The following discussion and analysis is for the three-month period ended June 30, 2004 compared with the three-month period ended June 30, 2003. This information is current to August 27, 2004 and has not been reviewed by the Company's auditors.


Description of Business

New Guinea Gold Corporation ("the Company") is a Canadian junior resource company involved in mineral exploration and development activities on twelve gold and gold/copper projects in Papua New Guinea ("PNG"). The Company's primary objective is to develop mineral properties to a stage where they can be exploited profitably.


The Company's Development Strategy

The Company has interests in twelve properties in Papua New Guinea. Four projects are considered core gold projects at this stage, on which the Company's funds are focused. Three of the core properties (Sinivit, Normanby and Sehulea) are partly drilled, have modest resources and/or reserves, and are considered to have untested potential which could yield major gold ore bodies (plus 1 million ozs contained gold). The fourth core project is Mt Penck.

The Company's strategy, based on present resources, is to develop three mines over the next three years. These mines should yield 40,000 ozs gold per annum and a net cash flow of $10 million per annum for four to five years. At the same time, exploration will proceed on these projects, the other core projects and remaining projects to define additional and new resources. The initial mine at Sinivit is planned to be in production by mid 2005.

It is most important to note that none of the proposed mine projects have been fully explored. Exploration was terminated in 1998/1999 due to market conditions and reduced funds available to the Company and its parent company Macmin Silver Ltd. All three mine projects could yield much larger and longer life mines than are presently proposed. The resources defined to date, and considered for mining, come from relatively small parts of large mineralized systems. In particular, Normanby and Sehulea could have multi-million ounce gold potential.

The Sinivit mine revised Feasibility Study (see Press Release dated 25 May 2004) is intended as the first of three such studies. The remaining two studies will relate to the proposed Imwauna Mine (Normanby Property), the Weioko Mine (Sehulea Property), and should be completed in 2005 and 2006 respectively. An original Feasibility Study was completed for Sinivit in 1995 by external consultants Ausenco Limited. This feasibility envisaged gold extraction over a three year period by a 100,000 tonne per annum CIP Plant. Development did not proceed on the basis of this feasibility because of lower gold prices in the late 1990's.

A review of the project, which minimized and reduces the mining/processing period and changes the processing from CIP to non reusable vats has significantly improved the economics of the project. The Proposal for Development of the Sinivit Gold Project as submitted to the Papua New Guinea Department of Mines is on the Company's web site at www.newguineagold.ca .

The remaining eight properties in which the Company has an interest are all significant projects with major orebody potential as determined from extensive exploration completed to date. Two properties, which have geological similarities to Lihir and Porgera, Feni and Crater Mt respectively, have been joint ventured to third parties who are sole funding exploration. The Company considered joint venturing appropriate for the projects even though they have significant gold in drill holes and potential in excess of five million contained ozs of gold, because both projects require multi-million dollar expenditures to proceed them to the next phase of evaluation.

Four of the above eight properties are held by Kanon Resources (the Company and Vangold Resources 50/50), and expenditures are presently shared 50/50. The fifth Kanon property, Mt Penck, is presently being sole funded by the Company to the amount of $300,000, after which expenditure will be shared 60% the Company and 40% Vangold. Low key/low cost exploration is proceeding and subject to results, any of these projects could be upgraded to a core project in the future (see Press Release on Allemata Property dated 10 June, 2004.

Two projects with significant copper potential, Simuku (the Company 90% interest) and Mt Nakru (the Company effective 75% interest) are being assessed with exploration proceeding at Simuku at present.

The Company operates in Papua New Guinea through its wholly owned subsidiary Macmin (PNG) Limited (a PNG private company which holds title to the properties).


Overall Performance

The Company's cost of administration are relatively unchanged from the 2003 period, however they are considerably reduced from the first quarter during which time the Konon acquisition and joint ventures were negotiated. The Company earned $475,000 during the six month period ended 2004 from the exercise of warrants and stock options.

