Queenstake's Third Quarter Results

DENVER, Nov. 14 /PRNewswire-FirstCall/ Queenstake Resources Ltd. (AMEX:QEE)(TSE:QRL) reported a net loss of $8.1 million for the third quarter of 2006. Cash and cash equivalents at the end of the quarter totaled $5.5 million.

As described in the October 4, 2006 "Cost Reductions" news release, an internal review recently concluded that the Company needed to immediately defer production from higher cost production areas of Jerritt Canyon's underground mines and reduce the costs of ongoing operations.  Cost reduction measures implemented in late September 2006 included reducing the cost of contract underground development, streamlining maintenance, discontinuing the use of higher cost mining equipment and reducing the work force in accordance with the lower production rate. Estimated annual savings from these measures include approximately $12 million in cash operating costs and approximately $4 million in development contractor costs.

Third quarter gold production was 43,781(1) ounces, including production from ore purchased from Newmont.  Cash operating costs at Jerritt Canyon were negatively impacted by significantly lower than expected production, mill throughput limitations and higher commodity costs, resulting in significantly higher cash operating costs per ounce of $643 for the third quarter. However, the Jerritt Canyon operations showed improvement in October 2006 as a result of the cost reduction measures implemented in late September, with production and costs generally consistent with the revised plan and with sufficient cash flow to continue to fund the ongoing exploration program at Jerritt Canyon.

As announced on October 4, 2006, Queenstake's financial advisors Blackmont Capital are assisting the Company in evaluating and pursuing strategic alternatives to enhance the long-term value of the Jerritt Canyon assets. There is a high level of interest in Queenstake and a due diligence process is underway.

                                                           9 mos.    9 mos.
                                                           Ending    Ending
  Operating Highlights                3Q 2006   3Q 2005   9/30/06   9/30/05

  Gold ounces produced(1)              43,781    49,613   124,075   158,536
  Gold ounces sold                     43,129    54,446   122,833   155,856
  Average realized gold price ($/oz)     $617      $442      $607      $433
  Cash operating costs per ounce(2)      $643      $401      $546      $381
  Ore tons mined                      161,371   220,779   578,617   736,039
  Tons processed                      297,563   267,116   719,648   895,350
  Grade processed (opt)                  0.18      0.21      0.21      0.21
  Process recovery                       86.3%     86.5%     86.3%     86.6%



  Financial Review


For the third quarter of 2006, the Company reported a net loss of $8.1 million, compared with a net loss of $4.3 million in the year ago quarter. Revenues were $26.6 million from gold sales of 43,129(1) ounces at an average realized price of $617 per ounce.

Third quarter cash operating costs per ounce were $643, a significant increase from the year ago quarter due to significantly lower Jerritt Canyon production, mill throughput limitations and higher commodity and labor prices. Factors leading to lower production and mill throughput are discussed below under the heading, "Operations Review."  Over the past 12 months, cash operating costs were negatively impacted by a number of factors, including $3.2 million in rising commodity costs primarily from fuel, electric power, commodities and freight, $2.1 million in wage increases and higher than anticipated overtime costs, and $3.1 million from increased contractor costs. Together, these factors accounted for an increase in cash operating costs of approximately $48 per ounce in the past 12 months.

Depletion charges were $3.6 million, including approximately $0.3 million expensed as a result of a reduction of stockpiled Jerritt Canyon ore and work-in-process inventory from the previous quarter.  Corporate general and administrative costs were $919,000, compared with $890,000 a year ago. Exploration expense was $2.0 million during the third quarter of 2006, compared with $1.5 million in the third quarter of 2005.

At the end of the quarter, there were approximately 7,800 contained gold ounces of Jerritt Canyon ore and approximately 15,700 contained gold ounces of purchased ore in stockpiles at the mill.  There was a working capital deficit of $3.4 million, a reduction of $10.9 million from June 30, 2006, primarily due to the increase in purchased ore stockpile inventories, which accumulated as a result of mill processing limitations from the temporary gear issue, as well as reimbursable reclamation related receivables.

During the third quarter, the Company invested $5.4 million in capital expenditures, primarily for underground mine development and refurbishment of plant and equipment.

Operations Review

During the third quarter, gold production was 43,781(1) ounces of gold, of which 6,892 ounces came from ore purchased from Newmont.  Mined ore tons and total mined tons were 27% and 26% lower than the year ago quarter, respectively.  Slower than anticipated dewatering at the Smith Mine and lower than expected ore tons mined from the SSX-Steer Mine Complex significantly impacted production.

In an environment of increasing commodity costs and with the gold price declining below $600 per ounce during the third quarter, the Company conducted an internal review of the Jerritt Canyon operations in September.  This resulted in a decision to defer mining of higher cost areas of the Smith and SSX mines and to immediately implement cost reduction measures.  Specifically, production from below the current water table at the Smith Mine and from Zone 1 of the SSX Mine has been deferred.

Processed ore tonnage was unfavorably impacted as the mill ran at a reduced capacity as a result of gear limitations.  During the second quarter of 2006, the bull gear was refurbished and turned over and a new pinion gear was installed.  At that time, after consultation with several mill consultants, the Company believed the mill could operate normally at near capacity without risks to the gears.

