that interest becomes available, via a direct purchase or via Beaconsfield Gold's comprehensive pre-emptive rights under the BMJV Agreement. The approval also provides for the financing of any other transaction which increases Beaconsfield Gold's beneficial interest in the Beaconsfield Mine

3.4.3 Allstate's restructuring plans

Allstate had been conducting an Australia-wide process to seek expressions of interest in a restructure of the company but suspended those plans in September when the Supreme Court of Victoria confirmed Beaconsfield Gold's comprehensive pre-emptive rights under the BMJV Agreement.

The Deed Administrator for Allstate currently has no enunciated plan to repay Allstate's remaining creditors and return control of Allstate to its shareholders. Allstate's record over the last five years in administration contrasts dramatically to what Beaconsfield Gold has achieved over the same period.


3.4.4 Allstate intercompany debt

Beaconsfield Gold owns 30.1% of the fully paid shares in Allstate (25.6% of the fully paid plus partly paid shares). The Allstate interest is carried in Beaconsfield Gold's accounts at zero value.

In March 2002, Macquarie Bank acquired $77 million of Allstate group intercompany debt (previously owed to Allstate by the two Allstate subsidiaries) for $0.3 million.

Shortly after the 25 April 2006 incident at the Beaconsfield Mine, Macquarie Bank announced that it would transfer the balance of this debt (approximately $47 million) to a trust to be set up for the sole benefit of the Allstate workforce at the Beaconsfield mine.

On 4 October 2006, Macquarie Bank advised in a release to the ASX: "The Bank is continuing to work with an interested trustee with the objective that the trust be finalised without further delay. Regardless of the final structure, the Bank remains committed to ensuring that the intended commercial outcome for the employees of the mine on Anzac Day 2006 will be delivered, being that the economic value of the intercompany debts will be given to the intended beneficiaries of the trust. It will be for the beneficiaries to determine how the intercompany debts are dealt with."

Beaconsfield Gold expects that the commitments made by Macquarie Bank will shortly be delivered.

The finalisation of these arrangements is essential ahead of any restructure of the ownership of the mine.


3.5 MELICK INVESTIGATION

Special investigator Greg Melick SC is continuing to conduct an independent investigation into the 25 April 2006 incident in the underground workings of the Beaconsfield Mine which resulted in the death of Larry Knight and the trapping of two other miners underground for fourteen days. His full report, which is not expected before the end of November, is to be provided to the Tasmanian Coroner and the Tasmanian Director of Public Prosecutions.

Beaconsfield Gold awaits the outcome of the legal processes underway in Tasmania. It reserves its rights in regards to any possible action for the recovery of losses suffered by the Company following the incident of 25 April 2006.


3.6 BEACONSFIELD GOLD'S POSITION IN REGARDS TO GEOTECHNICAL REVIEWS AT THE BEACONSFIELD MINE

On 6 September 2006, Allstate announced to the ASX the findings of Coffey Mining, who were commissioned in mid May to carry out the independent geotechnical assessment of the mine as required by the Tasmanian Chief Inspector of Mines.

Allstate still has not yet provided Beaconsfield Gold with a copy of the Coffey report, either in draft or final form. Nevertheless, Beaconsfield Gold is very encouraged by the positive comments made by Coffey Mining in the 6 September announcement concerning mine re-opening and at a preceding BMJV overview briefing on 1 September 2006 that was attended by representatives of Beaconsfield Gold.

Following a rock fall at the Beaconsfield Mine on 26 October 2005, Allstate, as Manager of the BMJV, commissioned Australian Mining Consultants (AMC) to review the October 2005 seismic event. Like Coffey Mining, which subsequently analysed both the October 2005 and April 2006 rock falls, AMC in its 30 January 2006 report considered that longer ground support bolts should now be used in those stopes at the Beaconsfield Mine prone to seismic events.

An article in The Australian newspaper on 9 October 2006 reported that the AMC report may not have been passed on to the Tasmanian Chief Inspector of Mines or Beaconsfield Gold before the 25 April 2006 rock fall. Beaconsfield Gold can confirm to its shareholders that, prior to 25 April 2006, Allstate had not provided a copy of the 30 January 2006 AMC report to Beaconsfield Gold, or informed Beaconsfield Gold of AMC's recommendation regarding longer ground support bolts, as the Manager was obliged to do under the BMJV Agreement.


3.7 TENEMENTS

Beaconsfield Gold has interests in the following tenements.

(a) A subsidiary of BCD has an option to acquire 100% interest, subject to a 3% net smelter return royalty.


3.8 INTERNET

Shareholders are invited to visit the Company's website to view all ASX releases (including all quarterly and annual reports), historical information relating to the Beaconsfield Mine and Beaconsfield Gold NL corporate information: www.beaconsfieldgold.com.au

Shareholders who wish to receive Beaconsfield Gold ASX releases by e-mail are encouraged to contact the Company on: enquiries@beaconsfieldgold.com.au




For further information contact:
Bill Colvin - Chief Executive Officer

Beaconsfield Gold NL
t: 61-3-9909-7401
e: enquiries@beaconsfieldgold@.com.au
w: www.beaconsfieldgold.com.au