ARIKA RESOURCES LIMITED — Capital/Financing Update 2008

May 21, 2008

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ASX/media announcement

GM called to approve additional capital.

22 May 2008 , Sydney : Portland Orthopaedics Limited (ASX:PLD) is seeking to raise additional capital through the issue of shares or convertible notes, primarily to expand inventory and marketing budgets to meet growing US and Australian demand.

The additional capital arising from the proposed issue requires shareholder approval and therefore a GM has been called for the 25[th] of June 2008. Two ordinary resolutions will be considered. These are set out in the notice of meeting and explanatory memorandum attached.

The notice of meeting, explanatory memorandum and voting details will be forwarded to all Portland shareholders today.

“Approval for this raising will provide Portland with an opportunity to expand sales and marketing efforts through maintaining full inventory levels and pushing through to the 100 surgical cases a month level in the next nine months. Breakeven and cashflow positivty intra-month will follow closely and Portland will emerge as a more financially resilient, expansive, global orthopaedics company,” said Mr John Brassil, CEO of Portland Orthopaedics.

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Enquiries:

John Brassil CEO Portland Orthopaedics 612 9700 1533

James A Wynn CFO Portland Orthopaedics 0412 430 583

The Freedom of an Active Lifestyle.

NOTICE OF GENERAL MEETING AND EXPLANATORY MEMORANDUM WEDNESDAY, 25 JUNE 2008, 2.00PM, LEVEL 17, 383 KENT STREET, SYDNEY 2000

To be valid, the Proxy Form enclosed for use at the Meeting must be completed and returned no later than 2.00pm on Tuesday, 24 June 2008

This is an important document and requires your immediate attention. You should carefully read this document. If you are in any doubt as to the course you should follow, please consult your fi nancial or other professional adviser.

The Meeting will be held at Level 17, 383 Kent Street, Sydney 2000 on Wednesday, 25 June 2008.

The Meeting will commence at 2.00pm and light refreshments will be available. Registration will commence at 1.15pm.

Dear Shareholder,

Enclosed is a Notice and Explanatory Memorandum convening a General Meeting of Shareholders of Portland Orthopaedics Limited (“Portland” or “Company”) to obtain Shareholder approval of the latest round of capital raising by your Company. As Portland achieves additional sales and market penetration, additional working capital is required to fund inventory and keep debt at appropriate levels. Your Board and Senior Management have been working hard to secure additional funding in diffi cult fi nancial market times.

The Company is continuing discussions with sophisticated and institutional investors in relation to proposals to either issue Convertible Notes or make a placement of Shares to raise up to a maximum of $8,000,000. Portland is seeking Shareholder approval to undertake either one of those capital raising initiatives.

I commend the resolutions to you and advise that the Directors have unanimously agreed to support the resolutions being put forward. Yours sincerely,

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John R Lee Chairman Portland Orthopaedics Limited 23 May 2008

2008 Notice of General Meeting Portland Orthopaedics Limited ABN 92 086 839 992

NOTICE IS GIVEN that a General Meeting of the members of Portland Orthopaedics Limited will be held at 2.00pm on Wednesday, 25 June 2008 at Level 17, 383 Kent Street, Sydney 2000. The business of the Meeting is to consider and, if thought fi t, to pass the following resolutions.

Agenda

Business

Resolution 1 – Issue of Convertible Notes or Placement of Shares To consider and, if thought fi t, to pass the following resolution as an ordinary resolution:

“That for the purposes of Listing Rule 7.1 and for all other purposes, the issue of:

1. up to 2,000,000 Stage A Convertible Notes and 6,000,000 Stage B Convertible Notes by the Company; or

2. Shares in the capital of the Company to raise up to $8,000,000, on terms set out in the Explanatory Memorandum to the Notice of General Meeting is approved.”

