AGUIA RESOURCES LIMITED

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

THE MATTERS RAISED IN THIS DOCUMENT WILL AFFECT YOUR SHAREHOLDING IN THE COMPANY. YOU ARE ADVISED TO READ THIS DOCUMENT IN ITS ENTIRETY BEFORE THE GENERAL MEETING REFERRED TO BELOW IS CONVENED.

IF YOU ARE IN ANY DOUBT ABOUT THE ACTION YOU SHOULD TAKE, PLEASE CONSULT YOUR STOCKBROKER, SOLICITOR, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER.

Aguia Resources Limited ABN 94 128 256 888

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Notice of Extraordinary General Meeting

and

Explanatory Memorandum

A NOTICE OF GENERAL MEETING TO BE HELD AT 11.00 AM (AEST) ON 24 JUNE, 2011 IS INCLUDED WITH THIS DOCUMENT. TO BE VALID, ALL PROXY FORMS FOR USE AT THIS MEETING MUST BE COMPLETED AND RETURNED TO THE COMPANY NO LATER THAN 11.00 AM (AEST) ON 22 JUNE 2011

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18 May 2011

Dear Shareholders,

Acquisition of Potassio do Atlantico Ltda (“PALTDA”) by Aguia Resources Limited (“Aguia” or “Company”)

I am pleased to present to you a Notice of Meeting and Explanatory Memorandum for an Extraordinary General Meeting to be held on 24 June 2011. The meeting has been convened to seek Aguia shareholder approval for the proposed acquisition of PALTDA by Aguia, or a nominated wholly-owned subsidiary of Aguia ( Proposed Transaction ).

Background

On 25 January, 2011, Aguia announced that it had entered into a conditional agreement to acquire all of the issued shares in PALTDA, a wholly owned subsidiary of Potash Atlantico Corp. ( PAC ).

The directors of Aguia believe that the Proposed Transaction represents an opportunity for Aguia to acquire a potentially large-scale potash project (“ Project ”) located in northeast Brazil. The acquisition of the Project will compliment the Company‟s Brazilian phosphate projects, thereby enabling Aguia to capitalise on the increasing demand for fertilisers, both within Brazil and elsewhere in the world.

The commercial terms of the acquisition, the completion of which is subject to approval by Aguia shareholders, include the issue of 20 million ordinary Aguia shares at settlement and 1.5 million Aguia options (collectively Consideration Securities ), together with a right to acquire a further 80,000,000 ordinary Aguia shares ( Performance Rights ) to be issued upon the earlier to occur of a “change of control” event such as a takeover of the Company and the achievement of various and staggered “performance” milestones involving independent delineation, classification and reporting of mineral resources in accordance with the JORC Code, over the succeeding five (5) years. I note that for the purposes of this Proposed Transaction, the acquisition of all or any of the Consideration Securities and the acquisition of all or any Shares that are issued as a result of the conversion or enforcement of any Performance Rights, will not be taken into account when determining whether or not a “change of control” event has occurred.

Details of the Proposed Transaction‟s terms are set out in Part B of the Explanatory Memorandum.

Aguia shareholder approval is necessary because the Proposed Transaction involves:

the acquisition of PALTDA Shares that are valued at five per cent. (5%) or more of the total value of Aguia‟s shareholder equity, from PAC, in which company both Mr Anthony Wonnacott and Mr Fernando Tallarico (or interests associated with them), who are both directors of the Company, hold shares; and
an issue of the Consideration Securities and creation of Performance Rights that will result in PAC, or if directed the PAC Shareholders, acquiring after the completion of the Proposed Transaction, an aggregate relevant interest in the ordinary shares of Aguia that is in excess of:

Aguia Resources Limited ABN 94 128 256 888 Suite 4, Level 9, 341 George Street, Sydney, NSW 2000 Telephone 02 9299 9690 Facsimile 02 9299 9629

twenty per cent. (20%) of all voting shares of Aguia, thereby requiring Shareholder approval under section 611, Item 7 of the Corporations Act; and
fifteen per cent. (15%) of all voting shares of Aguia, thereby requiring Shareholder approval under Listing Rule 7.1.

As the Proposed Transaction involves dealings with related parties, the Company has engaged William Buck Corporate Advisory Services (NSW) Pty Limited ( William Buck ), to act as an independent expert, which role will include the preparation of a report to Aguia shareholders on the Proposed Transaction including an opinion as to whether the Proposed Transaction is fair and reasonable to Aguia shareholders not associated with the Proposed Transaction ( Non-Associated Shareholders ).

William Buck has concluded that the Proposed Transaction is “fair and reasonable” from the perspective of the non-Associated Shareholders. Annexure 1 to this Document contains a complete copy of the Independent Expert‟s Report.

Directors’ Recommendations

As a result of various conflicts of interest affecting some of the Directors, the recommendations of the Directors in respect of the Resolutions are as follows:

(a) Anthony Wonnacott – non executive Chairman of the Board and who is also a director of PAC – recommends that Shareholders vote in favour of each of the First Resolution, Fourth Resolution, Fifth Resolution, Sixth Resolution and Seventh Resolution;
(b) Fernando Tallarico – an executive Director – recommends that Shareholders vote in favour of each of the First Resolution, Fourth Resolution, Fifth Resolution, Sixth Resolution and Seventh Resolution;
(c) Simon Taylor – the chief executive officer and managing director recommends that Shareholders vote in favour of each of the Resolutions; and
(d) Graham Ascough - a non-executive Director - recommends that Shareholders vote in favour of each of the First Resolution, Second Resolution, Third Resolution, Fifth Resolution, Sixth Resolution and Seventh Resolution.

Messrs Wonnacott and Tallarico make no recommendation about either the Second Resolution or the Third Resolution ( Acquisition Resolutions ) – and will abstain from any vote in respect of both Acquisition Resolutions in their (or their related interest‟s) capacity as a Shareholder – because they (or their related interests) both are shareholders in PAC and accordingly stand to benefit from the approval of both Acquisition Resolutions.

Subject to the above, and to the extent that they are permitted under the Listing Rules and the Corporations Act to so vote, each of the Directors will vote any Shares under their control in favour of the relevant Resolutions.

Please read the Explanatory Memorandum, including the Independent Expert‟s Report, carefully and in its entirety, as it sets out information about the Proposed Transaction, including advantages, disadvantages and risks, that is material to your decision on how to vote on the Resolutions.

I look forward to welcoming you to the Extraordinary General Meeting.

Yours faithfully

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Graham Ascough Non-executive Independent Director Aguia Resources Limited

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

THE MATTERS RAISED IN THIS DOCUMENT WILL AFFECT YOUR SHAREHOLDING IN THE COMPANY. YOU ARE ADVISED TO READ THIS DOCUMENT IN ITS ENTIRETY BEFORE THE GENERAL MEETING REFERRED TO BELOW IS CONVENED.

IF YOU ARE IN ANY DOUBT ABOUT THE ACTION YOU SHOULD TAKE, PLEASE CONSULT YOUR STOCKBROKER, SOLICITOR, ACCOUNTANT OR OTHER PROFESSIONAL ADVISER.

Aguia Resources Limited ABN 94 128 256 888

Notice of Extraordinary General Meeting

and

Explanatory Memorandum

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PART A: ABOUT THESE DOCUMENTS .......................................................................................... 1 PART B: BACKGROUND TO THE PROPOSED TRANSACTION ................................................. 2 PART C: NOTICE OF GENERAL MEETING ..................................................................................11 PART D: EXPLANATORY MEMORANDUM ..................................................................................13 PART E: GLOSSARY OF TERMS ...................................................................................................28 ANNEXURE 1 – INDEPENDENT EXPERT‟S REPORT.................................................................32 ANNEXURE 2 – TERMS AND CONDITIONS OF OPTIONS ........................................................33 ANNEXURE 3 – TERMS AND CONDITIONS OF PERFORMANCE RIGHTS ............................38 ANNEXURE 4 – PAC SHAREHOLDERS ........................................................................................42

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PART A: ABOUT THESE DOCUMENTS

Shareholders in Aguia Resources Limited ABN 94 128 256 888 ( Company ) are requested to consider each of the Resolutions set out in the Notice as well as the contents of all other Documents accompanying the Notice.

You can vote by:

attending and voting at the Meeting; or
appointing someone as your proxy to attend and vote at the Meeting on your behalf, by completing and returning the Proxy Form to the Company in the manner set out on the Proxy Form. The Company must receive your duly completed Proxy Form by no later than 11.00 am (AEST) on 22 June 2011.

A glossary of the key terms used throughout this document is contained in Part E of this Document.

Please read the whole of this Document carefully, determine how you wish to vote and then cast your vote accordingly, either in person or by proxy. If you have any questions regarding the contents of this Document or any part thereof, you are encouraged to consult your solicitor, accountant or other financial adviser for assistance.

PART B: BACKGROUND TO THE PROPOSED TRANSACTION

Introduction

On 25 January 2011, Aguia announced that it had entered into a conditional agreement to acquire all of the issued shares in Potassio do Atlantico Ltda (PALTDA ), a wholly owned subsidiary of Potash Atlantico Corp. ( PAC ).

The commercial terms of the acquisition, which is subject to approval by Shareholders, include the issue of 20 million ordinary shares at settlement and 1.5 million options, with further ordinary shares to be issued upon achievement of “performance” milestones involving independent delineation, classification and reporting of mineral resources in accordance with the JORC Code.

The Proposed Transaction represents an opportunity for Aguia to acquire a potentially large-scale potash project (“ Project ”) located in northeast Brazil. The acquisition of the Project will compliment the Company‟s Brazilian phosphate projects, thereby enabling Aguia to capitalise on the increasing demand for fertilisers, both within Brazil and elsewhere in the world.

Brazilian Potash Projects

The Project is located in the northeastern portion of Brazil in the State of Sergipe. The Project sits to the west and northeast of the city of Aracaju, the capital of Sergipe State. That city has a population of approximately 570,000 inhabitants and a large scale harbour.

PAC has acquired a 100% interest in 121 exploration claims totaling approximately 2,100 km[2,] consisting of five property areas in the Sergipe-Alagoas basin.

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Figure 1: Location of the PAC projects in Sergipe-Alagoas Basin.

The Project is well located with extensive infrastructure of roads, water and energy. Fertilizer blenders are located in the Project area providing a ready local market for the product of the Project. The area has considerable oil exploration infrastructure, with several companies having offices and warehouses in Aracaju, including Halliburton and Schlumberger Limited. Aracaju‟s harbour is located 15 km north of that city and it is used for the transport of oil, potash and heavy equipment.

Geology and Mineralisation

The Muribeca Formation within the Sergipe Basin hosts an important evaporate sequence, salt and potash deposits including significant sylvinite and carnallite deposits. The potash salts occur in isolated subbasins, of which the most well known is the Taquari Vassouras basin. These potash layers can occur in several levels within the Ibura Member. Whilst the sylvinite always occurs as one single layer, the carnallite can be present as one thick carnallite layer as well as carnallite and rock salt layering.

Previous Exploration/Development

Potash mineralisation was discovered in the Sergipe-Alagoas Basin by Petromisa (Petrobras) during oil and gas exploration in the 1950‟s and 60‟s. In Sergipe, sylvinite deposits occur in the regions of TaquariVassouras and Santa Rosa de Lima. The discovery of Sylvinite mineralisation resulted in the commencement of mining at the Taquari-Vassouras underground mine in 1985, first by Petrosima and in 1991, this was transferred to VALE.

In Sergipe there are also important deposits of carnallite-rock. In anticipation of the sylvinite deposit becoming exhausted, VALE has been working on a project to develop its much bigger reserves of carnallite surrounding its underground sylvinite operation. A pilot plant was commissioned in 2008 to test the solution mining of carnallite, with the aim of establishing capacity for 1.2 mtpa KCl by 2015.

PAC Studies/Assessment Completed

The Project was identified as potentially attractive to PAC because of the potash occurrences reported in the historical petroleum wells. PAC has completed a detailed assessment of approximately 300 drill holes and over 32,000 km of existing 2D seismic data. Of the historical holes 24 are located within the Properties and 61 are located within 3 kilometres of the Property.

After an initial analysis of these occurrences and extensive seismic data, PAC commenced staking five project areas (Areas 1-5) in 2008.

In the second half of 2010 an Independent Technical Report according to the Canadian National Instrument NI 43-101 was compiled by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (ERCOSPLAN), a German consulting and engineering company with more than 50 years experience in the potash and salt industry.

The report summarised the findings of the detailed work completed by PAC and recommended that further exploration comprising of drilling, assaying, seismic surveys, geophysical drill hole investigation and laboratory testwork (geochemical, rock mechanical and dissolution tests) was fully justified on the Properties.

The most advanced Project is Area 1 as shown in Figure 2 below.

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Figure 2: Location of Area 1, historical drilling and seismic lines and Vale Operation in Sergipe-Alagoas Basin

Exploration Programs

Aguia will carry out a large exploration program primarily targeting Area 1 to compile an initial Mineral Resource estimate that can be reported in accordance with the JORC Code before advancing to feasibility studies.

A detailed work program will be announced on completion of the Proposed Acquisition.

Commercial Terms of the Acquisition

Aguia has entered into an agreement to acquire all of the issued capital of PALTDA in consideration for the issue and allotment to PAC, or if PAC directs in writing in accordance with the provisions of the Acquisition Agreement, to the PAC Shareholders, the following consideration:

(a) 20,000,000 Shares;
(b) 1,500,000 Options, exercisable at a price of $0.50 per Option, expiring on 30 June 2014;
(c) 20,000,000 Performance Rights, that will convert into 20,000,000 Shares upon the completion of one drill hole returning an intersection of ten per cent. (10%) KCl mineralisation of a continuous thickness in excess of 10 metres at the Projects, on or before the third anniversary of the Completion Date;
(d) 30,000,000 Performance Rights, that will convert into 30,000,000 Shares upon the completion of an independent JORC compliant combined Mineral Resource Estimate including any and all categories of resources as defined by the JORC guidelines of not less than 100,000,000 tonnes with a grade of not less than ten per cent. (10%) KCl at the Projects, on or before the third anniversary of the Completion Date; and
(e) 30,000,000 Performance Rights, that will convert into 30,000,000 Shares upon the completion of an independent JORC compliant combined Mineral Resource Estimate including any and all categories of resources as defined by the JORC guidelines of not less than 200,000,000 tonnes with a grade of not less than ten per cent. (10%) KCl at the Projects, on or before the fifth anniversary of the Completion Date.

If a Change of Control Event was to occur prior to the fifth anniversary of the Completion Date, each of the conditions for the conversion of the Performance Rights into the above stated number of Shares would be deemed to have been satisfied and those Shares would thereupon be issued and allotted to PAC, or if so directed by PAC, directly to the PAC Shareholders on a pro rata basis. However the number of Performance Shares that may be converted to Shares as a result of the occurrence of a Change of Control Event is limited to ten per cent. (10%) of all Shares as determined immediately after the issue and allotment of the Performance Shares as a result of the occurrence of a Change of Control Event.

Completion of the sale and purchase of all the issued capital of PALTDA to the Company is conditional upon and subject to:

(a) Aguia completing a placement of Shares, at a minimum price of at least $0.50 or on such other terms as otherwise agreed by PAC and Aguia, that would raise no less than $15,000,000.00;
(b) If required, the principals of London Investment Partners, agreeing to place and/or underwrite at least $7.5 million of the Shares that are subject to condition (a) immediately above;
(c) Aguia being satisfied in its absolute discretion with the results of technical, financial and legal due diligence investigations in relation to each of PAC, PALTDA and the Projects;
(d) Aguia being satisfied with the proposed terms and conditions of the documents required to give effect to the Proposed Transaction;
(e) Aguia being satisfied, inter alia, that PALTDA has unencumbered title to each of the Claims;
(f) The Shareholders passing all Resolutions as are required under the Listing Rules, the constitution of Aguia and the Corporations Act to give effect to the transactions contemplated by the Acquisition Agreement; and
(g) Aguia complying with the Listing Rules and the Corporations Act in order for Completion to occur.

On Completion, PAC will have the right to nominate one person to be appointed as a Director, on the same terms and conditions as are applicable to other non-executive Directors.

Additionally, the Acquisition Agreement remains subject to all required approvals required by PAC, including the receipt of the approval of the PAC Shareholders.

Shareholder Approval

Shareholder approval of the Proposed Transaction is necessary because it involves:

the acquisition of PALTDA Shares from PAC, that are valued at five per cent. (5%) or more of the total value of Shareholder equity, from:
an entity associated with Mr Anthony Wonnacott who is a Director ( as well as being a director of PAC), and therefore related party of Aguia and which controls approximately 5.3% of the shares in PAC. In consideration of the acquisition by the Company of all of PALTDA Shares in the course of the Acquisition, PAC will either:
- be issued and allotted with, and retain, all the Consideration Securities ( Indirect Scenario ); or
- direct the Company to issue and allot the Consideration Securities to the PAC Shareholders on a pro-rata basis, and otherwise in accordance with the provisions of the Acquisition Agreement ( Direct Scenario ).

In the Indirect Scenario, Mr Wonnacott would thereby indirectly acquire a 5.3% commercial interest in all the Consideration Securities. In the Direct Scenario, Mr Wonnacott would directly be issued and allotted with 1,060,000 Shares and 79,500 Options. In either the Indirect Scenario or the Direct Scenario, the value of that indirect or direct interest to be acquired by Mr Wonnacott is estimated to be $602,477.50 based on the Share price of $0.55, being the share price immediately before the announcement of the Acquisition on 24 January 2011, or $902,033.50 based on a Share price of $0.80, being the closing Share price on 13 May 2011.

However, against the indirect or direct acquisition of that interest by Mr Wonnacott, needs to be “offset” the value of Mr Wonnacott‟s indirect interest – nominally 5.3% - in the PALTDA Shares that will have been transferred to the Company. Based on the valuations placed on the PALTDA Shares – which by definition are for the purposes of the Acquisition

valued at the value of the Consideration Securities - as set out in the Independent Expert‟s Report (see Annexure 1 ), as well as the conclusion by the Independent Expert in that report that the Acquisition is “fair” and “reasonable” from the view point of the Shareholders, Mr Wonnacott will not receive any material net benefit as a result of the Acquisition;

Mr Fernando Tallarico, who is a director and therefore related party of Aguia and who controls approximately 2.1% of the shares in PAC.
In the Indirect Scenario, Mr Tallarico would thereby indirectly acquire a 2.1% commercial interest in all the Consideration Securities. In the Direct Scenario, Mr Tallarico would directly be issued and allotted with 420,000 Shares and 31,500 Options .In either the Indirect Scenario or the Direct Scenario, the value of that indirect or direct interest to be acquired by Mr Tallarico is estimated to be $242,962.50 based on the Share price of $0.55, being the Share price immediately before the announcement of the Acquisition on 24 January 2011, or $349,009.50 based on a Share price of $0.80, being the closing Share price on 13 May 2011.

However, against the indirect or direct acquisition of that interest by Mr Tallarico, needs to be “offset” the value of Mr Tallarico‟s indirect interest – nominally 2.1% - in the PALTDA Shares that will have been transferred to the Company. Based on the valuations placed on the PALTDA Shares – which by definition are for the purposes of the Acquisition valued at the value of the Consideration Securities - as set out in the Independent Expert‟s Report (see Annexure 1 ), as well as the conclusion by the Independent Expert in that report that the Acquisition is “fair” and “reasonable” from the view point of the Shareholders, Mr Tallarico will not receive any material net benefit as a result of the Acquisition; and

an issue of the Consideration Securities and creation of Performance Rights that will result in PAC, or if directed the PAC Shareholders, acquiring after the completion of the Proposed Transaction, an aggregate relevant interest in the ordinary shares of Aguia that is in excess of:
twenty per cent. (20%) of all voting shares of Aguia, thereby requiring Shareholder approval under section 611, Item 7 of the Corporations Act; and
fifteen per cent. (15%) of all voting shares of Aguia, thereby requiring Shareholder approval under Listing Rule 7.1.

The Rationale for the Proposed Acquisition

Aguia is focused on the exploration and development of the raw materials required to produce fertiliser materials in Brazil.

The Atlantic Potash Project of PALTDA compliments Aguia‟s Brazilian phosphate projects that are expected to enable Aguia to capitalise on the increasing world demand for potash as the Company aims to be a developer in the Brazilian fertiliser sector.

Brazil is Latin America‟s biggest economy but remains heavily reliant on imports of up to half of its phosphate and 90% of its potash needs. Agriculture accounts for a very significant part of Brazil‟s economic growth due to it possessing large areas of land suitable for agriculture with large renewable freshwater resources. Brazil has been over reliant on imports partly due to under-investment in its agricultural sector.

Aguia is already well positioned to capitalise on the growing demand for phosphorous-based fertilisers in the expanding agriculture sector in Brazil and currently controls two projects covering approximately 400,000 hectares, located close to existing infrastructure.

Alternatives Considered by the Company including any Alternative Transactions

The Company is committed to its existing projects whilst continuing to pursue other opportunities within the phosphate and potash sector.

The Company is continuously considering new projects and opportunities according to the following criteria – the proposed acquisition must be:

potentially economic, subject to exploration results;
located close to existing infrastructure; and
located near end markets.

The Company maintains a significant competitive advantage through the establishment of a Brazilian based technical team. This team has reviewed various phosphate and potash opportunities in the last 12 months. During that period, other than the project that is the subject of the Acquisition, no other projects have met the specified criteria sufficiently for the Company to advance to further due diligence and documentation.

However, the Company continues to assess other potash and phosphate projects in Brazil and throughout Latin America in accordance with the criteria outlined above.

Summary of Advantages and Disadvantages of the Acquisition

The advantages and disadvantages of the Acquisition are:

Advantages

The Independent Expert, William Buck Corporate Advisory Services (NSW) Pty Limited, has assessed the consideration of the proposed transaction as “fair”;
The terms of the Acquisition were negotiated on arm‟s length basis;
The proposed Acquisition will strengthen the company‟s interest in minerals used in fertilizers;
The proposed Acquisition will result in diversification of the Company‟s exploration assets;
The Acquisition may result in an increased market capitalisation of the Company, which may lead to increased coverage from capital market analysts, improved access to capital market opportunities and increased liquidity in share trading;
The Company‟s Brazilian office is already setup through existing phosphate projects thereby enabling the Company to effect the Acquisition with only minor increases expected to overhead costs;
The potash projects that are the subject of the Acquisition are located within an oil and gas producing region, providing excellent access to drilling rigs, engineering and development infrastructure and services;
The Company has the benefit of access to a knowledge base and experience through its highly experienced technical team headed by personnel responsible for developing and building a similar style of project on adjacent project;
A resource calculated in accordance with the JORC code may be calculated with limited initial exploration; and
The Project is located within close proximity to the potential markets for the potash produced.

Disadvantages

Existing Shareholders will be diluted by the issue of new Shares as a result of the Acquisition;
The Acquisition will result in PAC becoming a significant shareholder in the Company;

The assets being acquired through the Acquisition are early stage without a proven resource being identified; and
The proposed exploration of the tenements held by PALTDA is expensive through deep drilling and 3D seismic, and additional capital will be required for additional future exploration. This capital may be raised at a higher or lower price that than of the proposed Acquisition.

Control Implications of the Acquisition

The maximum number of Shares that will be controlled by PAC and its associates under the Acquisition is outlined in Table 7 of the Independent Expert‟s Report. A copy of the table is repeated below.

AGR – Potential Issued Shares after approval of the Acquisition

Shareholders	Current Plus Exercise of Existing Options	Current Plus Exercise of Existing Options	Current Shares/Options Plus Conversion of Phosphate Performance Shares	Current Shares/Options Plus Conversion of Phosphate Performance Shares	Current Shares/Options Plus Conversion of Phosphate Performance Shares Plus Converting Performance Shares and Options under Proposed Transaction Plus Proposed Placement	Current Shares/Options Plus Conversion of Phosphate Performance Shares Plus Converting Performance Shares and Options under Proposed Transaction Plus Proposed Placement




	No	%	No	%	No	No
Current Shareholders Current Option Holders Current Class A Performance Shareholders Current Class B Performance Shareholders PAC Interest Unlisted Options A Class Converting Performance Shares B Class Converting Performance Shares C Class Converting Performance Shares Proposed Placement Proposed Placement	60,850,001 11,325,000	84.3% 15.7%	60,850,001 11,325,000 20,000,000 20,000,000	54.2% 10.1% 17.8% 17.8%	60,850,001 11,325,000 20,000,000 20,000,000	28.71% 5.34% 9.44% 9.44%
					112,175,001	52.92%
					1,500,000 20,000,000 30,000,000 30,000,000 2,853,659	0.71% 9.44% 14.15% 14.15% 1.35%
					84,353,659	39.80%
					15,439,024	7.28%
	72,175,001	100%	112,175,001	100%	211,967,684	100%

Key Risks of the Acquisition

Valuation of PALTDA

The assets being acquired as part of the Acquisition of PALTDA represent early stage explorations assets with no proven resource. Should a proven economic resource not be delineated as part of the proposed exploration program, further exploration on the assets may not be considered viable. As a result, the valuation of PALTDA is uncertain at this stage, evidenced by the wide valuation estimates included in the Independent Expert‟s report from a low of $4.67 million to a high of $18.02 million.

The Independent Expert has assessed the consideration being paid by the Company at a range of $16.14 million to $17.62 million, making the consideration payable by the Company at the high end of the assessed valuation of the PALTDA assets.

Development of the Potash Projects

The costs associated with the exploration and subsequent development of the Potash Projects is significant, and well beyond the current financial resources of the Company. The Company will therefore be reliant on raising additional capital and the introduction of economic partners to be able to progress the projects to a development stage. If the Company is unable to successfully attract the additional capital and economic partners as required, the Company will not be able to develop the Potash Projects which would most likely have a material negative impact on the Company‟s share price.

Change of Control Event

Where there is a Change of Control Event, as defined in Part E - Glossary of Terms, some or all of the Performance Rights created in favour of PAC (depending upon whether any of those Performance Rights have already been converted into Shares) will convert to Shares, without the respective performance milestones of those Performance Rights being achieved. However the number of Performance Shares that may be converted to Shares as a result of the occurrence of a Change of Control Event is limited to ten per cent. (10%) of all Shares as determined immediately after the issue and allotment of the Performance Shares as a result of the occurrence of a Change of Control Event.

This potential conversion of Performance Securities as a result of the occurrence of a Change of Control Event may act as a disincentive for an investor interested in acquiring a controlling interest in the Company.

Dilutionary Impact of the Issue of Shares under the Acquisition

As noted above under the section titled “ Control Implications of the Acquisition ”, the relative voting power of the Shares held by existing Shareholders will be diluted such that, after the issue of all Shares, Options and Performance Rights, on a fully diluted basis, that are the subject of the First Resolution, Second Resolution and Third Resolution, those Shareholders will collectively control 52.92% of the voting power of the Company.

Summary of the Expert’s Opinion on the Acquisition

As the Acquisition involves dealings with related parties, Aguia has engaged William Buck Corporate Advisory Services (NSW) Pty Limited ( William Buck ), as an Independent Expert to prepare a report on the Acquisition, including an opinion as to whether the Acquisition is fair and reasonable to Shareholders not associated with the Acquisition.

The Independent Expert has considered the Acquisition to be both fair and reasonable to the nonassociated Shareholders.

It should be noted that the Independent Expert has assessed the assets of PALTDA that are being acquired under the Acquisition with wide valuation estimates, from a low of $4.67 million to a high of $18.02 million, whilst the consideration being paid by the Company has been assessed at a range of $16.14 million to $17.62 million, making the consideration payable by the Company at the high end of the assessed valuation of the PALTDA assets.

The wide range of valuations reflects the uncertainty in relation to the Company‟s future exploration program and the uncertainty relating the geological structure within the assets being acquired. The major sensitivity factors in the valuation are; an increase in the probability of finding suitable sub-basin structures; the assumed economic grade of KCl; and the total exploration costs.

Any change in the above factors may significantly alter the economics of the Acquisition and, as a result, the Share price.

Please read the whole of this Document carefully, determine how you wish to vote and then cast your vote accordingly, either in person or by proxy. If you have any questions regarding the contents of this Document or any part thereof, you are encouraged to consult your solicitor, accountant or other financial adviser for assistance.

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Simon Taylor, who is a member of the Australian Institute of Geoscientists. Mr Taylor is a full-time employee of Aguia Resources Limited. Mr Taylor has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the „Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”). Mr Taylor consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

PART C: NOTICE OF GENERAL MEETING

NOTICE is hereby given that a general meeting of members of Aguia Resources Limited ABN 94 128 256 888 will be held at the offices of the Franks & Associates Pty Ltd, Suite 4, Level 9, 341 George Street, SYDNEY, NSW, 2000 on 24 June 2011 at 11.00 am (AEST).

Definitions: Unless expressly provided otherwise, each capitalised term used in this Notice has the same meaning as is ascribed to it in Part E of the Documents.

BUSINESS

1. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders approve the issue of 7,900,000 fully paid ordinary shares by the Company (each a Share ) on 24 November, 2010 to professional and sophisticated investors under an unconditional placement at a price of $0.50 per Share ( Placement ) as further set out in the Explanatory Memorandum.”

( First Resolution )

2. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, and subject to the approval by Shareholders of the Third Resolution in accordance with its terms, Shareholders approve the Company raising up to $15,000,000, for the purposes set out in the Explanatory Memorandum by issuing and allotting up to 18,300,000 Shares under an unconditional placement at a price not lower than $0.82 per Share.”

( Second Resolution )

3. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Section 611, Item 7 of the Corporations Act 2001 and for all other purposes, and subject to the approval by Shareholders of the Second Resolution in accordance with its terms, the Shareholders approve:

(a) the issue and allotment of 20,000,000 Shares and 1,500,000 Sale Options; and
(b) the creation and coming into force and effect of 80,000,000 Performance Rights,

to and in favour of (respectively) Potash Atlantico Corp. ( PAC ), or if so directed by PAC, directly to or with the PAC Shareholders in accordance with the provisions of that direction, and otherwise in accordance with the provisions of the Acquisition Agreement and as further set out in the Explanatory Memorandum.”

( Third Resolution )

4. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 10.11 and Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve the Company issuing and allotting 640,000 Options to Graham Ascough or his nominee, for the purposes and upon the terms and conditions set out in the Explanatory Memorandum.”

( Fourth Resolution )

5. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, Shareholders approve the Company issuing and allotting 640,000 Options to Andrew Bursill or his nominee, for the purposes and the terms and conditions set out in the Explanatory Memorandum.”

( Fifth Resolution )

6. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, the Shareholders approve the issue of 200,000 Termination Options to PlatSearch NL ACN 003 254 395 and 50,000 Termination Options to Bohuon Resources Pty Limited ACN 102 533 817 pursuant to the termination of the Pathfinder Project Joint Venture Agreement.”

( Sixth Resolution )

7. To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and Listing Rule 7.3.3 and for all other purposes, approval is given for the Company to raise up to $30,000,000 by the issuing of Shares at a price not lower than eighty per cent. (80%) of the average market price of the Shares over the last five (5) days on which sales were recorded before the issue is made, for the purpose and on the terms and conditions set out in the Explanatory Memorandum.”

( Seventh Resolution )

By order of the Board

==> picture [100 x 57] intentionally omitted <==

Andrew Bursill

Company Secretary

PART D: EXPLANATORY MEMORANDUM

The purpose of this Explanatory Memorandum is to provide Shareholders with information to assist them in assessing the merits of the Resolutions contained in the accompanying Notice of Extraordinary General Meeting of Aguia Resources Limited ( Company ).

The Directors recommend that Shareholders read this Explanatory Memorandum carefully and in its entirety before making any decision in relation to how they may vote in respect of any Resolution.

A. Background to applicable Listing Rules and provisions of the Corporations Act

ASX Listing Rule 7.1

ASX Listing Rule 7.1, known as the "15% rule", limits the capacity of a company to issue securities without the approval of its shareholders. In broad terms, that Listing Rule provides that a company may not, in a twelve (12) month period, issue securities equal to more than fifteen per cent. (15%) of the total number of ordinary securities on issue at the beginning of the twelve (12) month period, unless the issue is first approved by shareholders or otherwise it comes within one of the exceptions to Listing Rule 7.1, as set out in Listing Rule 7.2.

ASX Listing Rule 7.4

ASX Listing Rule 7.4 states that an issue of securities made without approval under Listing Rule 7.1 will be treated as having been made with approval for the purpose of Listing Rule 7.1, if that issue did not otherwise breach Listing Rule 7.1 when made, at and after such time as the holders of the entity‟s ordinary securities subsequently approve that issue.

ASX Listing Rule 10.11

ASX Listing Rule 10.11 states that an entity must not issue or agree to issue equity securities to any of the following persons without the approval of holders of ordinary securities:

(a) a related party; or
(b) a person whose relationship with the entity or a related party is, in the ASX‟s opinion, such that approval should be obtained.

A “related party” for the purposes of the Corporations Act includes a director of a public company. Accordingly Graham Ascough is a “related party” to the Company.

In accordance with ASX Listing Rule 7.2, as Shareholder approval for the Fourth Resolution is being sought under ASX Listing Rule 10.11, ASX Listing Rule 7.2, Exception 14 provides that further Shareholder approval in respect of the substance of the Fourth Resolution is not required to be obtained under ASX Listing Rule 7.1.

Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of a public company unless the benefit falls within one of various exceptions to the general prohibition. One of the exceptions includes where the company first obtains the approval of its shareholder in general meeting.

A “financial benefit” for the purposes of the Corporations Act includes issuing securities to a related party.

Sections 606 and 611, Item 7 of the Corporations Act

Section 606 of the Corporations Act prohibits certain acquisitions of relevant interests in voting shares. Sub-section 606(1)(c)(i) prohibits a transaction where a person‟s relevant interest in voting shares in the company increases from twenty per cent. (20%) or below to more than twenty per cent. (20%). However a person may acquire such a relevant interest without breaching the provisions of section 606 if it is acquired under one of the exceptions listed in Section 611 of the Corporations Act.

Section 611, Item 7 of the Corporations Act permits the acquisition of a relevant interest in voting shares in the company increases from twenty per cent. (20%) or below to more than twenty per cent. (20%), where approval is obtained by a resolution passed at a general meeting of the target company in which the acquisition is made, if:

(a) no votes are cast in favour of the resolution by:
(i) the person proposing to make the acquisition and their Associates; or
(ii) the person or persons (if any) from whom the acquisition is to be made and its or their Associates; and
(b) the members of the target company were given all information known to the person proposing to make the acquisition or their Associates, or known to the target company, that was material to the decision on how to vote on the resolution, as more particularly referred to in Section 611, Item 7, paragraph (b).

As elaboration of the necessary information that is required to be provided to target shareholders, ASIC has published Regulatory Guide 74, in which ASIC requires the target company directors to either commission an independent expert to provide a detailed report to target shareholders or alternatively undertake a detailed examination of the proposal themselves and prepare a report for the non-associated target shareholders (see Paragraphs 74.11 to 74.17 and Paragraphs 74.20 to 74.22 (inclusive)).

B. Commentary on each Resolution

1. First Resolution – Ratification of Placement

The First Resolution relates to the capital raising announced by the Company on 18 November 2010, which comprised an unconditional placement of Shares to professional and sophisticated investors ( Placement ).

On 24 November, 2010, the Company issued 7,900,000 Shares at a price of $0.50 per Share (each a Placement Share ) to professional and sophisticated investors under the Placement. Proceeds from the Placement will be used to assist the Company in funding its drilling program in Brazil and for further exploration activities in connection with its Brazilian projects. The terms of the Placement were included in the announcements to the ASX on 18 November, 2010 and 29 November, 2010.

Shareholder approval was not required prior to the issue of the Placement Shares – due to the number of Placement Shares being, at the time of their issue, less than the prescribed fifteen per cent. (15%) limit referred to in Listing Rule 7.1 - but is being sought now for the purposes of compliance with the provisions of Listing Rule 7.4.

The effect of Shareholder approval of the First Resolution will be to:

(a) ratify the issue of the Placement Shares, for the purposes of Listing Rule 7.1. Under Listing Rule 7.4, once the First Resolution has been passed in accordance with its terms, the issue of the Placement Shares will be treated as having been made with approval for the purposes of Listing Rule 7.1; and
(b) exclude the Placement Shares from the calculation of the Company's capacity to issue further equity securities under the 15% limit contained in Listing Rule 7.1. That exclusion will provide the Company with increased capacity during the next twelve (12) month period to issue Securities without being required to seek further Shareholder approval.

In accordance with the requirements of Listing Rule 7.5, the Company provides the following information in relation to the Placement:

(a) 7,900,000 Placement Shares were issued and allotted on 24 November, 2010;
(b) the issue price of the Placement Shares was A$0.50 per Placement Share;

(c) the Placement Shares were issued on the same terms as, and rank equally with all other Shares, from the time of their issue and allotment;
(d)
the allottees of the Placement Shares were as follows:

Name of Applicant	No. of Shares
Bond Street Custodians Limited Citicorp Nominees Pty Limited Samcarni Super Richard F Wolff Nathalie Guillemette Stephane Amireault Citicorp Nominees Pty Limited GMP Securities Inc. <400-HMFO-E A/C> DB Celeste Investments Inc. Stan Bharti Station Capital Colbern Fiduciary Nominees Taycol Nominees Pty Limited Craig Benjamin Hawley Christopher Donald and Robyn Lynette Peter Trevor Chappel HSBC CustodyNominees (Australia)Limited	2,800,000 500,000 50,000 50,000 10,000 10,000 500,000 20,000 60,000 500,000 500,000 75,000 2,425,000 40,000 40,000 120,000 200,000

Name of Applicant

No. of Shares

Bond Street Custodians Limited
Citicorp Nominees Pty Limited
Samcarni Super
Richard F Wolff
Nathalie Guillemette
Stephane Amireault
Citicorp Nominees Pty Limited
GMP Securities Inc. <400-HMFO-E A/C>
DB Celeste Investments Inc.
Stan Bharti
Station Capital
Colbern Fiduciary Nominees
Taycol Nominees Pty Limited
Craig Benjamin Hawley
Christopher Donald and Robyn Lynette
Peter Trevor Chappel
HSBC CustodyNominees (Australia)Limited

2,800,000
500,000
50,000
50,000
10,000
10,000
500,000
20,000
60,000
500,000
500,000
75,000
2,425,000
40,000
40,000
120,000
200,000

(e) the funds raised by the Placement will be used to assist the Company in funding its drilling program in Brazil and for further exploration activities in connection with the Company‟s Brazilian projects.

Voting Exclusion Statement: The Company will disregard any votes cast on the First Resolution by any person who participated in the Placement, and any Associate of any such person.

However, the Company will not disregard a vote on the First Resolution if it is cast by:

(i) a person as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form, or
(ii) the person chairing the Meeting, as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form, to vote as the proxy decides.

2. Second Resolution – Unconditional Placement

It is proposed that the Company issue up to 18,300,000 Shares under a placement to professional and sophisticated investors ( Unconditional Placement ) at an issue price of $0.82 per Share ( Unconditional Placement Shares ). The Company proposes to raise $15,000,000 under the Unconditional Placement.

Approval is sought in the Second Resolution for the proposed issue and allotment of Unconditional Placement Shares to the Unconditional Placement investors, without breaching the 15% limit which applies to the Company under Listing Rule 7.1 and to preserve the Company's capacity to issue further Shares within this 15% limit in a twelve (12) month period, without requiring the prior approval of Shareholders.

In accordance with ASX Listing Rule 7.3, the Company provides the following information in relation to the Conditional Placement:

(a) the maximum number of Unconditional Placement Shares that the Company will issue is 18,300,000;
(b) the date by which the Company will issue the Unconditional Placement Shares is intended to be 24 September, 2011 and in any event will be no later than three (3) months after the date of the Meeting;
(c) the issue price for the Unconditional Placement Shares to be issued is $0.82 per Share;
(d) the Unconditional Placement Shares will be issued to various professional and sophisticated investors, being the clients of Lead Manager, Taylor Collison, Paterson Securities, and Azure Capital;
(e) the Unconditional Placement Shares will be issued on the same terms as, and will rank equally with, all other Shares, from the time of their issue and allotment; and
(f) the Company will apply the net proceeds from the Unconditional Placement to assist in the funding of its drilling and exploration program in Brazil and, more particularly, in relation to the drilling and exploration of certain potash projects.

