The decline development at Austindo Resources Cibaliung gold project in Java"s Bantan Province in Indonesia has begun, however staffing and equipment issues have put the development behind schedule

Austindo Resources is undertaking a review of the development and stoping of ore blocks and reviewing local grades so in an effort to maximise revenues within the first quarter of next year and throughout 2007.

The company says any changes to the mining or decline development will only be made if it can economically enhance the project development.

Construction of the project's gold processing plant is also fundamental to achieving first gold pour within the first quarter of next year. The plant has arrived in Indonesia and cleared customs. Preliminary earthworks have been undertaken and the first truck loads of equipment have arrived on site. Negotiations are continuing with the contractor, PT Petrosea to ensure the plant is constructed within the first quarter of 2007.

Detailed engineering and procurement being undertaken by PT Petrosea is well advanced and preliminary site establishment works have started.

Austindo still believes that the purchase of the second hand gold processing plant from Sipa Resources Mount Olumpus operations in Western Australia, will still result in comparative savings over the purchase of a new plant given the world wide escalation of equipment costs and delivery time pressures and uncertainties when ordering new plant in the current inflationary climate.

Austindo's Cibaliung capital costs have increased by US$15.2 million. The company has revised its Based Case Financial Model to reflect higher fuel and power prices. The impact of higher fuel prices has contributed to a significant increase in anticipated cash operating costs. Austindo's board has engaged external consultants to verify these costs which will be calculated in accordance with The Gold Institute Production Cost Standard over the life of the mine.