Alkane Resources — Capital/Financing Update 2012

Mar 1, 2012

==> picture [114 x 57] intentionally omitted <==

==> picture [76 x 12] intentionally omitted <==

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

RESOURCES LTD
ABN 35 000 689 216
----- End of picture text -----

2 March 2012

[Shareholder name] [Shareholder address]

Dear Shareholder

Alkane Resources Ltd – Non-renounceable Entitlement Offer and Share Placement

On 1 March 2012, Alkane Resources Ltd ABN 35 000 689 216 ( Alkane ) announced its intention to raise a total of approximately $107 million, comprising:

• up to $30 million pursuant to a partially underwritten 1 for 10 non-renounceable entitlement offer of fully paid ordinary shares in Alkane ( New Shares ) at an issue price of $1.10 per New Share ( Entitlement Offer );

• $44 million under a placement of 40.3 million Alkane shares to professional and sophisticated investors within the Company's 15% placement capacity under ASX Listing Rule 7.1 at an issue price of $1.10 per Alkane Share ( Unconditional Placement ); and

• subject to obtaining shareholder approval, $33 million under a placement of 30 million Alkane shares to professional and sophisticated investors at an issue price of $1.10 per Alkane share ( Conditional Placement ).

Together, the Unconditional Placement and the Conditional Placement are the Share Placement .

Purpose and use of funds raised

The purpose of the Entitlement Offer and Share Placement is to raise funds to be applied towards the construction and commissioning of the Tomingley Gold Project, preparation of an Environmental Impact Statement and continuing development of the Dubbo Zirconia Project, working capital for general purposes and costs of the capital raising.

Basis of participation

If you are an Eligible Shareholder (as defined below), you will be entitled to apply for 1 New Share at a price of $1.10 per New Share for every 10 Alkane shares held by you at 4.00 pm (Perth time) on 9 March 2012 ( Record Date ) subject to the terms of the Entitlement Offer ( Entitlements ). New Shares issued under the Entitlement Offer will rank equally with existing Alkane shares from issue. Fractional Entitlements will be rounded up to the nearest whole number.

65 Burswood Road, Burswood WA 6100, AUSTRALIA (PO Box 4384, Victoria Park WA 6979, AUSTRALIA) Telephone: +61 8 9227 5677 Facsimile: 61 8 9227 8178 www.alkane.com.au mail@alkane.com.au

==> picture [57 x 28] intentionally omitted <==

The full terms of the Entitlement Offer are outlined in the offer booklet that was released to ASX on 1 March 2012. The offer booklet will be mailed to Eligible Shareholders following the Record Date.

The Entitlements are non-renounceable. This means that Entitlements are not transferrable and cannot be sold or traded, and Alkane shareholders will not receive any value in respect of Entitlements that they do not take up or which they are ineligible to receive.

Alkane shares to be issued under the Share Placement will be issued after the Record Date and will therefore not participate in the Entitlement Offer.

Eligible Shareholders

Alkane is making the Entitlement Offer available to Eligible Shareholders only. Eligible Shareholders are those persons who:

• are the registered holder of Alkane shares at 4.00 pm (Perth time) on the Record Date and have a registered address in Australia or New Zealand;

• are not in the United States or a U.S. Person or acting for the account or benefit of a U.S. Person (each as defined in rule 902(k) of the U.S. Securities Act of 1933, as amended); and

• are eligible under all applicable securities laws to receive an offer under the Entitlement Offer without any requirement for a prospectus or offer document to be lodged or registered.

Subject to the following, the Entitlement Offer is not being extended to any Alkane shareholder with a registered address outside Australia and New Zealand. In Alkane's absolute discretion, Alkane may elect to treat as Eligible Shareholders certain shareholders who would otherwise not be Eligible Shareholders because their registered addresses are not in Australia or New Zealand.

Shareholders who are not eligible will not be able to participate in the Entitlement Offer and will not be sent the documents relating to the Entitlement Offer.

Underwriting

Any shortfall under the Entitlement Offer is underwritten (up to an amount of approximately $12.2 million) by Regal Funds Management Pty Ltd ( Regal ). Regal has appointed Gandel Metals Pty Ltd ( Gandel Metals ) as trustee for the Gandel Metals Trust, an investment company associated with Alkane director, Mr Ian Gandel to sub-underwrite its obligations.