The Company had a very active exploration/development program during the quarter.

• A Feasibility Study and Proposal for Development for the Sinivit Mines in PNG was completed and submitted to the PNG government. Gold production is forecast for mid 2005.

• Bulldozer trenching commenced at the Simuku porphyry copper/gold property. As at 6 August 2004, approximately 2.5km of trench has been completed and sampled.

• Very high grade gold, 4m of 100g/t gold, was encountered in trenches at the Allemata property.
  
  The above trench is one of several trenches with more than 50g/t gold. In addition very high soil results were encountered over wide intervals - 200m width of 1.24g/t gold including 50 of 4.54g/t gold.
  

• Joint Venture partner, Vangold Resources Ltd, encountered widespread by low grade gold and copper mineralisation at the Feni Property.

• Subsequent to the end of the quarter, diamond core drilling commenced at the Kavola East prospect, Mt Penck property.

• Drilling is planned to commence at the Imwauna Prospect, Normanby Property in September.

• The Company terminated the joint venture/conditional financing arrangement with Celtic Minerals Ltd and Triple Plate Junction PLC.

Selected Quarterly Information

Operating expenses for the six months ended June 30, 2004 increased to $295,792 from $89,929 over the comparative period in 2003. Wages and benefits increased to $55,810 from $27,014, transfer agent and regulatory fees increased to $28,934 from $12,193, shareholder communications increased to $47,567 from $0. These expenses increased as the Company has become more active in exploration activities, issuing its shares pursuant to the exercise of options and warrants, and the acquisition of Kanon Resources Ltd.

Amortization expense increased to $23,429 from $1,000 as the Company's equipment increased from the acquisitions of Kanon and Macmin (PNG) Ltd.

The Company recognized a foreign exchange loss of $65,530 due to the decline in the value of the Canadian dollar, the Company is reporting currency, versus the Australian dollar and the Papua New Guinea Kina.

Related Party Transactions

The Company owes $35,566 to Macmin Silver Ltd. for expense reimbursements.

Summary of Historical Quarterly Financial Information

Operating Results

1. Sinivit Gold Project

A revised feasibility study was completed which supports the immediate development of the Sinivit Gold Mine. An external feasibility was completed in the late 1990's but because of market conditions the project did not proceed at that time. The revised feasibility differs from the original feasibility in two main areas: recovery of gold will be from vat leaching instead of CIP and the known reserves will be mined over a 15 month period instead of 3 years. These changes substantially increase the return on the project and thus its viability.

The revised metallurgical testing was carried out in house and by consultants Ammtec Limited. This testing showed that column leach tests gave gold recoveries of 88%. The revised mine plan was completed by consultant mining engineer, Colin Wregg.

The main conclusions of the feasibility itself in respect to the project (92.5% NGG) are as follows:

• 300,000t of oxide ore at a grade of 5.3g/t gold, and 600,000t of waste, would be mined from an open pit over a 15 month period.
• Processing of ore would take 24 to 30 months.

• Gold recovery from oxide ore is estimated at 88%.

• Capital cost of the mine would be CAD$6.3M

• Cost/oz of gold recovered (before tax, royalty and cost of capital) is CAD$168.

• Cash flow, before tax, royalty and repayment of capital, is approximately CAD $17.5M. Net cash flow for the project is estimated at approximately CAD $8.85 million (includes $850,000 for residual plant value).

Part of the cash flow will be used to upgrade inferred oxide gold resources at Sinivit to reserves or for drilling to increase the oxide resource base. The intention is to extend the life of the mine. The cash flow will also be used to advance the Imwauna Project (Normanby Property) which the company expects will be its second mine.

In addition to the oxide resources, the Sinivit Project has a resource of telluride/gold mineralisation plus excellent potential to substantially increase that resource. Studies will be carried out to determine if this additional resource can be economically developed.

The Sinivit Project has road access to site from the port of Kokopo (Rabaul), relatively easy access and logistics and is 92% beneficially owned by the Company.