Voting Exclusion Statement: The Company will disregard any votes cast on the Second Resolution by any person who may participate in the proposed Unconditional Placement or any person that may obtain a benefit, other than in that person‟s capacity as a Shareholder and any Associate of any of those persons.

However, the Company will not disregard a vote on the Second Resolution if it is cast by:

(i) a person as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form; or
(ii) the person chairing the Meeting, as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form, to vote as the proxy decides.

The Second Resolution will be conditional upon, and hence will not come into effect or be implemented, unless and until Shareholders approve the Third Resolution in accordance with its terms, at the Meeting or at any adjournment thereof.

3. Third Resolution – Approval of issue of Securities pursuant to the Acquisition

The Company has entered into a conditional agreement to acquire control and ownership of a potentially large-scale potash project ( Project ) located in north east Brazil.

The acquisition of the Project will occur as a result of the Company acquiring all of the issued capital of Potassio do Atlantico Ltda ( PALTDA ). PALTDA is a 100% owned subsidiary of Potash Atlantico Corp. ( PAC ), a private Canadian company that is in turn associated with the Forbes & Manhattan Group.

In addition, the Company will have a five (5) year exclusivity period with PAC, whereby if PAC, or an Associate or related corporation of PAC, obtains an interest in a potash project or right to obtain an interest in a potash project that is wholly or partially located within Segipe or Alagoas States of north east Brazil, such interest must first be offered to the Company at the cost incurred by the party acquiring that interest.

Terms of the Acquisition

The Company has entered into the Acquisition Agreement to acquire all of the issued capital of PALTDA. In consideration for the completion of the Acquisition, the Company has agreed to:

(a) the issue and allotment of 20,000,000 Shares and 1,500,000 Sale Options (collectively Consideration Securities ); and

(b) the creation and coming into force and effect of 80,000,000 Performance Rights,

to and in favour of PAC, or if so directed by PAC, directly to or with the PAC Shareholders in accordance with the provisions of that direction, and otherwise in accordance with the provisions of the Acquisition Agreement.

The Shares that form part of the Consideration Securities will be issued on a fully paid up basis and the rights attaching to those Shares will be identical in all respects with the rights attaching to Shares currently on issue.

The Sale Options that form part of the Consideration Securities will be issued on the terms that they are exercisable at a price of $0.50 per Option on or before 30 June 2014 and otherwise in accordance with the provisions of Section B of Annexure 2.

The Performance Rights will be issued on terms that include:

(a) 20,000,000 Performance Rights, that will convert into 20,000,000 Shares upon the completion of one drill hole returning an intersection of ten per cent. (10%) KCl mineralisation of a continuous thickness in excess of 10 metres at the Projects, on or before the third anniversary of the Completion Date;
(b) 30,000,000 Performance Rights, that will convert into 30,000,000 Shares upon the completion of an independent JORC compliant combined Mineral Resource Estimate including any and all categories of resources as defined by the JORC guidelines of not less than 100,000,000 tonnes with a grade of not less than ten per cent. (10%) KCl at the Projects, on or before the third anniversary of the Completion Date; and
(c) 30,000,000 Performance Rights, that will convert into 30,000,000 Shares upon the completion of an independent JORC compliant combined Mineral Resource Estimate including any and all categories of resources as defined by the JORC guidelines of not less than 200,000,000 tonnes with a grade of not less than ten per cent. (10%) KCl at the Projects, on or before the fifth anniversary of the Completion Date.

If a Change of Control Event was to occur prior to the fifth anniversary of the Completion Date, each of the conditions for the conversion of the Performance Rights into the above stated number of Shares would be deemed to have been satisfied and each holder of Performance Rights upon such occurrence would be issued and allotted with a number of Performance Shares that is the lesser in number of:

(i) the number of Performance Rights held by that holder on the date upon which the Change of Control Event occurs; and
(ii) a pro-rata entitlement in an aggregate number of Performance Shares equal to ten per cent. (10%) of all Shares, as determined immediately after the issue and allotment of all Performance Shares upon the occurrence of a Change of Control Event, where that pro-rata entitlement will be equal to the proportion that the number of Performance Rights held by that holder bears to all Performance Rights. That number is more exactly determined in accordance with the formula set out in Paragraph 7(c) of Annexure 3.

A complete description of the terms and conditions upon which the Performance Rights are proposed to be created and issued is set out in Annexure 3.

The sale and purchase of all the issued capital of PALTDA to the Company is conditional upon and subject to:

(a) the Company completing a placement of Shares, at a minimum price of at least $0.50 or on such other terms as otherwise agreed by PAC and the Company, that would raise no less than $15,000,000.00 – these being the Shares that are the subject of the Second Resolution;
(b) if required, the principals of London Investment Partners agreeing to place and/or underwrite at least $7.5 million of the Shares that are subject to condition (a) immediately above;

(c) the Company being satisfied in its absolute discretion with the results of technical, financial and legal due diligence investigations in relation to each of PAC, PALTDA and the Projects;
(d) the Company being satisfied with the proposed terms and conditions of the documents required to give effect to the Proposed Transaction;
(e) the Company being satisfied, inter alia, that PALTDA has unencumbered title to each of the Claims;
(f) the Shareholders passing all Resolutions as are required under the Listing Rules, the constitution of the Company and the Corporations Act to give effect to the transactions contemplated by the Acquisition Agreement;
(g) the Company complying with the Listing Rules and the Corporations Act in order for Completion to occur; and
(h) ASX approving the terms and conditions of the Performance Rights.

On Completion, PAC will have the right to nominate one person to be appointed as a Director, on the same terms and conditions as are applicable to other non-executive Directors.

Additionally, the Acquisition Agreement remains subject to all required approvals required by PAC, including the receipt of the approval of the PAC Shareholders.

The Conditions referred to in paragraphs (a) to (h) inclusive immediately above are for the benefit of the Company and must be satisfied or waived by 31 May 2011 or such other date as agreed between the Company and PAC. The parties have subsequently agreed to extend this date to 30 June 2011.

Upon approval of the Third Resolution, PAC or if so directed the PAC Shareholders, will acquire:

(a) on a fully diluted basis, Consideration Securities that will constitute 14.03 per cent of the fully diluted capital of the Company; and
(b) a relevant interest – through the creation of the Performance Rights in accordance with the provisions of the Acquisition Agreement – in an additional and maximum 80,000,000 Shares that will, at Completion, constitute 34.03 per cent of the fully diluted capital of the Company.

As a result, and as explained in Part C, Section A of this Explanatory Memorandum, the Directors have commissioned the preparation of the Independent Expert‟s Report about whether the proposed of issue and allotment of the Consideration Securities and the creation of the Performance Rights is “fair” and/or “reasonable” from the point of view of Shareholders who are not associated with PAC or otherwise directly involved in the Acquisition. A complete copy of the Independent Expert‟s Report is set out in Annexure 1 and accompanies this Explanatory Memorandum.

The Directors urge all Shareholders to read the Independent Expert‟s Report carefully and in its entirety before deciding on how they will vote upon the Third Resolution. If you have any questions regarding the contents of the Independent Expert‟s Report, you are encouraged to consult your solicitor, accountant or other financial adviser for assistance.

Escrow Arrangements

Each of the Shares, Sale Options and Performance Rights, as well as any Shares that are issued as a result of the exercise of any or all of the Sale Options or exercise of any or all of the Performance Rights, will be classified by the ASX as “restricted securities” in accordance with the requirements of the Listing Rules (collectively, Restricted Securities ). As a result, it will be a condition of completion of the Acquisition that PAC provides or procures the provision to the Company, of duly completed and executed escrow agreements – each of which have been drafted in accordance with the provisions of Appendix 9A of the Listing Rules – from PAC or from any PAC Shareholder that is an allottee of any Restricted Securities that are the subject of the Third Resolution and that form part of the Consideration Securities.

The effect of the above classification will be that each of the holders of Restricted Securities will not be permitted to Deal with any of Restricted Securities For a period of twelve (12) months commencing on the latter to occur of:

(i) the date of issue of those Restricted Securities; and
(ii) the date upon which all the escrow agreements in respect of all those Restricted Securities are entered into in accordance with the provisions of the Acquisition Agreement.

Voting Exclusion Statement: The Company will disregard any votes cast on the Third Resolution by PAC shareholders who are also Shareholders (of the Company) and any Associates of those persons.

However, the Company need not disregard a vote cast on the Third Resolution if it is cast by:

(i) a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(ii) the person chairing the Meeting, as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

The Third Resolution will be conditional upon, and hence will not come into effect or be implemented, unless and until Shareholders approve the Second Resolution in accordance with its terms, at the Meeting or at any adjournment thereof.

4. Fourth Resolution – Approval of issue of Options

The Company is seeking Shareholder approval to the proposed issue of six hundred and forty thousand (640,000) Options to Graham Ascough, a non-executive director of the Company.

In accordance with the provisions of Listing Rule 10.13 and Chapter 2E of the Corporations Act, the Company advises as follows:

(a) the Options are proposed to be issued to Graham Ascough or his nominee;
(b) the maximum number of Options that it is proposed to issue to Graham Ascough is six hundred and forty thousand (640,000) and which if vested in and exercised by Graham Ascough, will entitle him to acquire six hundred and forty thousand (640,000) Shares;
(c) the date by which the Company will issue the Options is intended to be 24 June 2011, 2011 and in any event will be no later than one (1) month after the date of the Meeting;
(d) no cash consideration will be payable by Graham Ascough for the issue to him of the Options referred to in paragraph (b);
(e) the material terms of the Options are outlined in Annexure 2 below;
(f) the Options will vest immediately; and
(g) there will be no proceeds arising from the proposed issue of Options that are the subject of the Fourth Resolution.

The proposed issue of six hundred and forty thousand (640,000) Options to Graham Ascough will give Mr Ascough a financial benefit within the ambit of Chapter 2E of the Corporations Act.

Voting Exclusion Statement : the Company will disregard any votes cast on the Fourth Resolution by:

(i) Graham Ascough and any of his Associates; and

(ii) any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Fourth Resolution is passed.

However, the Company need not disregard a vote cast on the Fourth Resolution if it is cast by:

(i) Graham Ascough or any of his Associates, as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(ii) the person chairing the Meeting, as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Background and reason for the proposed issue of the Options to Graham Ascough or his nominee

The Board is aware that the offer of equity to a Director must consider contemporary remuneration guidelines and market practices and that there be offered an effective and balanced incentive for the executives to improve the Company‟s performance and the value of investments of the Shareholders.

Since Graham Ascough is a non-executive Director, Shareholder approval is required under ASX Listing Rule 10.11 before any issue or allotment of Securities, such as the abovementioned Options, can be made to him or his nominee.

Graham Ascough joined the Board on 19 October 2010 and receives total remuneration of $2,500 per calendar month.

After the passing of the Fourth Resolution, Mr Ascough or his nominee will hold six hundred and forty thousand (640,000) Options and no Shares. Assuming all Resolutions are passed at the Meeting, Mr Ascough‟s holding of Options will represent 0.56% of the Company‟s issued capital on a fully diluted basis, after the issue or allotment of any Shares that are the subject of the Performance Rights or any Shares pursuant to the implementation of the Seventh Resolution.

The 52 week high for the Share price was $1.56 and the 52 week low share price was $0.40. The closing share price as at 28 April 2011 was $0.98.

As indicated in Paragraph 2 of the terms of the Options (see Annexure 2 ), the exercise price that Mr Ascough will be required to pay will be the price that is forty five per cent. (45%) above the five (5) day VWAP of the Shares immediately preceding the date of issue of the Options.

The market price for Shares during the period in which Mr Ascough will be permitted to exercise any or all of the Options would additionally determine whether or not all or any of those Options are exercised. If, at any time the Options are exercised and the Shares are trading in the ASX at a price that is higher than the Exercise Price, there may be a perceived cost to the Company.

The remuneration of the Directors for the year ending 30 June, 2010 and year to date from 1 July, 2010 to 31 March, 2011 (for clarity this excludes the proposed Options being issued pursuant to this Resolution) is as follows:

Table 1

For year ending 30 June, 2010
	SHORT-TERM		POST-EMPLOYMENT		SHARE-BASED
2010		Non monetary benefits $
	Salary & Fees $		Super- annuation $	Retirement benefits $
					Shares $	Options $	Total $
Anthony Wonnacott	-	-	-	-	-	-	-
Simon Taylor	88,342	-	7,951	-	-	347,848	444,141

For year ending 30 June, 2010
	SHORT-TERM		POST-EMPLOYMENT		SHARE-BASED
2010		Non monetary benefits $
	Salary & Fees $		Super- annuation $	Retirement benefits $
					Shares $	Options $	Total $
Fernando Tallarico	-	-	-	-	-	-	-
Mark Pearce	20,000	-	1,800	-	-	-	21,800
Ian Middlemas	36,000	-	3,240	-	-	-	39,240
Stephen Evans	13,333	-	1,200	-	-	5,060	19,593

Table 2

	SHORT-TERM	SHORT-TERM	POST-EMPLOYMENT	POST-EMPLOYMENT	SHARE-BASED	SHARE-BASED
1 July, 2010 – 31 March, 2011	Salary & Fees $		Super- annuation $	Retirement benefits $
		Bonus $			Shares $	Options $	Total $

Anthony Wonnacott	21,222	-	-	-	-	44,857	66,078
Simon Taylor	166,569	100,000	15,098	-	-	326,134	607,801
Fernando Tallarico	136,966	-	-	-	-	252,000	388,966
Mark Pearce	13,000**	-	-	-	-	-	13,000
Graham Ascough	13,468***	-	-	-	-	-	13,468

9 months of payments of BRL$25,000 per month by Aguia Metais Ltda (wholly owned subsidiary of the Company)
** Includes $9,000 accrued but unpaid as at 31 March, 2011.
*** Includes $7,500 accrued but unpaid as at 31 March, 2011.

The current annual remuneration package of Mr Ascough is a base remuneration, including superannuation, of $32,700.00.

Total (all Shares and Options)	5,022,002	3,150,001	2,168,646	640,000	102,434,352	113,415,001
Director / Employee Options (Expire 30 Jun 2014) (subject to Shareholder approval)	-	-	-	640,000	-	640,000
Unlisted Options (25c, Expire 31/12/2011)	-	-	-	-	1,600,000	1,600,000
Unlisted Options (35c, Expire 31/12/2011)	-	-	-	-	1,000,000	1,000,000
Unlisted Options (25c, Expire 31/12/2012)	-	-	-	-	4,000,000	4,000,000
Incentive Options (70c, Expire 30 30/11/2014)	250,000	-	-	-	-	250,000
Incentive Options (60c, Expire 30/11/2013)	250,000	-	-	-	-	250,000
Incentive Options (60c, Expire 31/03/2014)	-	-	500,000	-	150,000	650,000
Incentive Options (50c, Expire 30/09/2013)	-	-	500,000	-	575,000	1,075,000
Incentive Options (40c, Expire 30/09/2012)	-	-	500,000	-	-	500,000
Incentive Options (30c, Expire 31/12/2013)	-	1,000,000	-	-	-	1,000,000
Incentive Options (20c, Expire 30/06/2013)	-	500,000	-	-	-	500,000
Incentive Options (15c, Expire 30/06/2012)	-	500,000	-	-	-	500,000
Unlisted Options (25c, Expire 12/02/2012)	-	600,000	-	-	-	600,000
Class A Performance Shares	3,626,199	-	192,342	-	36,181,459	40,000,000
Ordinary Shares	895,803	550,001	476,304	-	58,927,893	60,850,001
Security Holder	Anthony Wonnacott	Simon Taylor	Fernando Tallarico	Graham Ascough	Other	TOTAL

Table 4 sets out the dilutionary effect that, subject to obtaining the necessary Shareholder approval, the proposed issue and allotment of the Options that are the subject of the Fourth Resolution is expected to have.

Table 4

Security Holder	Fully Diluted holding in Company before passing of the Fourth Resolution	Fully Diluted holding in Company after passing of the Fourth Resolution


Anthony Wonnacott	4.45%	4.43%
Simon Taylor	2.79%	2.78%
Fernando Tallarico	1.92%	1.91%
Graham Ascough	0.00%	0.56%
Others	90.84%	90.32%
Total	100.00%	100.00%

Value of Options subject of the Fourth Resolution

The Options that are the subject of the Fourth Resolution have an assessed valuation of $197,120 (using a price of 30.8 cents per Option, being the valuation of Options as provided in the valuation report prepared by Stantons International Securities Pty Ltd ( SIS ), based on the assessed fair value of the Options as calculated in the SIS Report. It is noted that SIS has valued the Options to be in a range of values between 30.8 cents to 40.5 cents per Option, based on volatilities ranging from 77.3% to 100.0%.

For further information on the valuation of the Options that are the subject of the Fourth Resolution, please see Annexure 2 .

Directors’ Recommendation and Reasons for Recommendation in relation to the Fourth Resolution

The Directors, other than Graham Ascough, believe that it is in the best interests of the Company to grant the Options the subject of the Fourth Resolution to Graham Ascough, as the current nature and scale of the Company‟s operations impedes the ability of the Company to attract and retain experienced and appropriately qualified personnel through the payment of cash remuneration in excess of what is already being offered. The Directors believe that the offer of Options, on the terms set out in Annexure 2 , as supplementary remuneration, assists in overcoming this impediment.

Each of the Directors, who are entitled to vote, will vote their Shares in favour of the Fourth Resolution and recommend that all Shareholders vote in favour of the Fourth Resolution. Mr Ascough makes no recommendation in respect of how Shareholders should vote in respect of the Fourth Resolution.

The Directors believe that the proposed issue of Options will incentivise the future performance of Mr Ascough. Graham Ascough has not previously been issued with any Options.

5. Fifth Resolution – Approval of issue of Options to Andrew Bursill

The Company is seeking Shareholder approval to the proposed issue of 640,000 Options to Andrew Bursill, the Company‟s Chief Financial Officer and Secretary.

In accordance with the provisions of Listing Rule 7.3, the Company advises as follows:

(a) the maximum number of Options that it is proposed to issue to Andrew Bursill is six hundred and forty thousand (640,000);

(b) the date by which the Company will issue and allot the Options the subject of the Fifth Resolution is intended to be 24 June 2011 and in any event will be no later than three (3) months after the date of the Meeting;
(c) no cash consideration will be payable by Andrew Bursill for the issue to him of the Options referred to in paragraph (b);
(d) the Options are proposed to be issued to Andrew Bursill or his nominee;
(e) the material terms of the Options are outlined in Annexure 2 below;
(f) the Options will vest immediately; and
(g) there will be no proceeds arising from the proposed issue of Options that are the subject of the Fifth Resolution.

Voting Exclusion Statement : the Company will disregard any votes cast on the Fifth Resolution by:

(i) Andrew Bursill and any of his Associates; and
(ii) any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Fifth Resolution is passed.

However, the Company need not disregard a vote cast on the Fifth Resolution if it is cast by:

(i) Andrew Bursill or any of his Associates, as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(ii) the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Background and reason for the proposed issue of the Options to Andrew Bursill or his nominee

Andrew Bursill was appointed as Chief Financial Officer and Company Secretary of the Company on 28 September, 2010.

The Board is aware that the offer of equity to an officer of the Company must consider contemporary remuneration guidelines and market practices and that there be offered an effective and balanced incentive for the executives to improve the Company‟s performance and the value of investments of the Shareholders.

Directors’ Recommendation and Reasons for Recommendation in relation to the Fifth Resolution

The Directors believe that it is in the best interests of the Company to grant the Options the subject of the Fifth Resolution to Andrew Bursill or his nominee, in order to align the interests of the senior executive management of the Company with those of the Shareholders. Each of the Directors, who are entitled to vote, will vote their Shares in favour of the Fifth Resolution and recommend that Shareholders vote in favour of the Fifth Resolution.

The Directors believe that the proposed issue of Options will incentivise the future performance of Mr Bursill. Andrew Bursill has not previously been issued with any Options.

6. Sixth Resolution – Approval of issue of Termination Options pursuant to the termination of the Pathfinder Project Joint Venture

Under the Pathfinder Project Joint Venture Agreement dated 31 October, 2007 between each of PlatSearch, Bohuon and the Company (then known as Newport Mining Limited) ( JV Agreement ), the abovementioned parties agreed to act in joint venture relating to exploration of a prospective

area of over 2,310 square kilometres in the southern end of the Fowler Domain on the western side of the Gawler Craton, located in South Australia ( Joint Venture ).

An amendment to the JV Agreement was signed by Bohuon on 12 August, 2010, by the Company on 24 August, 2010 and by PlatSearch on 2 September, 2010 ( Amendment ).

Pursuant to recent correspondence and discussions between representatives of PlatSearch and the Company, it has been agreed that upon and from 29 October, 2010:

(a) the Company will:
(i) be permitted to withdraw from the Joint Venture;
(ii) terminate its involvement in the JV Agreement, the Amendment and any transactions therein contemplated; and
(iii) have no current or future obligation or liability in connection with the Joint Venture, or any transaction contemplated in the provisions of the JV Agreement, as amended by the Amendment, or in the Amendment itself;
(b) neither PlatSearch nor Bohuon, nor any other person who may become a party to the JV Agreement, or any successor agreement thereof, will represent that the Company is a party to the JV Agreement, the Amendment or any successor agreement to the foregoing, or is otherwise involved in the Joint Venture; and
(c) PlatSearch and Bohuon will indemnify and hold the Company harmless for any loss, cost or expense that the Company suffers or incurs as a result of any action or omission by PlatSearch, Bohuon or any other person who may become a party to the JV Agreement, or any successor agreement thereof, after the date upon which PlatSearch and Bohuon accept and sign the document evidencing the Company‟s withdrawal from the Joint Venture.

All of the above matters of agreement are hereafter referred to as the Withdrawal .

As at the close of the market conducted by ASX on 24 August, 2010 – being the date upon which the Company executed the JV Agreement – the closing price of a Share was $0.44.

In consideration of both PlatSearch and Bohuon agreeing to the Withdrawal, the Company has agreed that, subject to obtaining Shareholder approval, it will issue to PlatSearch 200,000 Termination Options and Bohuon 50,000 Termination Options, on the following terms and conditions:

(a)	exercise price:	$0.50 per Termination Option;
(b)	issue consideration:	as stated above, otherwise nil cash consideration;
(c)	issue date:	subject to Shareholder approval, on or before 30 June, 2011
		(Issue Date)
(d)	entitlement upon exercise:	one (1) Share for each Termination Option exercised;
(e)	vesting:	on the Issue Date;
(f)	exercise period:	on or before 31 December, 2014;
(g)	official quotation:	none of the Termination Options will be officially quoted on
		ASX;
(h)	non-transferable:	none of the Termination Options will be permitted to be sold or
		transferred from, or encumbered by, the original allottee;

(i) change of control all of the Termination Options will expire within 30 days of a Change of Control of the Company;
(j) capital re-structure: in the event that the Company engages in any issue of capital or capital re-structure, the terms and conditions of the Termination Options will be adjusted to ensure that the Option holders are not materially prejudiced; and

(k) other terms all other terms and conditions upon which the Termination Options are to be issued will be identical with those applicable to the Sale Options.

Voting Exclusion Statement: The Company will disregard any votes cast on the Sixth Resolution by PlatSearch, Bohuon or any other person who has become a party to the JV Agreement and any Associates of those persons.

However, the Company need not disregard a vote cast on the Sixth Resolution if it is cast by:

(i) a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(ii) the person chairing the Meeting, as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

7. Seventh Resolution - Approval for the raising of up to $30,000,000 by issuing of Shares within three (3) months of the date of approval

Under the Second Resolution, the Company is seeking approval to raise $15,000,000 to commence the initial exploration program for the tenements acquired under the Proposed Transaction. The Company may require additional capital to finance additional exploration programs depending on the results of the initial exploration programs.

The Company intends to raise the additional funds up to an additional $30,000,000 by means of a private placement to a number of parties at a price determined by market conditions at the time.

In any event, the Company intends to issue Shares at a discount not greater than twenty per cent. (20%) to the VWAP of the Shares as determined immediately before the day on which the Shares are to be issued in accordance with the proposed capital raising.

Listing Rule 7.1 requires that a listed company must obtain shareholder approval prior to the issue of Shares, or securities convertible into Shares (such as a convertible note), representing more than fifteen per cent. (15%) of the issued capital of the Company in any 12 month period.

The Seventh Resolution seeks Shareholder approval pursuant to ASX Listing Rule 7.1 for the issue of the above Shares.

ASX Listing Rule 7.3

Listing Rule 7.3 requires the Notice to include the following information for Shareholders consideration in respect of the Seventh Resolution:

(a) The maximum number of Shares that will be issued under the Seventh Resolution is not known. However, the maximum number of those Shares will not be more than the number of Shares that if issued and allotted at the proposed VWAP price level, would not require more than $30,000,000 to be subscribed by investors .
(b) The Shares will be issued and allotted progressively within three (3) months of the date of the passage of the Seventh Resolution.

(c) The Company intends to issue the new Shares that are the subject of the Seventh Resolution at a discount not greater than twenty per cent. (20%) of the VWAP of the Shares as determined immediately before the day on which the Shares are to be issued in accordance with the proposed capital raising.
(d) The identity of allottee/s has not yet been determined but all are expected to be professional and/or sophisticated investors. The identity of the allottee/s will be at the discretion of the Company or in consultation with any broker the Company may engage to assist in the placing of the Shares or both and who are not related parties.
(e) The Shares issued will rank equally with, and be on the same terms as, in all respects, the existing Shares.
(f) The funds raised are intended to provide working capital to the Company for additional exploration activity.

Directors’ recommendation and reasons for recommendation in relation to the Seventh Resolution

The Directors recommend that all Shareholders vote in favour of the Seventh Resolution for the reasons set out in this Explanatory Statement. Subject to the noted exclusions, the Directors‟ intend to vote their Shares in favour of the Seventh Resolution.

Voting Exclusion Statement: The Company will disregard any votes cast on the Seventh Resolution by any person who may participate in the proposed capital raising that is the subject of the Seventh Resolution or any person that may obtain a benefit from such participation, other than in that person‟s capacity as a Shareholder and any Associates of those persons.

However, the Company need not disregard a vote cast on the Seventh Resolution if it is cast by:

(i) a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(ii) the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

PART E: GLOSSARY OF TERMS

A. Definitions

Acquisition means the acquisition of Potassio do Atlantico Ltda, more particularly described in the Explanatory Memorandum.

Acquisition Agreement means an agreement dated 24 January 2011 between the Company and Potash Atlantico Corp in connection with the acquisition by the Company of the Assets.

ASIC means the Australian Securities & Investments Commission.

Assets means has the meaning given to that term in the Acquisition Agreement.

Associate has the meaning ascribed to that term in Section 12(2) of the Corporations Act.

ASX means the ASX Limited ACN 008 624 691.

Board means the board of Directors.

Bohuon means Bohuon Resources Pty Limited ACN 102 533 817.

Business Day means:

(a) for the purpose of sending or receiving a notice, a day on which banks are open for business in the city where the notice or other communication is received; and
(b) for all other purposes, a day on which banks are open for business in Sydney.

Change of Control Event means:

(a) where:
(i) a person has, or is entitled to acquire, the right or power to secure, whether directly or indirectly, 50.1% or more in number of the issued share capital of the Company as a result of a takeover bid; and
(ii) that takeover bid has become unconditional; or
(b) the announcement by the Company that:
(i) shareholders of the Company have, at a court convened meeting of those shareholders, voted in favour of, by the necessary majority, a proposed scheme of arrangement under which all the issued share capital of the Company is to be either:
- (A) cancelled; or
- (B) transferred to a third party; and
(ii) the court, by order, approved that proposed scheme of arrangement.

For the purposes of this Document and any part thereof, the acquisition of all or any of the Consideration Securities and the acquisition of all or any Shares that are issued as a result of the conversion or enforcement of any Performance Rights, will not be taken into account when determining whether or not a Change of Control Event has occurred.

Company or Aguia means Aguia Resources Limited ACN 128 256 888.

Completion Date means the date upon which completion of the Acquisition occurs in accordance with the terms of the Acquisition Agreement.

Consideration Securities means each of the Securities more particularly referred to in Part C, Section B, Paragraph 3 under the heading of “Terms of Acquisition” in respect of the Third Resolution.

Constitution means the constitution of the Company, as amended from time to time.

Corporations Act means Corporations Act 2001 (Commonwealth).

Deal means acquire, purchase, sell, transfer, assign, create a Security Interest over, declare oneself a trustee of or part with the benefit of or otherwise dispose of property (or any interest in it or any part of it).

Director means a member of the board of directors of the Company.

Documents means each of the Notice, the Explanatory Memorandum, the Proxy Form and any or all other documents that each constitute part of this booklet.

Explanatory Memorandum means the explanatory memorandum set out in Part C of these Documents and that accompanies the Notice.

First Performance Event means the completion of one drill hole returning an intersection of ten per cent. (10%) KCl mineralisation of a continuous thickness in excess of 10 metres at the Projects, on or before the third anniversary of the Completion Date.

First Performance Rights means 20,000,000 Performance Rights as more particularly referred to in Part D, Explanatory Memorandum, Section B, Paragraph 3, under the heading “Terms of the Acquisition”.

Independent Expert’s Report means the report prepared by William Buck Corporate Advisory Services (NSW) Pty Limited, a copy of which is set out in Annexure 1 .

JORC means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, as more particularly set out in Appendix 5A of the Listing Rules.

KCl means, and is the recognised symbol for, potassium chloride.

Listing Rules means the rules and procedures issued and enforced by the ASX, as amended from time to time, including all appendices and guidance notes thereto.

Meeting means the general meeting being convened by the Directors and pursuant to the Notice.

Notice means the Notice of Extraordinary General Meeting of Shareholders that accompanies and forms part of these Documents and all disclosures made in these Documents in accordance with the requirements of the Listing Rules and the Corporations Act.

Option means an option, if exercised in accordance with its terms, to acquire one (1) Share that is issued in accordance with the terms and conditions set out in Section A of Annexure 2.

PAC means Potash Atlantico Corp., a company incorporated in Canada and associated with Forbes & Manhattan.

PAC Shareholder means a holder of shares in PAC and whose name and shareholding in PAC is set out in Annexure 3.

PALTDA Shares means all the issued Securities in Potassio do Atlantico Ltda.

Performance Right means the contractual right to be issued with one (1) Share, for nil cash consideration, upon the satisfaction of certain conditions set out in Annexure 3 and as also referred to in Part D, Section B, Paragraph 3 of the Explanatory Memorandum. For the sake of clarity, the expression Performance Rights means and includes each of the First Performance Rights, Second Performance Rights and Third Performance Rights.

Performance Share means a Share that is issued and allotted pursuant to the exercise of the applicable rights attaching to a Performance Right, and includes each of the First Performance Share, Second Performance Share and Third Performance Share, as each term is defined in Annexure 3.

PlatSearch means PlatSearch NL ACN 003 254 395.

Project means the potash exploration and development project more particularly referred to in Part B of this Document.

Property means any real property that is the subject of the 121 exploration claims referred to in Part B of this Document.

Proxy Form means the proxy form as attached to these Documents.

Relevant Interest has the meaning given to that term in section 608 of the Corporations Act.

Resolution means any one of the resolutions set out in the Notice.

Sale Option means an option, if exercised in accordance with its terms, to acquire one (1) Share that is issued in accordance with the terms and conditions set out in Section B of Annexure 2.

Second Performance Event means the completion of an independent JORC compliant combined Mineral Resource Estimate including any and all categories of resources as defined by the JORC guidelines of not less than 100,000,000 tonnes with a grade of not less than ten per cent. (10%) KCl at the Projects, on or before the third anniversary of the Completion Date.

Second Performance Rights means 30,000,000 Performance Rights as more particularly referred to in Part D, Explanatory Memorandum, Section B, Paragraph 3, under the heading “Terms of the Acquisition”.

Security has the meaning given to it in the Listing Rule 19.12.

Security Interest means an interest or power:

(a) reserved in an interest in property; or
(b) created or otherwise arising in an interest in property under a bill of sale (as defined in any statute) mortgage charge lien pledge hypothecation trust or power,

by way of security for the payment of a debt or other monetary obligation or the observance of any other obligation:

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means the holder of a Share.

Termination Option means an Option, the terms and conditions of the issue of which are set out in Part D: Explanatory Memorandum, Section B, Paragraph 6, under the heading “Approval of issue of Termination Options pursuant to the termination of the Pathfinder Project Joint Venture”.

Third Performance Event means the completion of an independent JORC compliant combined Mineral Resource Estimate including any and all categories of resources as defined by the JORC guidelines of not less than 200,000,000 tonnes with a grade of not less than ten per cent. (10%) KCl at the Projects, on or before the fifth anniversary of the Completion Date.

Third Performance Rights means 30,000,000 Performance Rights as more particularly referred to in Part D, Explanatory Memorandum, Section B, Paragraph 3, under the heading “Terms of the Acquisition”.

Trading Day has the meaning given to that term in Listing Rule 19.

Underwriting Agreement means the Placement Agreement between the Company and London Investment Partners.

VWAP means the volume weighted average price of the Shares sold on the ASX during the five (5) Trading Days immediately preceding and including the date on which such price is to be determined, but does not include any transactions defined in the ASX Business Rules as „special‟ crossings prior to the commencement of normal trading, crossings during the after hours adjust phase nor any overseas trades or trades pursuant to the exercise of options over ordinary shares in the capital of the Company.

B. Interpretation

In these Documents, unless the context requires otherwise:

(a) a reference to a word includes the singular and the plural of the word and vice versa;
(b) a reference to a gender includes any gender;
(c) if a word or phrase is defined, then other parts of speech and grammatical forms of that word or phrase have a corresponding meaning;
(d) a term which refers to a natural person includes a company, a partnership, an association, a corporation, a body corporate, a joint venture or a governmental agency;
(e) headings are included for convenience only and do not affect interpretation;
(f) a reference to a document includes a reference to that document as amended, novated, supplemented, varied or replaced;
(g)
a reference to a thing includes a part of that thing and includes but is not limited to a right;
(h) the terms “included”, “including” and similar expressions when introducing a list of items do not exclude a reference to other items of the same class or genus;
(i) a reference to a statute or statutory provision includes but is not limited to:
(i) a statute or statutory provision which amends, extends, consolidates or replaces the statute or statutory provision;
(ii) a statute or statutory provision which has been amended, extended, consolidated or replaced by the statute or statutory provision; and
(iii) subordinate legislation made under the statute or statutory provision including but not limited to an order, regulation, or instrument;
(j) reference to “$”, “A$”, “Australian Dollars” or “dollars” is a reference to the lawful tender for the time being and from time to time of the Commonwealth of Australia;
(k) a reference to an asset includes all property or title of any nature including but not limited to a business, a right, a revenue and a benefit, whether beneficial, legal or otherwise.

ANNEXURE 1 – INDEPENDENT EXPERT’S REPORT

Independent Expert’s Report and Financial Services Guide

18 May 2011

455450\PERM\CORP\QUAR\825718_1:

18 May 2011

The Directors Aguia Resources Limited Suite 4, Level 9, 341 George Street, Sydney, NSW, 2000

Dear Sirs,

Aguia Resources Limited

Independent Expert’s Report: Acquisition of Potash Atlantico Ltda

Introduction

The Directors of Aguia Resources Limited (“ Directors ” and “ AGR ” or the “ Company ” respectively) have engaged William Buck Corporate Advisory Services (NSW) Pty Limited (“ William Buck ” or “ we ” or “ us ” or “ our ” as appropriate) to prepare an Independent Expert’s Report (“ Report ”) in relation to the proposed acquisition of all the issued shares and options in Potash Atlantico Ltda (“ PALTDA ” and the “ Proposed Transaction ”) from its current holding company Potash Atlantico Corporation (“ PAC ”).

PALTDA’s only assets comprise a portfolio of exploration claims and permits over areas believed to be prospective in potash mineralisation. We understand that PALTDA’s exploration claims and permits comprise 121 exploration claims, 43 of which are under application, covering a total of approximately 2,100km[2] (“ the Potash Projects ”).

The consideration payable by AGR to PAC (“ Consideration ”) comprises the following:

issue of 20 million fully paid ordinary shares in AGR;
issue of 1,500,000 options in AGR exercisable at a price of $0.50 per option (“ Consideration Options ”);
issue of 20 million A class converting performance shares, which convert into 20 million fully paid ordinary shares in AGR upon the completion of one drill hole returning an intersection of 10% potassium chloride (“ KCl ”) mineralisation of a continuous thickness in excess of 10 metres at the Potash Projects within three years of being issued;
issue of 30 million B class converting performance shares, which convert into 30 million fully paid ordinary shares in AGR upon the completion of an independent JORC compliant combined mineral resource estimate including all categories of resources as defined by the JORC guidelines of not less than 100,000,000 tonnes with a grade of not less than 10% KCl at the Potash Projects within three years of being issued; and

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issue of 30 million C class converting performance shares, which convert into 30 million fully paid ordinary shares in AGR upon the completion of an independent JORC compliant combined mineral resource estimate including all categories of resources as defined by the JORC guidelines of not less than 200,000,000 tonnes with a grade of not less than 10% KCl at the Potash Projects within five years of being issued.

We note that the performance criteria referred to in regard to the Converting Performance Shares is also deemed to have been satisfied if a “change of control event” occurs in respect of AGR prior to the conversion of the of the Converting Performance Shares. In determining whether or not a “change of control” event has occurred, the acquisition of all or any of the shares and options issued as part of the Consideration and the acquisition of all or any fully paid ordinary shares in AGR that are issued as a result of the conversion or enforcement of any of the shares and options issued as part of the Consideration, will not be taken into account.

We understand that the shares and options to be issued as part of the Consideration may, at the direction of PAC, be issued directly to the shareholders of PAC.

A condition precedent to completing the Proposed Transaction is that AGR undertakes a placement of fully paid ordinary shares in order to raise $15 million to fund working capital for the further exploration and development of various mineral prospects owned by PALTDA (“ Proposed Placement ”). We understand that the terms of this placement involve the issue of 18,292,683 fully paid ordinary shares in AGR at $0.82 per share. We understand that any shares allotted to parties associated with PAC pursuant to the Proposed Placement will constitute approximately 15.6% of the total number of shares allotted under the Proposed Placement.

We understand that, on completion of the Proposed Transaction, PAC will be entitled to approximately 39.8% of AGR’s enlarged share capital on a fully diluted basis (that is, allowing for all existing options and other converting performance shares to be converted into fully paid ordinary shares in AGR and completion of the Proposed Placement). Further, we understand that completion of the Proposed Transaction will also result in a number of common shareholders in AGR and PAC and that AGR and PAC currently have a common director.

Further details of the Proposed Transaction are set out in Section 1.1 of our Report.

Purpose of Report

Corporations Act

The Proposed Transaction is subject to Sections 606 and 611 of the Corporations Act 2001 (“ Act ”). Unless allowed by other provisions, Section 606 of the Act (“ Section 606 ”) does not allow a person to acquire a relevant interest in shares such that they would control 20% or more of the voting shares in a company. As noted, if the Proposed Transaction is approved, the shareholders of PALTDA will hold a up to a combined 39.8% of AGR’s enlarged share capital on a fully diluted basis (that is, allowing for all existing options and other converting performance shares being converted into fully paid ordinary shares in AGR).

Section 611 of the Act (“ Section 611 ”) provides an exemption to Section 606 if the Proposed Transaction is approved by a resolution of the shareholders at a general meeting called for that purpose.

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Section 611 requires shareholders to be given all relevant information known to the person making the acquisition, their associates or the company, which is material to the proposal.

Whilst Section 611 does not explicitly state that an expert’s opinion is required in relation to such acquisitions, regulatory guidance issued by the Australian Securities and Investments Commission (“ ASIC ”) states that it is the Directors’ obligation to provide shareholders with full and proper disclosure so as to enable them to assess the merits of the proposal, and to decide whether to agree by resolution to the proposed acquisition. This obligation may be satisfied by commissioning an independent expert’s report on whether the proposed transaction is “fair” and “reasonable” to the non-associated shareholders. The non-associated shareholders are those shareholders in AGR whose votes are not to be disregarded in voting on the resolutions relating to the Proposed Transaction (“ Non-Associated Shareholders ”).

ASX Limited Listing Rules

The Proposed Transaction is also subject to the provisions of ASX Limited’s (“ ASX ”) Listing Rules (“ ASX Listing Rules ”). ASX Listing Rule10 (“ ASX Listing Rule 10 ”) relates to transactions with persons in a position of influence. We understand that the provisions of ASX Listing Rule 10 apply on the basis that AGR and PAC have a number of common shareholders and that AGR and PAC currently have a common director.