No Prospectus

The Entitlement Offer is being made pursuant to section 708AA of the Corporations Act 2001 (Cth) ( Corporations Act ) which permits Alkane to conduct the Entitlement Offer without issuing a prospectus. Instead, Alkane lodged with ASX on 1 March 2012, a notice in accordance with section 708AA(2)(f) of the Corporations Act and Eligible Shareholders will receive an offer booklet, together with a personalised Entitlement and Acceptance Form which contains details of your Entitlement and information detailing how to participate in the Entitlement Offer, on or about 14 March 2012. A copy of the offer booklet was lodged with ASX on 1 March 2012.

Eligible Shareholders should read all of the information contained in the offer booklet carefully before deciding whether to participate in the Entitlement Offer.

Shareholder approval

Shareholder approval is not required for the Entitlement Offer or the Unconditional Placement. The Conditional Placement is subject to obtaining shareholder approval at a general meeting of shareholders to be held on or about 16 April 2012.

2

==> picture [57 x 28] intentionally omitted <==

Timetable

Event	Date
Announcement of Entitlement Offer and Share Placement	Thursday, 1 March 2012
Lodgement of Appendix 3B, Entitlement Offer Cleansing Notice and Entitlement Offer	Thursday, 1 March 2012
Booklet with ASX
Existing Alkane shares quoted on an ex-Entitlements basis	Monday, 5 March 2012
Record Date for determining Entitlements under the Entitlement Offer	4.00 pm (Perth time)
	Friday,9 March 2012
Alkane shares issued under Unconditional Placement and holding statements	Wednesday, 14 March 2012
despatched
Entitlement Offer Booklet and Entitlement and Acceptance Forms despatched, and	Wednesday, 14 March 2012
Entitlement Offer open for acceptances
Notice of general meeting sent to Alkane shareholders	Wednesday, 14 March 2012
Closing time for acceptances	5.00 pm (Perth time)
	Thursday,29 March 2012
New Shares under Entitlement Offer quoted on a deferred settlement basis	Friday, 30 March 2012
Shortfall notification	Tuesday, 3 April 2012
New Shares under Entitlement Offer issued and holdingstatements despatched	Tuesday,10 April 2012
New Shares under Entitlement Offer commence trading on ASX on a normal	Wednesday, 11 April 2012
settlement basis
General meeting	Monday,16 April 2012
Alkane shares issued under Conditional Placement (if approved) and holding	Monday, 23 April 2012
statements despatched

The timetable is indicative only and may change, subject to the requirements of the ASX Listing Rules and the Corporations Act.

Offer document and continuous disclosure

Eligible Shareholders should carefully read the offer booklet that will be sent to them and have regard to all publicly available information on Alkane, including all announcements made by Alkane to ASX. These announcements include Alkane's interim and annual reports, including, Alkane's Half Yearly Report and Accounts for the half year ended 30 June 2011 and Alkane's Quarterly Report dated 18 January 2012. The offer booklet and these announcements are available from Alkane's website, www.alkane.com.au or from ASX's website, www.asx.com.au.

It is anticipated that Alkane's financial statements for the year ended 31 December 2011 will be lodged with ASX on or about 23 March 2012.

3

==> picture [57 x 28] intentionally omitted <==

Capital structure

The following table sets out the capital structure of Alkane as at the date of this announcement and on completion of the Entitlement Offer.

Securities	Number
Alkane shares on issue as at the date ofthisnotice	269,028,158
Issue of Alkane shares underthe Unconditional Placement	40,300,000
Maximum number of New Shares to be issued under the Entitlement Offer (subject to rounding)	26,902,815
Issue of Alkane shares underthe Conditional Placement (ifapproved)	30,000,000
Total Alkane shares on issue immediately following completion of the Entitlement Offer and Share Placement (assuming no other issues of Alkane shares)	366,230,973

The Board is pleased to offer this opportunity to you.

Yours faithfully,

==> picture [241 x 72] intentionally omitted <==

Chairman

ALKANE RESOURCES LTD

This notice does not constitute an offer to sell, or the solicitation of an offer to buy, securities in the United States. Persons in the United States and persons acting for the account or benefit of persons in the United States may not access the offer booklet or the other documents relating to the Entitlement Offer.

4