However, during the third quarter, the new pinion gear exhibited a high degree of wear and pitting, and elevated temperatures that could represent a high risk of failure and potential collateral damage should the mill be pushed to full capacity.  As a result, the mill operated at lower capacity for the third quarter and will continue to run at about 75% capacity until the new bull gear is installed as anticipated in early 2007.  The gears have been subject to intense monitoring and daily inspections, further limiting mill throughput.  Delivery of the new bull gear, which is being fabricated in Australia, is now expected in January of 2007.

The Jerritt Canyon mining and processing operations continue their unrivalled safety record in excess of 2.6 million hours worked without a lost time accident.  The Murray Mine, which is no longer being mined, and the SSX Mine were recognized as the safest underground mines in Nevada, winning the first and second place awards, respectively, from the Nevada Mining Association (NMA) in September 2006.  The Jerritt Canyon mill also was recognized by the NMA with a second place award in the safest surface mines and mills category in Nevada.

2006 Outlook

The Company had previously announced on October 4, 2006 estimated fourth quarter production of 40,000 ounces of gold from Jerritt Canyon at cash operating costs of about $420 per ounce.  The Company continues to expect fourth quarter production of approximately 40,000 ounces of gold from Jerritt Canyon, excluding gold produced from ore purchased as part of the ore purchase agreement with Newmont.  The Company is less confident of achieving the $420 cash operating costs per ounce.  Jerritt Canyon costs for October 2006 appear to be generally in line with the revised operating plan and the cost cutting measures appear to be taking effect.  However, the Company is analyzing the full impact of the cost reduction measures implemented as well as evaluating further possible measures.  In view of uncertainties in ongoing operating costs, the Company is not providing cost guidance for the fourth quarter of 2006.

As the Company reported in its October 4 news release, for the full year 2006, gold production from Jerritt Canyon is currently estimated at 160,000 ounces, excluding production from ore purchased from Newmont.  This reflects the year-to-date mill-related production shortfalls and lower throughput rate, delays in accessing ore and deferral of the mining of higher cost areas of the mines. Cash operating costs continue to be adversely affected by increases in basic commodity prices.

Exploration expenditures are expected to be $5 million in 2006, compared with $3.9 million in 2005.  Capital expenditures are expected to be approximately $21 million, compared with $21.6 million in 2005.  Corporate general and administrative costs are estimated at approximately $4.0 million in 2006.  The Company expects to fund the balance of these 2006 estimated expenditures from existing cash and expected cash flow from operations.

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 three underground mines.  At year-end 2005, total measured and indicated resources(3) were 8.8 million tons at 0.24 opt (8 million tonnes at 8 grams per tonne), containing 2.1 million ounces of gold, including approximately 878,000 ounces in reserves(3). 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 third quarter of 2006
      included 6,892 ounces of gold from the ore purchased from Newmont.
      (See news releases of March 30, 2006 and April 13, 2006.)
  (2) Cash operating costs per ounce are 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 Table 5 of the Management Discussion and
      Analysis on file at http://www.sedar.com/ and http://www.sec.gov/ for further
      information.
  (3) Mineral "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 demonstrated economic viability.  For further
      information, please refer to the risk factors and definitions of
      mineral reserves and resources in the Company's filings on SEDAR and
      with the SEC on the Company's website, http://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.

  For further information call:
  Wendy Yang 303-297-1557 ext. 105
  800-276-6070
  Email -   web - http://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) estimates and projections of future gold production, processing rates and cash operating costs, (ii) estimates of savings or cost reductions, mill refurbishment and maintenance costs, (iii) estimates related to financial performance, including cash flow, capital expenditures, exploration and administrative costs, (iv) estimates and projections of reserves and resources, (v) estimates and opinions regarding geologic and mineralization interpretation, (vi) estimates of exploration investment, scope of exploration programs and timing of project advancement, commencement of production and availability of drills and other equipment, and (vii) estimates of reclamation and closure costs.  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 and other risks which are described in the Company's most recent Annual Information Form filed on SEDAR (http://www.sedar.com/) and Annual Report on Form 40-F on file with the Securities and Exchange Commission (SEC; http://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.

    INTERIM CONSOLIDATED STATEMENTS OF LOSS
    UNAUDITED
                                         For the Three      For the Nine
                                         Months Ended       Months Ended
    (In Thousands of U.S. Dollars,       September 30,      September 30,
     except per share amounts)           2006     2005      2006      2005

    Gold sales                         $26,610  $24,076   $74,528   $67,451
    Costs and expenses
      Cost of sales                     28,160   22,907    69,050    62,046
      Depreciation, depletion and
       amortization                      3,618    3,058    10,819    13,411
      Non-hedge derivatives                 --      388       207     1,528
      Exploration                        1,979    1,474     3,303     2,859
      General and administrative           919      890     3,275     4,090
      Accretion of reclamation and
       mine closure liability              293      194       880       460
      Stock-based compensation             143      146     1,057       571
                                        35,112   29,057    88,591    84,965
      Income (loss) from operations     (8,502)  (4,981)  (14,063)  (17,514)