2. Allemata Gold Property

Trenching and soil sampling at the Allemata Property, Milne Bay Province, PNG gave very encouraging gold assays from trenches and soils including one trench result of 4m at 100g/t gold, (Press Release dated June 10, 2004).

The above trench, 4m of 100g/t gold, is 20m along strike from a previously sampled 1.4m wide gold zone averaging 71.9g/t gold, (within a 4m wide zone of 18.7g/t gold) which was reported in a news release dated March 9, 2004.

In addition to this outstanding trench result, exceptional and very high (for soils) gold in soil values were encountered such as 200m surface width (11 samples taken at 25m intervals), averaging 1.24g/t fold, including 50m at 4.54g/t gold. New trenches in addition to the 4m of 100g/t gold included a 100m wide zone at 1.36g/t gold, including 20m of 3.83g/t gold and 4m at 16.75g/t gold. The work program included 364 soil and hand trench samples, 131 from the Uloulo Project and 233 from the Haluba Prospect. The data is presently being compiled and assessed so that the full significance of the results can be evaluated and further exploration, including excavator trenching and drilling can be planned.

The Allemata property (EL 1323 of 243 sq kms) is beneficially owned 50% by the Company and 50% by Vangold Resources Ltd. Pursuant to the acquisition of Kanon Resources Ltd. (news release dated December 15, 2004, January 22 and February 17, 2004). Allemata has the best access of any Kanon project in Papua New Guinea and is connected by a 15km, all weather road to the provincial capital of Alotau. In addition, numerous logging tracks provide access to most parts of the property. The property includes 13 named prospects of which to date, Kanon has conducted exploration on only two, Uloulo and Mt Haluba.

Previous exploration by Kanon and others gave trench results such as 30m of 9.0g/t gold, 87m of 1.83g/t gold, 24m of 2.47g/t gold, 28m of 1.19g/t gold and 1.4m of 71.9g/t gold. Very limited drilling has given results such as 28m of 1,59g/t gold and 40m of 78g/t silver. Historic production is approximately 14,000 ozs gold and 6kg of platinum. The presence of platinum and silver is a project upside which we have not yet investigated.

3. Simuku Copper/Gold Property

Trench evaluation of the southern part of the Simuku porphyry copper/gold system commenced in June 2004 and will continue until end of August 2004.

Past exploration, including a comprehensive soil sampling program in 2003, has defined a very large copper mineralized system which is presently known to be at least 4.5kms wide, 500 to 1800m long and at least 250m deep.

Twelve drill holes in the northern third of the system suggests a background copper/gold grade of about 0.35%Cu and 0.1g/t gold with some molybdenum credits. Higher grade zones exist as indicated by some of the drill results below and the Company's present exploration is targeted to locate additional such higher grade copper/gold mineralization.

Drill hole intersections include 277m @ 0.33% copper and 0.06g/t gold (entire hole); 63m @ 0.52% copper and 0.12g/t gold; 41m @ 0.64% copper and 0.04g/t gold; 150m @ 0.15% copper, 0.02g/t gold, 1.4g/t silver and 0.01% molybdenum; 30m of 0.70% copper and 0.1g/t gold.

The 2003 soil geochemical sampling outlined a two kilometer long zone at the southern end of the system which appeared to overly possible higher copper grades. This zone is now being comprehensively trenched to determine the copper grades in bedrock and will be mapped to predict likely sub-surface copper grades, and the areal extent of the higher grades within the copper system. Channel sample results should be available early in September 2004.

The Simuku Project is located near the West New Britain Provincial capital and port of Kimbe, in Papua New Guinea. It is relatively easily accessible and can be accessed by road and track. Additional drill tracks are being constructed in preparation for a possible later drilling program. The Company holds a 90% interest in this property.

4. Normanby Gold Property

26 bulk samples totaling 1.3 tonnes of trench samples were collected from excavator trenches at the Imwauna Project to provide assay checks on channel trench gold grades and additional samples for metallurgical, vat leach testing. Assay results should be available early in September.