This Report is to accompany the Notice of Extraordinary General Meeting and Explanatory Memorandum (“ EM ”) being provided to the shareholders of AGR (“ Shareholders ”) and has been prepared to assist the Directors in fulfilling their obligation to provide Shareholders with full and proper disclosure so as to enable them to assess the merits of the Proposed Transaction and to assist them in their consideration of whether or not to approve resolutions relating to the Proposed Transaction.

The purpose of our Report is to express an opinion as to whether or not the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders of AGR.

Our Report has been prepared solely for use of the Directors of AGR, and for the purpose set out herein. William Buck does not accept any responsibility for the use of our Report outside this purpose. Except in accordance with the stated purpose, no extract, quote, or copy of our Report, in whole or in part, should be reproduced without the written consent of William Buck, as to the form and context in which it may appear.

Scope of Report

Our procedures in preparing this Report have been limited to those procedures we believed are required in order to form our opinion. Our procedures included an analysis of financial information and accounting records. However, the procedures did not include verification work nor did they constitute:

an audit in accordance with Australian Accounting Standards (“ AUS ”);
an assurance engagement in accordance with Australian Standards on Assurance Engagements (“ ASAE ”); or
a review in accordance with Australian Standard on Review Engagements (“ ASRE

iii

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The assessment of whether or not the Proposed Transaction is fair and reasonable will necessarily involve us determining the “fair market value” of various securities, assets and interests. For the purposes of our opinion, the term “fair market value” is generally defined as the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing, but not anxious purchaser, and a knowledgeable, willing, but not anxious vendor, acting at arm’s length.

We have not considered special value in forming our opinion. Special value is the amount which a potential acquirer may be prepared to pay for a business in excess of the fair market value. This premium represents the value to the potential acquirer of potential economies of scale, reduction in competition or other synergies arising from the acquisition of the asset not available to likely purchases generally. Special value is not normally considered in the assessment of fair market value as it relates to the individual circumstances of special purchasers.

We have treated any valuations undertaken in connection with our assessment of the Proposed Transaction as “full scope valuations” under Accounting Professional and Ethical Standard (“ APES ”) 225 – Valuation Services.

By their very nature, any valuation assessment is necessarily the subject of uncertainty and volatility and the conclusions arrived at will include considerations that are dependent on the exercise of individual judgement. Accordingly, there is unlikely to be an “indisputable value”, and we have expressed our opinion regarding values as falling within a likely range.

Bases of Evaluation

In assessing the Proposed Transaction, we have considered the provisions of the Act, the matters set out in various ASIC Regulatory Guides (“ RG ”), and any other relevant pronouncements insofar as they may be applicable to this Report, including the following:

RG 111: Content of Expert Reports;
RG 112: Independence of Experts; and
RG 170: Prospective Financial Information.

In addition, we have had regard to the provisions of various APESs, including APES 225: Valuation Services.

As there is no legal definition of the expression fair and reasonable in the Act, we have considered guidance provided by the RGs in assessing whether the Proposed Transaction is fair and reasonable from the perspective of the Non-Associated Shareholders.

RG 111 treats “fair” and “reasonable” as two distinct criteria. The transaction is “fair” if the value of the consideration offered is equal to or less than the value of the securities or assets being acquired and which are the subject to the transaction. The transaction will be “reasonable” if it is fair, or, despite being not fair, after considering other significant factors, there are sufficient reasons for the shareholders to accept the transaction.

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In our opinion, the most appropriate basis on which to evaluate the Proposed Transaction is to assess the likely overall impact on the Non-Associated Shareholders and to form a judgement as to whether the expected benefits outweigh any disadvantages that might result from approving the transaction.

In forming our opinion as to whether or not the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders, we have considered and compared the following:

the fair market value of the consideration offered by AGR with the fair market value of shares in PALTDA to be acquired by AGR under the Proposed Transaction;
the advantages and disadvantages to the Non-Associated Shareholders if the Proposed Transaction is approved; and
the advantages and disadvantages to the Non-Associated Shareholders if the Proposed Transaction is not approved.

If applicable, we have considered whether or not an appropriate premium (for control or significant influence) is reflected in the consideration under the Proposed Transaction.

In our opinion, the Proposed Transaction is to be judged in terms of its overall effect. It is not meaningful to assess the individual elements of the Proposed Transaction separately.

Information

This Report is based upon financial and other information provided by AGR and PALTDA and made available to us up to the date of the Report. A list of specific documents referred to and relied upon in the preparation of our Report has been included at Appendix A. A listing of defined terms and abbreviations used in this Report is set out in Appendix B.

William Buck has considered and relied upon the information provided by AGR and PALTDA. William Buck believes the information provided to be reliable, complete and not misleading, and has no reason to believe that any material facts have been withheld. The information provided was evaluated through analysis, inquiry and review for the purpose of forming an opinion as to whether the Proposed Transaction is fair and reasonable.

William Buck does not warrant that its inquiries have identified or verified all of the matters which an audit, extensive examination or due diligence investigation might disclose. In any event, an opinion as to whether a corporate transaction is fair and reasonable is in the nature of an overall opinion rather than an audit or detailed investigation.

As the assets of PALTDA comprise mineral rights, in accordance with ASIC Regulatory Guide 111 we have utilised the services of the mining consultancy firm SRK Consulting (Australasia) Pty Limited (“ SRK ”) for the purpose of valuing the mineral rights held by PALTDA. Further details in respect of the valuation prepared by SRK are set out in Section 10.3 of this Report.

We reserve the right to review and amend all calculations and opinions included or referred to in our Report and, if we consider it necessary, to revise our Report in light of any information which becomes known to us after the date of the Report or if additional information not referred to in Appendix A is provided to us.

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We note that an important part of the information base used in forming an opinion of the kind set out in this Report, consists of opinions and judgements of management. This type of information has been evaluated through analysis, enquiry and review to the extent practical. Often it is not possible, however, to externally verify or validate such information.

The statements and opinions expressed in this Report are made in good faith and have been based on information available as at the date of this Report. On completion of our review, we believe the information to be reliable, accurate, and prepared on a reasonable basis. We have relied upon information set out in Appendix A and have no reason to believe that any material information has been withheld from us. We have not performed anything in the nature of an audit or financial due diligence on the information provided for this opinion. No warranty of accuracy or reliability is given by William Buck or its affiliated companies and their respective officers and employees in relation to this information.

The opinions of William Buck are based on prevailing market, economic and other conditions at the date of this Report. Conditions can change over relatively short periods of time. Any subsequent changes in these conditions could impact upon our opinion.

Prospective Financial Information

The information provided to us during the course of preparing this Report included limited prospective financial information with respect to PALTDA. The achievability of the prospective financial information is not warranted or guaranteed by either AGR, PALTDA or William Buck.

We understand that, given the early stage nature of the exploration and development work undertaken in respect of the Potash Projects being acquired as part of the Proposed Transaction and the Phosphate Projects and other assets held by AGR, any prospective financial information prepared by either PAC or AGR is subject to significant uncertainties. Accordingly, in preparing this Report we have not reviewed or relied upon any prospective financial information.

Qualifications and Independence

Details of the experience and qualifications of the Directors of William Buck responsible for the preparation of this Report and in independence of William Buck in connection AGR, PALTDA and the Proposed Transaction which is the subject of this Report are set out in Section 12 of this Report.

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Summary of Opinion

We have considered the terms of the Proposed Transaction and conclude that the Proposed Transaction is both fair and reasonable to the Non-Associated Shareholders of AGR.

Value Considerations

Based on our analysis, we set out below a summary of our valuation opinion in respect of the Proposed Transaction comprising a comparison between:

our valuation of the Consideration to be paid to PAC under the Proposed Transaction; and
our valuation of 100% of the shares in PALTDA being acquired by AGR under the Proposed Transaction.

Table 1 – Assessment of Fairness

	Ref.	Low Value	High Value	Mid-Point Value
Total Value of Consideration Value of PALTDA Shares	9.2 10.5	$16,142,822	$17,616,037	$16,875,339
		$4,670,000	$18,020,000	$11,345,000

Source: William Buck

A graphic representation of the comparison of our valuation ranges is set out below:

Figure 1

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----- Start of picture text -----

Fair value of Consideration
$16.1 million to $17.62 million
Millions
Fair value of PALTDA shares
$4.67 million to $18.02 million
Source: William Buck
$4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50 $10.00 $10.50 $11.00 $11.50 $12.00 $12.50 $13.00 $13.50 $14.00 $14.50 $15.00 $15.50 $16.00 $16.50 $17.00 $17.50 $18.00 $18.50 $19.00 $19.50 $20.00
----- End of picture text -----

It may be seen from the above that the total value of the Consideration being offered by AGR under the Proposed Transaction is at the upper end of, but within, the fair value range of the shares being acquired in PALTDA.

Accordingly, in our opinion, the Proposed Transaction is considered fair from the perspective of the Non-Associated Shareholders of AGR.

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Assessment of Reasonableness of the Proposed Acquisition

We have considered the following factors in determining whether or not the Proposed Transaction is reasonable to the Non-Associated Shareholders of AGR.

Advantages of approving the Proposed Transaction

The following may be considered advantages of approving the Proposed Transaction:

Consideration is fair: The consideration under the Proposed Transaction is “fair”;
Arm’s length basis: We understand that the terms of the Proposed Transaction were negotiated on an arm’s length basis;
Significant portion of the Consideration is conditional: A significant proportion of the Consideration payable by AGR is in the form of Converting Performance Shares which is therefore dependent on the satisfaction of conditions that will add value to the interest being acquired by AGR before they are converted into fully paid ordinary shares in AGR;
Strengthening of interests in minerals used in fertilisers: The approval of the Proposed Transaction will result in AGR acquiring an interest in rights which are potentially rich in potash, a commodity for which there is generally expected to be high demand as global agriculture continues to be dependent on the use of fertilisers to improve agricultural productivity;
Diversification of assets: The approval of the Proposed Transaction will result in AGR acquiring an interest in potentially valuable potash assets which will result in a diversification of its assets in a way that is complementary to the interests that it holds in phosphate assets; and
Increased market capitalisation: The potential increase in the market capitalisation of AGR may lead to increased coverage from capital market analysts, improved access to equity capital market opportunities and increased liquidity in its share trading.

Disadvantages of approving the Proposed Transaction

The following may be considered disadvantages of approving the Proposed Transaction:

High level of uncertainty in value of PALTDA : the fair value of PALTDA’s assets, and consequently the fair value of the shares in PALTDA, is the subject of a high level of uncertainty. The high level of uncertainty results in a large valuation range reflective of the sensitivity of the valuation to the geological probabilities and to the large exploration costs associated with the exploration program. As assessed in this Report, the value of the Consideration being paid for PALTDA is at the upper end of the assessed fair value of PALTDA. The value of PALTDA’s assets, and consequently the value of shares in PALTDA, are sensitive to significant uncertainties in relation to the following:
the geological probabilities of success assigned to various prospects;
the ultimate level of contained KCl; and
the dollar value of contained KCl per tonne based on the comparable transactions and companies examined.

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By approving the Proposed Transaction the Non-Associated Shareholders will be exposed to the risk that the various significant uncertainties associated with determining the fair value of PALTDA’s assets will result in the ultimate value of PALTDA’s assets being at the lower end of the assessed fair value range and, accordingly, below the value of the Consideration;

Existing shareholders’ interest in the Company will be diluted: By approving the Proposed Transaction the interests of the Non-Associated Shareholders will be diluted;
Shareholder with significant influence: Approval of the Proposed Transaction will result in PAC becoming the significant shareholder in AGR. The presence of such significant shareholding generally both reduces the liquidity of a Company’s share trading and reduces the likelihood that the Company will be the target of any potential takeover activity; and
Investment in ‘early stage’ assets: The assets of PALTDA represent relatively ‘early stage’ assets without a proven resource being identified. The Company is therefore making a substantial investment into assets that are (as yet) unproven.
Conversion on “change of control: The performance criteria referred to in regard to the Converting Performance Shares is deemed to have been satisfied if a “change of control event” occurs in respect of AGR prior to the conversion of the of the Converting Performance Shares. Accordingly, it is possible that the Converting Performance Shares will be converted into fully paid ordinary shares in AGR without any mineral resource being indicated or proven in accordance with the performance criteria set out in the terms of the Converting Performance Shares. However we note that in determining whether or not a “change of control” event has occurred, the acquisition of all or any of the shares and options issued as part of the Consideration and the acquisition of all or any fully paid ordinary shares in AGR that are issued as a result of the conversion or enforcement of any of the shares and options issued as part of the Consideration, will not be taken into account. This significantly lessens the likelihood that a “change of control event” will occur.

Advantages and disadvantages of not implementing the Proposed Transaction

In our view, the significant advantages or disadvantages of rejecting the Proposed Transaction include the reverse of the matters noted above, as well as the following:

Ability to pursue alternative investments: By not approving the Proposed Transaction AGR will be able to continue to explore alternative potential projects and investments. However, we note that whilst alternative investments may be pursued by AGR no feasible opportunity may emerge; and
Post announcement share price: We note that AGR’s share price increased significantly following the announcement of the Proposed Transaction. Failure to approve the Proposed Transaction may result in a fall in AGR’s share price to the level prevailing prior to the announcement of that Proposed Transaction.

In our opinion, based on a consideration of the above, the Proposed Transaction is considered reasonable from the perspective of the Non-Associated Shareholders of AGR as:

on bala nc e, the advantages of approving the Proposed Transaction outweigh the disadvantages of approving it to the Non-Associated Shareholders; and
on balance, the disadvantages of rejecting the Proposed Transaction outweigh the advantages of rejecting it to the Non-Associated Shareholders.

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General Advice and Other

General advice

In forming our opinion, we have co n sidered the interests of the Non-Associated Sha r eholders as a whole. This advice therefore does n ot consider the financial situation, objectives or n eeds of the individual Non-Associated Shareholders. It is neither practical nor possible to asses s the implication of the Proposed Transa c tion on individual Non-Associated Shareholders as their individual financial circumstances a re not known.

Some Non-Associated Shareholde r s may place a different emphasis on various aspects of the Proposed Transaction from that ad o pted in our Report. Accordingly, individual Non- A ssociated Shareholders may reach different conclusions on whether or not the Proposed Tran s action is fair and reasonable to them and each i n dividual Shareholder must take into account his or her own circumstances when deciding whet h er or not to vote in favour or against the resoluti o ns relating to the Proposed Transaction. Shareh o lders should seek their own independent profes s ional advice to assist them in their decision, taking into account their preferences and expectations.

As an individual Non-Associated S h areholder’s decision to vote in favour of the Pro p osed Transaction may be influenced by h is or her particular circumstances, we recomme n d that individual non-associated sharehol d ers consult their financial advisors.

Other

William Buck is an Authorised Rep r esentative under an appropriate Australian Fina n cial Services Licence. Accordingly, we are required to provide a Financial Services Guide in situ a tions where we may be taken as providing financial product advice. A copy of William Buck’s Finan c ial Services Guide is set out in the annexure hereto.

Details of our qualifications, independence and the estimated fees that we are entitl e d to receive for the preparation of this Report are set out in Section 12.

The above opinion should be consi d ered in conjunction with, and not independently of, the information set out in the remainde r of this Report including the appendices.

Yours faithfully, William Buck Corporate Advisory Services (NSW) Pty Limited ABN 50 133 845 637 Authorised Representative No. 333393 AFSL 240769

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Domenic Quartullo Director

Manda Trautwein Director

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Financial Services Guide

Dated: 18 May 2011

William Buck Corporate Advisory Services (NSW) Pty Ltd ABN 50 133 845 637 (“ William Buck ” or “ we ” or “ us ” or “ our ” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide (“ FSG ”). This FSG is designed to help retail clients make a decision as to their use of general financial product advice and to ensure that we comply with our obligations as an authorised representative of a financial services licensee.

The FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide as an Authorised Representative of William Buck Financial Services (NSW) Pty Ltd (Licence No: 240769);
remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

Financial Services we are Licensed to Provide

We are an authorised representative of William Buck Financial Services (NSW) Pty Ltd who holds an Australian Financial Services Licence, which authorises us to provide financial product advice in relation to:

debentures, stocks or bonds issued or proposed to be issued by a government;
life products including:
investment life insurance products as well as any products issued by a Registered Life Insurance Company that are backed by one or more of its statutory funds; and
life risk insurance products as well as any products issued by a Registered Life Insurance Company that are backed by one or more of its statutory funds;
interests in managed investment schemes including investor directed portfolio services;
retirement savings accounts products (within the meaning of the Retirement Savings Account Act 1997);
securities; and
superannuation.

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as an authorised representative of a financial services licensee authorised to provide the financial product advice contained in the report.

deposit and payment products limited to:
basic deposit products;
deposit products other than basic deposit products;
derivatives limited to old law securities options contracts and warrants;

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General Financial Product Advice

In our report we provide general financial product advice, not personal financial advice, because it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

Benefits that we may Receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither William Buck, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other Benefits Received by our Employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are authorised to provide.

addressed to The Compliance Officer, William Buck, Level 29, 66 Goulburn Street, Sydney NSW 2000.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service. The Financial Ombudsman Service is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry.

Further details about the Financial Ombudsman Service are available at the website www.fos.org.au or by contacting them directly at: the Financial Ombudsman Service, GPO Box 3, Melbourne VIC 3001, or by telephone on 1300 780 808 or by facsimile on (03) 9613 6399.

Professional Indemnity Insurance

William Buck has professional indemnity insurance in place which covers any work done by us, as an authorised representative of William Buck Financial Services (NSW) Pty Ltd and by representatives/employees after they cease to work for us. The compensation arrangements we have in place comply with sec.912B of the Corporations Act.

Contact Details

You may contact us at William Buck, Level 29, 66 Goulburn Street, Sydney, NSW 2000 or by telephone on (02) 8263 4000

Associations and Relationships

From time to time William Buck may provide professional services including financial advisory services to financial product issuers in the ordinary course of its business.

Complaints Resolution

Internal Complaints Resolution Process

As an authorised representative of a holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing,

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1.	The	Proposed Transaction .......................................................................................................... 4
	1.1	Overview of Proposed Transaction ........................................................................................ 4
	1.2	Proposed Capital Raising ....................................................................................................... 5
	1.3	AGR Capital Structure Prior to Approval of the Proposed Transaction ................................. 5
	1.4	Capital Structure After Approval of the Proposed Transaction............................................... 7
2.	Scope and Limitations ................................................................................................................. 9
	2.1	Regulatory Background .......................................................................................................... 9
	2.2	Purpose and Scope ................................................................................................................ 9
	2.3	Basis of Evaluation ............................................................................................................... 10
	2.4	Reliance on Information ........................................................................................................ 11
	2.5	Prospective Financial Information ........................................................................................ 12
	2.6	Current Market Conditions .................................................................................................... 12
	2.7	Sources of Information .......................................................................................................... 12
	2.8	Assumptions ......................................................................................................................... 12
3.	Economic and Industry Overview ............................................................................................. 13
	3.1	Introduction ........................................................................................................................... 13
	3.2	Global and Australian General Economic Conditions .......................................................... 13
	3.3	Global Fertiliser Industry ....................................................................................................... 14
	3.4	Market Characteristics and Segmentation ............................................................................ 18
	3.5	Potash Mining in Brazil ......................................................................................................... 20
	3.6	Phosphate Mining in Brazil ................................................................................................... 21
4.	Profile of AGR ............................................................................................................................. 22
	4.1	Background and Activities .................................................................................................... 22
	4.2	Board of Directors ................................................................................................................. 24
	4.3	Corporate Structure .............................................................................................................. 25
	4.4	Capital Structure ................................................................................................................... 25
	4.5	Financial Position .................................................................................................................. 28
	4.6	Financial Performance .......................................................................................................... 29
	4.7	Share Price Trading Performance ........................................................................................ 30
5.	Profile of PALTDA ....................................................................................................................... 33
	5.1	Background ........................................................................................................................... 33
	5.2	Exploration Claims and Permits ........................................................................................... 33
	5.3	Board and Management ....................................................................................................... 33
	5.4	Corporate and Capital Structure ........................................................................................... 34

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	5.5	Financial Performance .......................................................................................................... 34
	5.6	Financial Position .................................................................................................................. 34
6.	Valuation of Fully Paid Ordinary Shares in AGR ..................................................................... 36
	6.1	Selection of Valuation Methodology ..................................................................................... 36
	6.2	Valuation of AGR Shares by Reference to Quoted Share Prices ........................................ 37
	6.3	Allowance for Dilution ........................................................................................................... 38
	6.4	Secondary Valuation of AGR Shares ................................................................................... 39
	6.5	Requirement for a Control Premium ..................................................................................... 39
	6.6	Conclusion ............................................................................................................................ 42
7.	Valuation of Options Issued in AGR ......................................................................................... 43
	7.1	Selection of Valuation Methodology ..................................................................................... 43
	7.2	Selection of Valuation Inputs ................................................................................................ 43
	7.3	Valuation of Consideration Options ...................................................................................... 44
8.	Valuation of Converting Performance Shares ......................................................................... 45
	8.1	Overview ............................................................................................................................... 45
	8.2	Valuation of Converting Performance Shares ...................................................................... 45
9.	Valuation of Consideration ........................................................................................................ 47
	9.1	Overview ............................................................................................................................... 47
	9.2	Valuation of the Consideration ............................................................................................. 47
10. Valuation of PALTDA .................................................................................................................. 48
	10.1	Valuation Summary .............................................................................................................. 48
	10.2	Selection of Valuation Methodology ..................................................................................... 48
	10.3	Fair Market Value of PALTDA’s Assets ................................................................................ 48
	10.4	Restatement of PALTDA’s Net Assets to Fair Market Value................................................ 54
	10.5	Valuation of Shares in PALTDA ........................................................................................... 54
	10.6	Secondary Valuation Methodology ....................................................................................... 54
11. Evaluation of the Proposed Transaction.................................................................................. 56
	11.1	Basis of the Evaluation of the Proposed Transaction ........................................................... 56
	11.2	Assessment of Fairness of the Proposed Transaction ......................................................... 56
	11.3	Assessment of Reasonableness of the Proposed Acquisition ............................................. 57
	11.4	Conclusion on Proposed Transaction ................................................................................... 59
12. Qualifications .............................................................................................................................. 60
	12.1	Qualifications ........................................................................................................................ 60
	12.2	Independence and Declarations ........................................................................................... 60
13. Appendices ................................................................................................................................. 62
	13.1	Appendix A – Sources of Information ................................................................................... 62
	13.2	Appendix B – Abbreviations and Definitions......................................................................... 63

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13.3	Appendix C – Prospecting Rights held by AGR ................................................................... 65
13.4	Appendix D – Copy of SRK Report ...................................................................................... 69
13.5	Appendix E – Valuation Methodologies for Businesses and Shares ................................. 108
13.6	Appendix F – Qualifications and Experience ...................................................................... 111

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1. The Proposed Transaction

1.1 Overview of Proposed Transaction

On 25 January 2011 AGR announced that it had entered into a conditional agreement to acquire 100% of the issued capital of PALTDA from PAC in consideration for the issue of the following shares and options in AGR ( “Consideration” ).

Table 2 – Consideration Payable under the Proposed Transaction

Equity Instrument	Number	Conditions
Fully paid ordinary shares	20,000,000	N/A
Options	1,500,000	Exercisable at $0.50 per option at any time within three years of their grant date which is 30 June 2011 (ie. the expiry date is 30 June 2014).
A Class Converting Performance Shares	20,000,000	Convertible into 20,000,000 fully paid ordinary shares upon meeting performance criteria – refer below.
B Class Converting Performance Shares	30,000,000	Convertible into 30,000,000 fully paid ordinary shares upon meeting performance criteria – refer below.
C Class Converting Performance Shares	30,000,000	Convertible into 30,000,000 fully paid ordinary shares upon meeting performance criteria – refer below.

Source: AGR announcement dated 25 January 2011

We understand that the shares and options to be issued as part of the Consideration may, at the direction of PAC, be issued directly to the shareholders of PAC.

In this Report the A Class Converting Performance Shares, the B Class Converting Performance Shares and the C Class Converting Performance Shares are collectively referred to as “ Converting Performance Shares ”.

The performance criteria of each class of the Converting Performance Shares are as follows:

Table 3 – Performance Criteria for Converting Performance Shares

Equity Instrument	Performance Criteria
A Class Converting Performance Shares	Completion of one drill hole returning an intersection of 10% KCl mineralisation of a continuous thickness in excess of 10 metres within 3 years of being issued.
B Class Converting Performance Shares	Completion of an independent JORC compliant combined mineral resource estimate including all categories of resources as defined by the JORC guidelines of not less than 100,000,000 tonnes with a grade of not less than 10% KCl at the Potash Projects within 3 years of being issued.
C Class Converting Performance Shares	Completion of an independent JORC compliant combined mineral resource estimate including all categories of resources as defined by the JORC guidelines of not less than 200,000,000 tonnes with a grade of not less than 10% KCl at the Potash Projects within 3 years of being issued.

Source: AGR announcement dated 25 January 2011

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In the event that there is a “change of control event” (as defined) of AGR prior to the conversion of the of the Converting Performance Shares then the performance criteria referred to in regard to the Converting Performance Shares is deemed to have been satisfied and the Converting Performance Shares will be converted into fully paid ordinary share in AGR. For the purposes of this Proposed Transaction, the acquisition of all or any of the shares and options issued as part of the Consideration and the acquisition of all or any fully paid ordinary shares in AGR that are issued as a result of the conversion or enforcement of any of the shares and options issued as part of the Consideration, will not be taken into account when determining whether or not a “change of control” event has occurred.

A “change of control event” is defined as:
the acquisition (or entitlement to acquire) by a party of 50.1% or more of the issued capital of AGR as a result of a takeover bid that has become unconditional; or
the announcement by AGR that its shareholders have approved a scheme of arrangement under which all the issued shares in AGR will be either cancelled or transferred to a third party and the scheme of arrangement is approved by a Court Order.

1.2 Proposed Capital Raising

A condition precedent to completing the Proposed Transaction is that, subject to shareholder approval, AGR undertakes a placement of fully paid ordinary shares in order to raise $15 million to fund working capital for the further exploration and development of various mineral prospects owned by PALTDA (“ Proposed Placement ”). We understand that the terms of this placement involve the issue of 18,292,683 fully paid ordinary shares in AGR at $0.82 per share. We understand that any shares allotted to parties associated with PAC pursuant to the Proposed Placement will amount to approximately 2,853,659 shares (or 15.6% of the total number of shares allotted under the Proposed Placement).

1.3 AGR Capital Structure Prior to Approval of the Proposed Transaction

Issued Securities

AGR’s issued capital prior to the issue of any securities forming part of the Consideration under the Proposed Transaction comprises the following:

Table 4 – AGR – Issued Capital Prior to Proposed Transaction

Security Class	No.
Fully Paid Ordinary Shares Unlisted Class A Performance Shares Unlisted Class B Performance Shares Unlisted Incentive Options Unlisted Options	60,850,001
	20,000,000
	20,000,000
	10,825,000
	500,000

Source: AGR

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Phosphate Performance Shares

We note that the unlisted Class A Performance Shares and the unlisted Class B Performance Shares (collectively “ Phosphate Performance Shares ”) were issued as part of the consideration for AGR’s acquisition of the Lucena Phosphate Project and the Mata da Corda Phosphate Project (the “ Phosphate Projects ”) announced on 25 February 2010.

The terms of the Phosphate Performance Shares are as follows:

Table 5 – AGR – Phosphate Performance Shares Terms

Security Class	Dividends Rights	Expiry Date	Performance Criteria
Unlisted Class A Performance Shares	Nil	Three years from 23 June 2010	Each A Class Performance Share will convert into one fully paid ordinary share in AGR upon the satisfaction, prior to the expiry date, of an independently calculated mineral resource of not less than 30,000,000 tonnes with a grade of not less than 10% P2O5, or an equivalent total amount of P2O5, being determined within either or both of the Phosphate Projects.
Unlisted Class B Performance Shares	Nil	Three years from 23 June 2010	Each B Class Performance Share will convert into one fully paid ordinary share in AGR upon the satisfaction, prior to the expiry date, of an independently calculated mineral resource of not less than 70,000,000 tonnes with a grade of not less than 10% P2O5, or an equivalent total amount of P2O5, being determined within either or both of the Phosphate Projects.

Source: AGR

In addition to the above, the Phosphate Performance Shares have the following terms:

Conversion after Expiry Date : If either of the resource milestones noted in Table 5 are not met by the expiry date, the Company will:
convert the total number of A Class Performance Shares on issue into one fully paid ordinary share in AGR; and
convert the total number of B Class Performance Shares on issue into one fully paid ordinary share in AGR.
After Conversion : Any fully paid ordinary share in AGR issued on conversion of any Phosphate Performance Shares will rank equally with and confer rights identical with all other fully paid ordinary shares in AGR then on issue and application will be made by the Company to ASX for official quotation of the shares upon the date of conversion;
Issue of Shares for No Consideration : Any fully paid ordinary share in AGR issued on conversion of any Phosphate Performance Share shall be allotted and issued for no consideration;
Non-transferable : The Phosphate Performance Shares are not transferable;
Voting Rights : The holders of the Phosphate Performance Shares shall have no right to vote, subject to the Corporations Act; and
Quotation : The Phosphate Performance Shares are unquoted and no application for quotation of the Phosphate Performance Shares will be made by the Company.

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Unlisted Options

Details of AGR’s issued options are set out in the following table.

Table 6 – AGR – Unlisted Options

Security Class	Expiry Date	Exercise Price	No.
Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Unlisted Options Total Options	31/12/2011 31/12/2011 30/06/2012 30/09/2012 31/12/2012 30/06/2013 30/09/2013 30/11/2013 31/12/2013 30/03/2014 30/11/2014	$0.25 $0.35 $0.15 $0.40 $0.25 $0.20 $0.50 $0.60 $0.30 $0.60 $0.70	1,600,000 1,000,000 500,000 500,000 4,000,000 500,000 1,075,000 250,000 1,000,000 650,000 250,000
			11,325,000

Source: AGR

We note that, based upon AGR’s closing share price as at 21 April 2011 of $0.98, all issued options are “in the money”.

1.4 Capital Structure After Approval of the Proposed Transaction

Based on the above, it can be seen that the ultimate issued securities in AGR if the Proposed Transaction is approved will depend upon the following:

the extent to which existing unlisted issued options are exercised – on the basis that all existing unlisted issued options are “in the money” as at 21 April 2011 it is reasonable to assume that all existing options will be exercised;
whether or not the resource milestones noted in Table 5 in respect of the Phosphate Performance Shares are met by the expiry date of those shares;
whether or not the options issued as part of the Consideration are exercised;
whether or not the resource milestones noted in Table 3 in respect of the Converting Performance Shares are met by the expiry date of those shares; and
the number of shares ultimately issued as part of the Proposed Placement.

The table below sets out AGR’s current and potential issued share capital assuming the following:

that all existing unlisted issued options are exercised;
that all resource milestones noted in Table 5 in respect of the Phosphate Performance Shares are met by the expiry date of those shares;
that 18,292,683 fully paid ordinary shares will be issued by AGR pursuant to the Proposed Placement; and

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that the options issued as part of the Consideration are exercised and that all resource milestones noted in Table 3 in respect of the Converting Performance Shares are met by the expiry date of those shares.

Table 7 – AGR – Potential Issued Shares after Approval of the Proposed Transaction

Shareholders	Current Plus Exercise of Existing Options	Current Plus Exercise of Existing Options	Current Shares/Options Plus Conversion of Phosphate Performance Shares	Current Shares/Options Plus Conversion of Phosphate Performance Shares	Current Shares/Options Plus Conversion of Phosphate Performance Shares Plus Converting Performance Shares and Options under Proposed Transaction Plus Proposed Placement	Current Shares/Options Plus Conversion of Phosphate Performance Shares Plus Converting Performance Shares and Options under Proposed Transaction Plus Proposed Placement
	No	%	No.	%	No.	No.
Current Shareholders Current Option Holders Current Class A Performance Shareholders Current Class B Performance Shareholders PAC Interest Unlisted Options A Class Converting Performance Shares B Class Converting Performance Shares C Class Converting Performance Shares Proposed Placement * Proposed Placement **	60,850,001 11,325,000	84.3% 15.7%	60,850,001 11,325,000 20,000,000 20,000,000	54.2% 10.1% 17.8% 17.8%	60,850,001 11,325,000 20,000,000 20,000,000	28.71% 5.34% 9.44% 9.44%


					112,175,001	52.92%
					1,500,000 20,000,000 30,000,000 30,000,000 2,853,659	0.71% 9.44% 14.15% 14.15% 1.35%





					84,353,659	39.80%
					15,439,024	7.28%
	72,175,001	100.0%	112,175,001	100.0%	211,967,684	100.00%

* Represents number of shares under the Proposed Placement that will be taken up by PAC shareholders.

** Net of number of shares under the Proposed Placement that will be taken up by PAC shareholders.

Source: William Buck

It may be seen from the above that, the Consideration payable under the Proposed Transaction may result in PAC holding approximately 39.8% of AGR’s enlarged share capital on a fully diluted basis.

It should be noted that PAC’s share holding may be as high as 49.05% of AGR’s issued shares if:

all existing options are exercised;
no Phosphate Performance Shares are converted into ordinary shares;
the Proposed Placement takes place; and
all securities issued under the Proposed Transaction are ultimately converted into ordinary shares.

Shareholders should refer to the accompanying EM for full details of the Proposed Transaction.

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2. Scope and Limitations

2.1 Regulatory Background

Corporations Act

The Proposed Transaction is subject to Sections 606 and 611 of the Act.

Unless allowed by other provisions, Section 606 of the Act (“ Section 606 ”) does not allow a person to acquire a relevant interest in the issued voting shares of a listed company if, by entering into the transaction, their (or someone else’s) voting power in the company increases:

from 20% or below to more than 20%; or
from a starting point above 20% and below 90%.

As noted in Section 1.4 above, if the Proposed Transaction is approved PAC would acquire an interest in AGR in excess of 20%.

Section 611 of the Act provides an exemption to Section 606 if the Proposed Transaction is approved by a resolution of the shareholders at a general meeting called for that purpose.

Whilst Section 611 does not explicitly state that an expert’s opinion is required in relation to such transactions, regulatory guidance issued by the Australian Securities and Investments Commission (“ ASIC ”) states that it is the Directors’ obligation to provide shareholders with full and proper disclosure to enable them to assess the merits of a proposed transaction for the purpose of assisting them to decide whether to approve any resolutions relating to the transaction. This obligation may be satisfied by commissioning an independent expert’s report on whether the proposed transaction is fair and reasonable to the Non-Associated Shareholders of AGR.

The ASX Listing Rules

Further, we understand that AGR and PAC have a number of common shareholders and that AGR and PAC currently have a common director. Accordingly, the Proposed Transaction is also subject to the provisions of ASX Listing Rule10 relating to transactions with persons in a position of influence.

2.2 Purpose and Scope

Purpose

William Buck has been appointed by the Directors of AGR to prepare an independent expert’s report expressing our opinion as to whether or not the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders of AGR.

This Report is to accompany the EM being provided to the shareholders of AGR and has been prepared to assist the Directors in fulfilling their obligation to provide shareholders with full and proper disclosure to enable them to assess the merits of the Proposed Transaction and to assist them in their consideration of whether or not to approve the resolutions relating to the Proposed Transaction.

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This Report should not be used for any other purpose and we do not accept any responsibility for use outside this purpose. Except in accordance with the stated purpose, no extract, quote or copy of our report, in whole or in part, should be reproduced without the written consent of William Buck, as to the form and context in which it may appear.

Scope

Section 611 requires shareholders to be given all relevant information known to the persons entering into a transaction, their associates or the company, which is material to the proposed transaction.

Whilst, Section 611 does not explicitly state that an expert opinion is required in relation to such transactions, it is the company’s directors’ obligations to provide shareholders with full and proper disclosure to enable them to assess the merits of the proposed transactions, for the purpose of assisting them to decide whether to approve any resolutions relating to the transactions. This obligation may be satisfied by commissioning an independent expert’s report on whether the Proposed Transaction is fair and reasonable.

The scope of our procedures undertaken have been limited to those procedures we believed are required in order to form our opinion. Our procedures, in the preparation of this Report, may have involved an analysis of financial information and accounting records. However, the procedures did not include verification work nor did they constitute:

an audit in accordance with AUS;
an assurance engagement in accordance with ASAE; or
a review in accordance with ASRE.

The assessment of whether or not the Proposed Transaction is fair and reasonable will necessarily involve the determining the “fair market value” of various securities, assets and interests. For the purposes of our opinion, the term “fair market value” will be defined as the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing, but not anxious purchaser, and a knowledgeable, willing, but not anxious vendor, acting at arm’s length.

By their very nature, any valuation assessments are necessarily the subject of uncertainty and volatility and the conclusions arrived at will include considerations that are dependent on the exercise of individual judgement. Accordingly, there is unlikely to be an “indisputable value”, and we have expressed our opinion as to values as falling within a likely range.

We have not considered the effect of the Proposed Transaction on the particular circumstances of individual shareholders. Some individual shareholders may place a different emphasis on various aspects of the Proposed Transaction from the one adopted in this Report. Accordingly, individuals may reach different conclusions on whether or not the Proposed Transaction is fair and reasonable to them.

An individual shareholder’s decision in relation to the Proposed Transaction may be influenced by their particular circumstances and, therefore, shareholders should seek independent advice.

2.3 Basis of Evaluation

As there is no legal definition of the expression fair and reasonable in the Act, we have therefore considered guidance provided by ASIC in its RGs in assessing whether the Proposed Transaction is

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fair and reasonable from the perspective of the Non-Associated Shareholders. Specifically, we will have regard to the provisions of the following:

RG 111: Content of Expert Reports;
RG 112: Independence of Experts; and
RG 170: Prospective Financial Information.

RG 111 treats “fair” and “reasonable” as two distinct criteria. The transaction is “fair” if the value of the consideration offered is equal to or less than the value of the securities or assets acquired and which are the subject to the transaction. The transaction will be “reasonable” if it is fair, or, despite being not fair, after considering other significant factors, there are sufficient reasons for the shareholders to accept the transaction.

In our opinion, the most appropriate basis on which to evaluate the Proposed Transaction is to assess its likely overall impact on the Non-Associated Shareholders and to form a judgement as to whether the expected benefits outweigh any disadvantages that might result from approving the transaction.

In forming our opinion as to whether or not the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders, we have considered and compared the following:

the issue price per fully paid ordinary share under the Proposed Transaction with the fair market value of the fully paid ordinary shares to be issued by AGR under the Proposed Transaction;
the advantages and disadvantages to the Non-Associated Shareholders if the Proposed Transaction is approved; and
the advantages and disadvantages to the Non-Associated Shareholders if the Proposed Transaction is not approved.

Where applicable, we have considered whether or not an appropriate premium (for control or significant influence) is reflected in the consideration under the Proposed Transaction.

In our opinion, the Proposed Transaction is to be judged in terms of their overall effect. It is not meaningful to assess the individual elements of the Proposed Transaction separately.

2.4 Reliance on Information

This Report is based upon financial and other information provided by AGR and PALTDA. We have considered and relied upon this information. We believe the information provided to be reliable, complete and not misleading, and has no reason to believe that any material facts have been withheld. The information provided was evaluated through analysis, inquiry and review for the purpose of forming an opinion as to whether the Proposed Transaction is fair and reasonable.

We do not warrant that our inquiries have identified or verified all of the matters which an audit, extensive examination or “due diligence” investigation might disclose. In any event, an opinion as to whether a corporate transaction is fair and reasonable is in the nature of an overall opinion rather than an audit or detailed investigation.

Where we have relied on the views and judgement of management the information was also evaluated through analysis, inquiry and review to the extent practical. However, such information is often not capable of direct external verification or validation. In the context of this Report, the views not capable of direct external verification or validation related principally to matters such as the likely future actions of management and/or the likely future behaviour of competitors.

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2.5 Prospective Financial Information

2.6 Current Market Conditions

Our opinion is based on economic, market and other conditions prevailing at the date of this Report. Such conditions can change significantly over relatively short periods of time. Accordingly, changes in those conditions may result in any valuation opinions becoming quickly outdated and in need of revision. We reserve the right to revise any valuation, or other opinion, in the light of material information existing at the valuation date that subsequently becomes known to us.