      Interest expense                     103       47       209       372
      Other income, net                   (496)    (302)   (1,019)     (697)
      Foreign exchange (gain) loss          (4)    (424)     (162)     (165)
      (Gain) loss on disposal of
       assets                               (5)      --      (102)       --
      Loss on write down of assets          31       --       197        --
                                          (371)    (679)     (877)     (490)
      Net income (loss)                $(8,131) $(4,302) $(13,186) $(17,024)

      Net Income (loss) per share -
       basic and diluted                ($0.01)  ($0.01)   ($0.02)   ($0.03)

    Weighted average number of shares
     outstanding (000's) - basic       582,692  549,842   569,787   495,545



    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)      2006      2005      2006      2005

    Deficit, beginning of period     $(87,915) $(75,911) $(82,860) $(63,189)
    Net Income (loss)                  (8,131)   (4,302)  (13,186)  (17,024)
    Deficit, end of period           $(96,046) $(80,213) $(96,046) $(80,213)



    INTERIM CONSOLIDATED BALANCE SHEETS
    (In Thousands of U.S. Dollars)             September 30,    December 31,
                                                    2006             2005
    ASSETS                                       Unaudited
    Current assets
    Cash and cash equivalents                      $5,494          $10,225
    Trade and other receivables                     6,207              463
    Inventories                                    13,319            6,519
    Marketable securities                              13               13
    Prepaid expenses                                2,413            1,499
    Total current assets                           27,446           18,719

    Restricted cash                                27,275           27,165
    Mineral property, plant and
     equipment, net                                53,972           45,692
    Other assets                                    1,329            1,763
    Total assets                                 $110,022          $93,339

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and accrued
     liabilities                                  $28,763          $11,063
    Other current liabilities                       2,130            2,846
    Total current liabilities                      30,893           13,909

    Other long-term obligations                     2,122            2,117
    Reclamation and mine closure                   26,900           26,382
    Total liabilities                              59,915           42,408

    Shareholders' equity
    Common shares, no par value,
     unlimited number authorized
    Issued and outstanding  582,936,489
     (2005 - 550,021,360)                         143,176          131,804
    Contributed surplus                             2,963            1,973
    Convertible securities                             14               14
    Deficit                                       (96,046)         (82,860)
    Total shareholders' equity                     50,107           50,931
    Total liabilities and shareholders'
     equity                                      $110,022          $93,339



    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
    Unaudited
                                        For the Three      For the Nine
                                        Months Ended       Months Ended
                                        September 30,      September 30,
    (In Thousands of U.S. Dollars)      2006     2005      2006      2005
    OPERATING ACTIVITIES
      Net loss                         $(8,131) $(4,302) $(13,186) $(17,024)
      Non-cash items:
        Depreciation, depletion and
         amortization                    3,618    3,058    10,819    13,411
        Write down of assets                31       --       197        --
        (Gain) on disposal of assets        (5)      --      (102)       --
        Accretion of reclamation and
         mine closure liability            293      194       880       460
        Write down of non-hedge
         derivatives                        --      388       207     1,528
        Stock-based compensation           143      146     1,057       571
        Foreign exchange loss               (4)    (424)     (162)     (165)
        Loss on sale of marketable
         securities                         --       --        --        38
        Write down of marketable
         securities                         --        3        --         7
                                        (4,055)    (937)     (290)   (1,174)

      Reclamation costs incurred            --     (500)     (362)     (500)
      Changes in non-cash working
       capital:
        Inventories                       (737)   2,372    (6,374)       23
        Accounts receivable and
         prepaid accounts               (6,150)   1,029    (5,731)      723
        Accounts payable and accruals   11,982    3,978    19,094    (5,484)
      Cash provided by (used in)
       operating activities              1,040    5,942     6,337    (6,412)

    INVESTING ACTIVITIES
      Property, plant and equipment
       expenditures                     (5,445)  (7,745)  (20,404)  (14,806)
      Proceeds from sale of assets         100       --       121        --
      Sale of marketable securities         --       --        --       442
      Restricted cash                     (345)    (122)     (110)     (373)
      Cash (used in) investing
       activities                       (5,690)  (7,867)  (20,393)  (14,737)

    FINANCING ACTIVITIES
      Common shares issued, net of
       costs                               174       44    11,305    30,393
      Notes payable and leases            (478)  (1,002)   (1,976)   (1,392)
      Deferred financing costs              (4)      --        (4)       --
      Cash provided by (used in)
       financing activities               (308)    (958)    9,325    29,001

      Net increase (decrease) in cash
       and cash equivalents             (4,958)  (2,883)   (4,731)    7,852
      Cash and cash equivalents,
       beginning of period              10,452   16,867    10,225     6,132
      Cash and cash equivalents, end
       of period                        $5,494  $13,984    $5,494   $13,984


DATASOURCE: Queenstake Resources Ltd.



CONTACT:  Wendy Yang or Queenstake Resources Ltd., [phone],

ext. 105, or [phone], 



Web site:  http://www.queenstake.com/ 

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