Drilling is expected to commence at this property in September.

The Normanby property is in Milne Bay Province, Papua New Guinea and is held 100% by the Company.

5. Mt Penck Property

Subsequent to the end of the quarter, drill testing commenced at the Kavola East Prospect, Mt Penck Property, West New Britain Province, Papua New Guinea (Press Release dated July 22, 2004).

The Mt Penck property is held by the Company (beneficial interest 60%) and Vangold Resources Ltd (40% interest).

The Kavola East Prospect is a 400m long by 200m wide area of anomalous gold in soils, with trench results such as 97m of 3.39g/t gold, 20m of 2.77g/t gold, 5m of 60g/t gold, 40m of 8.89g/t gold, 131m of 2.36g/t gold and 64m of 2.50g/t gold.


The objectives of this initial 1,000m diamond core drilling program are to test at Kavola East the near surface or shallow depth extent of the widespread gold encountered in soils and trenches, and to allow an initial resource estimate to be calculated if appropriate; and within the Mt Penck property to provide information on the possible size of the gold system and style of gold mineralisation.

The Kavola East Prospect is one of six named prospects within the Mt Penck property.

The Mt Penck property title is Exploration License (EL) 1322, 101.4 sq kilometres in area, and is situated in West New Britain Province, approximately 55km west of the Provincial capital and port of Kimbe. Access is relatively good as the main known prospects are all within a few kilometres of the north coast of New Britain.

6. Feni Project

The Feni Project has been joint ventured to Vangold Resources Ltd who are the managers and earning a 75% interest.

In a press release on June 8, 2004, Vangold reported that "three diamond core holes in the initial drilling program were completed prior to the temporary cessation of drilling in late May. Two holes, MAD005 and ,MAD007, intersected encouraging results (see press release for table of results) which will require further follow-up. Hole MAD 006 which was drilled to test a major induced polarization (IP) anomaly approximately 900m SW of holes MAD005 and MAD007 failed to intersect significant gold values, but did encounter narrow zones of sulphides (up to 10% sulphides) between 125m and 237m in depth, coincident with argillic alteration and brecciation. This sulphide would appear to account for the IP anomaly at this location.

Hole MAD005 (final depth 350m) which was drilled 50m north of the original gold discovery in MAD001, intersected gold values comparable to those in MAD001, but with less depth extent to the gold grades. Best intersection was 48m of 1.54g/t gold between 50 and 98m depth, which correlates with 52m of 1.65g/t gold in MAD001 between 68 and 120m depth. The copper content increases significantly below 100m depth and the drill hole appears to penetrate significant porphyry copper/gold mineralisation, eg. Between 230m and 248m the core contains 0.72g/t gold and 0.68% copper.

Hole MAD007 was collared approximately 100m SW of MAD005 and was drilled in a north westerly direction across a structure known as the Kabang structural zone. This hole encountered porphyry copper/gold mineralisation, but without zones of elevated gold as in hole MAD005, throughout its entire length pf 350m. Best intersection was 44m of 0.54g/t gold and 0.21% copper between 72 and 116m depth. The best gold encountered was near the bottom of the hole - 2m of 1.35g/t gold between 344m and 346m depth.


Changes in Accounting Policy

There have been no significant changes in accounting policy during the period.


Financial and Other Instruments

The Company's financial assets and liabilities consist of cash, accounts payable and accrued liabilities, and loans payable. These accounts are recorded at their fair market value.


Outstanding Share Data

The Company has one class of common shares: as at June 30, 2004, there were 49,636,405 common shares outstanding.

There are no options, warrants, or other convertible securities outstanding. There are no shares in escrow.


Risks and Uncertainties

Except for historical information contained in this discussion and analysis, disclosure statements contained herein are forward-looking, which statements are subject to risks and uncertainties, which could cause actual results to differ materially from those in such forward-looking statements.