2.7 Sources of Information

Appendix A to this report sets out details of information referred to and relied upon by us during the course of preparing this Report and forming our opinion.

AGR has agreed to indemnify William Buck, and its owner practice, their partners, directors, employees, officers and agents (as applicable) against any claim arising out of misstatements or omissions in any material supplied by the Company, its subsidiaries, directors or employees, on which we have relied.

2.8 Assumptions

In forming our opinion, the following has been assumed:

all relevant parties have complied, and will continue to comply, with all applicable laws and regulations and existing contracts and there are no alleged or actual material breaches of the same or disputes (including, but not limited to, legal proceedings), other than as publicly disclosed and that there has been no formal or informal indication that any relevant party wishes to terminate or materially renegotiate any aspect of any existing contract, agreement or material understanding, other than as publicly disclosed;
that matters relating to title and ownership of assets (both tangible and intangible) are in good standing, and will remain so, and that there are no material legal proceedings, or disputes, other than as publicly disclosed;
information in relation to the Proposed Transaction provided to the AGR shareholders or any statutory authority by the parties is complete, accurate and fairly presented in all material respects;
if the Proposed Transaction is approved, it will be implemented in accordance with its disclosed terms; and
the legal mechanisms to implement the Proposed Transaction are correct and effective.

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3. Economic and Industry Overview

3.1 Introduction

The current principal interests of AGR and PALTDA lie in potential phosphate projects and potash projects, respectively, situated in Brazil. Phosphate and potash are global commodities and accordingly, the prospects of both companies will be affected by both future general global economic conditions and industry conditions in the global fertiliser industry, being the industry in which phosphate and potash are principally used.

In preparing our Report, we have given consideration to current expectations with regard to general global economic conditions and industry conditions in the global fertiliser industry.

3.2 Global and Australian General Economic Conditions

In preparing this Report, we have had regard to likely global and Australian economic conditions over the foreseeable future. The following observations regarding global and Australian global economic conditions are based on William Buck’s review of generally available economic analysis reports published by major Australian trading banks and economic forecasting bodies at or about March 2011.

3.2.1 Global Economic Conditions

Notwithstanding the unstable financial conditions in a number of European countries, the later part of 2010 saw the recovery in the global industrial cycle beginning to take hold in the US and other parts of Europe.

Economic conditions in the US suggest that business confidence is improving and that employment growth, whilst variable, is encouraging. However, domestic consumption is still weak reflecting low wage growth and still high levels of household debt. Whether the encouraging sentiment continues to gain momentum will ultimately depend on continuing jobs growth and/or new growth in real wages. Whilst jobs growth has been evident, the growth has been modest and this is likely to be reflected in modest consumption outcomes. Whilst the current round of government economic stimulus is drawing to a close, it is still uncertain as to whether or not a tightening of monetary policy is warranted.

Growth in China continues but government policy over the coming years will be aimed at controlling growth within an annual target range which is likely to be lower than the growth achieved in recent years. The controlling of annual growth is required to accommodate the structural changes desired in the Chinese economy as it enters the next phase of growth.

The economic outlook for Japan is uncertain and subject to significant reassessment in the aftermath of its recent earthquake, tsunami and problems in controlling radiation at the disabled nuclear plant in Fukushima Prefecture. In the absence of the nuclear plant issues, expectations are that the recent earthquake and tsunami would have an immediate short-term negative economic impact, to be followed by a medium-term stimulatory effect with the commencement of the rebuilding of infrastructure. However, the difficulties being experienced in bringing the Fukushima nuclear plant under control and the difficulty in assessing the full extent of the radiation contamination may have serious implications on Japan’s economic outlook if not addressed quickly.

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In Europe there are signs that economic conditions have shifted from a “downside risk” to more "balanced" position. But an emphasis on maintaining control of inflationary pressures will re-focus the market attention on possible rate increases by the European Central Bank. The continue risk of renewed sovereign debt concerns should continue to act as a counter to any significant rate increases In any case, growth is only expected to be moderate in most of Europe, except for Germany where a strong export performance will underpin growth.

A summary of economic growth expectations globally and in Australia is set out in the following table.

Table 8 – Australian & Global Economic Outlook - GDP Forecast Calendar Year - % Change

Region	2007	2008	2009	2010	2011	2012
Total Global China United States Euro-zone Australia	5.4% 14.2% 2.0% 2.8% 4.7%	2.9% 9.6% 0.0% 0.3% 2.6%	-0.7% 9.1% -2.6% -4.0% 1.3%	4.9% 10.3% 2.8% 1.7% 2.7%	4.4% 9.2% 2.9% 1.5% 2.7%	4.2% 8.1% 2.7% 1.6% 3.9%

Source: William Buck: Based on consensus economic forecasts published by various Australian trading banks March 2011

3.2.2 Australian Economic Conditions

Whilst the overall Australian economy has performed strongly over recent years, 2010 clearly exhibited the “two-speed” nature of the domestic economy, with growth being predominantly driven by strong demand for commodities from Australia’s trading partners, most notably China.

The medium-term outlook remains positive, with continuing strong demand from Australia’s major trading partners having a significant positive influence on Australia’s terms of trade.

Business investment plans confirm a further strengthening of the mining boom and whilst the shortterm negative impact of the January 2011 floods may be reflected in economic results for the March 2011 quarter, the reconstruction effort will add a second growth factor to the expected continuing strong global demand for commodities in further boosting subsequent growth.

Australian commodity exports finished 2010 in a strong position as recovery in the global industrial cycle began to take hold and this was reflected in significant increases in the prices of a wide range of base metals and coal. Agricultural prices also increased significantly during 2010 as extreme global weather conditions boosted demand for Australian production.

3.3 Global Fertiliser Industry

3.3.1 Overview of Global Fertiliser Industry

Commercial fertilisers are used primarily in the agricultural sector where they are used as a plant nutrient in the growing of many food products. Most commercial fertilisers are applied to the soil as part of a compound mineral fertiliser which strengthens the earth’s soils, while maximising crop yields. Demand for commercial fertilisers is primarily driven by economic growth and the demand for food products and biofuels.

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The economic events which occurred during recent years have had an impact on the commercial fertiliser industry as a result of a significant decline in commodity prices and demand, an increase in stockpiles and a suspension of projects. As the global economy recovers, commodity prices are expected to stabilise, reducing uncertainty and thereby increasing the use commercial fertilisers as farmers increase production. This is expected to result in a steady recovery in prices and the demand for phosphate and potash fertilisers.

World population is expected to reach 7 billion in 2011, and is expected to exceed 9 billion by 2050. This growth in population, combined with increasing income levels in developing nations, will lead to an increasing demand for food products for human consumption, which will ultimately create strong demand for fertiliser products.

Furthermore, as population levels grow on a global scale, the amount of farm land will decrease over time. This will exert pressure on the availability of fertile land as more developments and infrastructure projects takes place resulting in less fertile land being available for agricultural purposes. Consequently, it is expected that increasing use of fertilisers will be required for the remaining farm land to be more productive and deliver higher, more efficient yields. Present estimates are that fertile land used in agriculture is decreasing at approximately 25 million acres annually.

The above factors are expected to have a positive impact of the demand for chemical fertilisers including potash and phosphate. Further information with regard to potash and phosphate as ingredients into chemical fertilisers is outlined in the following sections.

3.3.2 Potash

Potash is a vital component of mineral fertilisers used in plants and food growing processes. Potash fertilisers are derived from raw potash rock after the separation of salt and other minerals and physical grading into a form suitable for fertiliser manufacture or farm spreading. Potash based fertiliser is primarily applied to a wide range of plants including large yielding crops such as cereals, oilseeds, potatoes, sugar beets and forage crops. At present, there are no commercial substitutes for potash.

Potash is also used as a feed supplement as it contributes to both animal growth and milk production. Furthermore, potash has several industrial purposes, including the production of glass, ceramics and soaps. It is estimated that 95% of all potash production goes into the agricultural sector where it is used as a plant nutrient.

Potash is consumed in approximately 160 countries around the world, with China and India recording significant growth rates in the demand for potash rock in recent years. Although potash is used worldwide, only 12 countries and small number of producers have significant operations in respect of the production of potash rock and fertilisers. Canada, Russia and Belarus combined account for over two-thirds of world production capacity and more than 80 percent of estimated world reserves.

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The following table sets out the historical potash price in US dollars from January 2001 to December 2010.

Figure 2: Historical Potash Price

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----- Start of picture text -----

1000
900
800
700
600
500
400
300
200
100
0
US Dollars per Metric Ton
Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
----- End of picture text -----

Source: Index Mundi

Potash prices remained relatively stable for nearly two decades, averaging little more than US$100 per tonne between 1980 and 2003. Rising demand in recent years, combined with limited global supplies and mine depletion, has resulted in significant increases in potash prices since the secondhalf of 2007. Prices for potash rock reached a record high of approximately US$870 during 2008 before falling to approximately US$400 during the second half of 2009 as a result of the global financial and economic crisis.

The combination of strong population growth, reducing availability of fertile land for agriculture and increasing demand for food products in most countries has created strong demand levels for potash rock and fertilisers. These factors are expected to continue to have a positive impact on demand for potash-based fertiliser over the foreseeable future.

3.3.3 Phosphate

Phosphate is a type of phosphoric mineral that is mostly used in the fertiliser industry and is an essential input into the production of phosphate based fertilisers. Approximately 90% of mined phosphate is used to produce chemical fertilisers and phosphate is one of the three major nutrients required by plants for growth. Phosphate products are also used in animal feeds, as a leavening agent in baking powder and flour, as an additive to beverages and in pharmaceuticals.

The global reserves of high-grade phosphate rock are declining. Phosphate based fertilisers are expected to continually to be in high demand due to increasing population levels and demands for food produce.

Asia is currently the largest phosphate rock consumer in the world, with China and India together accounting for over one-third of global demand. China is the largest global producer of phosphate,

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while India has limited supplies of phosphate rock and relies primarily on imports from other nations to meet its rising domestic requirements. Morocco is also a major participant in the phosphate rock export market, providing approximately 40% of global exports.

Current phosphate rock export prices are well above the historical average price prior to 2007. This has primarily been driven by strong growth in demand for fertiliser and related products.

Future phosphate rock production is projected to increase in almost all regions with particularly strong growth would mainly be in Africa, West Asia and East Asia. It is expected that emerging suppliers will add approximately 17 million tonnes (“ Mt ”) to annual global production, of which more than half would be available for exports.

The following table sets out the historical phosphate rock price in US dollars from January 2001 to December 2010.

Figure 3: Historical Phosphate Rock Price

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500
450
400
350
300
250
200
150
100
50
0
US Dollars per Metric Ton
Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
----- End of picture text -----

Source: Index Mundi

International prices for rock phosphate had remained relatively stable for about three decades prior to 2007. Global consumption of rock phosphate started to grow from 2003 and prices started to rise from 2007. Drivers for this growth were the increasing demand from developing economies (such as China and India) as they aimed to increase their agricultural productivity through increased fertiliser application and the move to increase biofuel production.

Prices for phosphate rock have risen from a low of US$40 per tonne during 2005 to over US$400 per tonne during early 2008. The global economic crisis had a negative impact on demand for phosphate rock and fertilisers which resulted in prices falling to under US$200 per tonne during 2009.

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3.4 Market Characteristics and Segmentation

Developing countries in Asia and Latin America account for almost two-thirds of global consumption of fertilisers to support food production for their large and growing populations. China and India are the largest consuming countries, together accounting for more than 40% of total world fertiliser use.

The following chart sets out the geographical segmentation of fertilisers use by percentage of total fertiliser consumption.

Figure 4: Geographical Segmentation of Fertilisers Use

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----- Start of picture text -----

30% 28%
25%
21%
20%
14% 14%
15%
12%
11%
10%
5%
0%
China India North Other Asia Latin Other
America America
----- End of picture text -----

Source: PotashCorp, October 2010

3.4.1 Industry Performance

As a result of the global economic downturn, demand for fertilisers and related products weakened. Consumption of potash rock and fertilisers recorded a two year consecutive drop with a decline of 8.6% during 2008, following a decline of 16% during 2007. Sales of potash rock and fertilisers recorded significant declines, as major carry-over stocks were available in several consuming countries at the beginning of 2009.

Consumption of fertiliser products declined 7% during 2009 to 156.7 Mt. A drop in consumption was recorded in most regions except South Asia, Eastern Europe, Central Asia and Africa. During this period, global phosphate and potash fertiliser consumption is estimated to have recorded a decrease of 11% and 20%, respectively. The combination of depressed economic and financial conditions, sluggish international demand and the severe downward corrections on fertilizer prices impacted the planning and construction of most new phosphate and potash projects.

The conditions in the global fertilizer market stabilized during 2009, and fertilizer demand started to recover by mid-year in the main consuming countries on the back of improving economic conditions. As economic conditions recover, global demand for fertilisers is expected to continue to increase. During 2010, demand increased by approximately 3.7% to 162.5 Mt, with increases of 8.8% and a 1.2% decline for phosphate and potash fertilizers, respectively.

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Since consumption and demand for both potash and phosphate rocks was severely depressed during 2007 to 2009, it is expected that demand for these fertilisers will register strong growth during 2010 and 2011 as a result of a recovery in economic and financial conditions. Beyond 2011, it is estimated by the International Fertiliser Industry Association that demand for potash and phosphate rocks will increase at an average annual rate of 3% and 4%, respectively.

Demand prospects in the medium term are expected to be positive. Demand for global fertilisers is expected to increase at an annual rate of 3.5% between 2009 and 2014. Global demand for fertilisers during 2011 is forecast to increase by 4.8% to 170.4 Mt in 2011, with phosphate and potash fertilisers increasing by approximately 4.5% and 18%, respectively. In the medium term, the positive agricultural outlook is expected to stimulate fertiliser demand. World demand for fertilisers is projected to be 188.3 Mt by 2015.

The bulk of the increased demand is expected come predominantly from Asia and, to a lesser extent, from the Americas. East Asia and South Asia together are expected to account for approximately 59% of total growth in demand. Combining Latin America and North America with Asia, the four regions together are expected to account for 82% of the projected increase in demand in the next five years ending 2015.

The following chart sets out the global potash and phosphate consumption for the years of 2008, 2009 and 2010 and the forecast consumption for the years of 2011 and 2015.

Figure 5: Global Potash and Phosphate Consumption

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----- Start of picture text -----

45.00
40.00
35.00
30.00
25.00
20.00
2008 2009 2010 2011 F 2015F
Potash Phosphate
Consumption (Mt)
----- End of picture text -----

Source: International Fertiliser Industry Association, June 2010

Global potash supply capacity is forecast to increase from 41.6 Mt in 2009 to 54.7 Mt in 2014. This represents an additional 13 Mt of supply, mostly from Canada and Russia. New tonnage will also emerge from Argentina, Chile, China, the Republic of Congo, Israel, Jordan and Laos.

It is expected that, with a return to more favourable and more stable market conditions, farmers will reinvest in the use of phosphate and potash fertilizers to maintain or improve the fertility of their soils.

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3.5 Potash Mining in Brazil

3.5.1 Overview of Potash Mining Industry in Brazil

Brazil is the world’s largest coffee bean producer, accounting for over 60% of total global production, as well as approximately half of the world’s soybean and sugar production. Mexico and Columbia in particular are large producers of high-value crops such as fruits, vegetables and coffee beans.

According to PotashCorp, more than half of Latin America’s tropical soils in Brazil are naturally deficient in potash. Accordingly, farmers in Brazil are constantly required to apply large amounts of fertilisers to keep soils productive.

3.5.2 Market Characteristics and Segmentation

As the leading agricultural market in Latin America, Brazil accounts for approximately 75% of the region’s potash consumption. The following chart sets out the geographic segmentation of potash consumption by the Latin American market by percentage of consumption.

Figure 6: Geographical Segmentation of Fertilisers Used by Latin American Markets

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----- Start of picture text -----

76%
80%
70%
60%
50%
40%
30%
20% 14%
10%
10%
0%
Brazil Other South America Central America
----- End of picture text -----

Source: PotashCorp, October 2010

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3.5.3 Industry Performance

Potash demand in Latin America has followed an upward trend since late 2008. During this period, imports declined as farmers reduced the application of fertilisers on agricultural products and distributors worked through existing inventories. Annual demand for potash is expected to rise from current levels of approximately 8.5 Mt to almost 12 Mt by 2014.

3.6 Phosphate Mining in Brazil

3.6.1 Overview of Phosphate Mining Industry in Brazil

Brazil is currently the world’s largest monoammonium phosphate importer and second largest diammonium phosphate importer. Imports and domestic production supply the region’s rising phosphate demand.

All world regions are forecast to have steady or increasing demand for phosphate going forward as the global economy begins its recovery. This growth in demand is expected to be led by Brazil and Asia.

3.6.2 Market Characteristics and Segmentation

It is estimated that there are approximately 1 billion tonnes of phosphate reserves in Latin America which represents approximately 2% of total world reserves. Brazil alone accounts for approximately 31% or 319 Mt of phosphate reserves in the Latin American region.

3.6.3 Industry Performance

Latin America is able to produce 6.2 Mt of phosphate rock every year, but still falls short of the total demand requirement of 9.1 Mt per year. Fertilizer demand in Latin America is expected to increase from the levels recorded during 2010. Argentina and Brazil are anticipated to strengthen their position on the international agricultural market and phosphate rock production from these regions is expected to increase over time as more mining operators commence production.

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4. Profile of AGR

4.1 Background and Activities

AGR (formerly known as Newport Mining Limited) was registered on 31 October 2007 and is an Australian public company whose shares were listed and quoted for trading on the Australian Securities Exchange (“ ASX ”) on 13 February 2008.

The Company was incorporated and listed for the purpose of undertaking exploration, development and investment in the resources sector.

Pathfinder Project

On 27 November 2007, the Company entered into a joint venture with PlatSearch NL and Bohuon Resources Pty Limited to undertake exploration in South Australia in an area believed to be prospective for nickel sulphides and iron-oxide associated copper-gold deposits and potentially heavy mineral sands (the “ Pathfinder Project ”).

During the year ended 30 June 2008, in addition to undertaking work in respect of the Pathfinder Project, the Company undertook a review of other exploration opportunities both in Australia and overseas, including China.

Norwest Claim

During the financial year ended 30 June 2008, AGR was in negotiations to acquire a strategic phosphate project located in Sichuan Provence of China from Norwest Holdings Pty Ltd (“ Norwest ”). AGR lodged a bid for the acquisition of the asset on 9 May 2008 and this bid was accepted on 12 May 2008. In July 2008, AGR announced that it would not be continuing with the negotiations and would not acquire the asset.

During the year ended 30 June 2009, Norwest made a claim against the Company for an amount of SGD $5,647,500 (AUD $4,828,048 at 30 June 2009) which represented the shortfall from the subsequent sale of the assets to another party and the amount of the offer made by AGR. This claim was dismissed by the Singapore High Court in November 2009 and the subsequent appeal was dismissed by The Court of Appeal in Singapore in December 2010.

Focus on Advanced Resource Projects

During the year ended 30 June 2009 the Company’s strategy was altered away from exploration activity and it commenced a global search to identify advanced resource projects that had the potential to become producing mines capable of generating positive cash flows within a reasonable timeframe. Also during the year, due to the difficult conditions faced by exploration companies as a result of the onset of the global financial crisis, expenditure and exploration activities on the Pathfinder Project were minimised.

Acquisition of Phosphate Projects in Brazil

On 25 February 2010, the Company announced that it had entered into a conditional agreement to acquire the Phosphate Projects situated in Brazil, which are regarded as projects being highly prospective and potentially large-scale in nature.

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During May 2010, shareholder approval was given to the Company to acquire the Phosphate Projects.

The acquisition of the Phosphate Projects was effected by the Company acquiring 100% of the issued shares of Aguia Metals Ltda from a private company held within the Forbes & Manhattan Group.

The acquisition of the Phosphate Projects was completed on 23 June 2010 and the consideration payable for the acquisition comprised the following:

10,000,000 fully paid ordinary shares in AGR; and
the 20,000,000 Unlisted Class A Performance Shares and the 20,000,000 Unlisted Class B Performance Shares noted in Section 1.3 of this Report.

AGR announced on 10 January 2011 that it had encouraging exploration results from the Mata da Corda Phosphate Project including high grade phosphate results being returned from reconnaissance chip rock sampling. In respect of the Lucena Phosphate Project, desktop studies were still in progress and a decision to advance the target to a JORC compliant mineral resource was expected shortly.

On 4 April 2011, AGR announced that drilling had commenced at the Lucena Phosphate Project with a view to testing for phosphate mineralisation of significant width so as to enable the rapid development of a start-up project.

Capital Raising

In November 2010, the Company completed a private placement of 7.9 million fully paid ordinary shares at an issue price of $0.50 per share to sophisticated and professional investors.

We understand that the above share issue represented freely negotiated transactions in an open and unrestricted market between knowledgeable, willing, but not anxious, parties acting at arm’s length.

Conditional Agreement regarding Potash Project

In January 2011, AGR entered into a conditional agreement to acquire the potentially large-scale potash areas located in Brazil via the Proposed Transaction which is the subject of this Report.

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4.2 Board of Directors

AGR’s directors have significant industry knowledge and include the following:

Mr Anthony Wonnacott: B.Comm, LL.B – Chairman

Mr Wonnacott is a corporate securities lawyer in Toronto, Ontario, Canada with over 15 years of experience, including significant experience in banking and securities and the mining and resource sector. As a consultant and officer of a number of mining and resource companies, he has been involved with the successful listings of private companies, the outright sale of a company for approximately CAD$750 million and capital raisings in excess of CAD$3 billion.

Mr Wonnacott was appointed a Director of the Company on 23 June 2010 and Chairman of the Company on 30 August 2010. Mr Wonnacott has also held directorships in Allana Potash Corp. (formerly Allana Resources Inc.), Alexis Minerals Corporation, Castillian Resources Corp, Explorator Resources Inc., G4G Resources Ltd., New Sage Energy Corp., Rodinia Lithium Inc. and Stetson Oil and Gas Ltd.

Mr Simon Taylor: B.Sc (Geology), MAIG, GCERTAppFin (Finsia) - Managing Director

Mr Taylor is a geologist with 19 years experience throughout Australia and overseas having held senior geologist and exploration manager positions for numerous ASX listed resource companies. He has gained considerable experience in exploration, project assessment and joint venture negotiations. His experience includes providing consulting services to resource companies and financial corporations as a resource analyst where he had a major interest in the phosphate sector. Mr Taylor’s corporate experience includes undertaking project appraisals, and providing advice on placements and fundraising. Mr Taylor is a member of the Australian Institute of Geoscientists.

Mr Taylor was appointed a Director of the Company on 27 November 2007 and Managing Director of the Company on 25 February 2010. Mr Taylor has held directorships in Bondi Mining Limited, Chesser Resources Limited and Probiomics Limited.

Dr Fernando Tallarico: BSc (Geology), MSc (Economic Geology), PhD (Economic Geology), PGeo – Executive Director

Dr Tallarico has over 19 years experience in exploration activities and has previously held senior roles with BHP, Noranda/Falconbridge and CVRD, including over 9 years working throughout South America, most recently as exploration director of Falcon Metais focused on the exploration of fertilizer raw materials.

Dr Tallarico was appointed a Director of the Company on 23 June 2010.

Mr Graham Ascough: BSc, PGeo - Non Executive Director

Mr Ascough has more than 22 years of industry exploration experience evaluating mineral projects and resources in Australia and overseas. He is a geophysicist by training and has been a director of a number of ASX listed companies.

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He has had broad industry involvement ranging from playing a leading role in setting the strategic direction for significant country-wide exploration programmes to working directly with junior explorers. Mr Ascough is also a Councillor of the South Australian Chamber of Mines and Energy and is Chair of its Exploration Committee. He is a member of the Australian Institute of Mining and Metallurgy and is a Professional Geoscientist of Ontario, Canada.

4.3 Corporate Structure

The existing corporate structure of AGR is as follows:

Figure 7 – Corporate Structure

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----- Start of picture text -----

Aguia Resources Limited
100% 100% 100%
Aguia Aguia Aguia Metais
Resources Pty Phosphate Pty Ltda (Brazil)
Limited Limited
----- End of picture text -----

Source: AGR

4.4 Capital Structure

AGR’s capital structure as at the date of this Report comprises:

60,650,001 fully paid ordinary shares;
20,000,000 Class A Performance Shares;
20,000,000 Class B Performance Shares; and
11,325,000 unlisted options.

Additional details regarding these equity instruments are set out below and well as in Section 1.3 of this Report.

As noted in Section 1.2 above, a condition precedent of the Proposed Transaction is the Proposed Placement that will result in AGR issuing an additional 18,292,683 fully paid ordinary shares to raise $15 million to fund working capital for the development of the Potash Projects and other activities.

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Details of the top 20 and total shareholders of AGR as at 31 March 2011 are as follows:

Table 9 – AGR Shareholders

Name	No of Ordinary Shares Held	Percentage of Issued Shares
Bond Street Custodians Limtied Arredo Pty Limited Forbes & Manhattan (Barbados) Inc PI Financial Corp Nefco Nominees Pty Limited Taycol Nominees Pty Limited Aberdeen International Inc Citicorp Nominees Nutsville Pty Limited Mr Anthony Wonnacott Calama Holdings Pty Limited Mr Helio Diniz Mr David Gower Mr Andrew Nigel Pullar & Mrs Melissa May Pullar Mr David Argyle HSBC Custody Nominees Souttar Superannuation Pty Limited Station Capital Pty Limited Dunrootin Pty Limited Stan Bharti	5,314,458 3,000,000 2,883,806 2,258,806 2,097,914 1,875,000 1,521,583 1,112,288 965,000 770,555 743,204 681,123 681,123 680,000 663,996 640,815 625,000 600,000 570,000 500,000	8.73% 4.93% 4.74% 3.71% 3.45% 3.08% 2.50% 1.83% 1.59% 1.27% 1.22% 1.12% 1.12% 1.12% 1.09% 1.05% 1.03% 0.99% 0.94% 0.82%
Total Top 20 Others Total Ordinary Shares on Issue	28,184,671 32,665,330	46.32% 53.68%
	60,850,001	100.00%

Source: AGR

We note that the top 20 shareholders currently hold just over 46% of issued fully paid ordinary shares in AGR and that no existing shareholder has more than an 8.73% interest in AGR. We understand that there has been no material change in the above details to the date of this Report.

The distribution of AGR’s fully paid ordinary shares as at as at 31 March 2011 is as follows:

Table 10 – Distribution of Fully Paid Ordinary Shares

Distribution	Ordinary Shares	Ordinary Shares
	Number of Holders	Number of Shares
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - Over	35 148 177 393 92	22,489 517,523 1,605,513 14,445,868 44,258,608

Total	845	60,850,001

Source: AGR

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As noted in Section 1.3, AGR’s issued securities include the Phosphate Performance Shares issued as part of the consideration for AGR’s acquisition of the Phosphate Projects. These shares were issued to a relative small number of shareholders, the details of which are set out below.

Table 11 – Major Holders of Phosphate Performance Shares

Name	No of Class A Performance Shares	% of Total	No of Class B Performance Shares	% of Total
Forbes & Manhattan (Barbados) Inc Aberdeen International Inc PI Financial Corp Mr Anthony Wonnacott Mr David Argyle Mr Helio Diniz Mr David Gower Others	5,233,596 4,145,556 3,150,262 1,976,293 1,631,020 1,555,770 1,555,770 751,733	26.17% 20.73% 15.75% 9.88% 8.16% 7.78% 7.78% 3.76%	5,634,105 3,318,763 4,175,774 1,649,906 1,403,749 1,410,627 1,410,627 996,449	28.17% 16.59% 20.88% 8.25% 7.02% 7.05% 7.05% 4.98%
Total Phosphate Performance Shares on Issue	20,000,000	100.00%	20,000,000	100.00%

Source: AGR

The distribution of AGR’s Phosphate Performance Shares is as follows:

Table 12 – Distribution of Phosphate Performance Shares

Distribution	Performance Shares	Performance Shares	Performance Shares	Performance Shares
	Class A		Class B
	Number of Holders	No of Shares	Number of Holders	No of Shares
1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - Over	1 10 1 24 7	214 32,963 5,236 713,320 19,248,267	1 5 6 23 8	284 12,145 38,491 835,896 19,113,184

Total	43	20,000,000	43	20,000,000

Source: AGR

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4.5 Financial Position

Set out below is a summary of AGR’s financial position based on its audited accounts for the year ended 30 June 2010 and reviewed accounts for the half year ended 31 December 2010:

Table 13 – AGR - Financial Position

Table 13 – AGR - Financial Position
Current assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets Non-current assets Plant and equipment Exploration and evaluation assets Total non-current assets Total assets Current liabilities Trade and other payables Provisions Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity	As at 30-Jun-10	As at 31-Dec-10
	4,949,721 17,582 5,046	5,828,587 12,376 106,340
	4,972,349	5,947,303
	87,250 18,678,996	153,704 20,254,690
	18,766,246	20,408,394
	23,738,595	26,355,697
	983,398 5,736	715,816 18,216
	989,134	734,032
	989,134	734,032
	22,749,461	25,621,665
	24,576,717 526,105 (2,353,361)	28,420,676 1,010,341 (3,809,352)
	22,749,461	25,621,665

Source: AGR Annual Report 30 June 2010 and AGR Interim Financial Report for the half year ended 31 December 2010

We note the following regarding AGR’s financial position as at 31 December 2010:

cash and cash equivalents represented cash at bank and on hand plus short term deposits;
exploration and evaluation assets predominantly represent the fair value adjustment arising in respect of AGR’s acquisition of Aguia Metals Ltda inclusive of the Phosphate Projects. Details of AGR rights in relation to the Phosphate Projects are contained at Appendix C; and
trade and other payables represent amounts owing to trade and other creditors as well as accrued expenses.

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As noted in Section 4.1, AGR is in the process of undertaking its drilling and evaluation activities in respect of the Phosphate Projects, and work continues towards establishing a JORC compliant mineral resource.

4.6 Financial Performance

Details of AGR’s historical results for the years ended 30 June 2009 and 2010, together with its results for the half year ended 31 December 2010 are set out below:

Table 14 – Financial Performance

	Six Months Ended 31-Dec-10	Year Ended	Year Ended
		30-Jun-10	30-Jun-09
Share based payments Interest revenue Loss before income tax Litigation costs Business development costs Exploration costs Corporate costs Income tax expense Total Comprehensive Loss attibutable to members Exchange differences arising on translation of foreign operations Other comprehensive income Loss for the period Administration costs	95,937 (542,636) (164,375) (48,010) (114,081) (49,576) (633,250)	137,104 (207,484) (716,972) (98,833) (244,536) (403,049) -	214,135 (91,396) (301,654) (107,093) (327,192) - -
	(1,455,991) -	(1,533,770) -	(613,200) -
	(1,455,991)	(1,533,770) (883)	(613,200) -
	(1,455,991)	(1,534,653)	(613,200)

Source: AGR Annual Report 30 June 2010 and AGR Interim Financial Report for the half year ended 31 December 2010

The historical results of AGR as set out in Table 14 reflect AGR’s activities to date in undertaking mineral exploration activities.

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4.7 Share Price Trading Performance

As noted in Section 4.1 above, AGR’s shares are listed and quoted for trading on the ASX.

We have reviewed the historical market trading in AGR’s shares over the 12 months ended 24 January 2011, being the day prior to AGR’s announcement of the Proposed Transaction (“ Historical Trading Period ”), with regard to the following factors:

the daily high, low and closing share prices;
the daily volume; and
the volume weighted average share price (“ VWAP ”).

In addition to our review of the historical share price and VWAP history of AGR’s shares, we have also reviewed the liquidity of trading in AGR’s shares for the twelve months to 24 January 2011 in order to assess whether the level of liquidity is sufficient to support a fair assessment of the market value of AGR’s shares based on its quoted market price.

Our analysis of AGR’s share trading is set out in the following table.

Table 15 –AGR Share Trading

Month Ended	Volume	Average Number of Shares on Issue	Turnover %	Value of Trades at Closing Price ($)	VWAP based on Value of Trades at Closing Price ($)

24 February 2010 24 March 2010 23 April 2010 24 May 2010 24 June 2010 23 July 2010 24 August 2010 24 September 2010 22 October 2010 24 November 2010 24 December 2010 24 January 2011	1,617,281 2,611,431 1,514,746 394,853 1,341,225 1,266,600 1,081,721 2,435,724 859,952 1,164,610 1,014,207 1,380,093	32,750,001 32,750,001 32,750,001 32,750,001 52,750,001 52,750,001 52,750,001 52,750,001 52,750,001 60,650,001 60,650,001 60,650,001	4.94% 7.97% 4.63% 1.21% 2.54% 2.40% 2.05% 4.62% 1.63% 1.92% 1.67% 2.28%	400,320 953,946 820,868 190,276 740,548 683,996 480,398 1,160,474 490,380 654,838 518,141 721,265	0.25 0.37 0.54 0.48 0.55 0.54 0.44 0.48 0.57 0.56 0.51 0.52
12 months to 24 January 2011 6 months to 24 January 2011 3 months to 24 January 2011	16,682,443 7,936,307 3,558,910	45,715,135 55,320,636 58,059,837	36.49% 14.35% 6.13%	7,815,450 4,025,495 1,894,243	0.47 0.51 0.53

Source: Thomson One, William Buck’s Analysis

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The figure below sets out the daily share price and trading volume of AGR’s shares for the 12 months to 24 January 2011.

Figure 8 – Daily Volume and Share Price History

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Volume and Share Price History
25 January 2010 - 24 January 2011
0.70 1,200
0.60 1,000
0.50 800
0.40 600
0.30 400
0.20 200
0.10 0
Volume
VWAP
Share Price ($) Volume (000's)
----- End of picture text -----

Source: Thomson One, William Buck’s Analysis

The figure below sets out the monthly volume weighted average price (“ VWAP ”) and total monthly trading volume of AGR’s shares for the 12 months ended 24 January 2011.

Figure 9 – Monthly Volume and VWAP History

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Volume and VWAP History
25 January 2010 - 24 January 2011
0.60 3,000
2,500
0.50
2,000
0.40
1,500
0.30
1,000
0.20
500
0.10 0
Volume
VWAP
Month Ended
Share Price ($) Volume (000's)
----- End of picture text -----

Source: Thomson One, William Buck’s Analysis

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We note the following with respect to trading in AGR’s shares over the Historical Trading Period:

whilst AGR’s shares traded on only 70% of the total number of available trading days during the Historical Trading Period, the number of days on which the shares traded improved to be in excess of 80% of available days during the three months ended 24 January 2011 and the six months ended 24 January 2011;
the total number of shares traded during the Historical Trading Period comprised approximately 36.49% of AGR’s average shares on issue. In our opinion, this level of trading represents a moderately liquid stock;
whilst AGR’s top 20 shareholders hold approximately 46.3% of its issued shares, only seven shareholders have interests in excess of 2%, the largest interest being 8.73%;
AGR’s share price traded in the range from a closing low of $0.15 per share on 16 February 2010 to a high of $0.625 per share on 22 October 2010; and
over a significant majority of the Historical Trading Period, AGR’s share price traded in the relatively narrow range of $0.44 to $0.57, as illustrated in the monthly VWAP details noted in Table 15 above.

Factors which may have had an impact on the trading activity of AGR shares during the 12 months ended 24 January 2011 are as follows:

Table 16 – Price Sensitive Announcements

Date	Announcement
28 January 2010 25 February 2010 29 April 2010 18 June 2010 21 June 2010 23 June 2010 30 July 2010 1 September 2010 9 September 2010 15 September 2010 23 September 2010 20 October 2010 29 October 2010 29 October 2010 5 November 2010 18 November 2010 2 December 2010 13 December 2010	Release of December 2009 quarterly report Newport to acquire two large phosphate projects in Brazil March 2010 quarterly report Significant surface phosphate mineralisation at Mata da Corda Significant ground acquisitions to consolidate Mata da Corda Settlement of Brazil phosphate project acquisition June 2010 quarterly report Drilling commenced at Mata da Corda phosphate project Surface sampling results identifies new target Excellent mineralogical results from Mata da Corda Surface sampling results identifies further new target Surface sampling results identifies further drilling target Quarterly activities report and cash flow report Annual report to shareholders Initial drilling delivers encouraging results Closure of $3.95m share placement Norwest appeal dismissed High grade surface sampling results

Date

Announcement

28 January 2010
25 February 2010
29 April 2010
18 June 2010
21 June 2010
23 June 2010
30 July 2010
1 September 2010
9 September 2010
15 September 2010
23 September 2010
20 October 2010
29 October 2010
29 October 2010
5 November 2010
18 November 2010
2 December 2010
13 December 2010

Release of December 2009 quarterly report
Newport to acquire two large phosphate projects in Brazil
March 2010 quarterly report
Significant surface phosphate mineralisation at Mata da Corda
Significant ground acquisitions to consolidate Mata da Corda
Settlement of Brazil phosphate project acquisition
June 2010 quarterly report
Drilling commenced at Mata da Corda phosphate project
Surface sampling results identifies new target
Excellent mineralogical results from Mata da Corda
Surface sampling results identifies further new target
Surface sampling results identifies further drilling target
Quarterly activities report and cash flow report
Annual report to shareholders
Initial drilling delivers encouraging results
Closure of $3.95m share placement
Norwest appeal dismissed
High grade surface sampling results

Source: ASX and William Buck

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5. Profile of PALTDA

5.1 Background

PALTDA was incorporated in November 2009 and since incorporation has focused principally on acquiring a portfolio of exploration claims and permits over areas believed to be prospective in potash mineralization.

PALTDA has not undertaken any active trading, exploration or development activities to date.

5.2 Exploration Claims and Permits

We understand that the Potash Projects (being PALTDA’s exploration claims and permits) comprise 121 exploration claims, 43 of which are under application, covering a total of approximately 2,100km[2] (or approximately 1,323 km[2] excluding those areas under application).

The exploration claims and permits have been acquired since late 2008 (with earlier claims having been initially granted to PAC and then transferred to PALTDA following its incorporation) and typically have expiry dates from late 2011 through to late 2013.

As will be noted in Section 10.3 below, Potash Projects have been the subject of an Independent Technical and Fair Market Valuation Report prepared by SRK dated 4 May 2011 (“ SRK Report ”). Details of PALTDA’s exploration claims, permits and other mineral assets are set out in Appendix 1 of the SRK Report.

5.3 Board and Management

PALTDA’s key personnel include the following:

Mr Paulo Souza: B.Sc., PMP – Chief Operating Officer

Mr Paulo Souza is an experienced mining engineer specific experience in the design and development of Vale’s Carnallite Project and Pilot Plant. He has over 26 years experience in mine planning and operation, with Vale, Rio Tinto and other companies and has conducted diverse projects for copper, nickel, potash and iron ore as a certified project management professional.

Mr Allan Pickett: Vice President – Corporate Development

Mr Pickett is an experienced fertilizer consultant formerly with CRU, a UK-based independent business analysis and consultancy group focused on the mining, metals, power, fertilizer and chemical sectors. He has been responsible for CRU’s global fertilizer consultancy business, British Sulphur Consultants for last 8 years.

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5.4 Corporate and Capital Structure

The corporate and shareholding structure of PALTDA is as follows:

Figure 10 – Corporate Structure

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----- Start of picture text -----

Forbes Empreendimentos
Minerais Ltda in Trust for
Potash Atlantico Corporation
Potash Atlantico Corporation
499,999 1 share
Potassio do Atlantico Ltda
----- End of picture text -----

Source: Management of PALTDA

As noted above, PALTDA is effectively 100% owned by PAC.

5.5 Financial Performance

As PALTDA has not undertaken any active trading, exploration or development activities to date, we have been advised by PALDTA management that all its outgoings since incorporation have been capitalised and are reflected in the recorded value of its exploration and evaluation assets. Accordingly, there are no meaningful statements of financial performance for PALTDA.

5.6 Financial Position

As noted in Section 5.1 above, to date, PALTDA has focused principally on acquiring its portfolio of exploration claims and permits over areas believed to be prospective in potash mineralization (ie. the Potash Projects).

