Chairman's Report

Dear Fellow Shareholder,

2007 has been a very interesting and fruitful year for Morning Star Gold N.L.

Morning Star has significantly enhanced its key asset, the Woods Point Gold Project in eastern Victoria. Rehabilitation at the historically rich Morning Star mine was completed in the June Quarter. Your company has since moved into a major new exploration phase. This includes underground diamond drilling of the 'Gap Zone' within the mine, resource extension diamond drilling from surface at 'Morning Star South Dyke' and mapping, surveying & exploration of proximal regional dyke targets, which historically yielded high grade gold from mostly shallow workings.

Morning Star was taken forward under new executive directorship with Nicholas Garling joining the Board in the role of Managing Director and the valuable contribution of Director Jeffrey Williams BSc MBA, who is a well-seasoned and highly regarded mining professional. In addition the company expanded its exploration team on the ground in Woods Point, with two senior geologists, Dr. Peter Jackson BSc(hons) PhD MAIG and Morrie Goodz BSc MBA MAusIMM.

At the beginning of this year, Morning Star set goals of completing rehabilitation of the Morning star mine to above the 'Gap Zone' area, in order to create substantially better access for planned underground resource exploration. Other goals included the continuance of extensive mapping, surveying and sampling of underground reefs, commencement of drilling programs, securing further strategic proximal mining titles and of course funding the future of the Woods Point Gold Project.

These goals have now been achieved. The accompanying Managing Director's Report will give some more 'up to the minute' insights and progress on Morning Star's activities at the Woods Point Gold Project.

It would be remiss of me not to thank all those involved in countering the Christmas 2006 Bushfires that swept through much of Alpine Victoria. The efforts of the Country Fire Authority, Parks Victoria and the Victorian Dept. of Sustainability & Environment were fantastic. Collective efforts ensured the township of Woods Point and the company's assets were preserved.

We look forward to the increased exploration activity and a buoyant gold price in the year ahead.

Yours Sincerely

Max M. Garling
Chairman

Morning Star Gold N.L.

October 2007