Resolution 2 – Approval of Financial Assistance

To consider and, if thought fi t, to pass the following resolution as a special resolution:

“That for the purposes of sections 260B(1) and 260B(2) of the Corporations Act and for all other purposes, the members approve the giving of fi nancial assistance by the Company and each of the Company’s subsidiaries, in connection with the issue of up to 2,000,000 Stage A Convertible Notes and up to 6,000,000 Stage B Convertible Notes, on terms set out in the Explanatory Memorandum to the Notice of General Meeting.”

Voting

Required Majority

In accordance with the Corporations Act and the Company’s Constitution:

• an ordinary resolution must be passed by a simple majority of the total votes cast by Shareholders entitled to vote on the resolution (whether in person or by proxy, attorney or representative); and

• a special resolution must be passed by at least 75% of the total votes cast by Shareholders entitled to vote on the resolution (whether in person or by proxy, attorney or representative).

Voting Exclusion Statements

The Company will disregard any votes cast on:

• Resolution 1, by a person who may participate in the proposed issue and a person who might obtain a benefi t, except a benefi t solely in the capacity of a Shareholder, if the resolution is passed; and

• Resolution 2, by any person who will acquire the Convertible Notes or their associates.

However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by 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.

Determination of Shareholders’ Right to Vote

For the purposes of Regulation 7.11.37 of the Corporations Regulations 2001 , the Directors have determined that the voting entitlements for the purposes of the Meeting will be based on the registered holdings as at 7.00pm (Sydney time) on Monday, 23 June 2008. Accordingly those persons will be entitled to attend and vote at the Meeting.

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How to Vote

You may vote by attending the Meeting in person or by proxy, attorney or authorised representative.

Voting by Proxy and Attorney

Each Shareholder has a right to appoint a proxy.

A proxy form and a reply paid envelope have been enclosed for Shareholders with this Notice. If an additional proxy form is required, the Company’s share registry, Computershare, will supply it on request (telephone: 1300 855 080 (within Australia) or +61 3 9415 4000 (outside Australia)).

A proxy need not be a Shareholder.

A Shareholder, who is entitled to cast two or more votes, may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no such proportion or number is specifi ed, each proxy may exercise half of your votes. Fractions of votes will be disregarded.

To be effective, the Company must receive the completed proxy form by no later than 2.00pm (Australian Eastern Standard Time) on 24 June 2008. Please send the proxy form:

• by facsimile to +61 3 9473 2118; or

• to the share registry, Computershare Investor Services Pty Limited, Level 2, 60 Carrington Street, Sydney NSW 2000 or by using the reply paid envelope to GPO Box 242, Melbourne VIC 3001.

If an attorney for a member is to vote at the Meeting, the instrument conferring the power of attorney or a certifi ed copy must be provided to the Company in the same manner as proxies, being not later than 24 hours before the Meeting.

Proxies given by corporate Shareholders must be executed in accordance with their constitutions, or under the hand of a duly authorised offi cer or attorney.

Voting in Person

Shareholders, or their attorneys, who plan to attend the Meeting are asked to arrive at the venue 30 minutes prior to the time designated for the Meeting, if possible, so that their holding may be checked against the share register and attendances recorded.

A corporation, which is a Shareholder, may appoint an individual to act as its representative and to vote in person at the Meeting. The appointment must comply with the requirements of section 250D of the Corporations Act. The representative should bring to the Meeting evidence of his or her appointment, including any authority under which it is signed, unless previously given to the Company’s share registry.

Voting Intentions

The Chairman intends to vote in favour of all resolutions on the agenda in respect of undirected proxy votes where the Chairman is appointed as proxy.

Key Dates

All times are in Sydney, Australia time.

	EVENT	DATE
	Deadline for lodgement of	2.00pm,
	proxy forms Date and time for determining eligibility to vote (being the date	Tuesday, 24 June 2008 7.00pm, Monday, 23 June 2008
	and time you must own Shares) General meeting of Shareholders	2.00pm, Wednesday, 25 June 2008
	If Resolutions 1 and 2 are approved,	26 June 2008
	expected date of the issue of the
	Convertible Notes or Shares

This timetable is indicative only and subject to change.

Any revocations of proxies or attorneys must be received by the time and at one of the places which the instrument appointing the proxy is required to be received.