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Set out in the table below is the unaudited statement of financial position of PALTDA as at 31 January 2011:

Table 17 – PALTDA - Statement of Financial Position

	As at 31 January 2011
Non-current assets Exploration and evaluation assets Total non-current assets Total assets Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity	205,000 205,000 205,000 -
	205,000
	205,000 - -
	205,000

Source: Management of PALTDA

The above statement of financial position reflects PALTDA activities to date and we understand that there has been no material change in the financial position of PALTDA since 31 January 2011 to the date of this Report.

The value of PALDTA’s exploration and evaluation assets represents costs incurred to date in the acquisition of the various exploration claims and permits held by PALTDA. As noted previously, the fair market value of PALTDA’s exploration claims and permits are the subject of the SRK Report, further details of which are set out in Section 10.3 below.

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6. Valuation of Fully Paid Ordinary Shares in AGR

6.1 Selection of Valuation Methodology

ASIC Regulatory Guide 111 outlines the appropriate methodologies which an expert should generally consider when valuing assets or securities for the purposes of, amongst other things, takeovers, schemes of arrangement, selective capital reductions, related-party transactions and share buybacks.

These include:

the discounted cash flow (“ DCF ”) methodology and the estimated realisable value of any surplus assets;
the application of earnings multiples appropriate for the businesses or industries in which the company or its profit centres are engaged, to the estimated future maintainable earnings or cash flows of the company, added to the estimated realisable value of any surplus assets;
the amount that would be available for distribution to security holders on an orderly realisation of assets;
the quoted price for listed securities, when there is a liquid and active market and allowing for the fact that the quoted price might not reflect their value, should 100% of the securities be available for sale; and
any recent genuine offers received by the company for any business units or assets as a basis for valuation of those business units or assets.

Set out in Appendix E is a summary of the various valuation methods that are commonly used to assess the fair value of businesses and shares in companies which we have considered in the course of arriving at our conclusion on the value of the issued shares in AGR. The selection of which methods are the most appropriate in any situation rests with the circumstances of the particular case.

Based on our understanding of AGR, its operations and its assets, in our opinion the most appropriate methods for determining the fair market value of issued shares in AGR are the following:

the quoted price of AGR’s listed shares on the ASX; and
recent share sales or subscription prices paid for shares in AGR prior to the date of the announcement date of the Proposed Transaction.

William Buck has assessed the quoted price for listed securities as the preferred valuation methodology due to the following:

AGR’s securities are listed on the ASX and are, in our opinion, sufficiently liquid to enable a valuation based on quoted market prices;
AGR is required to comply with the continuous disclosure regime required by the ASX and accordingly, the market is fully informed about the operations of AGR;
due to the nature of its operations, AGR does not have a history of profitable operations and, accordingly, an earnings based valuation methodology would not be appropriate;
AGR has not prepared forecast financial information regarding its proposed operations, that would reasonably allow the application of a discounted cash flow valuation method; and

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a net asset backing approach is not appropriate as a valuation methodology as there exist no current valuations reflecting the fair market value of AGR’s interests in its exploration rights and projects.

As a secondary valuation approach, we have considered the price at which fully paid ordinary shares have been issued by AGR in recent periods.

We understand that each of the above share issues represented freely negotiated transactions in an open and unrestricted market between a knowledgeable, willing, but not anxious, parties acting at arm’s length. The shareholders taking up shares under the placement comprised both existing shareholders and new shareholders.

The price at which unrelated parties have subscribed for shares in a company can be an appropriate methodology to apply in valuing the issued equity in the company, if those prices were paid in freely negotiated transactions in an open and unrestricted market between a knowledgeable, willing, but not anxious, parties acting at arm’s length.

In applying a recent share sales or subscription prices methodology to value the shares in AGR it is important to give consider ation to the following factors:

interests acquired in the subscriptions noted; and
the rights attaching to the class of shares purchased or subscribed for in comparison to the rights attaching to other classes of issued shares in the entity.

Our valuation of the issued shares in AGR based on the above methodologies is set out in the following Sections.

6.2 Valuation of AGR Shares by Reference to Quoted Share Prices

In our opinion, the value of AGR shares as at the date of the announcement of the Proposed Transaction was between $0.51 and $.53 per share.

In determining the value of AGR shares, we have taken into consideration the following factors in accordance with ASIC Regulatory Guide 111:

the depth of the market for AGR’s shares; and
the volatility of the market price.

The market valuation of listed securities is based on the efficient market hypothesis which assumes that the share market is totally efficient and that the share price of any security incorporates all publicly available information.

The efficient market hypothesis assumes that shares listed on a stock exchange will always trade at their fair market value.

As noted in Section 4.7 above, we have reviewed the trading history of the listed shares in AGR over the 12 months ended 24 January 2011, being the day prior to AGR’s announcement of the Proposed

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Transaction. We regard this to be the appropriate period for consideration, as any trading after that date will reflect to the terms of the Proposed Transaction.

Based on the details set out in Table 15, in our opinion, trading in AGR’s shares is sufficiently liquid to enable a valuation based on quoted market prices to be undertaken as:

AGR’s shares traded on over 80% of available trading days during the six-months prior to 24 January 2011; and
the total number of shares traded during the period comprised a reasonable percentage of the average AGR shares on issue during the period.

In addition:

the Company is required to comply with the continuous disclosure regime administered by the ASX and, accordingly, the market is fully informed about the operations of AGR; and
we are not aware of any factors which would suggest that the quoted market share price of AGR shares does not accurately reflect their fair market value.

Based on our analysis of the share price and VWAP history of trading in AGR’s shares over the Historical Trading Period, we note the following:

the share price traded at a range from a closing low of $0.15 per share on 16 February 2010 to a high of $0.625 per share on 22 October 2010;
since April 2010, AGR’s monthly VWAP has generally fluctuated within a relatively stable band; and
during a significant majority of the Historical Trading Period, AGR’s share price traded in the relatively narrow range of $0.44 to $0.57, as illustrated in the monthly VWAP details noted in Table 15 and Figure 8 and Figure 9 above.

Based on the above, in our opinion, the fair market value of AGR’s shares falls within the range of $0.51 and $.53 per share based upon the 3-month VWAP and six-month VWAP of trading in AGR’s share prior to the date of the announcement of the Proposed Transaction. In our opinion, the 3- month VWAP and six-month VWAP are the most relevant periods to which regard should be had as AGR commenced making regular market announcements regarding progress on its phosphate project interests in June 2010.

6.3 Allowance for Dilution

We have considered the potentially dilutionary effect of AGR’s options issued over unissued AGR shares and the Phosphate Performance Shares issued as part of the consideration for AGR’s acquisition of the Phosphate Projects.

We note that the market is fully informed of AGR’s convertible securities and that AGR makes regular announcements regarding its operations pursuant to its continuous disclosure obligations to the ASX.

Accordingly, in our opinion, AGR’s traded share price reflects the potential dilutionary impact arising from the potential conversion of AGR’s options issued over unissued AGR shares and the Phosphate Performance Shares into fully paid ordinary shares and that no adjustment to AGR’s share price is required.

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6.4 Secondary Valuation of AGR Shares

As noted in Section 4.1 above, in November 2010, the Company completed a private placement of 7.9 million fully paid ordinary shares at an issue price of $0.50 per share to sophisticated and professional investors. The shareholders taking up shares under the placement comprised both existing shareholders (84%) and new shareholders (16%).

We understand that the shares issued to shareholders under the placement represented freely negotiated transactions in an open and unrestricted market between knowledgeable, willing, but not anxious, parties acting at arm’s length. Accordingly, in our opinion, these transactions represent an appropriate secondary valuation approach to determine the fair market value of shares in AGR.

The issue price of shares under the share placement is consistent with and supports our valuation of AGR shares using our primary valuation methodology set out in Section 6.2.

6.5 Requirement for a Control Premium

The price at which AGR’s shares trade on the ASX represent the prices paid for minority parcels of shares.

Similarly, based on our review, the shares issued to shareholders pursuant to share placement in November 2010 represented minority interests in AGR.

We have considered whether or not an appropriate premium (for control or significant influence) is required to be reflected in the consideration under the Proposed Transaction.

As noted in Table 7, the Consideration payable under the Proposed Transaction may result in PAC holding up to 39.8% of AGR’s issued shares on a fully diluted basis. However, this:

assumes that all existing options are exercised;
assumes that all conversion conditions relating to the Phosphate Performance Shares issued as part of the consideration for AGR’s acquisition of the Phosphate Projects are satisfied and that they are converted into ordinary shares;
includes shares to be issued pursuant to Proposed Placement (noted in 1.2 above) to raise $15 million;
assumes that no shares (or an insignificant number of shares) under the Proposed Placement are taken up by PAC or its shareholders. As noted in 1.2 above, it is anticipated that approximately 2,853,659 shares (or 15.6% of the total number of shares allotted) under the Proposed Placement will be taken up by PAC or its shareholders; and
assumes that all conversion conditions relating to the Converting Performance Shares issued as part of the consideration for AGR’s acquisition of PALTDA are satisfied and that they are converted into ordinary shares.

The interest of PAC in AGR could increase to approximately 49.05% if none of the conversion conditions relating to the Phosphate Performance Shares issued as part of the consideration for AGR’s acquisition of the Phosphate Projects are satisfied and no Phosphate Performance Shares are converted into ordinary shares.

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The interest of PAC in AGR could be reduced below 39.8% if the conversion conditions relating to the Converting Performance Shares issued as part of the consideration for AGR’s acquisition of PALTDA are not satisfied and no Converting Performance Shares are converted into ordinary shares.

It is generally accepted that minority parcels of shares in companies are generally valued to a discount to a 100% (or controlling) holding of shares in a company. There is no completely satisfactory way of quantifying the extent of the control premium that may be applicable in any particular instance. Empirical evidence on premiums for control indicates that these premiums tend to range from 20% to 45% in the case of 100% control transactions, depending on the way in which the data has been compiled and analysed and the assessed benefits that control is expected to deliver. Further we note that empirical evidence in relation to control premiums paid in the case of acquisition of mining companies show premiums that are typically lower than the overall range referred to above.

The extent of the premium reflects such factors as the following:

the extent to which the holder can control the cash flows of the company; and
the extent of synergies that may generally be available to any acquirer making the acquisition.

In our opinion, based on the current share structure of AGR and the uncertainties relating to whether or not the conversion conditions relating to either the Phosphate Performance Shares or the PAC Converting Performance Shares will be satisfied, it is uncertain as to whether or not PAC’s interest in AGR will exceed 50%.

Irrespective of whether or not PAC’s interest in AGR will exceed 50%, ASIC Regulatory Guide 111 requires that in the case where an investor acquires a relevant interest in over 20% of the issued shares of a company as a result of a proposed transaction, the proposed transaction should be considered as if it was a takeover bid. Accordingly, we have considered the extent of any “control premium” that should be reflected in the value of AGR’s shares for the purpose of assessing whether or not the Proposed Transaction is “fair”.

A control premium recognises that control owners have rights that minority interests do not and (more importantly) that the exercise of those rights can be used to effect changes in a way that can be reasonable expected to result in economic benefits to the holders. Typical changes that are cited as influencing the magnitude of any control premium include the following:

the existence, nature and extent of any non-operating assets;
the nature and magnitude of discretionary expenses;
the nature and magnitude of business opportunities that are not currently being exploited;
the perceived quality of existing management; and
the ability to derive synergies through the integration of business and distribution channels.

In assessing the application of the above to the Proposed Transaction we note the following:

the principal benefit to be derived from level of control likely to arise as a result of the approval of the Proposed Transaction is the ability to block special resolutions;
AGR’s principal assets (for example the Mata da Corda Phosphate Project and the Lucena Phosphate Project) are under active exploration and assessment programs and AGR does not have any material assets that could be regarded as non-operating;

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AGR is not a manufacturing or distribution company. Accordingly, there does not exist any significant level of discretionary expenses that a controlling interest may be able to eliminate and therefore derive a benefit from;
AGR’s management team has extensive experience in the minerals sector and there are no plans to replace that team with PALTDA’s management; and
limited opportunities currently exist to derive synergies as no viable operating businesses are in existence and that nature of the exploration programs are site and prospect specific.

Accordingly, in our opinion, for the above reasons and given the presence of this uncertainty of PAC’s ultimate interest in AGR, it would not be appropriate to apply a significant control premium in valuing the potential interest being acquired by PAC in AGR. However, it is likely that PAC will hold a significant interest in AGR and, accordingly, a premium for significant influence should be applied in determining the fair market value of shares in AGR for the purpose of determining whether or not the Proposed Transaction is “fair”.

We note that in the current circumstances the early stage nature of AGR’s activities means that:

no meaningful cash inflows exist; and
little or no synergies are able to be derived.

Having regard to the above, and the limited strategic benefits that a controlling interest in AGR would provide, we have applied a premium for control of 10% to 15%.

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Applying the foregoing premium for significant influence to AGR’s share price range of $0.51 to $0.53 per share would result in the following share valuations:

Table 18 – AGR Valuation – Significant Influence Value

	Low Value	High Value	Mid-Point Value
AGR Share Value - Minority Interest Premium for Significant Influence AGR Share Value - Significant Influence	$0.510 10.0% $0.561	$0.530 15.0% $0.610	$0.520 12.5% $0.585

Source: William Buck

6.6 Conclusion

In our opinion, based on the analysis set out above, the fair market value of the issued shares in AGR allowing for an appropriate premium for control is in the range of $0.561 to $0.610 per share, with a mid-point of $0.585 per share.

Based on the above, in our opinion, the value of the 20,000,000 fully paid ordinary shares in AGR to be issued as part of the Consideration is as follows:

Table 19 – Value of Fully Paid Ordinary Shares in AGR Issued as part of the Consideration

Consideration Element	Ref.	Low Value	High Value	Mid-Point Value
No. of Fully Paid Ordinary Shares Value per Share - Significant Influence Value of Fully Paid Ordinary Shares	1.1 Table 18	20,000,000 $0.5610 $11,220,000	20,000,000 $0.6100 $12,200,000	20,000,000 $0.5855 $11,710,000

Source: William Buck

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7. Valuation of Options Issued in AGR

7.1 Selection of Valuation Methodology

As noted in Section 1.1 the Consideration payable under the Proposed Transaction includes the issue of 1,500,000 options over unissued fully paid ordinary shares in AGR exercisable at $0.50 per option at any time prior to 30 June 2014 (“ Consideration Options ”).

We have valued the Consideration Options using a binomial options pricing model for American-style call options.

7.2 Selection of Valuation Inputs

In valuing the Consideration Options we have used the following option valuation inputs:

Table 20 – Consideration Options – Valuation Inputs

Input	Note	Input Value
Exercise price Share price Grant date Expiry date Volatility Risk free rate Dividend yield	1 2 3 4 5 6 7	$0.50 per option $0.561 to $0.610 30 June 2011 30 June 2014 72.4% +/- 5% 5.1% 0%

Source: AGR and William Buck

The input values for each of the parameters set out in Table 20 are based in the following:

Exercise price: as per the terms of the Consideration Options;
Share price: as per our valuation of AGR shares on a significant influence basis as set out in 6.6 above;
Grant date: as per the terms of the Consideration Options;
Expiry date: as per the terms of the Consideration Options;
Volatility: based on the annualised price volatility of AGR shares as published by Sirca Limited (previously published by the Australian Graduate School of management) as at December 2010 (being the closest quarter-end data published to the date of the announcement of the Proposed Transaction);
Risk free rate: based on the 3 year Australian government bond rate as at 31 January 2011; and
Dividend yield: we have assumed that the AGR shares will not pay dividends during the term of the Consideration Options. In our opinion this is reasonable given the relatively early stage nature of AGR’s activities (even if the Proposed Transaction is approved).

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7.3 Valuation of Consideration Options

Based on the above, our fair market value of the Consideration Options is as set out below:

Table 21 – Valuation of Consideration Options

	Low Value	Mid-Point Value	High Value
Exercise Price Share Price Deal Date Expiry Date Volatility Risk Free Rate Dividend Type Dividend Details Option Value Number of Options Total Value of Options	0.50 $ 0.561 $ 31/01/2011 31/01/2014 67.4% 5.10% Non-paying 0% 0.28988 $ 1,500,000 434,822 $	0.50 $ 0.586 $ 31/01/2011 31/01/2014 72.4% 5.10% Non-paying 0% 0.32356 $ 1,500,000 485,339 $	0.50 $ 0.610 $ 31/01/2011 31/01/2014 77.4% 5.10% Non-paying 0% 0.35736 $ 1,500,000 536,037 $

Source: William Buck

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8. Valuation of Converting Performance Shares

8.1 Overview

The Converting Performance Shares forming part of the Consideration hold no rights to either income or capital until such time that the relevant performance conditions are met and the shares are converted into fully paid ordinary shares in AGR.

In our opinion, the Converting Performance Shares can be considered as representing “options” over fully paid ordinary shares in AGR for which the exercise price is Nil and for which the satisfaction of the relevant performance conditions represents the vesting condition allowing the options to be exercised.

Accordingly, we have valued the Converting Performance Shares as an option subject to a discount based on a probability assessment as to satisfaction of the performance conditions.

8.2 Valuation of Converting Performance Shares

8.2.1 Value of option (undiscounted)

Based on our assessed value of fully paid ordinary shares in AGR and the fact that no further amount is payable as an “exercise price” in respect of the conversion of the Converting Performance Shares into fully ordinary paid ordinary shares in AGR, the option inherent in the Converting Performance Shares can be considered to be heavily “in the money”.

We note that, for options that are heavily “in the money”, the value of the option is effectively the intrinsic value of the option, that is, the value of the share over which the option exists less the value of any consideration payable on the exercise of the option (in the current case Nil).

8.2.2 Discount for probability of satisfaction of the performance conditions

As will be noted in Section 10.3.4 below, the SRK Report has determined its valuation of PALTDA’s exploration claims and permits by reference to the value of those claims and permits if they were to achieve the more advance stage of resource delineation and a probability assessment of resource delineation being achieved. Details of SRK’s probability assessments of resource delineation being achieved are set out in Table 27 below. We note that the probability assessments set out in Table 27 below have an average of 12.16% and a median of 9.00%.

We have adopted a probability of 10% in assessing the probability weighted value of the Converting Performance Shares based on the range of probabilities of the PALTDA Prospects advancing to Stage D (ie. resource delineation) as referred to in the SRK Report.

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Based on the above, our valuation of the Converting Performance Shares is as follows:

Table 22 – Valuation of Converting Performance Shares

	Ref.	Low Value	High Value	Mid-Point Value
No. of AGR Fully Paid Ordinary Shares to be issued upon conversion of Converting Performance Shares Value per Share - Significant Influence Probaility Assessment of Conversion Value of Converting Performance Shares	1.1 Table 18 8.2.2	80,000,000 $0.5610 10.0% $4,488,000	80,000,000 $0.6100 10.0% $4,880,000	80,000,000 $0.5850 10.0% $4,680,000

Source: William Buck

As noted in Section 1.1 above, the performance criteria referred to in regard to the Converting Performance Shares is deemed to have been satisfied if a “change of control event” occurs in respect of AGR prior to the conversion of the of the Converting Performance Shares. However in determining whether or not a “change of control” event has occurred, the acquisition of all or any of the shares and options issued as part of the Consideration and the acquisition of all or any fully paid ordinary shares in AGR that are issued as a result of the conversion or enforcement of any of the shares and options issued as part of the Consideration, will not be taken into account. This significantly lessens the likelihood that a “change of control event” will occur. In our opinion, the above terms and the likely shareholding structure of AGR if the Proposed Transaction is approved, means that a “change of control event” is unlikely to occur and we have not attribute any value to the right of potential early conversion as a result of a “change of control event” occurring.

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9. Valuation of Consideration

9.1 Overview

As noted in Section 1.1 above, the Consideration payable under the Proposed Transaction comprises:

20,000,000 fully paid ordinary shares in AGR;
the Consideration Options; and
the Converting Performance Shares.

9.2 Valuation of the Consideration

Based upon our opinions set out in Section 6, Section 7 and Section 8 above, our valuation of the Consideration payable under the Proposed Transaction is as follows:

Table 23 – Valuation of Consideration

	Ref.	Low Value	High Value	Mid-Point Value
Value of AGR Fully Paid Ordinary Shares to be Issued Value of Options to be Issued Value of Converting Performance Shares Total Value of Consideration	Table 19 Table 21 Table 22	11,220,000 434,822 4,488,000	12,200,000 536,037 4,880,000	11,710,000 485,339 4,680,000
		$16,142,822	$17,616,037	$16,875,339

Source: William Buck

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10. Valuation of PALTDA

10.1 Valuation Summary

In our opinion, the value of the issued shares in PALTDA to be acquired by AGR under the Proposed Transaction is in the range of A$4.67 million to A$18.02 million.

Our selection of the valuation methodology and assessment of the value is detailed in the remainder of this Section.

10.2 Selection of Valuation Methodology

Based on our understanding of PALTDA, its operations and its assets, in our opinion the most appropriate method for determining the fair market value of its issued shares is the net assets backing method.

The net value of assets on a going concern basis takes into account the estimated value of the net assets. This methodology has been adopted based on the following considerations:

the issued securities of PALTDA are not listed on any public exchange and accordingly, a valuation based on quoted market prices is not possible;
the assets held by PALTDA consist of prospecting rights over exploration stage properties which do not generate income. Due to the nature of its operations, an earnings based valuation methodology would not be appropriate;
detailed and supportable forecast financial information is not available for PALTDA nor, given the stage of development of PALTDA’s major assets, would it be reasonable to rely upon any medium-to-long term forecasts that might be available. Accordingly, it is not possible or reasonable to adopt a discounted cash flow valuation methodology; and
the main assets held by PALTDA consist of prospecting rights for which a fair market value can be obtained. Accordingly, we are of the opinion that a valuation based on the net assets on a going concern basis is most appropriate.

10.3 Fair Market Value of PALTDA’s Assets

As noted in Section 5.5 above, PALTDA’s only assets consist of prospecting rights over exploration stage properties.

As part of the preparation of this Report, William Buck has commissioned the preparation of the SRK Report in order to assist it in determining the fair market value of PALTDA’s exploration and development assets.

The findings of SRK are set out in the SRK Report, a copy of which is contained in Appendix D hereto.

The SRK Report has determined the current fair market value of PALTDA’s exploration and development assets to be in the range of US$4.92 million to US$18.98 million, with a preferred value of US$11.77 million.

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The following sections set out a summary of the findings set out in the SRK Report. However we recommend that the SRK Report set out in Appendix D be read in full.

10.3.1 Overview

SRK is the Australian arm of an independent, international group providing specialised consultancy services.

SRK's clients include many of the world's mining companies, exploration companies, financial institutions, construction firms and government bodies.

Formed in Johannesburg in 1974, the SRK group now employs more than 1000 staff in over 40 permanent offices in 20 countries on 6 continents. SRK specialises in providing advice and solutions to resource industries for the entire life cycle of a mining project, from exploration through to mine closure, for large and small projects, in most areas of the world, and across the full range of commodities.

SRK has undertaken numerous mining project valuations and, based on William Buck’s review of the experience and expertise of SRK, in our opinion SRK has the appropriate experience and professional qualifications to provide the advice offered.

10.3.2 Summary of the Scope and Valuation Approach Adopted

The SRK Report provides an independent technical assessment and fair market valuation of the Potash Projects currently held by PALTDA located in the Sergipe and Alagoas Basins in northeast Brazil and is in compliance with the VALMIN code of the Australian Institute of Geoscientists.

The SRK Report notes that the Potash Projects represent exploration projects, which will need significant investment to potentially come into production.

The valuation method developed by SRK and applied to the Potash Projects is designed to assess the exploration value at the particular stage of exploration for each prospect and uses the following criteria:

exploration stage, i.e. position of the exploration project on the pathway to discovery;
probability of the exploration project proceeding to the next exploration stage;
cost of proceeding to the next exploration stage; and
minimum / threshold value of the exploration target - a value determined from the market value of potash projects determined by a review of company valuations and market transactions for this type of project.

In the SRK Report, the market value of different potash projects is determined by firstly reviewing the enterprise value of potash-only companies, and secondly by reviewing direct transaction related to potash properties. Using these data sources, the SRK Report determines a value range for potash on a $ / contained tonne of KCl that can be used to calibrate the known geology and project stages for PALTDA's Potash Projects.

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10.3.3 Summary Valuation Conclusion of SRK Report

Based on the data made available to them, SRK has identified ten (10) prospect areas owned by PALTDA and covered by Potash Projects and which have been valued by SRK.

The fair market valuation conclusion set out in the SRK Report is summarised as follows:

Table 24 – Fair Market Valuation US$ - SRK Report

Area	Low US$m	Preferred US$m	High US$m
Prospect 1 Prospect 2 Prospect 3 Prospect 4 Prospect 5 Prospect 5SW Prospect 6 Prospect 7 Prospect 8 Prospect 9 Total	0.48 2.28 0.26 0.68 0.12 0.37 0.02 0.55 0.04 0.10	3.95 3.17 0.81 1.02 0.12 1.14 0.44 0.97 0.04 0.10	7.35 4.03 1.35 1.36 0.12 1.89 0.92 1.37 0.46 0.10
	4.92	11.77	18.98

Source: SRK Report Note: Totals are subject to rounding errors

The SRK Report notes that the large valuation range reflects the sensitivity of the valuation to the geological probabilities and to the large exploration costs associated with the exploration program. In particular, we note that the most significant individual difference in value arises in respect of Prospect 1, being the prospect area which is the most advanced in terms of exploration stage (refer section 10.3.4 and Table 27 below). As such, Prospect 1 bears a large part of the expected exploration program costs which are fixed in nature. Accordingly, any change in the gross value assessment of the Prospect at a more advanced stage has a direct impact on its current fair value assessment as it is assumed that planned exploration costs will continue to be incurred in full.

In addition, we note that changes in the assessment of the geological probabilities assigned to individual prospect areas can also result in significant changes in valuation. Accordingly, we note that the valuation range determined in the SRK Report is subject to the following significant uncertainties, in the context of relatively fixed costs required to undertake the required exploration programs:

uncertainty as to the geological probabilities of success assigned to various prospects;
uncertainty as to the ultimate level of contained KCl; and
uncertainty as to the dollar value of contained KCl per tonne based on the comparable transactions and companies examined.

In our opinion, given the significant uncertainties generally associated with relatively early stage mineral exploration assets it is reasonable to expect a relatively large range in the valuation of the assets, as noted in the SRK Report. As the exploration program on the projects progresses it would be expected that the valuation certainty would increase and therefore the valuation range would diminish.

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Based on an average exchange rate over the month ending 29 April 2011 of A$1 = US$1.0532 the fair market valuation conclusion set out in the SRK Report expressed in Australian Dollars is as follows:

Table 25 – Fair Market Valuation – A$

Area	Low A$m	Preferred A$m	High A$m
Prospect 1 Prospect 2 Prospect 3 Prospect 4 Prospect 5 Prospect 5SW Prospect 6 Prospect 7 Prospect 8 Prospect 9 Total	0.46 2.16 0.25 0.64 0.12 0.35 0.02 0.53 0.04 0.09	3.75 3.01 0.77 0.97 0.11 1.08 0.41 0.92 0.04 0.09	6.98 3.83 1.28 1.29 0.11 1.79 0.88 1.30 0.44 0.09
	4.67	11.18	18.02

Source: William Buck Note: Totals are subject to rounding errors

10.3.4 SRK’s Determination of Probabilities

The SRK Report regards PALTDA’s exploration claims and permits as relatively early stage exploration projects.

The methodology used by SRK to value PALTDA’s exploration claims and permits is described in Sections 5.1 to 5.3 of the SRK Report. The SRK Report notes that, for early stage projects, a market value is commonly determined for projects at different stages of exploration by assessing the market value of projects at more advanced stages of exploration and applying appropriate probability risk factors to determine the market value of a comparable earlier stage project.

Under SRK’s approach the current value of a prospect is determined by the probability (P) of the exploration project advancing to the next exploration stage multiplied by the target value of the project (ie. the assessed value of the project at a more advanced stage) less the cost to be incurred in undertaking work to advance the project. This valuation approach generates a current value for each project at each of the main exploration stages.

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The key exploration stages defined in the SRK Report are set out in Section 5.2 of the SRK Report and are summarised in the following table:

Table 26 –SRK Report Definition of Exploration Stages

Exploration Stage	Characteristics
Stage A	Ground acquisition and project generation
Stage B	Prospect definition and mapping and geochemistry
Stage C	Drill testing
Stage D	Resource delineation
Stage E	Feasibility

Source: SRK Report

In SRK’s opinion, with the exception of Area 1, all other PALTDA prospects are assessed to be at Stage B of the exploration process. Prospect 1 is assessed to be at Stage C.

The SRK Report has assessed the probabilities of each PALTDA prospect moving from its current stage to Stage D by identifying the elements that are critical success factors in each prospect. Details of the basis on which SRK has assigned a probability to each factor are set out in Sections 5.3 and 5.4 of the SRK Report.

In the case of each prospect, SRK has considered the following factors:

presence of evaporate conditions in the stratigraphic column (“ P1 ”);
evidence for adequate accumulation of precipitates from halite through to sylvite (“ P2 ”); and
stablility of geological structure to provide a trap (“ P3 ”)

With regard to the Prospects assessed as currently being at Stage B, the total probability of advance to Stage C has been determined as follows:

P = P1 x P2 x P3

With regard to the Prospects assessed as currently being at Stage B, the total probability of them further advancing from Stage C to Stage D has been assessed at 0.5.

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The probability risk assessments determined by SRK of each prospect moving from its current stage to Stage D (ie. that of established resource delineation) are summarised below:

Table 27 –SRK Report Probabilities of Moving from Current Stage to Stage D

Area	Current Stage	Probability of Moving from Stage B to Stage C	Probability of Moving from Stage B to Stage C	Probability of Moving from Stage B to Stage C	Probability of Moving from Stage B to Stage C	Probability of Moving from Stage C to Stage D	Total Probability of Moving from Current Stage to Stage D
Prospect 1 Stage C Prospect 2 Stage B Prospect 3 Stage B Prospect 4 Stage B Prospect 5 Stage B Prospect 5SW Stage B Prospect 6 Stage B Prospect 7 Stage B Prospect 8 Stage B Prospect 9 Stage B Average Average (Excluding Prospect Median	Stage C Stage B Stage B Stage B Stage B Stage B Stage B Stage B Stage B Stage B	P1 na 0.8000 0.6000 0.5000 0.6000 0.6000 0.6000 0.5000 0.6000 0.6000	P2 na 0.8000 0.5000 0.5000 0.6000 0.7000 0.6000 0.6000 0.6000 0.6000	P3 na 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000	Total na 0.3200 0.1500 0.1250 0.1800 0.2100 0.1800 0.1500 0.1800 0.1800	0.3780 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000	0.3780 0.1600 0.0750 0.0625 0.0900 0.1050 0.0900 0.0750 0.0900 0.0900 0.1216 0.0931 0.0900
		1)

Source: SRK Report and William Buck

We have reviewed the methodology adopted in the SRK Report and have no reason to believe that the methodology adopted is not reasonable.

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10.4 Restatement of PALTDA’s Net Assets to Fair Market Value

Based upon the forgoing, PALTDA’s restated fair value statement of financial position would be as follows:

Table 28 – PALTDA – Fair Value Statement of Financial Position

A$	PALTDA (Unaudited)	Fair Value Adjustments	Fair Value Adjustments	Note	PALTDA (Pro-Forma)	PALTDA (Pro-Forma)
		Low Value	High Value		Low Value	High Value
Total current assets Non-current assets Exploration and evaluation assets Total non-current assets Total assets Total liabilities Net assets Equity Issued capital Reserves Total equity	- 205,000 205,000 205,000 - 205,000	- 4,465,000 4,465,000 4,465,000 - 4,465,000	- 17,815,000 17,815,000 17,815,000 - 17,815,000	1 1	- 4,670,000 4,670,000 4,670,000 - 4,670,000	- 18,020,000 18,020,000 18,020,000 - 18,020,000
	205,000 -	- 4,465,000	- 17,815,000		205,000 4,465,000	205,000 17,815,000
	205,000	4,465,000	17,815,000		4,670,000	18,020,000

Source: Unaudited financial statements of PALTDA as at 31 January 2011; William Buck’s assessment

Note 1: Exploration and Evaluation Assets

The value of PALTDA’s exploration and valuation assets has been restated to the range set out in the SRK Report of A$4.67 million to A$18.02 million as set out in Table 25 above. The pro-forma adjustment to the asset revaluation reserve account represents the fair value adjustment in relation to the prospecting rights.

10.5 Valuation of Shares in PALTDA

Our assessment of the fair value of the total issued shares of PALTDA is in the range of $4.67 million to $18.02 million as set out in Table 28 above.

Under the Proposed Acquisition, AGR will acquire 100% of the issued shares of PALTDA. We note that our valuation above includes a control premium. Accordingly, no further adjustment is required in this regard.

10.6 Secondary Valuation Methodology

In our opinion no other valuation methodologies set out in ASIC Regulatory Guide 111 are suitable for the valuation of PALTDA.

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Consequently, we have not undertaken a valuation of PALTDA by use of a secondary valuation methodology.

However, we not note that AGR’s share price following its announcement of the Proposed Transaction has increased from approximately $0.55 per share on 24 January 2011 (ie. prior to the announcement of the Proposed Transaction) to a high of $1.47 per share on 3 March 2011. AGR’s shares had a closing price of $0.98 on 21 April 2011.

Based on AGR’s total issued ordinary shares of 60,850,001, its market capitalisation has increased by approximately $26.1 million between 24 January 2011 and 21 April 2011.

Whilst not conclusive as a secondary valuation approach due to the possible existence of other influencing factors, the increase in AGR’s market capitalisation following the announcement of the Proposed Transaction is broadly consistent with the valuation ascribed to the Potash Projects in the SRK Report.

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11. Evaluation of the Proposed Transaction

11.1 Basis of the Evaluation of the Proposed Transaction

In our opinion, the Proposed Transaction will be fair and reasonable if:

the fair market value of shares in PALTDA to be acquired by AGR under the Proposed Transaction is greater than the fair market value of the Consideration offered by AGR;
on balance, the advantages to the Non-Associated Shareholders of approving the Proposed Transaction outweigh the disadvantages; and,
on balance, the disadvantages to the Non-Associated Shareholders of not approving the Proposed Transaction outweigh the advantages.

11.2 Assessment of Fairness of the Proposed Transaction

Based on our analysis, we set out below a summary of our valuation opinion in respect of the Proposed Transaction comprising a comparison between:

our valuation of the Consideration to be issued to PAC under the Proposed Transaction; and
our valuation of 100% of the shares in PALTDA being acquired by AGR under the Proposed Transaction.

Table 29 – Assessment of Fairness

	Ref.	Low Value	High Value	Mid-Point Value
Total Value of Consideration Value of PALTDA Shares	9.2 10.5	$16,142,822	$17,616,037	$16,875,339
		$4,670,000	$18,020,000	$11,345,000

Source: William Buck

A graphic representation of the comparison of our valuation ranges is set out below:

Figure 11

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----- Start of picture text -----

Fair value of Consideration
$16.1 million to $17.62 million
Millions
Fair value of PALTDA shares
$4.67 million to $18.02 million
$4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50 $10.00 $10.50 $11.00 $11.50 $12.00 $12.50 $13.00 $13.50 $14.00 $14.50 $15.00 $15.50 $16.00 $16.50 $17.00 $17.50 $18.00 $18.50 $19.00 $19.50 $20.00
----- End of picture text -----

Source: William Buck

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Accordingly, in our opinion, the Proposed Transaction is considered fair from the perspective of the Non-Associated Shareholders of AGR.

11.3 Assessment of Reasonableness of the Proposed Acquisition

We have considered the following factors in determining whether or not the Proposed Transaction is reasonable to the Non-Associated Shareholders of AGR.

11.3.1 Advantages of approving the Proposed Transaction

The following may be considered advantages of approving the Proposed Transaction:

Consideration is fair: The consideration under the Proposed Transaction is “fair”;
Arm’s length basis: We understand that the terms of the Proposed Transaction were negotiated on an arm’s length basis;
Significant portion of the Consideration is conditional: A significant proportion of the Consideration payable by AGR is in the form of Converting Performance Shares which is therefore dependent on the satisfaction of conditions that will add value to the interest being acquired by AGR;
Strengthening of interests in minerals used in fertilisers: The approval of the Proposed Transaction will result in AGR acquiring an interest in rights which are potentially rich in potash, a commodity for which there is generally expected to be high demand as global agriculture continues to be dependent on the use of fertilisers to improve agricultural productivity;
Diversification of assets: The approval of the Proposed Transaction will result in AGR acquiring an interest in potentially valuable potash assets which will result in a diversification of its assets in a way that is complementary to the interests that it holds in phosphate assets; and
Increased market capitalisation: The potential increase in the market capitalisation of AGR may lead to increased coverage from capital market analysts, improved access to equity capital market opportunities and increased liquidity in its share trading.

11.3.2 Disadvantages of approving the Proposed Transaction

The following may be considered disadvantages of approving the Proposed Transaction:

High level of uncertainty in value of PALTDA : the fair value of PALTDA’s assets, and consequently the fair value of the shares in PALTDA, is the subject of a high level of uncertainty. The high level of uncertainty results in a large valuation range reflective of the sensitivity of the valuation to the geological probabilities and to the large exploration costs associated with the exploration program. As assessed in this Report, the value of the Consideration being paid for PALTDA is at the upper end of the assessed fair value of PALTDA. The value of PALTDA’s assets, and consequently the value of shares in PALTDA, are sensitive to significant uncertainties in relation to the following:
the geological probabilities of success assigned to various prospects;
the ultimate level of contained KCl; and

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the dollar value of contained KCl per tonne based on the comparable transactions and companies examined.

By approving the Proposed Transaction the Non-Associated Shareholders will be exposed to the risk that the various significant uncertainties associated with determining the fair value of PALTDA’s assets will result in the ultimate value of PALTDA’s assets being at the lower end of the assessed fair value range and accordingly, below the value of the Consideration;

Existing shareholders’ interest in the Company will be diluted: By approving the Proposed Transaction the interests of the Non-Associated Shareholders will be diluted;
Shareholder with significant influence: Approval of the Proposed Transaction will result in PAC becoming the significant shareholder in AGR. The presence of such significant shareholding generally both reduces the liquidity of a Company’s share trading and reduces the likelihood that the Company will be the target of any potential takeover activity; and
Investment in ‘early stage’ assets: The assets of PALTDA represent relatively ‘early stage’ assets without a proven resource being identified. The Company is therefore making a substantial investment into assets that are (as yet) unproven.
Conversion on “change of control: The performance criteria referred to in regard to the Converting Performance Shares is deemed to have been satisfied if a “change of control event” occurs in respect of AGR prior to the conversion of the of the Converting Performance Shares. Accordingly, it is possible that the Converting Performance Shares will be converted into fully paid ordinary shares in AGR without any mineral resource being indicated or proven in accordance with the performance criteria set out in the terms of the Converting Performance Shares. However we note that in determining whether or not a “change of control” event has occurred, the acquisition of all or any of the shares and options issued as part of the Consideration and the acquisition of all or any fully paid ordinary shares in AGR that are issued as a result of the conversion or enforcement of any of the shares and options issued as part of the Consideration, will not be taken into account. This significantly lessens the likelihood that a “change of control event” will occur.

11.3.3 Advantages and disadvantages of not approving the Proposed Transaction

In our view, the significant advantages or disadvantages of rejecting the Proposed Transaction include the reverse of the matters noted above, as well as the following:

Ability to pursue alternative investments: By not approving the Proposed Transaction AGR will be able to continue to explore alternative potential projects and investments. However, we note that whilst alternative investments may be pursued by AGR no feasible opportunity may emerge; and
Post announcement share price: We note that AGR’s share price increased significantly following the announcement of the Proposed Transaction. Failure to approve the Proposed Transaction may result in a fall in AGR’s share price to the level prevailing prior to the announcement of that Proposed Transaction.

11.3.4 Overall conclusion on advantages and disadvantages of the Proposed Transaction

In our opinion, based on a consideration of the above, the Proposed Transaction is considered reasonable from the perspective of the Non-Associated Shareholders of AGR as:

on balance, the advantages of approving the Proposed Transaction outweigh the disadvantages of approving it to the Non-Associated Shareholders; and

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on balance, the disadvantages of rejecting the Proposed Transaction outweigh the advantages of rejecting it to the Non-Associated Shareholders.

11.4 Conclusion on Proposed Transaction

In our opinion the Proposed Transaction is, on balance, fair and reasonable to the Non-Associated Shareholders of AGR.

The total value of the Consideration being offered by AGR under the Proposed Transaction is at the upper end of, but within, the fair value range of the shares being acquired in PALTDA and is therefore considered fair from the perspective of the Non-Associated Shareholders of AGR.

On balance, the advantages of approving the Proposed Transaction outweigh the disadvantages to the Non-Associated Shareholders and the disadvantages of rejecting the Proposed Transaction outweigh the advantages of rejecting the Proposed Transaction.

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12. Qualifications

12.1 Qualifications

William Buck has extensive experience in the provision of corporate finance advice including with respect to mergers and acquisitions.

William Buck is an authorised representative of William Buck Financial Services (NSW) Pty Ltd which holds an Australian Financial Services Licence issued by ASIC for giving expert reports pursuant to the Listing Rules of the ASX and NSX and the Act.

The directors of William Buck responsible for the preparation of this Report are Mr Domenic Quartullo and Mrs Manda Trautwein.

This Report was prepared by Mr Domenic Quartullo, a director of William Buck. Mr Domenic Quartullo is a Director of William Buck. He is a Chartered Accountant and holds a Bachelor of Arts (Accounting) and Bachelor of Laws degree from Macquarie University. Mr Quartullo has over 25 years experience in Chartered Accountancy and has had extensive experience in the areas of litigation support, preparation and review of business feasibility studies, financial investigations, business valuations, independent expert’s reports and due diligence reviews. His valuation experience covers a wide range of industries for both public and private companies. Accordingly, Mr Quartullo has the appropriate experience and professional qualifications to provide the advice offered.

Mrs Manda Trautwein is a director of William Buck and an active Member of the Institute of Chartered Accountants and its Forensic Accounting and Business Valuation Special Interest Groups. She holds a Bachelor of Commerce degree and a Master of Applied Finance degree from Macquarie University and a Master of Applied Taxation degree from the University of New South Wales. Mrs Trautwein regularly advises clients on corporate transactions and is experienced in the provision of valuations of shares and businesses for a variety of applications. Accordingly, Mrs Trautwein has the appropriate experience and professional qualifications to provide the advice offered.

Further details of the experience and qualifications of Mr Quartullo and Mrs Trautwein are set out in Appendix F to this Report.

12.2 Independence and Declarations

William Buck is not aware of any matter or circumstance that would preclude it from preparing this report on the grounds of independence either under regulatory or professional requirements. In particular, we have had regard to the provisions of applicable pronouncements and other guidance statements relating to professional independence issued by Australian professional accounting bodies and ASIC.

William Buck considers itself to be independent in terms of RG 112: Independence of Experts, issued by ASIC.

Neither William Buck, nor any of its related entities, have acted for AGR with regard to any matter in the past and we are not aware of any matters or relationship that could be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Proposed Transaction.

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William Buck is entitled to receive a fee for the preparation of this Report of approximately $35,000 plus GST and disbursements. This fee is not contingent on the outcome of the Proposed Transaction. Except for this fee William Buck has not received and will not receive any pecuniary or other benefit, whether direct or indirect, for or in connection, with the preparation of this Report and accordingly, does not have any pecuniary or other interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to the Proposed Transaction.

In addition, SRK is entitled to receive a fee for the preparation of SRK Report of approximately $50,000 inclusive of GST and disbursements. This fee, whilst incurred by William Buck, will be passed on and reimbursed by AGR.

Three drafts of this Report were provided to the Directors of AGR for review of factual accuracy, as opposed to opinions, which are the responsibility of William Buck alone. Certain changes were made to the report as a result of the circulation of the draft reports. However, no changes were made to the methodology, conclusions or recommendations made to the Non- Associated Shareholders as a result of issuing the draft reports.

The statements contained in this Report are given in good faith and have been derived from information believed to be reliable and accurate. We have examined this information and have no reason to believe that any material factors have been withheld from us.

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13. Appendices

13.1 Appendix A – Sources of Information

a) AGR announcements in relation to the terms of the Proposed Transaction;
b) Draft Notice of Extraordinary General Meeting and Explanatory Memorandum to be issued in relation to the Proposed Transaction;
c) Copy of AGR share register and options register;
d) AGR’s annual reports and announcements made to the ASX;
e) Historical share trading data for AGR obtained from ThomsonOne;
f) Details of PALTDA’s issued shares as provided by the management of PALTDA;
g) Unaudited financial statement of financial position of PALTDA as at 31 January 2011;
h) SRK Report;
i) Annualised price volatility of AGR shares as published by Sirca Limited (previously published by the Australian Graduate School of management) as at December 2010;
j) Government bond, other interest rates and yield and exchange rates as published by the Reserve Bank of Australia;
k) Publicly available economic analysis reports published by major Australian trading banks and economic forecasting bodies;
l) Publicly available industry analysis reports published by industry research companies; and
m) Discussions and correspondence with management of AGR.

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13.2 Appendix B – Abbreviations and Definitions

Term	Definition
Act	Corporations Act 2001
AGR	Aguia Resources Limited ACN 003 201 910
APES	Accounting Professional and Ethical Standard
ASAE	Australian Standards on Assurance Assignments
ASIC	Australian Investments and Securities Commission
ASRE	Australian Standards on Review Assignments
ASX	ASX Limited ACN 008 624 691
ASX Listing Rules	Rules of ASX which are applicable while the Company
ASX Listing Rule 10	The provisions set out in Chapter 10 of the ASX Listing Rules
AUS	Australian Auditing Standards
Company	Aguia Resources Limited ACN 003 201 910
Consideration	The issue of 20,000,000 fully paid ordinary shares in AGR, 1,500,000 options in AGR, A Class Converting Performance Shares, B Class Converting Performance Shares, and C Class Converting Performance Shares
Consideration Options	The1,500,000 options over unissued fully paid ordinary shares in AGR exercisable at $0.50 per option at any time within 3 years of their grant datethat AGR will issue as part of the Consideration under the Proposed Transaction
Converting Performance Shares	A Class Converting Performance Shares, B Class Converting Performance Shares, and C Class Converting Performance Shares
Directors	The directors of AGR
EM	Explanatory Memorandum issued in connection with the Proposed Transaction
Historical Trading Period	12 months ended 24 January 2011
Mt	Million tonnes
Non-Associated Shareholders	Those shareholders in AGR whose votes are not to be disregarded in voting on the resolutions relating to the Proposed Transaction
Norwest	Norwest Holdings Pty Limited
PAC	Potash Atlantico Corporation
PALTDA	Potash Atlantico Ltda
Pathfinder Project	Joint venture between AGR, PlatSearch NL and Bohuon Resources Pty Limited to undertake exploration in South Australia in an area believed to be prospective for nickel sulphides and iron-oxide associated copper-gold deposits and potentially heavy mineral sands

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Phosphate Performance Shares	Unlisted Class A Performance Shares and the Unlisted Class B Performance issued as part of the consideration for AGR’s acquisition of the Lucena Phosphate Project and the Mata da Corda Phosphate Project (the “Phosphate Projects”) announced on 25 February 2010
Phosphate Projects	Lucena Phosphate Project and the Mata da Corda Phosphate Project acquired by AGR announced on 25 February 2010
Potash Projects	PALTDA’s exploration claims and permits comprise 121 exploration claims, 43 of which are under application, covering a total of approximately 2,100km2
Proposed Placement	Placement of fully paid ordinary shares in order to raise $15 million to fund working capital for the further exploration and development of various mineral prospects owned by PALTDA
Proposed Transaction	The transaction for the acquisition of all the issued shares in PALTDA which is the subject of this Report
Report	This report prepared by William Buck dated 18 May 2011
RG	Regulatory Guides issued by ASIC
RG 111	Regulatory Guide 111: Content of Expert Reports
RG 112	Regulatory Guide 112: Independence of Experts
RG 170	Regulatory Guide 170: Prospective financial information
Section 606	Section 606 of the Act
Section 611	Section 611 of the Act
Shareholders	The holders of fully paid ordinary shares in AGR
SRK	SRK Consulting (Australasia) Pty Limited
SRK Report	Independent Technical and Fair Market Valuation Report prepared by SRK dated 4 May 2011
VWAP	Volume Weighted Average Price
William Buck , we, us, our	William Buck Corporate Advisory Services (NSW) Pty Ltd ACN 133 845 637

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13.3 Appendix C – Prospecting Rights held by AGR

Prospecting rights held by AGR in relation to phosphate assets located in Brazil are as follows:

Tenement Number	Area (Hectares)	Location
830.710/10	1,698.53	MORRO DO PILAR e SANTANA DO RIACHO / MG
846.020/10	27.97	ALHANDRA, CAAPORA E PITIMBU / PB
846.036/09	98	LUCENA/PB
846.037/09	17.33	SANTA RITA/PB
846.105/09	1,772.99	CONDEe JOAOPESSOA/PB
846.106/09	1,538.93	ALHANDRA e CONDE / PB
846.107/09	1,146.40	ALHANDRA e CONDE / PB
846.108/09	188.17	ALHANDRA/PB
846.193/09	81.32	SANTA RITA / PB
846.439/08	1,521.49	MAMANGUAPE e RIO TINTO / PB
846.440/08	1,928.11	RIOTINTO /PB
846.441/08	1,927.43	CAPIM, MAMANGUAPE e RIO TINTO / PB
846.442/08	1,927.96	RIO TINTO e SANTA RITA / PB
846.443/08	1,891.02	CAPIM, RIO TINTO e SANTA RITA/ PB
846.444/08	1,927.80	RIO TINTO e SANTA RITA / PB
846.445/08	1,898.09	SANTA RITA / PB
846.446/08	1,927.64	SANTA RITA/PB
846.447/08	1,728.69	SANTA RITA / PB
846.448/08	1,395.06	SANTA RITA / PB
846.449/08	1,926.80	CRUZ DO ESPiRITO SANTO e SANTA RITA / PB
846.451/08	1,926.64	CRUZ DO ESPiRITO SANTO / PB
846.452/08	1,828.24	CRUZ DO ESPiRITO SANTO a SANTA RITA/PB
846.453/08	473.59	RIOTINTO /PB
846.454/08	966.26	RIO TINTO / PB
846.455/08	1,927.59	RIO TINTO/PB
846.456/08	1,927.59	RIO TINTO/PB
846.457/08	1,927.43	RIO TINTO e SANTA RITA/ PB
846.458/08	1,927.43	LUCENA, RIO TINTO e SANTA RITA / PB
846.459/08	1,927.28	SANTA RITA/PB
846.460/08	1,927.28	LUCENA e SANTA RITA / PB
846.461/08	1,927.12	SANTA RITA / PB
846.462/08	1,924.15	SANTA RITA / PB
846.463/08	1,926.96	SANTA RITA / PB
846.464/08	1,879.92	SANTA RITA / PB
846.465/08	1,553.98	SANTA RITA/PB
846.466/08	1,904.78	SANTA RITA / PB
846.467/08	1,613.55	SANTA RITA / PB
846.468/08	1,337.51	SANTA RITA / PB
846.469/08	1,728.19	RIO TINTO / PB
846.470/08	1,927.60	LUCENA e RIO TINTO/PB
846.471/08	1,927.59	LUCENAeRIOTINTO/PB
846.472/08	1,441.26	LUCENA e RIO TINTO/PB
846.473/08	933.1	LUCENA/PB
846.474/08	946.28	LUCENA E SANTA RITA/PB
846.475/08	1,169.81	LUCENA e SANTA RITA / PB
846.476/08	768.51	SANTA RITA/PB
846.477/08	203.87	LUCENAe SANTA RITA/PB
846.478/08	339.09	SANTA RITA / PB

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Tenement Number	Area (Hectares)	Location
846.479/08	1,438.88	SANTA RITA / PB
846.480/08	1,926.80	BAYEUX e SANTA RITA / PB
846.481/08	1,702.29	BAYEUX, JOAO PESSOA e SANTA RITA / PB
846.482/08	281.65	BAYEUX e SANTA RITA / PB
830.936/10	1,639.01	LAGOA FORMOSA/MG
830.937/10	1,806.05	LAGOAFORMOSA/MG
830.938/10	668.11	CARMO DO PARANAIBA e LAGOA FORMOSA / MG
830.940/10	1,815.47	TIROS / MG
830.941/10	1,727.47	TIROS / MG
830.942/10	1,609.24	TIROS/MG
830.943/10	1,849.36	TIROS /MG
831.029/10	564.86	TIROS/MG
831.031/10	1,774.45	TIROS eBIQUINHAS/MG
831.032/10	1,670.52	TIROS / MG
831.033/10	1,638.43	TIROS/MG
831.034/10	1,855.15	TIROS / MG
831.035/10	1,982.81	TIROS/MG
831.036/10	1,982.34	TIROS / MG
831.037/10	1,992.55	TIROS/MG
831.038/10	1,972.26	TIROS / MG
831.039/10	1,992.36	TIROS/MG
831.040/10	1,915.57	TIROS / MG
831.041/10	1,588.94	TIROS/MG
831.042/10	1,897.80	TIROS / MG
831.043/10	1,696.87	TIROS / MG
831.044/10	1,055.16	TIROS / MG
831.045/10	1,814.32	TIROS/MG
831.095/10	1,982.70	RIO PARANAIBA/MG
831.097/10	1,945.19	MATUTINAeTIROS/MG
831.098/10	1,980.68	RIO PARANAIBA/MG
831.099/10	1,771.10	RIO PARANAIBA / MG
831.100/10	1,845.12	RIO PARANAIBA / MG
831.101/10	1,614.34	MATUTINA, RIO PARANAIBA e SAO GOTARDO / MG
831.104/10	1,884.54	MATUTINA e TIROS/ MG
831.106/10	1,982.23	RIOPARANAIBA/MG
831.107/10	1,976.28	RIO PARANAIBA / MG
831.108/10	1,979.26	RIO PARANAIBA e SAO GOTARDO / MG
831.110/10	1,380.55	MATUTINA e SAO GOTARDO / MG
831.111/10	1,940.88	MATUTINA e SAO GOTARDO / MG
831.112/10	1,643.89	MATUTINA e TIROS / MG
831.113/10	1,289.40	RIOPARANAIBA/MG
831.114/10	1,987.20	RIO PARANAIBA / MG
831.115/10	1,991.60	RIO PARANAIBA/MG
831.116/10	1,988.67	SAO GOTARDO e RIO PARANAIBA / MG
831.117/10	1,750.96	SAO GOTARDO / MG
831.118/10	1,869.57	RIO PARANAIBA / MG
831.119/10	1,806.54	RIOPARANAIBA/MG
831.120/10	1,840.20	SAO GOTARDO e RIO PARANAIBA / MG
831.121/10	1,753.58	SAO GOTARDO / MG
831.122/10	1,947.59	RIO PARANAIBA/MG
831.123/10	1,987.73	RIO PARANAIBA/MG
831.124/10	1,987.72	RIOPARANAIBA/MG

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Tenement Number	Area (Hectares)	Location
831.127/10	598.76	RIO PARANAIBA / MG
831.128/10	1,992.11	RIO PARANAIBA/MG
831.129/10	1,992.11	RIO PARANAIBA/MG
831.130/10	1,981.79	CAMPOS ALTOS, RIO PARANAIBA e SAO GOTARDO / MG
831.189/10	1,393.42	PATOSDE MINAS ePRESIDENTEOLEGARIO /MG
831.190/10	1,948.49	PRESIDENTE OLEGARIO / MG
831.191/10	1,603.76	PRESIDENTE OLEGARIO / MG
831.192/10	1,745.09	PRESIDENTE OLEGARIO / MG
831.193/10	1,985.10	PRESIDENTE OLEGARIO / MG
831.194/10	1,983.60	PRESIDENTE OLEGARIO / MG
831.195/10	1,981.73	PRESIDENTEOLEGARIO /MG
831.196/10	1,983.58	PRESIDENTE OLEGARIO / MG
831.197/10	1,581.38	PRESIDENTE OLEGARIO / MG
831.198/10	1,937.76	PATOS DE MINAS e PRESIDENTE OLEGARIO/ MG
831.199/10	1,909.60	PRESIDENTE OLEGARIO / MG
831.200/10	1,948.96	PATOS DE MINAS e PRESIDENTE OLEGARIO/ MG
831.201/10	1,952.43	PATOSDE MINAS ePRESIDENTEOLEGARIO/MG
831.202/10	1,075.89	PATOS DE MINAS e PRESIDENTE OLEGARIO/ MG
831.206/10	82.34	PATOS DE MINAS / MG
831.209/10	1,972.78	PRESIDENTE OLEGARIO e VARJAO DE MINAS / MG
831.210/10	1,966.87	PRESIDENTE OLEGARIO / MG
831.211/10	1,737.49	PRESIDENTE OLEGARIO / MG
831.212/10	1,397.37	PATOSDE MINAS ePRESIDENTEOLEGARIO/MG
831.213/10	1,862.34	PATOS DE MINAS e PRESIDENTE OLEGARIO/ MG
831.214/10	1,979.06	MINAS / MG
831.215/10	1,982.60	PATOS DE MINAS E VARJAO DE MINAS / MG
831.216/10	1,985.61	PATOS DE MINAS E VARJAO DE MINAS / MG
831.217/10	1,450.52	PATOS DE MINAS E VARJAO DE MINAS / MG
831.219/10	1,834.61	PATOSDE MINAS /MG
831.220/10	1,491.72	PATOS DE MINAS / MG
831.221/10	1,484.27	PATOS DE MINAS E VARJAO DE MINAS / MG
831.223/10	636.38	PATOS DE MINAS E VARJAO DE MINAS / MG
831.224/10	1,429.75	PRESIDENTE OLEGARIO / MG
831.331/10	1,526.24	CARMO DO PARANAiBA / MG
831.332/10	1,573.49	CARMODOPARANAiBA/MG
831.333/10	1,981.84	CARMO DO PARANAiBA / MG
831.334/10	1,929.68	CARMO DO PARANAiBA / MG
831.335/10	1,933.47	CARMO DO PARANAiBA / MG
831.339/10	1,971.64	CARMO DO PARANAiBA e RIO PARANAiBA / MG
831.342/10	1,985.79	CARMO DO PARANAiBA e RIO PARANAIBA / MG
831.343/10	1,914.33	ARAPUAeRIOPARANAIBA/MG
831.344/10	1,979.42	CARMO DO PARANAiBA e RIO PARANAiBA / MG
831.345/10	1,844.82	RIO PARANAIBA / MG
831.346/10	1,979.50	PATOS DE MINAS e VARJAO DE MINAS / MG
831.347/10	1,968.41	PATOS DE MINAS / MG
831.379/10	1,966.44	CAMPOS ALTOS e RIO PARANAIBA/ MG
831.380/10	1,966.44	CAMPOSALTOS eRIOPARANAiBA/MG
831.381/10	1,948.46	CAMPOS ALTOS, RIO PARANAiBA e SAO GOTARDO/ MG
831.382/10	1,387.25	CAMPOS ALTOS / MG
831.383/10	1,982.84	CAMPOS ALTOS / MG
831.384/10	1,982.83	CAMPOS ALTOS / MG
831.386/10	1,957.82	CAMPOSALTOS /MG

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Tenement Number	Area (Hectares)	Location
831.387/10	1,957.82	CAMPOS ALTOS/ MG
831.388/10	1,936.30	CAMPOS ALTOS e SANTA ROSA DA SERRA / MG
831.389/10	1,786.24	CAMPOS ALTOS, SANTA ROSA DA SERRA e SAO GOTARDO / MG
831.390/10	1,978.13	CAMPOS ALTOS e SANTA ROSA DA SERRA / MG
831.391/10	1,978.13	CAMPOSALTOS /MG
831.392/10	1,984.73	CAMPOS ALTOS e SANTA ROSA DA SERRA / MG
831.393/10	1,987.19	CAMPOS ALTOS e SANTA ROSA DA SERRA / MG
831.394/10	1,943.02	CAMPOS ALTOS e SANTA ROSA DA SERRA / MG
831.395/10	1,988.07	CAMPOS ALTOS e SANTA ROSA DA SERRA / MG
831.397/10	1,964.06	PATOS DE MINAS / MG
831.398/10	1,968.79	PATOSDE MINAS /MG
831.399/10	1,988.70	PATOS DE MINAS / MG
831.400/10	1,703.84	PATOS DE MINAS / MG
831.401/10	1,637.08	PATOS DE MINAS / MG
831.402/10	1,923.00	LAGOA FORMOSA e PATOS DE MINAS / MG
831.403/10	1,686.00	LAGOA FORMOSA e PATOS DE MINAS / MG
831.404/10	1,953.03	LAGOA FORMOSA/MG
831.406/10	1,955.33	LAGOA FORMOSA/MG
832.847/09	4.29	QUARTEL GERAL / MG
832.897/08	1,833.38	ABAETE e CEDRO DO ABAETE/ MG
832.898/08	97.14	CEDRO DO ABAETE/MG
832.899/08	2,000.00	CEDRO DO ABAETE e QUARTEL GERAL/ MG
832.900/08	465.14	CEDRODOABAETEe QUARTELGERAL/MG
832.902/08	1,410.18	CEDRO DO ABAETE e QUARTEL GERAL/ MG
832.903/08	1,406.76	CEDRO DO ABAETE e QUARTEL GERAL/ MG
832.904/08	1,476.42	CEDRO DO ABAETE e QUARTEL GERAL/ MG

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13.4 Appendix D – Copy of SRK Report

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Independent Technical and Fair Market Valuation of assets of Potássio do Atlântico, Sergipe and Alagoas Basins, Brazil

Report prepared by

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4 May 2011 Project Code: WIL001

SRK Consulting � WIL001 Sergipe and Alagoas Potash

May 2011

Independent Technical and Fair Market Valuation of assets of Potássio do Atlântico, Sergipe and Alagoas Basins, Brazil

WIL001

Document Reference: WIL001_Sergipe_Alagoas_Potash_Rev2B.doc

William Buck Corporate Advisory Services (NSW) Pty Ltd Level 29, 66 Goulburn Street Sydney NSW 2000

SRK Consulting (Australasia) Pty Ltd

Level 1, Richardson Street West Perth WA 6005

Compiled by: Peer Reviewed by: Peter Williams Deborah Lord Corporate Consultant Principal Consultant

Email: [email protected]

Authors:

Peter Williams; Bert DeWaele; Antonio Girodo; Kimberley Webb

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SRK Report Client Distribution Record

Project Number: WIL001

Date Issued: 4 May 2011

Name/Title	Company
Domenic Quartullo	William Buck Corporate

This document is protected by copyright vested in SRK. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder, SRK.

Rev No.	Date	Revised By	Revision Details
Rev0	22 March 2011	Peter Williams	Draft Valuation
Rev1	28 March 2011	Peter Williams	Final Issued to Client
Rev 2	27 April 2011	Peter Williams	Final Issued to Client
Rev 3	4 May2011	Peter Williams	Final Issued to Client

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Executive Summary

Summary of Principal Objectives

This Report provides an independent technical assessment and fair market valuation of potash projects currently held by Potássio do Atlântico Ltda (PAC) located in the Sergipe and Alagoas Basins in northeast Brazil. William Buck Corporate Advisory Services (NSW) Pty Ltd (“William Buck”) asked SRK Consulting (Australasia) Pty Ltd (“SRK”) to prepare this Independent Specialist Valuation Report. The report will be relied upon by William Buck as Independent Experts for Aguia Resources Ltd (Aguia) in certain transactions that they are undertaking, as outlined in the Independent Experts Report.

The review will be included in the independent expert report for Aguia as part of its strategy to purchase PAC. SRK understands that this Report is to comply with the technical property information required under various securities laws of Australia and may be included in the Aguia information circular to shareholders. SRK indicates that his report complies with the VALMIN code of the Australian Institute of Geoscientists.

Results

Geology

The PAC Potash Projects comprise 121 exploration claims (43 of which under application) totalling ~2,100 km[2] (1,323 km[2] excluding those areas under application), located in the Cretaceous to Quaternary Sergipe-Alagoas Basin in NE Brazil. Potash, and associated evaporate mineralisation, has been identified from historic deep drilling in the Ibura Member of the Muribeca Formation at depths of just over 2 km. Evaporite mineralisation can also been inferred from the historic downhole geophysical log data, while the prospective horizons can be recognised from abundant historic seismic profiles.

The seismic data also confirm the presence of horst and graben structures and antiform-synform pairs, which may affect the geometry of mineralisation. In fact, the horst and graben geometry has subdivided the Sergipe-Alagoas Basin into various sub-basins, locally controlling evaporitic conditions and the development of evaporate mineral species. As a result, the regional distribution of carnallite or sylvitite (sylvite and halite) is strongly affected by basin geometry and may lead to carnallite-dominated and sylvitite-dominated sub-basins.

Exploration potential

The PAC Projects represent exploration projects, which will need significant investment to potentially come into production. Sylvitite and carnallite have been recognised at considerable depth from historic drill data, and several targets have been prepared for pilot testing. The company is planning an initial exploration programme of further data review and pilot drill testing, at the most advanced target of about $15.5M with a further $6M on other initial targets. SRK estimates that additional expenditure of a similar amount ($20M) will be required in future to meet similar exploration objectives across all of the current tenements. Additional drill testing, 3D seismic surveys and metallurgical test work will be required to develop an Indicated or Measured Resource. Depending on the presence of sylvitite or carnallite, a suitable solution mining method will need to be developed to extract the potash mineralisation.

Valuation

The valuation method developed by SRK and applied to the Sergipe and Alagoas exploration projects is designed to assess the exploration value at the particular stage of exploration for each prospect. The method uses the following criteria:

Exploration Stage, i.e. position of the exploration project on the pathway to discovery.
Probability of the exploration project proceeding to the next Exploration Stage.
Cost of proceeding to the next Exploration Stage.

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Minimum / threshold value of the exploration target – a value determined from the market value of potash projects determined by a review of company valuations and market transactions for this type of project.

For the Sergipe-Alagoas basin, the market value of different potash projects is determined by firstly the Enterprise Value of potash-only companies, and secondly by reviewing direct transaction related to potash properties. Using these data sources, a value range for potash on a $ / contained tonne of KCl can be determined. These values are used to calibrate the known geology and project stages for PAC’s property. The resultant valuation is shown in Table 1.

Table 1: Value range – all prospects

AREA	Low (US$M)	Preferred (US$M)	High (US$M)
Prospect 1	0.48	3.95	7.35
Prospect 2	2.28	3.17	4.03
Prospect 3	0.26	0.81	1.35
Prospect 4	0.67	1.02	1.36
Prospect 5	0.12	0.12	0.12
Prospect 5SW	0.36	1.14	1.89
Prospect 6	0.01	0.43	0.92
Prospect 7	0.55	0.96	1.37
Prospect 8	0.03	0.03	0.46
Prospect 9	0.10	0.10	0.10
Total	4.92	11.77	18.98

The large valuation range reflects sensitivity of this valuation to the geological probabilities and to the large exploration costs associated with the forward exploration program.

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Executive	Executive	Summary .......................................................................................................... iii
	Summary of Principal Objectives ............................................................................................. iii
	Results ..................................................................................................................................... iii
Disclaimer......................................................................................................................... vii
1.	Introduction and Scope of Report ........................................................................... 8
2.	Scope ......................................................................................................................... 9
3.	Background and Context ........................................................................................ 10
	3.1	Purpose of the Report and Consent ............................................................................ 10
	3.2	Reporting Standard ..................................................................................................... 10
	3.3	Work Programme and Project Team ........................................................................... 10
	3.4	Statement of SRK Independence ................................................................................ 10
	3.5	Warranties ................................................................................................................... 10
	3.6	Indemnities .................................................................................................................. 11
	3.7	Consents ..................................................................................................................... 11
4.	Geology .................................................................................................................... 12
	4.1	Location ....................................................................................................................... 12
	4.2	Access and Infrastructure ............................................................................................ 13
	4.3	Regional setting ........................................................................................................... 14
	4.4	Stratigraphy ................................................................................................................. 15
	4.5	Tectonic framework ..................................................................................................... 17
	4.6	Exploration ................................................................................................................... 19
	4.7	Planned Exploration .................................................................................................... 20
	4.8	Adjacent properties ...................................................................................................... 21
	4.9	Consideration on Metallurgy and Mining ..................................................................... 21
5.	Valuation .................................................................................................................. 22
	5.1	Introduction to the Valuation Methodology .................................................................. 22
	5.2	Definition and Discussion of Exploration Stages ......................................................... 23
		5.2.1 Stage definition for Sergipe and Alagoas Targets ...................................................... 24
	5.3	Determining Early Stage Exploration Probabilities ...................................................... 24
		5.3.1 Definitions of P1-P3 in this Study ............................................................................... 25
		5.3.2 Determining Late Stage Exploration Probabilities ...................................................... 25
		5.3.3 Setting Market Values at exploration stages .............................................................. 26
	5.4	Valuation of PAC properties ........................................................................................ 29
6.	Conclusions ............................................................................................................. 31
7.	References ............................................................................................................... 32

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List of Tables

Table 4-1: Local stratigraphy of the Sergipe-Alagoas Basin (based on Rauche and Klauw, 2010) ............................................................................................................................. 17 Table 4-2: Summary of historic exploration data within PAC tenements ....................................... 20 Table 4-3: Exploration budget for pilot drilling, based on original holding ..................................... 20 Table 5-1: Definition of Exploration Stages ................................................................................... 23 Table 5-2: Companies with value dominantly based on potash projects ....................................... 26 Table 5-3: Market assessment of company enterprise value for “potash-only” companies ........... 26 Table 5-4: Value range on a contained KCl basis ......................................................................... 27 Table 5-5: Recent market transactions in potash projects ............................................................. 27 Table 5-6: Transaction analysis of potash values on a price/tonne KCL (100% project basis) ..... 28 Table 5-7: Value range, combined data sets on a contained KCl basis ........................................ 29 Table 5-8: PAC project areas; stages and stage probabilities ....................................................... 29 Table 5-9: Valuation (preferred) of the PAC prospect areas, SA Basin (US$) .............................. 30 Table 6-1: Value range PAC Sergipe-Alagoas Properties ............................................................. 31

List of Figures

Figure 1-1: Approximate location of the projects in northeast Brazil .................................................. 8 Figure 4-1: General location of the Project, with tenements spanning just south of Aracaju to just north of Maceió ....................................................................................................... 12 Figure 4-2: Location map of the Project tenements and available historic exploration data ............ 13 Figure 4-4: Schematic stratigraphic column of the Sergipe-Alagoas Basin ..................................... 16 Figure 4-5: Tectonic reconstruction of sedimentary basins in a pre-drift (Pangaea) configuration .................................................................................................................. 18 Figure 4-6: Tectonic cartoon of the Sergipe-Alagoas Basin showing evaporite pillows and diapirs within the Muribeca formation ............................................................................ 19

List of Appendices

Appendix 1: Tenement list of the Project

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Disclaimer

The opinions expressed in this Report have been based on the information supplied to SRK Consulting (Australasia) Pty Ltd (SRK) by William Buck Corporate Advisory Services (NSW) Pty Ltd (“William Buck”). The opinions in this Report are provided in response to a specific request from William Buck to do so. SRK has exercised all due care in reviewing the supplied information. Whilst SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them. Opinions presented in this report apply to the site conditions and features as they existed at the time of SRK’s investigations, and those reasonably foreseeable. These opinions do not necessarily apply to conditions and features that may arise after the date of this Report, about which SRK had no prior knowledge nor had the opportunity to evaluate.

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1. Introduction and Scope of Report

William Buck Corporate Advisory Services (NSW) Pty Ltd (“William Buck”) asked SRK Consulting (Australasia) Pty Ltd (“SRK”) to prepare an Independent Specialist Valuation Report with respect to certain separate potash project interests situated in Brazil. William Buck, as Independent Experts for Aguia Resources Ltd (Aguia), will rely on this report in certain transactions that they are undertaking, as outlined in the Independent Experts Report.

The potash projects are currently held by Potássio do Atlântico Ltda (PAC), and are located in the Sergipe and Alagoas Basins in northeast Brazil (Figure 1-1).

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Figure 1-1: Approximate location of the projects in northeast Brazil

Source: after Bizzi et al., 2003

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2. Scope

SRK has undertaken the following scope of work to achieve a report compliant with the VALMIN Code.

Definition of the project status
Review of the current status of these projects with respect to exploration and resource definition
Assessment of the local geology and major controls on the deposits
Preparation of a geological assessment of the areas
Site visit
Review of the status of work on the ground
Inspection of the geology of the properties visited
Review drilling and sampling
Review methodologies used to reach the current level of understanding of the project geology
Collect information on site
Assess access, site condition and potential for infrastructure construction etc. as appropriate
Review of existing information
Undertake a review of all data available and prepare summary report suitable to support a project valuation under the VALMIN code
Reviewed geological models of the potash deposits to make an assessment of the size and grade of the deposits
Make an assessment of yields and other risks associated with solution mining
Valuation research data
Undertake a full search of public domain and SRK proprietary databases to determine a comparative market valuation for the project
Assess any potential major risks associated with these particular projects, and determine if any mitigating risk factors need to be applied in comparison to other projects from the market research information gathered
Determine a preferred market value for the projects and the ranges that should apply to that preferred value
Project Management
Provide liaison and instruction to SRK personnel in Brazil and coordinate activities in Australia and Brazil

A recent Independent Technical Report was prepared for PAC by Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau (Ercosplan) in 2010. Ercosplan is a German consulting and engineering company with more than half a century experience in the potash and mineral salt industry. This report has been used extensively in preparing this independent valuation, as the report provides a solid basis to assess grade and volume potential. No resources have been prepared for the PAC properties, and as such, the SRK valuation is based on an exploration potential from data included in Ercosplan (2010) and other additional data provided by Aguia.

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3. Background and Context

3.1 Purpose of the Report and Consent

The purpose of this Report is to provide an independent technical assessment and fair market valuation of the PAC potash assets in northeast Brazil, for William Buck. The review will be included in the independent expert report for Aguia as part of its strategy to purchase PAC. SRK understands that this Report is to comply with the technical property information required under various securities laws of Australia and may be included in the Aguia information circular to shareholders.

3.2 Reporting Standard

This Report has been prepared to the standard of, and is considered by SRK to be, a Technical Assessment Report under the guidelines of the VALMIN Code. The VALMIN Code is the code adopted by the Australasian Institute of Mining and Metallurgy and the standard is binding upon all Australasian Institute of Mining and Metallurgy (AusIMM) and Australian Institute of Geoscientists (AIG) members. The VALMIN Code incorporates the JORC Code for the reporting of Mineral Resources and Ore Reserves. This Report has been prepared to the standard of, and is considered by SRK to be, a Valuation Report under the guidelines of the VALMIN Code. The VALMIN Code incorporates the JORC Code for the reporting of Mineral Resources and Ore Reserves.

Aspects reviewed in this Report relate to the prospectivity of the area for potash only. Aspects of land tenure, environment, sovereign risk and other socio-political issues have not been reviewed.

3.3 Work Programme and Project Team

The project team consisted of Peter Williams (Expert), Bert De Waele (Principal Geologist), Antonio Girodo (Mining Engineer) and Kimberley Webb (Consultant Geologist).

Antonio Girodo, who described the nature of the project, the current mining issues, and geological and regional setting of the target potash deposits, undertook a site visit of two days duration.

Bert De Waele compiled the report and reviewed the exploration potential available for the project valuation. Kimberley Webb conducted research under supervision of Peter Williams. Peter Williams undertook the valuation and is the overall expert for this report.

3.4 Statement of SRK Independence

Neither SRK nor any of the authors of this Report have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK.

SRK has no prior association with William Buck or Aguia in regards to the mineral assets that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence.

SRK’s fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of the Report.

3.5 Warranties

Aguia has represented in writing to SRK that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

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3.6 Indemnities

As recommended by the VALMIN Code, Aguia has provided SRK with an indemnity under which SRK is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

which results from SRK's reliance on information provided by Aguia or to Aguia not providing material information; or
which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

3.7 Consents

SRK consents to this Report being included, in full, in the William Buck Independent Expert’s Report and in material provided to Aguia shareholders, in the form and context in which the technical assessment is provided, and not for any other purpose.

SRK provides this consent on the basis that the technical assessments expressed in the Executive Summary and in the individual sections of this Report are considered with, and not independently of, the information set out in the complete Report.

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4. Geology

4.1 Location

The PAC Potash Projects (Project) are located in the northeastern part of Brazil, in Sergipe and Alagoas states (see Figure 4-1 and Figure 4-22). The Project comprises 10 onshore exploration areas (Area 1 to Area 9), consisting of several claims, with a total surface are of 209,491.65 ha (or approximately 2,095 km[2] ). Figure 3-3Appendix 1 shows the list of all claims. SRK notes that about 43 claims are under application, with the total area of the granted permits covering 132,309.22 ha (approximately 1,323 km[2] ).

The properties were selected based on the compilation of government data and data purchased from the petroleum industry, as well as targeted stratigraphy located between 900 and 2,000 m depth.

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Figure 4-1: General location of the Project, with tenements spanning just south of Aracaju to just north of Maceió

Source: Ercosplan, 2010

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Figure 4-2: Location map of the Project tenements and available historic exploration data

4.2 Access and Infrastructure

The Project properties are spread across the Brazilian northeast coastal area concentrating around the City Aracaju, Capital of Sergipe State, in the south, just north of the city of Maceió, Capital of Alagoas State. Aracaju has approximately 570,000 inhabitants while Maceió has some 940,000 inhabitants. Both capitals have excellent urban infrastructure, including universities, bank services, hospitals, ports and airports.

The Project can be easily accessed via road, ship and flight. All projects are accessible via sealed and secondary roads, all passable throughout the year.

Aracaju, the capital of Sergipe state, has a well-serviced deep-water port. Several smaller cities are near the Sergipe areas but have only limited services. Area 5 is located in Alagoas state and is close to Maceió, which is the State capital, with almost one million inhabitants and with good services and infrastructure.

Aracaju is the major centre in the area and has strong oil exploration infrastructure with all services available for rigs and oil wells for both on- and off-shore activities. Several companies have offices and warehouses in Aracaju, including Halliburton and Schlumberger to name a few. The harbour is located 15 km north of Aracaju and it is used for the transport of oil, potash and heavy equipment.

Maceió is also a major centre in the region and the economy of the city is based on commerce, agriculture and tourism. It is well served with regular flight to the rest of Brazil, has a large-scale port, good highways and services. The production of salt and chemicals is a major economic activity in the area while there is moderate oil and gas production in the nearby localities.

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All areas are served with hydroelectric electric power from CHESF (Centrais Elétricas do São Francisco) System that generates and distributes 10,704 MW. CHESF has three big hydroelectric plants (Paulo Afonso, Sobradinho and Xingó) as well as the necessary substations and transmission lines that feed the Brazilian northeast region. The potash properties are located in the Zona da Mata region, close to the Atlantic sea shore, where water is still a relatively abundant resource.

4.3 Regional setting

The most important potash deposits in northeast Brazil occur in the Sergipe-Alagoas (SA) sedimentary basin which is located in the Sergipe and Alagoas states coast line region (Figure 1-1). The basins are almost 400 km in length and distributed between Estância town in the South to the Alagoas – Pernambuco state border in the North. The SA sedimentary basin has a maximum width around 50 km and covers an area of around 10,000 km[2] .

Figure 4-334 presents a simplified map of the Sergipe-Alagoas basin. Sedimentation occurred during two stages:

1 An Upper Jurassic to Lower Cretaceous terrestrial stage (fluvial, lacustrine, aeolian).

2 Lower Cretaceous to Lower Tertiary marine stage, in part comprising lagoonal evaporitic conditions.

Evaporite formations, some containing potash salts, are related to the Ibura Member of the Muribeca Formation of Aptian age (see Figure 4-445). All sediments in the Sergipe-Alagoas basin dip slightly to the east.

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Figure 4-3: Geologic map of Sergipe-Alagoas sedimentary basin
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Source: after Brito, 1979
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4.4 Stratigraphy

The stratigraphy of the Sergipe-Alagoas basin is presented in Santos and Sousa (2001) and comprises a pre-Albian terrestrial Rift development, and a post Aptian Passive Margin development reflecting the sedimentary response related to the opening of the Atlantic Basin. The period of interest with respect to evaporite development is the Aptian, during which the Ibura Member of the Muribeca Formation was deposited (Figure 4-445). This lagoonal and transitional environment was followed by progressive deepening of the basin, during which marine sedimentation started with development of the overlying Riachuelo, Cotinguiba, Calumbi and Barreiras Formations.