For more information concerning the appointment of proxies, please refer to the reverse side of the enclosed proxy form.

A proxy may decide whether to vote on any motion, except where the proxy is required by law or the Constitution to vote, or abstain from voting, in their capacity as proxy. If a proxy is directed how to vote on an item of business, the proxy may vote on that item only in accordance with the direction. If a proxy is not directed how to vote on an item of business, the proxy may vote as he or she thinks fi t.

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Explanatory Memorandum

2008 Notice of General Meeting

Important Notices

The Company has prepared this Notice and Explanatory Memorandum based on information available as of 23 May 2008. You should read the Meeting Documentation in its entirety before making a decision as to how to vote on the resolutions to be considered at the Meeting.

The Meeting Documentation does not take into account the investment objectives, fi nancial situation or particular needs of individual Shareholders or any other person. If you are in doubt as to what you should do, you should consult your legal, investment or other professional adviser.

Role of ASIC and ASX

A copy of the Meeting Documentation has been provided to ASIC and ASX. Neither ASIC nor ASX nor any of their respective offi cers takes any responsibility for the contents of the Meeting Documentation.

Forward Looking Statements

Certain statements in the Meeting Documentation relate to the future. Such statements involve known and unknown risks, uncertainties and other important factors that may cause the actual results, performance or achievements of Portland Orthopaedics to be materially different from the results, performance or achievements expressed or implied by such statements. These statements refl ect views held only as at the date of the Notice. The Company makes no representation and gives no assurance or guarantee that the occurrence of the events expressed or implied in such statements will actually occur. You are cautioned not to place undue reliance on any forward looking statement.

Dated this 23 May 2008 By order of the Board

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This Explanatory Memorandum has been prepared to assist Shareholders in considering the resolutions set out in the Notice. It is part of, and should be read in conjunction with, the Notice.

1. Overview of Issue of Convertible Notes or Placement of Shares

1.1 Introduction

The Company proposes to raise additional funds to meet its working capital requirements as it continues to increase sales and achieves further market penetration and to maintain its debt at appropriate levels. The Company is in discussions with sophisticated and institutional investors in regards to further investment in the Company, through either subscribing for new Convertible Notes or a placement of new Shares. At the date of this Notice, the Company has not yet fi nalised the form in which the new round of capital raising will take and seeks Shareholder approval for either the issue of new Convertible Notes or the placement of new Shares. The Company does not intend to undertake both forms of capital raising and will only issue either new Convertible Notes or new Shares, on the terms set out in this Explanatory Memorandum.

Portland Orthopaedics proposes to issue either:

1. up to 2,000,000 Stage A Convertible Notes and up to 6,000,000 Stage B Convertible Notes ( Convertible Notes ) with an issue price of $1.00 per Convertible Note; or

2. Shares with an issue price of not less than a 20% discount to the Market Price to raise up to $8,000,000.

The Company intends to use the proceeds from the capital raising for additional working capital, including stocking inventory and marketing costs and to maintain debt at appropriate levels.

If the Company decides to undertake the capital raising through the issue of Convertible Notes, the Convertible Notes will constitute unsecured obligations of the Company until the Company is in a position to grant security to the Holders.

James A Wynn Company Secretary Portland Orthopaedics Limited

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1.2 Key Terms of the Convertible Notes

A summary of the key terms of the Convertible Notes is set out in Schedule 1 of this Explanatory Memorandum.

The terms of the Stage A Convertible Notes and the Stage B Convertible Notes are the same, other than in respect of their conversion price.

1.3 Issue of Convertible Notes

In the event the Company decides to issue the Convertible Notes, the Company currently intends to:

• (a) fi rstly, issue Stage A Convertible Notes in respect of the fi rst $1,000,000 raised;

• (b) secondly, issue Stage B Convertible Notes in respect of the next $6,000,000 raised; and

• (c) lastly, issue Stage A Convertible Notes in respect of the last $1,000,000 raised.

However, the Directors may decide to alter this strategy at a later date.