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All these formations rest discordantly on slightly folded pre-Aptian formations. In the Project areas, only the Riachuelo, Cotinguiba and Barreiras Formations crop out at surface, with the evaporite-bearing Muribeca Formation limited to the subsurface.

The Ibura Member within the Muribeca Formation is the basin’s evaporitic unit, subdivided into 9 lithological cycles (479 m of maximum thickness). Ibura’s cycle IX has two traceable layers across the entire basins, which provide excellent marker horizons for correlation.

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Figure 4-4: Schematic stratigraphic column of the Sergipe-Alagoas Basin Source: after Feijó, 1995

The subsidence and sediment accumulation in the Sergipe Basin were triggered by normal faulting which developed a succession of NE-trending horsts and grabens.

The basin lithostratigraphy is as follows (Table 4-1).

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Table 4-1: Local stratigraphy of the Sergipe-Alagoas Basin (based on Ercosplan, 2010)

Table	4-1: Local stratigraphy of the Sergipe-Alagoas Basin (based on Ercosplan, 2010)
Formation	Lithologies
Barreiras	Intercalated medium to grit-coarse sandstone, with conglomeratic levels and clayish intercalations. Average thickness in the area is about 50 m.
Cotinguiba	The Sapucari Member comprises grey to light yellow limestone intercalated with calcareous sandstone, calcilutites and local breccia and has a maximum thickness of 744 m. The Aracaju Member contains clay- and siltstone with a maximum thickness of 280 m. The Cotinguiba Formation has an average thickness of 200 m.
Riachuelo	The Angico Member is a fine-grained and conglomeratic sandstone with a maximum thickness of 915 m. The Maruim Member is an oölitic-pisolitic beige limestone with a maximum thickness of 1,124 m. The Taquari Member comprises intercalating limestone, shale and siltite with a maximum thickness of 716 m.
Muribeca	Restricted to the sub-surface and subdivided, from bottom to top, into Carmópolis, Ibura and Oiteirinhos Members. The average thickness of the whole Muribeca Formation is about 1,000 m. The Carmópolis Member is represented by sandstones and conglomerate, with intercalated limestone and shale, and has a maximum thickness of 321 m. The Ibura Member includes evaporite, deposited in a series of sub-basins which either are dominated by sylvite (Taquari Vassouras sub-basin) or by carnallite (Taquari Vassouras, Santa Rosa de Lima, Pirambu-Aguilhada and Aracaju-Mosqueiro sub basins). Potash layers are present on several levels within the Ibura Member, and are locally absent due to dissolution. Sylvite commonly occurs as a single layer, whereas carnallite occurs as both a thick layer and interlayered with rock salt (halite). The Oiteirinhos Member is predominantly represented by shale and siltite, with sandstone, limestone and anhydrite intercalations and has a maximum thickness of 333 m.

4.5 Tectonic framework

The formation of the Sergipe-Alagoas sedimentary basin is related to a passive continental margin environment, with tectonic evolution phases linked to the separation of the African and South American continents (rifting) and subsequent marine ingression (drift and passive margin development, see Figure 4-556). The defining structural feature of the basin is a series of half-grabens and grabens, formed by synthetic and antithetic normal faults related to extensional processes. In turn, these were filled with siliciclastic and carbonate sediments deposited throughout the lower Cretaceous (Bizzi et al., 2003). Transitional sediments of Aptian age, deposited above a regional uncomformity, underlie evaporitic sedimentation of the continental drift phase, which suggests the existence of a shallow gulf subject to marine ingression. Diapirs and extensional and compressional structures are present (Bizzi et al., 2003).

The Cretaceous sediments of the evaporitic sequence and potash mineralisation have undergone regional folding and faulting, resulting in fluid circulation and dissolution of the evaporitic rocks, and causing local depletion of the highly soluble minerals, such as carnallite, sylvite and anhydrite, and enrichment of insoluble materials such as clay (Ercosplan, 2010).

Within the basin NE-SW to NNE-SSW striking normal faults predominate, which build up a subordinate system of smaller grabens and half-grabens within the cretaceous sediments (Figure 4-667). On a regional scale, the potential deposits appear to be marked by ENE-WSW-striking anti- and synclines with ENE dipping folding axes in the north.

The southern part is dominated by NE-SW to NNE-SSW-striking folds with NE – NNE dipping fold axes. The southern anticlines show open fractures accompanying the strike-direction of the folds.

The horst- and graben structure of the Sergipe-Alagoas Basin, and the resultant development of regionally restricted sub-basins, also resulted in differences in evaporitic conditions, with the development of carnalliteand sylvitite-dominated sub-basin stratigraphies.

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==> picture [369 x 559] intentionally omitted <==

Figure 4-5: Tectonic reconstruction of sedimentary basins in a pre-drift (Pangaea) configuration

Source: after Bizzi et al., 2003

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Figure 4-6: Tectonic cartoon of the Sergipe-Alagoas Basin showing evaporite pillows and diapirs within the Muribeca formation

Source: Ercosplan, 2010

4.6 Exploration

Exploration work by PAC has consisted only of the reinterpretation of historic exploration data. Previous exploration in the Project areas has been focused on oil and gas. These exploration activities included regional gravimetric surveys, seismic profiles and drilling. PAC has acquired all relevant data overlapping and within 3 km of the tenements, and has conducted a review and reinterpretation of this exploration data.

PAC reinterpreted 100 km of seismic profiles crossing their tenements in order to identify potential salt layers, antiforms and synforms. The interpretation was facilitated by the use of data from 220 oil exploration wells which included composite logs (PDF files), drilling reports including cutting descriptions and stratigraphic interpretations and raw down hole geophysical logging data. After reviewing the drillhole data, 86 drillholes were used in the reinterpretation and estimation of an Exploration Target.

Available down hole geophysical data included caliper, gamma ray, density, neutron, resistivity, sonic and spontaneous potential logging, although for most holes only a selection of these data are available.

The reinterpretations resulted in the identification of various target areas with interpreted salt accumulations. Based on the historic drill data, evaporitic units include the following mineralisation styles:

Sylvinite ore with depths up to 2,052 m and thicknesses between 1.0 and 10.4 m.
Carnallite ore with one single carnallite layer with depths up to 2,199 m and thicknesses between 0.8 and 19.0 m.
Carnallite interlayered with rock salt with depths up to 2,291 m and thicknesses of the individual carnallite layers of 0.8 to 45.0 m.

It was noted that areas where extensive salt was recognised in drill holes and interpreted from seismic data, the gravity signal is low. Priority for exploration was therefore given to targets within areas of low gravity signal.

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Based on the data made available to SRK, there are a total of 8729.26 km of seismic lines and 92 deep wells within PAC tenements. It remains, however uncertain how much of this historic data are available (see Table 4-2).

Table 4-2: Summary of historic exploration data within PAC tenements

Area	Km of seismic lines in tenements	Number of wells in tenements
1	1313.93	9
2	285.86	13
3	324.72	2
4	211.8	0
5	2465.88	11
5 SW	747.94	13
6	449.90	7
7	38.05	4
8	501.79	13
9	2389.39	22

4.7 Planned Exploration

The following exploration program was suggested by Ercosplan (2010) with the objective of identifying carnallite and possibly sylvinite horizons in the Ibura Member of the Muribeca Formation within the PAC properties:

Interpretation of drill hole logs to identify the target horizon, and integration of these interpretations with existing seismic lines.
Acquisition of remaining existing well and seismic data. Interpretation and delineation of potential targets.
Drillhole planning and drilling based on the results from interpretations of historic data. Ercosplan (2010) suggested the drilling of eight drill holes up to a maximum depth of 2,000 m to identify mineralised intervals.

The exploration cost for a pilot exploration drilling program for areas held in late 2010 was estimated at US$21,024,000 (Table 4-3).

Any promising identified targets can then be further delineated by step out drilling, delineation drilling and a 3D seismic surveys for the estimation of a resource. To date, no budget has been proposed for this follow up program.

Table 4-3: Exploration budget for pilot drilling, based on original holding

Description	Cost (US$)
Drilling (8 wells at 2000 m)	20,000,000
Seismic data purchase	24,000
Seismic data processing	360,000
Drill hole data purchase	40,000
Operational cost	600,000
Total	21,024,000

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The Ercosplan budget will be sufficient to explore the initial areas reviewed by Ercosplan. The exploration (if successful) should be adequate to define an initial Resource. However, in SRK’s opinion, the exploration budget will need to exceed this with the additional properties recently acquired resulting in almost double the area available for exploration. A budget will also be required over a 2-year or 3-year period, to advance these tenements to define a Resource. For the purposes of valuation, SRK has estimated a total 3-year budget to be US$40M, and factored this into the valuation methodology. This is distributed at the planned rate for Area 1 (adjacent to Vale tenements), and the remainder by area amongst the other projects. In the valuation, SRK has also allowed for additional expenditure (approximately 2 drill holes per prospect) to upgrade these to more certain Resources in future years.

4.8 Adjacent properties

The following competitors hold adjacent properties in the Sergipe-Alagoas Basin:

Talon.
Itafós Ltda.
Vale S.A.

Talon Metals Corp is working towards completing an initial National Instrument 43-101 mineral resource estimate for the Sergipe Potash Project during 2011.

Itafós Ltda. belongs to the MBAC Fertilizer Cooperation which was established in 2007. The company extracts and processes phosphate and potassium for the entire national market especially in Brazil for Brazilian consumption10. MBAC has properties in phosphate and potash in Brazil. In conjunction with the Coastal Potash Project, MBAC has acquired about one million hectares for exploration and estimating feasible extraction of potash along the coast of central and north-east Brazil. The company has the permission to use data from the oil and gas exploration programs of PETROBRÁS. No official data are available at the moment from projects in the Sergipe Basin.

VALE S.A. produces potash at the Taquari Vassouras Operational Unit, an underground mine with a processing plant on the surface. These underground operations, located 40 km Northwest of Aracaju have been under production since 1985. The Taquari Vassouras mine produces sylvinite (reported in Ercosplan, 2010). Some 30.1 million tonnes of ore have been exploited so far, which represents about half of the mineable reserve of potash. At full capacity the mine/processing plant complex produces 800 thousand tons KCleq/year (480 thousand tonnes/year of K2O). At Santa Rosa de Lima, 16 km west of Taquari Vassouras, 92.4 million tonnes of potash mineralisation have been estimated (DNPM, 2007).

In Sergipe there are also important deposits of carnallite-rock that require technological studies for its economic exploitation. In anticipation of exhausting the known sylvinite resource, VALE has been doing test work to extract carnallite. A pilot plant was commissioned in 2008 to test solution mining of carnallite, with the aim of establishing a capacity for 1.2 million tonnes per annum KCl to start operation in 2015.

4.9 Consideration on Metallurgy and Mining

Because the mineralisation is anticipated to be at considerable depth (~2 km below surface), any mining operation in the PAC properties will most likely need to employ solution mining methods. The solution mining method requires that the ore being mined is more soluble than the surrounding materials in a selected solvent and that the dissolution rate is high enough to achieve higher concentrations of the required elements in a reasonable amount of time. In solution mining, a number of wells are drilled from surface through the deposit and solvent (water or prepared brine) is injected. The solvent dissolves the ore and the resulting brine is removed from the resulting cavern using either another well or in the single well. With exception of the wells, all infrastructures for the operation, consisting of pumps, tanks and piping system are located on the surface. The rate fresh water is injected into a cavity affects its shape and the rate at which the salt is removed, so that detailed solution testing is required to define optimal parameters.

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5. Valuation

5.1 Introduction to the Valuation Methodology

The valuation method developed by SRK and applied to the Sergipe and Alagoas exploration projects is primarily designed to inform the reader of exploration value and of progress to discovery, based on the following criteria:

Exploration Stage, i.e. position of the exploration project on the pathway to discovery.
Probability of the exploration project proceeding to the next Exploration Stage.
Cost of proceeding to the next Exploration Stage.
Minimum / threshold value of the exploration target – a value determined from the market value of potash projects determined by a review of company valuations and market transactions for this type project.

For more advanced projects, this threshold value is the expected Net Present Value (NPV) of the target resource that has to be delivered to the company, meeting its financial criteria, by the business of exploration. For early stage exploration projects, a market value can commonly be determined for projects at different stages of exploration, through a comparative transactions analysis or rule-of-thumb method. If this market value applies to properties at a more advanced stage of exploration, this value can then be reduced by the risk that the project will fall short of the target.

In SRK’s approach, the Current Value (CV) of a property is the probability (P) of the exploration project advancing to the next Exploration Stage times the Target Market Value (TMV), less the cost of discovery (C), as shown in the following formula:

CV = (TMV x P) – C

This valuation method generates a Current Value for each project at each of the main exploration stages, or decision points, by working back from a project’s target market value. This requires an assessment of the risk profile and the cost of each of the principal exploration stages. This process is similar to a simplified ‘roll-back’ evaluation on one arm of a ‘successful’ decision tree analysis. Because the decision to proceed to the next stage is a forward-looking one, present dollar values are used for costs, based either on actual or budgeted costs that the exploring company can provide at the time. Where such cost information is lacking, the valuer must make an assumption based on experience and historical knowledge, and this is the case for this valuation.

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5.2 Definition and Discussion of Exploration Stages

Exploration Stages defined for exploration projects are given in Table 5-1.

Table 5-1: Definition of Exploration Stages

Exploration Stage	Goals
Stage A. Ground Acquisition, project generation	� To build an expert team for the commodity and basin � To have knowledge, knowledge management and data / information availability for the belt � To acquire ground in well-endowed belts, considering availability, political/environmental risks
Probabilities/risks associated with progressing from Stage A to Stage B, i.e. P(A-B)
Probability that the process of Ground Acquisition (A) will result in the acquisition of high quality, well-endowed and available ground that is worthy of further work
Stage B. Prospect Definition (Mapping & Geochemistry)	� To define drillable targets � To build area knowledge, quality data management systems, suitable geological models � To use efficient exploration methods, geologic skills of exploration team � To define prospect risks and target ranking tools, exploration audit process � To test presence of mineralising system
Probabilities/risks associated with progressing from Stage B to Stage C, i.e. P(B-C)
Probability that this process will define drillable targets (features that meet criteria of the geological model and knowledge of the area)
Stage C. Drill Testing (Systematic RC, DD)	� To test geological models, accuracy of mapping and sampling � To test geological information gathered during prospect definition � To test presence of mineralising system
Probabilities/risks associated with progressing from Stage C to Stage D, i.e. P(C-D)
Probability that the drill testing phase will result in one or more "economic drill intersections" that would be further drill tested
The decision to continue would be supported by other geological information that would give some initial confidence in the continuity of mineralisation
Stage D. Resource Delineation	� To have confidence in size and grade potential, continuity of grade and geological setting � To understand controls on grade distribution (low cost curve position)
Probabilities/risks associated with progressing from Stage D to Stage E, i.e. P(D-E)
Probability that a "drill-out" will result in the definition of a preliminary resource that is sufficiently robust at present prices to warrant proceeding to feasibility
Stage E. Feasibility	� To determine metallurgy, metal prices, mineability, cost, prices, mineral balance sheet � To result in decision to mine, asset with defined NPV

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5.2.1 Stage definition for Sergipe and Alagoas Targets

Based on Table 5-1 and the discussion on the project only Area 1 in Sergipe is at Stage C of the exploration process, with defined targets and a planned drilling campaign to test the identified targets. Some of the targets have known intersections of the valuable mineralisation.

All other areas are considered to be at Stage B, with ground acquired based on a validated exploration model, but no definite targets as yet identified.

5.3 Determining Early Stage Exploration Probabilities

The early Exploration Stages A to B to C lead up to the discovery of a ‘potash mineralisation’ by a potentially ‘economic’ drill intersection. The probability of a project proceeding from one stage to the next is firmly based on the geological model, its critical success factors and the application of Bayesian probabilistic analysis. This method requires:

understanding the underlying geological process model;
identifying the critical success factors; and
assignment of probability to each factor.

The probability of the occurrence of a potash deposit can be derived from the product of the relative probabilities of each of the critical success factors, assuming that probabilities of occurrence of each of the critical factors are independent;

P = P1 x P2 x P3

(Where P = probability of advancing exploration project and P1-3 = probability of occurrence of each of the critical success factors of the geological process model).

Usually, no more than three or four critical success factors will apply. For the case of an economic evaporitic potash deposit, the following essential geological criteria apply:

presence of evaporitic conditions in the stratigraphic column (source of salts Source, P1);
evidence for adequate accumulation of precipitates from halite through to sylvite (Accumulation, P2); and
stability of geological structures to provide a trap ( Trap , P3 ).

For each relative probability of the critical success factors described above, a value between 1.0 and 0.0 is assigned, where a value of 1.0 indicates that the factor is definitely present, and 0.0 indicates that the factor is definitely not present. A value of 0.5 is assigned where information about the factor is not known or data are not available. Therefore, a relative probability > 0.5 indicates that there is a degree of evidence that the factor is present, whereas a relative probability < 0.5 indicates that there is a degree of evidence that the factor is not present.

Each exploration project is carefully reviewed in relation to the geological process model for the target or region. Relative probabilities are assigned to each factor for each project, and multiplied to obtain an overall probability (P), that all of the essential components of the mineralizing system are present in the target or region. This probability is then assigned to the relevant Exploration Stage in the valuation spreadsheet, representing the probability that the exploration project or prospect could advance to the next phase of exploration.

The benefits of the Bayesian probabilistic approach include:

Semi quantitative, geologically based, simple to apply and mathematically sound.
Consistent disciplined approach to evaluating targets within and between regions.
Transparent, explicit, challengeable and changeable with new results.
Assesses exploration risk profile and cost in a consistent and quantitative method.
Value of company minimum target is embedded

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5.3.1 Definitions of P1-P3 in this Study

Assignation of probabilities against the critical success factors (i.e. P1-P3) is determined by reviewing geological, geophysical and geochemical datasets and through discussions with project staff. The source (P1) of sylvinite and carnallite fluids in the basin sequences is restricted shallow seas with a high evaporation rate. These are evidenced by the presence of a number of different types of salt deposits, potential salt domes, and other salts in fine-grained sediment. The pathway criteria (P2) of the mineralisation process model relates to the overall evaporation rate and other physical conditions in the basin. This is equivalent to evidence for a sufficient accumulation rate, and relies on information from drilling or seismic evidence of thick reflectors. The size and quality of the material accumulations is equivalent the trap criteria of mineral systems (P3), and is reliant on a thorough understanding of the structural framework or basin evolution and the size and continuity of sub-basin architecture in relation to evaporite accumulation.

Probabilities for these critical success factors were determined in the following manner:

P1: Evaporitic conditions Observed Geological Feature: Known sylvite or carnallite minerals in stratigraphic column Known halite Know halite or other evaporite minerals within, <3 km Evaporite minerals in shales Unknown/no information No evidence for evaporites P2: Fluid Sufficient accumulation of valuable minerals: Presence drill intercepts > 10m and >10% KCl Presence of thick sequences, unknown grade Presence of thin sequences Unknown/no information No significant anomalies, target tested. P3: Basin structure known Observed structural continuity: Zone of structural simplicity, bounding sub-basin faults known Seismic continuity of horizons, on-lap structure evident, sequence boundaries defined Bounding faults (only) known Unknown/ no information No continuity visible in seismic	Probability Assigned
	0.9 0.8 0.7 0.6 0.5 0.3 Probability Assigned
	0.9 0.7 0.6 0.5 0.1 Probability Assigned
	0.8 0.7 0.6 0.5 0.3

In general terms, the geology of the project areas within the Sergipe and Alagoas Basins would need to be defined in some detail to assess these probabilities accurately. In the case where multiple criteria relate to one critical success factor, the highest probability is assigned for the calculation.

5.3.2 Determining Late Stage Exploration Probabilities

To establish the risk profile for the exploration process requires estimation of regional or belt-wide probabilities for the style of target sought by the company. As the PAC exploration projects tend to fall into the early Stages B & C, for valuation purposes it is also necessary to assign probabilities to the later Stages D & E in order to complete the valuation spread sheet. A range of probabilities can be estimated at each Exploration Stage based on the knowledge and experience in each belt, e.g. the number of prospects generated, the number that advanced to drilling and to resource definition and finally to feasibility studies. Accumulation of knowledge in the early Exploration Stages and strong focus in ‘well-endowed’ belts is a major value-creating step in the exploration business. Location of the concessions in areas adjacent to producing mines is also a factor on deciding the Later Stage Probabilities.

For the Sergipe-Alagoas basin, a later stage probability is required for the Stage B prospects. SRK has assumed a 0.5 probability that projects will proceed past the target identification stage, because of the similarities in stratigraphy, tectonic setting and structural evolution in different parts of the Sergipe-Alagoas basin. Once targets have been identified, it is probable that they will proceed to the second stage, given the known presence of mineable product in the same stratigraphic horizon in the same basin.

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5.3.3 Setting Market Values at exploration stages

To determine a project market value, two approaches are possible. Firstly, company enterprise values can be determined for companies that have a predominantly single-project focus for potash. These companies may be either at different stages of the exploration or development of the projects, and therefore the enterprise values can be used as a benchmark for the stock market assessment of the project value.

Companies with potash projects at different stages are shown in Table 5-2.

Table 5-2: Companies with value dominantly based on potash projects

Company	Code: Exchange	Company share of project	Comments
Potash One	KCL: TSX	100%	Legacy Project in Saskatchewan. Resource calculation includes a recovery factor. Planned sylvinite solution mine with a depth of approximately 1600 m. Friendly takeover by K&S Industries.
South Boulder Mines	STB: ASX	100%	Colluli Project in Eritrea. Shallow, with depths in the order of 20-60 m, and between 6 and 28 m thick. Mixture of sylvinite, carnallite and kainite, higher grade pod of 119.21 Mt dominated by sylinite.
Elemental	ELM: ASX	93%	Sintakoula Project in the Republic of the Congo. The mineralisation is in the order of 4-5 m thick at a depth of 250-300 m. The mineralisation is dominantly sylvinite.
Mag Industries	MAA: TSX	100%	Developing the Mengo Project in the RoC. This is a planned carnallite solution mine, located near ELM's Sintakoula Project. The carnallite layer is at between 400 and 900 m depth.
Allana Potash	AAA: TSX	100%	Dallol Potash Project in the Danakil Depression of Ethiopia, located close to STB's Colloli Project. Shallow mineralisation, with an average depth of 30 m. Mineralisation is 30% Sylvinite and 70% Kainite.

Table 5-3: Market assessment of company enterprise value for “potash-only” companies

Company	EV Diluted (m)	MI & I Resource (Mt) 100% basis	Grade	Contained M I & I KCl (Mt) 100% basis	EV/M & I tonnes KCL (company share)	Status	Area
Potash One	$372	3961	27.10%	1073 Mt	$0.35	Developer	Saskatchewan
South Boulder Mines	$338	547.62	18.58%	102 Mt	$3.32	Explorer/ Developer	Eritrea
Elemental	$306	235	23.30%	55 Mt	$5.20	Explorer	RoC
Mag Industries	$304	1401.9	17.22%	241 Mt	$1.26	Developer	RoC
Allana Potash	$294	105	20.80%	22 Mt	$13.48	Explorer	Ethiopia

An intermediate value is determined by averaging after removing the high and the low outliers. A low value is determined by averaging after removing the high value, and a high value is determined by averaging after removing the low value. The result is shown in Table 5-444.

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Table 5-4: Value range on a contained KCl basis

Table 5-4: Value	range on a contained KCl basis
Area	Contained KCl ($/tonne)
High	$5.81
Average	$3.26
Low	$2.53

A second approach is direct analysis of comparable market transactions. SRK has reviewed the transactions shown in Table 5-5.

Table 5-5: Recent market transactions in potash projects

Project	Location	Transaction	Date	Former Owner	New Owner
Burr	Lanigan, Saskatchewan	Purchase	Jan-10	Athabasca Potash	BHP Billiton
*Dallol*	Djibouti, Danakil Depression, Ethiopia	Earn In	Jul-09	ChinaCo	Allana Resources Inc
*Legacy*	Regina, Saskatchewan	Purchase	Oct-10	Potash One	K+S Aktiengesellschaft
*Mengo*	Pointe-Noire, Congo	Earn In	Feb-10	Mag Industries	China National Complete Plant Import & Export
Potasio Rio Colorado	Barrancas, Argentina	Purchase	Feb-09	Rio Tinto	Vale SA
Spar Potash	Saskatchewan	Purchase	Aug-09	Raytec Metals	Encanto Potash Corp

Three of these transactions are common with the company data used to determine a value, and Burr is a at Reserve development stage.

The transactions are summarised in Table 5-6.

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Price $/tonne KCl	7.63	0.69	2.27			0.34
Contained KCl (Mt)	139,773,450	21,881,600	183,661,240	152,540,480	113,882,580	16,289,000
Total Reserves at deal	Reserves	Reserves	Reserves	Reserves	Reserves	Resources
	611,700,000	105,200,000	1,075,300,000	1,407,200,000	332,990,000	81,445,000
Grade	22.85%	20.80%	17.08%	10.84%	34.20%	20%
Price (eq AU$ M)	320	4.5				5.48
Terms	Purchase of 100%	ChinaCo finance 70% of total project costs at all stages to earn 70% of the project; Allana issue 19.99% of issued and outstanding shares to ChinaCo at $0.25/share (approx total gross proceeds of C$4500000 max)	K+S acquire all issued and outstanding shares of Potash One for C$4.50/share in cash for approx $417.8 million (C$434 million); condition of agreement: affiliate of K+S subscribed for $28.9 million (C$30 million) convertible secured debenture from Potash One	Definitive option agreement
Project	Burr	Dallol	Legacy	Mengo	Potasio Rio Colorado	Spar Potash1

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The Burr transaction was a take-over by BHP Billiton, and includes a significant component of goodwill or control premium. Typically, these may be up to 30%. For this analysis, Burr is therefore reduced by 30% to reflect the underlying potash value.

There is a wide range of values shown in the transaction data, reflecting project quality, sovereign risk and stage. Spar has the lowest value and is at an earlier stage (Resource), whereas Burr is a very large deposit with reserves, strategically located in the Saskatchewan potash basin.

Using an average of these transactions gives a potash value of US$2.29/tonne KCl, and a median of US$1.48/tonne KCl. These figures are at the low end on the valuation range as determined from the enterprise value assigned by markets, and suggests that there is a significant premium in the markets due to either expected future price increases or anticipation of improved market conditions for fertilisers in general.

All recent transactions shown are at a more advanced stage than the PAC properties. In terms of the staged approach shown in Table 5-1, the transactions are at Stage D. It is therefore necessary to apply an assessment of geological risk and deductible cost factor to provide a market assessment of the PAC properties.

From the two data sets, a low-end of the valuation range is set from the average of the property transactions. This is US$2.29 / tonne KCl. The high-end value can be set from the average of the company valuation range, as these represent the market perception, and may not in all cases be a realisable number for the seller. A preferred value takes the mean of the high and the low value. This set of valuation factors effectively looks at the projects at Stage D of exploration, and removes the effect of more advanced projects, at either stage E or between stage D and E.

Table 5-7: Value range, combined data sets on a contained KCl basis

Area	Contained KCl ($/tonne)
High	$3.26
Preferred	$2.78
Low	$2.29

5.4 Valuation of PAC properties

Using the above information and methodology, the probabilities and exploration stages for the projects are shown in Table 5-8.

Table 5-8: PAC project areas; stages and stage probabilities

Project	Area (Ha)	Holding Expenditure	# Claims	P1	P2	P3	Probability	Stage
Area 1	17,151.50	$69,931	14	0.9	0.7	0.6	0.378	C
Area 2	3,873.52	$10,632	2	0.8	0.8	0.5	0.32	B
Area 3	13,306.08	$50,255	8	0.6	0.5	0.5	0.15	B
Area 4	3,222.54	$9,048	2	0.5	0.5	0.5	0.125	B
Area 5	44,228.06	$123,302	26	0.6	0.6	0.5	0.18	B
Area 5 SW	18,680.05	$28,756	10	0.6	0.7	0.5	0.21	B
Area 6	12,870.74	$19,879	7	0.6	0.6	0.5	0.18	B
Area 7	5,936.87	$9,031	3	0.5	0.6	0.5	0.15	B
Area 8	25,247.18	$38,554	13	0.6	0.6	0.5	0.18	B
Area 9	64,974.66	$100,752	36	0.6	0.6	0.5	0.18	B

A minimum value for any tenement is set as the accumulated holding cost as shown in Table 5-8.

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April 2011

Setting a target tonnage for these deposits is uncertain at this stage of exploration. Ercosplan (2010) have suggested a potential target in excess of 187.5 Mt of ore in one of the PAC prospect areas, based only on three oil-exploration drillholes with carnallite/sylvinite interesections. SRK cannot replicate that as a compliant exploration target. An economic deposit may be as small as 50-75 Mt of ore, and a number of the areas held by PAC are quite small relative to the areas held by Vale. However, the areas 1, 5, 5SW, 8 and 9 groups are quite large, and able to support a much larger resource.

For the purposes of the valuation, SRK has assumed a target size of 125 Mt for each of the larger prospects (area 1, area 5, and area 9), 100 Mt for intermediate-sized prospects, and 75 Mt for the smaller prospects. All of these are approximately the minimum economic size for individual sub-basins, as there is no reliable data to determine a firm exploration target or resource number for any of the areas. Table 5-9 summarises the valuation using these factors.

Table 5-9: Valuation (preferred) of the PAC prospect areas, SA Basin (US$)

Probability of advancing from previous stage	Stage A	Stage B	Stage B		Stage C	Stage D
	1.00					0.5
Prospect 1				0.38	$3,953,250	$52,125,000
Prospect 2		0.32	$3,171,630		$11,437,500	$31,275,000
Prospect 3		0.15	$819,883		$16,650,000	$41,700,000
Prospect 4		0.13	$1,023,393		$11,437,500	$31,275,000
Prospect 5		0.18	$123,302		$21,862,500	$52,125,000
Prospect 5SW		0.21	$1,141,338		$16,650,000	$41,700,000
Prospect 6		0.18	$436,020		$11,437,500	$31,275,000
Prospect 7		0.15	$967,110		$11,437,500	$31,275,000
Prospect 8		0.18	$38,554		$16,650,000	$41,700,000
Prospect 9		0.18	$100,752		$21,862,500	$52,125,000

Green highlighted cells show the preferred value

Assumptions: a) KCl grade (target) 15% KCl; b) Preferred Value US$2.78 / tonne contained KCl.

Negative values from the valuation model are converted to zero, and a value on the concessions equivalent to the acquisition cost and value of collected data is used as the value for the low end of the valuation range. This results in a valuation for the prospects as follows:

Table 5-10: Value range – all prospects

Area	Low (US$M)	Preferred (US$M)	High (US$M)
Prospect 1	0.48	3.95	7.35
Prospect 2	2.28	3.17	4.03
Prospect 3	0.26	0.81	1.35
Prospect 4	0.67	1.02	1.36
Prospect 5	0.12	0.12	0.12
Prospect 5SW	0.36	1.14	1.89
Prospect 6	0.01	0.43	0.92
Prospect 7	0.55	0.96	1.37
Prospect 8	0.03	0.03	0.46
Prospect 9	0.10	0.10	0.10
Total	4.92	11.77	18.98

The wide range associated with the valuation reflects the uncertainty in relation to the future exploration program, and the uncertainty in relation to the geological structure. An increase in the probability of finding suitable sub-basin structures, the assumed economic grade of KCl, and the total exploration cost are the major sensitivity factors in the valuation.

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April 2011

6. Conclusions

The PAC potash project is an early-stage exploration project, in which historic data indicate the presence of Sylvinite (KCl+NaCl), Carnallite (KMgCl3 6H2O) and other associated evaporite minerals. Potash mineralisation is present in three forms:

Sylvinite ore with depths up to 2,052 m and thicknesses between 1.0 and 10.4 m.
Massive Carnallite ore in one single layer with depths up to 2,199 m and thicknesses between 0.8 and 19.0 m.
Carnallite interlayered with rock salt with depths up to 2,291 m and thicknesses of the individual carnallite layers of 0.8 to 45.0 m.

These mineralisation styles have been identified from a review of deep drill holes for oil exploration, and also find confirmation in various geophysical datasets (downhole logs, seismic profiles and regional gravimetric datasets). This comprehensive database can be used for selection of the most prospective areas. Unfortunately, historic drilling samples appear to be unavailable to define the mineralogical and chemical composition and structure of the identified potash zones, or conduct metallurgical test work at present (dissolution and rock mechanical behaviour).

SRK recommend the acquisition of all available historic seismic and drill hole data to allow a preliminary assessment and ranking of target areas to conduct further exploration.

Following this, an extensive exploration program will be needed to allow the identification and delineation of the potash units. Such a program should include:

Drilling down to the base of the mineralisation, hosted in the Ibura Member.
Geophysical logging.
Sampling and chemical and mineralogical assaying of the drillcore samples.
Dissolution and rock mechanical test work on drill core samples as well as seismic survey and vertical seismic profiling for the investigated prospect areas to define resource estimation drill targets.

Based on the geological position of PAC’s tenements in the Sergipe-Alagoas Basin, SRK is of the opinion that PAC’s projects have the potential to develop mineable reserves comparable to other regional and international projects. The historic exploration data justify expenditures for further exploration to help define resources in compliance with NI 43-101.

Determining a Market Valuation of the prospects by direct comparison to similar transactions is problematic, due to the small number of transactions of this type. However, there are several companies with projects at a similar stage, and there are transactions which can be used that are at a more advanced stage. In determining the value of the properties, SRK has used this market information to determine a range of values based on the contained KCl in the deposits, and then assessed the geological setting and likely outcomes from exploration in the PAC properties. The market values are then reduced by the risk factors that are specific to the PAC exploration properties. This methodology results in a valuation shown in Table 6-1.

Table 6-1: Value range PAC Sergipe-Alagoas Properties

	Low (US$M)	Preferred (US$M)	High (US$M)
Total	4.92	11.77	18.98

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April 2011

7. References

BizzI, L. A., Schobbenhaus, C., Vidotti, R. M. and Gonçalves, J. H. Editors (2003) - Geologia, Tectônica e Recursos Minerais do Brasil, CPRM, Brasília, 674 pp.

Brito, I. M. (1973)-Bacias Sedimentares e Formações Pós-Paleozóicas do Brasil. Ed. Interciências, Rio de Janeiro,179pp.

DNPM (2007): Mineral Summary - Potassium, 3 pages http://www.dnpm.gov.br/enportal/ conteudo.asp?IDSecao=170&IDPagina=1093, accessed on 11 March 2011).

Ercosplan (2010) – Resource Potential Assessmentof the Sergipe and Alagoas Basin Potash Properties owned by Potash Atlantico, Sergipe and Alagoas State, NE Brazil, (authors Rauche, H. and Klauw, S.), Erfurt, 100p.

Santos, R.A. and Souza, J.D. (2001): Programa Levantamentos Geológicos do Brasil – PLGB. Geologia e recursos minerais do Estado de Sergipe. Escala 1:250.000. Texto explicativo do Mapa geológico do Estado de Sergipe. / Organizado por Reginaldo Alves dos Santos, Adriano A. M. Martins, João Pedreira da Neves e Rômulo Alves Leal. – Brasília: CPRM/DIEDIG/DEPAT; CODISE; 156 p.; il.; mapas.

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April 2011

Appendices

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Appendices

SRK Consulting � WIL001 Sergipe and Alagoas Potash

April 2011

Appendix 1: Tenement list of the Project

WILL/GIRO/WEBB/DEWA/reay

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Appendix 1

# WellsExp	0	0	0	1	0	0	1	1	3	1	0	1	1	0	9	7	6	13	0	0	0	0	0	2	0	0	2	0	0	0	0	0	0	0	0	0	0	0	0	0	0	1	0	0
# WellsDev	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
# Seismic	62.31	65.36	12.53	21.29	71.1	124.1	189.75	142.96	61.1	35.38	148.18	133.46	134.9	111.51	1313.93	162.6	123.26	285.86	56.61	9.85	14.12	37.87	38.94	30.31	63.55	73.47	324.72	111.99	99.81	211.8	54.35	64.01	101.61	167.45	38.33	47.92	26.23	12.79	17.96	51.6	39.78	96.48	11.79	46.32
Total (Reals)	4705	7231	2393	10673	5661	5596	9972	12794	12429	6932	9836	6899	10039	10926	116086	8671	8978	17649	8669	3753	10242	11562	13031	9999	13090	13079	83424	8967	6052	15019	8973	8965	8989	8990	7762	7835	4980	8972	8631	9065	5545	8950	8869	8881
2011 Rate (Reals)	1852.522	2076.843	464.3172	3224.344	1553.683	1531.988	2990.59	3931.284	3809.619	1977.479	2945.423	1966.389	3012.951	3308.598		3835.273	3989.237		3834.445	1376.266	3080.5	3520.698	4010.468	2999.599	4029.9	4026.405		3983.561	2525.97		3986.652	3982.309	3994.55	3994.954	3381.238	3417.497	1989.902	3985.763	3815.396	4032.566	2272.379	3975.097	3934.617	3940.576
2010 Rate (Reals)	1852.522	2076.843	464.3172	3224.344	1553.683	1531.988	2990.59	3931.284	3809.619	1977.479	2945.423	1966.389	3012.951	3308.598		3835.273	3989.237		3834.445	1376.266	3080.5	3520.698	4010.468	2999.599	4029.9	4026.405		3983.561	2525.97		3986.652	3982.309	3994.55	3994.954	3381.238	3417.497	1989.902	3985.763	3815.396	4032.566	2272.379	3975.097	3934.617	3940.576
2009 Rate (Reals)		2077	464	3224	1554	1532	2991	3931	3810	1977	2945	1966	3013	3309							3081	3521	4010	3000	4030	4026
Stake Rate (Reals)	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	Area 1 Total (14 claims)	1000	1000	Area 2 Total (2 Claims)	1000	1000	1000	1000	1000	1000	1000	1000	Area 3 Total (8 claims)	1000	1000	Area 4 Total (2 claims)	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000
Zone	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1	Area 1		Area 2	Area 2		Area 3	Area 3	Area 3	Area 3	Area 3	Area 3	Area 3	Area 3		Area 4	Area 4		Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5
STATUS	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit		Permit	Permit		Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit		Permit	Permit		Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit
TITULAR	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	FALCON METAIS LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA
Area (Ha)	917.09	1028.14	229.86	1596.21	769.15	758.41	1480.49	1946.18	1885.95	978.95	1458.13	973.46	1491.56	1637.92		1898.65	1974.87		1898.24	681.32	1525.00	1742.92	1985.38	1484.95	1995.00	1993.27		1972.06	1250.48		1973.59	1971.44	1977.50	1977.70	1673.88	1691.83	985.10	1973.15	1888.81	1996.32	1124.94	1967.87	1947.83	1950.78
Until	25-05-12	06-07-12	06-07-12	25-05-12	25-05-12	01-08-11	01-08-11	01-08-11	01-08-11	01-08-11	01-08-11	01-08-11	01-08-11	01-08-11		25-05-12	06-07-12		25-05-12	06-07-12	15-09-11	15-09-11	15-09-11	15-09-11	15-09-11	15-09-11		25-05-12	07-09-12		27-07-12	27-07-12	27-07-12	27-07-12	30-11-12	30-11-12	30-11-12	30-11-12	30-11-12	30-11-12	08-01-13	30-11-12	30-11-12	08-01-13
Date	29-01-09	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08		29-01-09	29-01-09		29-01-09	29-01-09	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08	15-04-08		29-01-09	29-01-09		12-06-09	12-06-09	12-06-09	12-06-09	12-06-09	12-06-09	12-06-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09
ID	878.013/09	878.034/08	878.035/08	878.036/08	878.037/08	878.038/08	878.039/08	878.040/08	878.041/08	878.042/08	878.043/08	878.044/08	878.045/08	878.046/08		878.011/09	878.012/09		878.009/09	878.010/09	878.047/08	878.048/08	878.049/08	878.050/08	878.051/08	878.052/08		878.007/09	878.008/09		844.021/09	844.022/09	844.023/09	844.024/09	844.025/09	844.026/09	844.027/09	844.036/09	844.037/09	844.038/09	844.039/09	844.040/09	844.041/09	844.042/09

# WellsExp	0	3	0	0	0	1	0	0	6	0	0	0	11	0	0	1	0	3	0	2	0	1	0	7	0	3	0	0	1	1	0	5	1	0	3	4	0	0	0	0	0	0	1	6	0
# WellsDev	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	5	0	0	0	1	0	6	2	0	0	0	0	0	0	2	0	0	0	0	0	0	0	0	0	0	0	0	0
# Seismic	145.2	170.07	143.23	49.44	252.64	237.28	147.76	138.84	210.47	194.33	0	0	2465.88	131.2	108.86	47.71	118.66	83.44	62.23	64.23	73.91	42.56	15.14	747.94	54.32	48.2	51.27	87.31	83.04	77.95	47.81	449.9	9.01	9.01	20.03	38.05	0	12.56	6.62	71.3	78.54	54.75	37.2	52.73	53.88
Total (Reals)	8969	9014	9014	6287	8864	8908	8908	8452	8843	8999	1529	1485	204681	5014	4752	4920	4801	4764	4824	4236	4986	4738	4701	47735	4975	3197	5015	4916	4965	4965	4965	32999	4985	5019	4988	14992	4966	4932	4789	4992	4946	4960	5022	4873	4873
2011 Rate (Reals)	3984.591	4006.993	4006.993	2643.291	3932.071	3954.19	3954.19	3726.193	3921.668	3999.741	264.519	242.7434		4013.74	3751.766	3919.79	3801.014	3763.927	3824.082	3235.575	3986.046	3737.667	3701.004		3974.552	2196.912	4015.053	3915.932	3965.482	3965.482	3965.482		3984.975	4019.396	3988.106		3966.452	3932.253	3789.237	3991.803	3946.171	3959.503	4022.143	3872.582	3872.582
2010 Rate (Reals)	3984.591	4006.993	4006.993	2643.291	3932.071	3954.19	3954.19	3726.193	3921.668	3999.741	264.519	242.7434
2009 Rate (Reals)
Stake Rate (Reals)	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	Area 5 Total (26 claims)	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	Area 5 SW Total (10 claims)	1000	1000	1000	1000	1000	1000	1000	Area 6 Total (7 claims)	1000	1000	1000	Area 7 Total (3 claims)	1000	1000	1000	1000	1000	1000	1000	1000	1000
Zone	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5	Area 5		Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW	Area 5 SW		Area 6	Area 6	Area 6	Area 6	Area 6	Area 6	Area 6		Area 7	Area 7	Area 7		Area 8	Area 8	Area 8	Area 8	Area 8	Area 8	Area 8	Area 8	Area 8
STATUS	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit		Application	Application	Application	Application	Application	Application	Application	Application	Application	Application		Application	Application	Application	Application	Application	Application	Application		Application	Application	Application		Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit	Permit
TITULAR	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA
Area (Ha)	1972.57	1983.66	1983.66	1308.56	1946.57	1957.52	1957.52	1844.65	1941.42	1980.07	130.95	120.17		1987.00	1857.31	1940.49	1881.69	1863.33	1893.11	1601.77	1973.29	1850.33	1832.18		1967.60	1087.58	1987.65	1938.58	1963.11	1963.11	1963.11		1972.76	1989.80	1974.31		1963.59	1946.66	1875.86	1976.14	1953.55	1960.15	1991.16	1917.12	1917.12
Until	30-11-12	30-11-12	30-11-12	30-11-12	30-11-12	30-11-12	30-11-12	30-11-12	08-01-13	30-11-12	30-11-12	30-11-12																									17-09-13	17-09-13	17-09-13	17-09-13	17-09-13	17-09-13	17-09-13	17-09-13	17-09-13
Date	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	06-07-09	09-09-09	09-09-09		15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10		15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10		15-07-10	15-07-10	15-07-10		15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10
ID	844.043/09	844.044/09	844.045/09	844.046/09	844.047/09	844.048/09	844.049/09	844.050/09	844.051/09	844.052/09	844.068/09	844.069/09		844.112/10	844.113/10	844.114/10	844.115/10	844.116/10	844.117/10	844.118/10	844.119/10	844.120/10	844.121/10		844.122/10	844.123/10	844.124/10	844.125/10	844.126/10	844.127/10	844.128/10		844.129/10	844.130/10	844.131/10		844.102/10	844.103/10	844.104/10	844.132/10	844.133/10	844.134/10	844.135/10	844.136/10	844.137/10

# WellsExp	1	0	4	1	13	0	0	0	0	0	1	0	1	2	0	2	1	0	0	1	0	0	0	0	0	0	0	0	5	4	0	0	2	1	0	0	0	0	2	0	0	22	86
# WellsDev	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	8
# Seismic	46.41	22.45	37.31	28.04	501.79	61.2	42.73	34.07	44.33	108.75	86.8	53.01	78.9	56.17	72.58	70.27	50.23	28.73	39.07	40.97	29.67	9.71	144.63	159.22	118.28	78.35	10.26	0	0	7.43	4.45	137.9	190.99	126.09	154.87	76.76	95.21	74.02	23.64	57.36	22.74	2389.39	8729.26
Total (Reals)	5011	4976	4830	4830	63999	4942	3840	4967	4967	4944	4907	4684	4998	4898	4247	4922	4898	5023	4966	4932	4966	4911	4985	4970	4517	4710	3438	3872	4948	4048	3291	4027	5020	4941	4975	4583	4881	4551	3715	4858	4908	167249	763833
2011 Rate (Reals)	4010.892	3976.33	3829.678	3829.678		3941.99	2840.059	3966.735	3966.735	3943.848	3906.943	3684.177	3997.519	3898.438	3246.685	3921.769	3898.297	4023.194	3965.523	3931.91	3965.523	3911.063	3985.379	3970.047	3517.022	3710.073	2438.362	2871.612	3948.292	3047.534	2290.559	3027.394	4020.345	3941.404	3974.794	3583.278	3881.046	3550.736	2714.819	3857.715	3907.993
2010 Rate (Reals)
2009 Rate (Reals)
Stake Rate (Reals)	1000	1000	1000	1000	Area 8 Total (13 claims)	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	1000	Area 9 Total (36 claims)
Zone	Area 8	Area 8	Area 8	Area 8		Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9	Area 9		Grand Total
STATUS	Permit	Permit	Permit	Permit		Application	Application	Permit	Permit	Application	Permit	Permit	Permit	Permit	Application	Permit	Application	Permit	Permit	Application	Application	Permit	Application	Application	Application	Application	Application	Application	Application	Application	Application	Application	Application	Permit	Permit	Application	Application	Application	Application	Application	Permit
TITULAR	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA		POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA	POTASSIO DO ATLANTICO LTDA
Area (Ha)	1985.59	1968.48	1895.88	1895.88		1951.48	1405.97	1963.73	1963.73	1952.40	1934.13	1823.85	1978.97	1929.92	1607.27	1941.47	1929.85	1991.68	1963.13	1946.49	1963.13	1936.17	1972.96	1965.37	1741.10	1836.67	1207.11	1421.59	1954.60	1508.68	1133.94	1498.71	1990.27	1951.19	1967.72	1773.90	1921.31	1757.79	1343.97	1909.76	1934.65
Until	17-09-13	17-09-13	17-09-13	17-09-13				17-09-13	17-09-13		17-09-13	17-09-13	17-09-13	17-09-13		17-09-13		17-09-13	17-09-13			17-09-13												23-09-13	23-09-13						23-09-13
Date	15-07-10	15-07-10	15-07-10	15-07-10		15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	15-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10	16-07-10
ID	844.138/10	844.139/10	844.140/10	844.141/10		844.105/10	844.106/10	844.107/10	844.108/10	844.109/10	844.110/10	844.111/10	844.142/10	844.143/10	844.144/10	844.145/10	844.146/10	844.147/10	844.148/10	844.149/10	844.150/10	844.151/10	878.084/10	878.085/10	878.086/10	878.087/10	878.088/10	878.089/10	878.090/10	878.091/10	878.092/10	878.093/10	878.094/10	878.095/10	878.096/10	878.097/10	878.098/10	878.099/10	878.100/10	878.101/10	878.102/10

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13.5 Appendix E – Valuation Methodologies for Businesses and Shares

Discounted Cash Flow (“DCF”) Method

The DCF approach is a technically superior methodology since it allows for fluctuations in future performance to be recognised. This methodology derives the enterprise value of an entity by discounting its expected future cash flows.

In applying the DCF valuation methodology consideration must be given to the following factors:

The estimated future cash flows of the business for a reasonable period including as assessment of the underlying assumptions.
An estimate of the terminal value of the business at the end of the forecast period.
The assessment of an appropriate discount rate that quantifies the risk inherent in the business and reflects the expected return to which investors can obtain from investments having equivalent risks.

Capitalisation of Estimated FME

The capitalisation of estimated FME method is useful as a primary valuation technique where the DCF methodology cannot be used. This method derives the enterprise value of the entity and requires consideration of the following factors:

Selection of an appropriate level of estimated FME having regard to historical and forecast operating results, and adjusting for non-recurring or non-business items of income and expenditure in addition to any known factors likely to affect the future operating performance of the business.
Profits arising from assets which are surplus to the operations of the sustainable business are eliminated and the assets, net of any liabilities relating thereto, treated incrementally.
Determination of an appropriate capitalisation multiple having regard to the market rating of comparable companies or businesses, the extent and nature of competition in the industry, quality of earnings, future growth opportunities, asset backing and relative investment risk.

Net Asset Backing Approach

Asset based valuations involve the determination of the fair market value of a business based on the net realisable value of the assets used in the business.

Valuation of net realisable assets involves:

Separating the business or entity into components which can be readily sold, such as individual business units or collection of individual items of plant and equipment and other net assets, and
Ascribing a value to each based on the net amount that could be obtained for this asset if sold.

The net realisable value of the assets can be determined on the basis of:

Orderly realisation: this method estimates fair market value by determining the net assets of the underlying business including an allowance for the reasonable costs of carrying out the sale of assets, taxation charges and the time value of money assuming the business is

108

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wound up in an orderly manner. This is not a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value

Liquidation: this is a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value, or
Going concern: the net assets on a going concern basis estimates the market value of the net assets but does not take into account any realisation costs. This method is often considered appropriate for the valuation of an investment or property holding company. Adjustments may need to be made to the book value of assets and liabilities to reflect their going concern value.

The net asset backing value of a trading company’s assets will generally provide the lowest possible value for the business. The difference between the value of the company’s identifiable net assets (including identifiable intangibles) and the value obtained by capitalising earnings is attributable to goodwill.

The application of the net asset backing methodology is appropriate where a company:

Is not trading, or
Is making sustained losses or profits but at a level less than the required rate of return, or
Is close to liquidation, or
Is a holding company, or
Holds assets which are liquid.

It is also relevant to businesses which are being segmented and divested and to value assets that are surplus to the core operating business. The net realisable assets methodology is also used as a check for the value derived using other methods.

These approaches ignore the possibility that the company’s value could exceed the realisable value of its assets.

Share Market Trading History

The application of the price that a company’s shares trade on an organised exchange is an appropriate basis for valuation where:

The shares trade in an efficient market place where ‘willing’ buyers and sellers readily trade the company’s shares, and
The market for the company’s shares is active and liquid.

In such circumstances, the prices at which shares have traded are regarded as reflective of the elements included in the definition of “fair market value”.

Recent Share Subscription Prices

The price at which unrelated parties have recently subscribed for shares in a company can be an appropriate methodology to apply in valuing the issued equity in the company, if those prices were paid in freely negotiated transactions in an open and unrestricted market between a knowledgeable, willing, but not anxious, parties acting at arm’s length.

In applying this methodology it is relevant to consider the following factors:

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The timing of any shares issues
Any pre-existing relationship (if any) between the subscribers to the shares and the company
The level of knowledge that the parties subscribing to the shares could reasonably be assumed to possess, and
The extent of any material changes in circumstances that have occurred between the date on which the shares were issued and the valuation date.

Capitalisation of Estimated Future Maintainable Dividends

The mechanics of the capitalisation of estimated future maintainable dividends valuation method is similar to that of the capitalisation of estimated future maintainable earnings method. The methodology is most commonly applied to minority holdings in private companies and unlisted public companies. It requires the estimation of future maintainable earnings, the likely distribution of such earnings as dividends and the application of an appropriate dividend yield or discount rate.

The capitalisation of estimated future maintainable dividends methodology is generally applicable only where the equity interest subject to valuation has no effective control in the determination of dividend policy.

110

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13.6 Appendix F – Qualifications and Experience

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Domenic Quartullo

Domenic.Quartullo@williambucknsw .com.au

Level 29, 66 Goulburn Street Sydney NSW 2000

Telephone: +61 2 8263 4000 Facsimile: +61 2 8263 4111

Domenic Quartullo Director Corporate Advisory Services Domenic has over 25 years experience in chartered accounting and corporate advisory work, specialising in business, securities and intangible asset valuations, due diligence reviews, preparation of independent expert reports, financial investigations and business appraisals. Domenic has worked for clients in the construction, gaming, health and pharmaceuticals, recruitment, resources, retail, telecommunication and IT services, media and advertising and wholesale distribution sectors. He has been responsible for preparing numerous Independent Expert Reports for ASX listed companies, and has conducted valuations of businesses and securities for divestments, mergers and acquisitions, stamp duty, and capital gains tax purposes. Domenic has also undertaken many financial due diligence reviews for proposed business acquisitions and ASX initial public offers and listings. He also has experience in preparing Business Information Memoranda for proposed sales of businesses, financing applications and other strategic planning purposes. Domenic’s experience also includes 8 years in undertaking forensic accounting investigations for litigation and mediation proceedings involving economic loss calculations, fraud investigations, insurance claims, royalty audits and other investigations. Core Expertise — Business, share and share option valuations — Purchase price allocations (intangible asset valuations) and impairment reviews — Due diligence reviews on acquisitions, divestments and ASX listings — Independent expert reports for Corporations Act/ASX Listing Rule requirements — Expert witness reports and evidence in litigation and mediation proceedings — Capital raisings including debt and private equity placements

Domenic’s Experience in Public Company Sector includes:

Independent expert in:

merger of MyState Financial Credit Union of Tasmania Limited with Tasmanian Perpetual Trustees Limited
compulsory acquisition of minorities by Mitsui & Co. Limited in Onslow Salt — scheme of arrangement acquisition of CCI Holdings Limited by Bureau Veritas — acquisition of Pengana Hedgefunds Limited by Magellan Financial Group Limited

Investigating accountant in ASX initial public offering and listing of:

Zingmobile Group Limited — Everyday Mine Services Limited — Healthzone Limited — Probiotec Limited — Allomak Limited — Ambertech Limited

Qualifications

Bachelor of Arts; Bachelor of Laws – Macquarie University
Member of the Institute of Chartered Accountants in Australia (ICAA)
Member ICAA Business Valuations Special Interest Group — Solicitor of the Supreme Court of New South Wales (Non-practicing)

111

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Manda Trautwein Manda.Trautwein@williambucknsw. com.au

Level 29, 66 Goulburn Street Sydney NSW 2000

Telephone: +61 2 8263 4000 Facsimile: +61 2 8263 4111

Manda Trautwein

Director Corporate Advisory Services

Manda heads up the corporate advisory services division at William Buck.

Before joining William Buck Manda successfully co-directed the specialist corporate advisory firm, VMC Global where she advised clients on a wide range of corporate transactions in a number of industries including; telecommunications, resources, healthcare, software and technology and marketing. She has significant experience in leading corporate advisory projects including overseeing both private and public company mergers and acquisitions, undertaking due diligence reviews and assisting companies with capital raisings and stock exchange listings. Manda has also undertaken a variety of business, intangible asset and financial instrument valuations and she has prepared a number of expert reports for court proceedings.

Prior to founding VMC Global Manda gained valuable experience at Farrar and Company, a Chartered Accounting firm, as a business services manager and at PricewaterhouseCoopers as an accountant in their middle market division.

Manda takes an active role in establishing strong relationships with her clients and chooses to focus on each business as a whole rather than a single transaction. This approach allows her to assist clients with all aspects of the transaction including pre-transaction planning and post-transaction support.

Manda’s team includes a CA qualified manager and accountants at various stages of the CA program.

Core Expertise

Business and share valuations
Purchase price allocations and impairment reviews
Acquisitions and divestments
Due diligence reviews
Independent expert reports for litigation matters and Corporations Act requirements
Provision of expert evidence in court proceedings
Capital raisings including debt and private equity placements
Listing on the stock exchange

Qualifications

Bachelor of Commerce – Macquarie University
Member of the Institute of Chartered Accountants and their Business Valuations and Forensic Accounting Special Interest Groups
Master of Applied Finance – Macquarie University
Master of Applied Taxation – University of New South Wales
Fulfilled ASIC’s requirement of PS 146

112

113

ANNEXURE 2

SECTION A - TERMS AND CONDITIONS OF OPTIONS

1. Entitlement

Each Option (together Options ) entitles the holder to subscribe for and be issued one fully paid ordinary share ( Share ) in the capital of Aguia Resources Limited ( Company ) upon exercise of each Option. The date of issue of that Option will hereafter be referred to as the Issue Date .

2. Exercise Price and Expiry Date

(a) The Expiry Date of the Options is 31 December, 2013 (for the purposes of this Section A, Expiry Date ).
(b) The Exercise Price of an Option will be calculated as the price that is forty five per cent. (45%) above the VWAP of the Shares over the last five (5) trading days on which sales were recorded immediately preceding the Issue Date of that Option, with the result to be rounded up to the nearest whole cent. ( Exercise Price ).

By way of example, if the abovementioned VWAP was $0.90 on the Issue date of an Option, the Exercise Price of that Option would be $1.31, being $1.305 rounded up to the nearest cent.

3. Exercise Period and Vesting Date

(a) Subject to the provisions of paragraph 3(b) below, each Option is exercisable at any time after the later of the date of grant of the Option and the vesting date (if applicable) and before the Expiry Date.
(b) Notwithstanding that the Expiry Date has not occurred, each Option that has not already vested as outlined above will expire on that date which is the earlier of the date the Option holder ceases to be employed, engaged as a consultant or appointed as an executive director of the Company because of:
(i) if the holder is an employee, the date the holder is dismissed from employment with the Company for gross misconduct;
(ii) if the holder is a consultant, the date the holder‟s appointment is terminated for gross misconduct;
(iii) if the holder is a director, the date the holder is disqualified from holding the office of director;
(iv) retirement;
(v) voluntary cessation; or
(vi) by mutual agreement (unless the Board resolves otherwise),

and thereafter no party has any claim against any other party arising under or in respect of any Option.

(c) If a Change in Control Event occurs in respect of the Company, all Options that have been issued but have not yet vested, will immediately thereupon vest.
(d) For the purposes of clause 3(c) a Change in Control Event means:
(i) the occurrence of:

(A) the offeror under a takeover offer in respect of all Shares announcing that it has achieved acceptances in respect of 50.1% or more in number of the Shares; and
(B) that takeover bid has become unconditional (except any condition in relation to the cancellation or exercise of the Options); or
(ii) the announcement by the Company that:
(A) shareholders of the Company have at a Court convened meeting of shareholders voted in favour, by the necessary majority, of a proposed scheme of arrangement under which all Shares are to be either:
- (1) cancelled; or
- (2) transferred to a third party; and
(B) the Court, by order, approves the proposed scheme of arrangement.

4. Notice of Exercise

The Options may be exercised by notice in writing to the Company ( Notice of Exercise ) and payment of the Exercise Price for each Option being exercised. Any Notice of Exercise of an Option received by the Company will be deemed to be a notice of the exercise of that Option as at the date of receipt by the Company of that Notice of Exercise.

5. Shares issued on exercise

Shares issued on exercise of the Options rank equally with all other issued Shares.

6. Quotation of Shares on exercise

Application will be made by the Company to ASX for official quotation of the Shares issued promptly after the exercise of the Options.

7. Timing of issue of Shares

Within fifteen (15) Business Days after the later to occur of:

(a) receipt of a Notice of Exercise given in accordance with these terms and conditions and payment of the Exercise Price for each Option being exercised by the Company (each an Exercised Option ) where the Company is not in possession of any excluded information (as defined in section 708A(7) of the Corporations Act) ( Excluded Information ); and
(b) the date upon which the Company ceases to be in possession of Excluded Information in respect to the Company following the receipt of the Notice of Exercise and payment of the Exercise Price for each Exercised Option being exercised by the Company,

the Company will:

(c) allot and issue the Shares pursuant to the exercise of the Exercised Options;
(d) give ASX a notice that complies with section 708A(5)(e) of the Corporations Act or lodge a prospectus with ASIC that qualifies the Shares for resale under section 708A(11) of the Corporations Act; and

(e)

apply for official quotation on ASX of Shares issued pursuant to the exercise of the Exercised Options.

8. Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders of Options will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options.

However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least ten (10) business days after the date upon which the proposed new issue of capital is announced, in order to give the holders of Options the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

9. Adjustment for bonus issues of Shares

If the Company makes a bonus issue of Shares or other securities to existing shareholders (other than an issue in lieu or in satisfaction, of dividends or by way of dividend reinvestment):

(a) the number of Shares which must be issued on the exercise of an Option will be increased by the number of Shares which the Option holder would have received as if the Option holder had exercised the Option before the record date for the bonus issue; and
(b) no change will be made to the Exercise Price.

10. Adjustment for rights issue

If the Company makes an issue of Shares pro rata to existing shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment), the Exercise Price of an Option will be reduced according to the following formula:

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O = the old Exercise Price of the Option;
E = the number of underlying Shares into which one (1) Option is exercisable;
P = average market price (as defined in the Listing Rules) per Share weighted by reference to volume of the underlying Shares during the five (5) trading days ending on the day before the ex rights date or ex entitlements date;
S = the subscription price of a Share under the pro rata issue;
D = the dividend due but not yet paid on the existing underlying Shares (except those to be issued under the pro rata issue); and
N = the number of Shares with rights or entitlements that must be held to receive a right to one (1) new Share.

11. Adjustments for reorganisation

If there is any reconstruction of the issued share capital of the Company, the rights of the Option holders will, be varied to the extent necessary to comply with the Listing Rules which apply to the reconstruction at the time of the reconstruction.

12. Quotation of Options

No application for official quotation of the Options will be made by the Company.

13. Options Transferable

The Options are transferable provided that the transfer of Options complies with section 707(3) of the Corporations Act.

14. Lodgement Instructions

Cheques payable in respect of the exercise of any right attaching to an Option shall be in Australian currency made payable to the Company and crossed "Not Negotiable". The application for Shares on exercise of Options with the appropriate remittance should be lodged at the Company's Registry.

VALUATION OF OPTIONS

The Options that are the subject of the Fourth Resolution and the Fifth Resolution have an assessed valuation of $197,120 per Resolution (using a price per Option of 30.8 cents per Option, being the valuation of Options as provided in the valuation report prepared by Stantons International Securities Pty Ltd ( SIS ), based on the assessed fair value of the Options as calculated in the SIS Report. It is noted that SIS has valued the Options to be in a range of values between 30.8 cents to 40.5 cents per Option, based on volatilities ranging from 77.3% to 100.0%.

The fair value of the Options has been independently determined using a Black-Scholes option pricing model that takes into account the Exercise Price, the term of the Option, the impact of dilution, the Share price at grant date, the expected volatility of the underlying Share, the expected dividend yield and the risk free rate for the term of the Option.

The model inputs for the calculation of the range of values of these Options include:

(i) Options are granted for no consideration, have a maximum life of 2.5 years, with all Options vesting immediately;
(ii) Expected Grant Date: 24 June 2011;
(iii) Exercise Price: the price that is forty five per cent. (45%) above the VWAP of the Shares over the last five (5) trading days on which sales were recorded immediately preceding the date upon which Option was issued, with the result to be rounded up to the nearest whole cent.;
(iv) Expiry Date: 31 December 2013;
(v) ASX quoted Share price at valuation date: $0.98;
(vi) Expected Price Volatility of the Shares: 77.3%;
(vii) Expected Dividend Yield: nil; and
(viii) Risk-Free Interest Rate: 5.13%.

It is noted that the valuation has included a discount of 20.0% on the basis that the Options will not be quoted on the ASX.

SECTION B - TERMS AND CONDITIONS OF SALE OPTIONS

1. Exercise Price and Expiry Date

(a) The Expiry Date of the Options is 31 December, 2014 (for the purposes of this Section B, Expiry Date ).

(b) The Exercise Price of a Sale Option will be $0.50 per Sale Option.

2. Other terms and conditions

Each of the terms and conditions set out in paragraphs 1, 3(a), 4 to 14 (inclusive) of Section A of this Annexure 2 immediately above will apply equally to, and together with the terms and conditions set out in paragraph 1 of this Section B of this Annexure 2, constitute all of the terms and conditions upon which each of the Sale Options will be issued.

ANNEXURE 3 – TERMS AND CONDITIONS OF PERFORMANCE RIGHTS

Each of the Performance Rights and the Performance Shares will be issued and allotted:
(a) fully paid, and free from all Security Interests;
(b) subject to all the provisions of the Constitution for the time being in force;
(c) in the case of all Performance Rights:
- (i) on or immediately after the Completion Date;
- (ii) without any attaching voting rights, other than as required by law;
- (iii) without any attaching dividend rights, other than as required by law;
- (iv) without any attaching rights to participate in any of the surplus profits or assets of the Company on a winding up or liquidation of the Company, other than as required by law; and
- (v) on the basis that upon the first date on which:
  - (a) the First Performance Event is no longer capable of occurring in accordance with its terms, all First Performance Rights will cease to be of any further force or effect and will be thereupon cancelled without any payment or provisions of benefit to any holder of any First Performance Right;
  - (b) the Second Performance Event is no longer capable of occurring in accordance with its terms, all Second Performance Rights will cease to be of any further force or effect and will be thereupon cancelled without any payment or provisions of benefit to any holder of any Second Performance Right; and
  - (c) the Third Performance Event is no longer capable of occurring in accordance with its terms, all Third Performance Rights will cease to be of any further force or effect and will be thereupon cancelled without any payment or provisions of benefit to any holder of any Third Performance Right;
(d) in the case of all Performance Shares, ranking pari passu in all respects with the existing issued Shares, including:
- (i) all voting rights;
- (ii) all entitlements to all dividends or distributions declared, made or paid after the relevant date of issue and allotment, other than any dividend or distribution previously declared or resolved to be paid if the record date for the same falls on or before the relevant date of issue and allotment; and
- (iii) all rights to participate in any of the surplus profits or assets of the Company on a winding up or liquidation of the Company; and
(e) subject to the prior approval of ASX, in accordance with the provisions of Listing Rules 6.1 and 6.2.
As soon as practicable following the:
(a) creation and issue of the Performance Rights; and
(b) the issue and allotment of any Performance Shares,

the Company will:

(c) register or procure the registration of, the holder thereof in the applicable register of the Company; and
(d) use its best efforts to procure that any other waivers, consents and approvals which may be required from the Company or the Shareholders, if any, in connection with the issue of the Performance Shares are duly granted; and
(e) prepare and lodge with ASIC and ASX all prescribed notices and forms required to be filed in accordance with the provisions of the Corporations Act and the Listing Rules.
In any reconstruction of the share capital of the Company, the Performance Rights shall be treated in the following manner:
(a) in the event of a consolidation or sub-division of Shares, the number of Performance Shares that the holder of Performance Rights would otherwise be entitled to be issued and allotted with, will be consolidated or sub-divided (as applicable) in the same ratio were the Shares;
(b) in the event of a sub-division of Shares, the number of Performance Rights shall be subdivided in the same ratio as the Shares; and
(c) the number of Performance Rights, and the number of Performance Shares that the holder of those Performance Rights is or may become entitled to be issued and allotted with, must be re-organised such that that holder is not denied a benefit that Shareholders receive in respect of such reconstruction.
If the Company makes a bonus issue of Shares or other securities pro rata to Shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) and no or only some Performance Shares have been issued or allotted in respect and as a result of the exercise of any Performance Rights before the record date for determining entitlements to that bonus issue, any holder of those remaining Performance Rights at that record date will not be entitled to receive any Performance Shares that that holder would have otherwise been entitled to be issued and allotted with under that bonus issue, if those remaining Performance Rights had been exercised in accordance with their terms of issue and the Performance Shares issued and allotted as a result of that exercise before that record date.
The Company will make application to ASX for the official quotation of any Performance Shares within three (3) Business Days after those Performance Shares are issued and allotted in accordance with the provisions set out in this Annexure 3.
Subject to the provisions of paragraph 7 below, the Company agrees that upon the occurrence of:
(a) the First Performance Event, on or prior to the third anniversary of the date of issue of the First Performance Rights:
- (i) each holder of First Performance Rights (each a First Holder) will thereupon be issued and allotted with a number of Shares that is equal to the number of all, but not some, of the First Performance Rights held by that First Holder ( First Performance Shares ) ; and
- (ii) upon completion of the issue and allotment of the First Performance Shares, as evidenced in respect of each First Holder by the registration of the applicable First Performance Shares in the name of that First Holder in the members register of the Company, the Performance Rights of each First Holder will be thereupon be cancelled, and of no further force or effect;
(b) the Second Performance Event, on or prior to the third anniversary of the date of issue of the Second Performance Rights:

  - (i) each holder of Second Performance Rights (each a Second Holder) will thereupon be issued and allotted with a number of Shares that is equal to the number of all, but not some, of the Second Performance Rights held by that Second Holder ( **Second Performance Shares** ); and

  - (ii) upon completion of the issue and allotment of the Second Performance Shares, as evidenced in respect of each Second Holder by the registration of the applicable Second Performance Shares in the name of that Second Holder in the members register of the Company, the Performance Rights of each Second Holder will be thereupon be cancelled, and of no further force or effect; and

(c) the Third Performance Event, on or prior to the fifth anniversary of the date of issue of the Third Performance Rights:
- (i) each holder of Third Performance Rights (each a Third Holder) will thereupon be issued and allotted with a number of Shares that is equal to the number of all, but not some, of the Third Performance Rights held by that Third Holder ( Third Performance Shares ); and
- (ii) upon completion of the issue and allotment of the Third Performance Shares, as evidenced in respect of each Third Holder by the registration of the applicable Third Performance Shares in the name of that Third Holder in the members register of the Company, the Performance Rights of each Third Holder will be thereupon be cancelled, and of no further force or effect.
The Company acknowledges and agrees that:
(a) the creation and issue of the Performance Rights, and the issue and allotment of any Performance Share as a result of the exercise of any right or entitlement attaching to any Performance Right by the holder of that Performance Right, will be subject to the prior approval of the Shareholders as contemplated in Third Resolution and otherwise in accordance with the requirements of the Corporations Act and the Listing Rules;
(b) it will not be permitted to Deal in any right, title or interest in any Performance Right; and
(c) upon the date of the occurrence of a Change of Control Event on or before the fifth anniversary of the date of issue of the Performance Rights (that date being referred to in this paragraph (c) and in respect of that Change of Control Event as the Record Date ), and notwithstanding the expiry of any period referred to in either paragraph 6(a) or paragraph 6(b), each holder of Performance Rights at the Record Date will thereupon be entitled to be, and will be, issued and allotted with that number of Shares that is the lesser of:
- (i) the number of Performance Rights held by that holder on the Record Date; and
- (ii) that number of Shares as is determined in accordance with the following formula, being:

A = S x PR

10 PR

Where:

A means the number of Shares that are to be issued and allotted to each holder of Performance Rights upon the occurrence of a Change of Control Event;

S means the number of Shares that will be on issue after the issue and allotment of all Performance Shares pursuant to the provisions of this paragraph 7(c), as a result of the occurrence of a Change of Control Event on or before the Record Date;

PR means the number of Performance Rights in force and effect held by a holder on the Record Date; and

 PR means the aggregate of all Performance Rights in force and effect on the Record Date.

ANNEXURE 4 – PAC SHAREHOLDERS

Name of PAC Shareholder	% of shares in PAC held
1039593 Ontario Ltd.	0.09%
2145647 Ontario Inc.	0.17%
Aaron Wolfe	0.08%
ACP Investments Pty Ltd	0.42%
Ahmed Said	0.11%
Allan Pickett	0.98%
Ana Lopes	0.02%
Andrew Bradfield	0.03%
Anthony John Wonnacott	2.12%
Baring Nominees Pty Ltd.	0.15%
Baston Nominee Pty Ltd.	0.05%
Bernard Wilson	0.03%
Beth Gleeson	0.17%
Blair Krueger	0.08%
BMO Nesbitt ITF 402-20648-20/53	9.59%
Brianna Davies	0.01%
C. Pismiris Pty Ltd.	0.15%
Caroline Arsenault	0.02%
China Blue Capital Group	0.75%
China Mineral Holdings Limited	1.50%
Chris Colucci	0.01%
Chris Hendricks	0.02%
David Argyle	5.11%
David Gower	5.79%
Deborah Battiston	0.03%
Dr. Salim Cassim	0.30%
FariGoodarzi	0.03%
Fernando Tallarico	2.09%
Forbes & Manhattan (Barbados) Inc.	22.48%
Forbes & Manhattan, Inc.	1.84%
Fratelli Investments Limited	1.05%
G&H Enterprises Group, Inc.	0.17%
George Faught	0.46%
GMP Securities L.P. ITF Brianna Davies	0.03%
GMP Securities Ltd. – A/C#1T0-1930-E	0.21%
Gregory Duras	0.03%
Group Partners International Ltd.	0.24%
Helio Diniz	7.05%
Holvu Pty Ltd.	0.03%
James McMahon + Catherine McMahon	0.03%
Jason Marinko & Jacqueline Marinko	0.06%
Jeannette Arsenault - A/C#426-05855	0.22%
Jennifer Wagner	0.00%
Jihong Gan	0.02%
John A. Begeman	0.17%
Jose Fanton	0.15%

Kam Gill	0.10%
Kurt Menchen	0.07%
Li Feng	0.08%
Louis E. Berg	0.08%
M.J. Colson	0.03%
Marina Carvalho	0.15%
Mark Eaton	0.03%
Matheus Pietrobon	0.15%
Matthew Weaver & Kate Dohmen	0.03%
Michael Arbus	0.23%
Mulloway Pty Ltd.	0.15%
Nathalie Guillemette	0.03%
NBCN Inc. ITF Pinetree Capital Ltd	0.42%
NBCN ITF Michael Hoffman – A/C#6A2G93E	0.41%
Pat Gleeson	0.04%
Paulo de Souza	0.98%
Peter J. MacLean	0.03%
Peter Tagliamonte	0.01%
PI Financial Corp. ITF A/C#24-0978-7	22.48%
PI Financial Corp. ITF Eila Gandhi A/C 25-1258-0	0.42%
Pierre Pettigrew	0.12%
Raymond B. Humphrey	0.08%
Roberto Sousa	1.72%
Ryan Ptolemy	0.03%
Ryan Rockwood	0.06%
Scott Moore	1.82%
Stan Bharti	1.54%
Stan Bharti	0.30%
Stephane Amireault	0.03%
Surfboard Pty Ltd.	0.45%
Suzanne Duras	0.06%
Thiago Bonas	0.15%
Tony Wonnacott	3.14%
Trudi Kempson	0.05%
Two Nine Tiger Pty Ltd.	0.02%
William Clarke	0.10%
Wonnacott Consulting Professional Corporation	0.05%
ZAP Nominees Pty Ltd	0.15%
Zargos Hood	0.08%

Aguia Resources Limited ACN 128 256 888

Lodge your vote:

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By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

000001 000 AGR MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 556 161 (outside Australia) +61 3 9415 4000

Proxy Form

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For your vote to be effective it must be received by 11:00am (Sydney time) Wednesday 22 June 2011

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

Turn over to complete the form

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View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Update your securityholding

Your secure access information is:

SRN/HIN: I9999999999

PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001/i

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

I 9999999999 I ND

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I9999999999
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.

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Proxy Form

Please mark to indicate your directions

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Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Aguia Resources Limited hereby appoint

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PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

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the Chairman OR of the Meeting

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the General Meeting of Aguia Resources Limited to be held at Franks & Associates Pty Ltd, Suite 4, Level 9, 341 George Street, Sydney NSW on Friday 24 June 2011 at 11:00am (Sydney time) and at any adjournment of that meeting.

Important for Items 2 & 3: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Item 2 & 3 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Items 2 & 3 and your votes will not be counted in computing the required majority if a poll is called on this Item. The Chairman of the Meeting intends to vote undirected proxies in favour of items 2 & 3 of business.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

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PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

Items of Business

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BUSINESS

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1 Ratifying the Placement of 7,900,000 Shares to professional and sophisticated investors
2 Approving the Unconditional Placement of up to 18,300,000 Shares at $0.82 per Share to professional and sophisticated investors
3 Approving the issue of 20,000,000 Shares, 1,500,000 Options and 80,000,000 Performance Rights to Potash Atlantico Corp. or its shareholders
4 Approving the issue of up to 640,000 Options to Graham Ascough or nominee
5 Approving the issue of up to 640,000 Options to Andrew Bursill or nominee
6 Approving the issue of 200,000 Options to PlatSearch and 50,000 Options to Bohuon
7 Approving the proposed issue of Shares to the value of $30 million

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

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Signature of Securityholder(s) This section must be completed.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary Contact Contact Daytime Name Telephone Date / /

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A G R

9 9 9 9 9 9 A

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AI assistant

AGUIA RESOURCES LIMITED — Proxy Solicitation & Information Statement 2011

64334_rns_2011-05-23_fe79c7e9-c5cf-4090-8907-5d9565498323.pdf

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

and

Explanatory Memorandum

18 May 2011

Acquisition of Potassio do Atlantico Ltda (“PALTDA”) by Aguia Resources Limited (“Aguia” or “Company”)

Background

Directors’ Recommendations

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Notice of Extraordinary General Meeting

and

Explanatory Memorandum

TABLE OF CONTENTS

PART A: ABOUT THESE DOCUMENTS

Introduction

Brazilian Potash Projects

Geology and Mineralisation

Previous Exploration/Development

PAC Studies/Assessment Completed

Exploration Programs

Commercial Terms of the Acquisition

Shareholder Approval

The Rationale for the Proposed Acquisition

Alternatives Considered by the Company including any Alternative Transactions

Summary of Advantages and Disadvantages of the Acquisition

Advantages

Disadvantages

Control Implications of the Acquisition

AGR – Potential Issued Shares after approval of the Acquisition

Valuation of PALTDA

Development of the Potash Projects

Change of Control Event

Dilutionary Impact of the Issue of Shares under the Acquisition

Summary of the Expert’s Opinion on the Acquisition

PART C: NOTICE OF GENERAL MEETING

BUSINESS

( First Resolution )

( Second Resolution )

( Third Resolution )

4. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

( Fourth Resolution )

5. To consider, and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

( Fifth Resolution )

( Sixth Resolution )

7. To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

( Seventh Resolution )

By order of the Board

PART D: EXPLANATORY MEMORANDUM

A. Background to applicable Listing Rules and provisions of the Corporations Act

ASX Listing Rule 7.1

ASX Listing Rule 7.4

ASX Listing Rule 10.11

Chapter 2E of the Corporations Act

Sections 606 and 611, Item 7 of the Corporations Act

B. Commentary on each Resolution

1. First Resolution – Ratification of Placement

2. Second Resolution – Unconditional Placement

3. Third Resolution – Approval of issue of Securities pursuant to the Acquisition

Terms of the Acquisition

Escrow Arrangements

4. Fourth Resolution – Approval of issue of Options

Background and reason for the proposed issue of the Options to Graham Ascough or his nominee

Table 2

Table 4

Value of Options subject of the Fourth Resolution

Directors’ Recommendation and Reasons for Recommendation in relation to the Fourth Resolution

5. Fifth Resolution – Approval of issue of Options to Andrew Bursill

Background and reason for the proposed issue of the Options to Andrew Bursill or his nominee

Directors’ Recommendation and Reasons for Recommendation in relation to the Fifth Resolution

6. Sixth Resolution – Approval of issue of Termination Options pursuant to the termination of the Pathfinder Project Joint Venture

7. Seventh Resolution - Approval for the raising of up to $30,000,000 by issuing of Shares within three (3) months of the date of approval

ASX Listing Rule 7.3

Directors’ recommendation and reasons for recommendation in relation to the Seventh Resolution

A. Definitions

Business Day means:

Change of Control Event means:

B. Interpretation

ANNEXURE 1 – INDEPENDENT EXPERT’S REPORT

AGUIA RESOURCES LIMITED Proxy Solicitation & Information Statement 2011