1.4 Key Terms of Shares

The Shares to be issued under the Placement will be ordinary fully paid Shares in the Company and will rank pari passu with the other Shares on issue at the time of the Placement.

2. Resolution 1 – Issue of Convertible Notes or Placement of Shares

2.1 ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company must not, subject to certain exceptions, issue during any 12 month period any equity security, or other securities with rights of conversion to equity securities (such as Convertible Notes), if the number of those equity securities exceeds 15% of the number of securities in the same class on issue at the commencement of the 12 month period prior to the date of issue. An issue of equity securities made with the prior approval of shareholders is not subject to this restriction. Further, any such equity securities issued with prior shareholder approval are excluded from the 15% limit (but added to the number of shares on which the 15% limit is based) when considering future issues of equity securities.

The maximum number of Shares that may be issued upon conversion of 2,000,000 Stage A Convertible Notes and 6,000,000 Stage B Convertible Notes including the number of Shares that may be issued upon the conversion of maximum amount of interest is 151,098,901 Shares, which represents approximately 93% of the Company’s issued Shares as at the date of this Notice.

The maximum number of Shares to be issued under the Placement will be determined by the Market Price at the time of issue of the Shares, as illustrated by the following formula:

Number of Shares = $8,000,000

Market Price

Accordingly, Shareholder approval is sought for the purposes of Listing Rule 7.1 in order that Portland Orthopaedics may issue the Convertible Notes or undertake the Placement.

The Convertible Notes or the new Shares under the Placement are expected be issued on or around 26 June 2008, but in any event, no later than three months after the date of the Meeting.

The Convertible Notes or the Shares under the Placement will be issued to sophisticated or institutional investors.

The proceeds from the issue of the Convertible Notes or the Placement will be used as additional working capital by the Company, including stocking additional inventory and funding additional marketing costs and to maintain the Company’s debt at appropriate levels.

2.2 Directors’ Recommendation and Reasons for Recommendation

The Directors recommend Shareholders vote in favour of Resolution 1 for the reasons set out in this Explanatory Memorandum. The Directors intend to vote any Shares they hold in favour of Resolution 1.

3. Resolution 2 – Approval of Financial Assistance

3.1 Introduction

This Resolution 2 is only required in the event that the Company decides to issue the Convertible Notes rather than to undertake the Placement.

It is intended that immediately after the existing security over the assets of the Company, which restricts any further security being guaranteed, is released, the Company will provide a fi xed and fl oating charge over all of its assets in favour of a security trustee, as trustee for the Holders, to secure its obligations in respect of the Convertible Notes. If required, each of the Subsidiaries may also provide a similar fi xed and fl oating charge over all of their assets in favour of a security trustee, as trustee for the Holders.

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Explanatory Memorandum

3.2 Financial Assistance

Section 260A of the Corporations Act requires that if a company fi nancially assists a person to acquire shares (or units of shares) in the company or a holding company, certain requirements must be met. These requirements include the approval of the fi nancial assistance by the Shareholders of the company or the holding company in accordance with the procedures under section 260B of the Corporations Act and the lodgement of notice of approval of the proposed fi nancial assistance with ASIC at least 14 days before the assistance is given.

The granting of a fi xed and fl oating charge by the Company and the Subsidiaries (if required) over all of their assets in connection with the issue of the Convertible Notes may amount to the giving of fi nancial assistance by the Company and the Subsidiaries to the initial subscribers of the Convertible Notes to acquire the Convertible Notes.

For the avoidance of doubt, the Company and each of the Subsidiaries wish to obtain the approval of Shareholders for the giving of any fi nancial assistance by the Company and each of the Subsidiaries in connection with the granting of the fi xed and fl oating charges and the issue of the Convertible Notes by the Company.

3.3 Reasons for Granting Charges

The Company and the Subsidiaries (if required) may grant a fi xed and fl oating charge over their assets in order to meet the requirements of investors under the offer of Convertible Notes.

3.4 Effect of Granting Charges

If the Company or the Subsidiaries are unable to pay the amounts owing under the Convertible Notes, the assets of the Company or the Subsidiaries could be the subject of enforcement action by the security trustee, as trustee for the Holders, to recover the outstanding amounts owing under the Convertible Notes. The Holders would also rank in priority for repayment to other creditors of the Company in the event of the insolvency of the Company.

The Directors of the Company and the Subsidiaries have no reason to believe that the Company will default in its obligations to the Holders under the terms of the Convertible Notes, in the event that the Company decides to issue the Convertible Notes rather than undertake the Placement.

3.5 Board Recommendation

The Directors unanimously recommend Shareholders vote in favour of Resolution 2. The Directors intend to vote any Shares they hold in favour of Resolution 2.

Glossary

In this Notice, the following defi nitions apply unless the context indicates otherwise.

ASIC means the Australian Securities and Investments Commission.

Associate has the meaning given in sections 10 to 17 of the Corporations Act.

Australian Securities Exchange or ASX means ASX Limited ACN 008 624 691.

Company or Portland Orthopaedics means Portland Orthopaedics Limited ABN 92 086 839 992.

Convertible Notes means Stage A Convertible Notes and Stage B Convertible Notes.

Corporations Act means the Corporations Act 2001 (Cth), including the regulations made under it.

Directors means the directors of Portland Orthopaedics.

Dollar or $ means Australian dollar.

Existing Security means the existing security over the Company’s assets restricting the grant of any further security.

Explanatory Memorandum means the explanatory memorandum accompanying the Notice of Meeting.

Holder means, in respect of a Convertible Note, a person recorded in the Company’s register as the holder of a Convertible Note from time to time.

Listing Rules means the listing rules of ASX.

Market Price means the average closing price on ASX, excluding special crossings, overnight sales and exchange traded option exercises, over the last fi ve days on which sales of Shares were recorded before the day on which the Placement is made.

Meeting means the general meeting of the Shareholders of Portland Orthopaedics to be held on 25 June 2008.

Meeting Documentation means the Notice and Explanatory Memorandum.

Notice or Notice of Meeting means this notice of general meeting.

Placement means the placement of Shares by the Company to raise up to $8,000,000, which is the subject of Resolution 1(b) in the Notice of Meeting.

Shareholders means the holders of Shares.

Shares means fully paid Shares in Portland Orthopaedics.

Stage A Convertible Note means a convertible note, with a conversion price of $0.070 and a principal amount of $1.00, the key terms of which are set out in Schedule 1 of the Explanatory Memorandum.

Stage B Convertible Note means a convertible note, with a conversion price of $0.065 and a principal amount of $1.00, the key terms of which are set out in Schedule 1 of the Explanatory Memorandum.

Subsidiaries means the wholly owned Australian subsidiaries of the Company, being Portland Square Pty Ltd, Portland Orthopaedics IP Holdings Pty Ltd, Portland Square Manufacturing Pty Ltd, Portland Orthopaedics (Aust.) Pty Ltd, Vimek Pty Ltd and entities controlled by Portland Square Manufacturing Pty Ltd.

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Schedule 1 – Summary of key terms of Convertible Notes

This is a summary only of the key terms of the Convertible Notes. Terms in this summary have the same meaning as defi ned in the full terms and conditions of the Convertible Notes (“Conditions”).

Issuer	Portland Orthopaedics Limited
Principal Amount	$1.00
Issue Price	$1.00
Form	Convertible Notes
Status	The Convertible Notes will constitute unsecured obligations of the Company. The Convertible Notes
	will become secured obligations of the Company immediately after the Existing Security is released.
Final Maturity Date	25 December 2010
Interest Rate	10.00% p.a.
Capitalisation of Interest	The Holder may elect to convert interest accrued into Shares or compound it by adding it to the
	Principal Amount.
Conversion	Convertible into fully paid Shares of the Company.
Conversion Rights	Unless previously redeemed or purchased or cancelled, Holders will have the right to convert
	Convertible Notes into Shares at the then applicable Conversion Price at any time until the Final
	Maturity Date.
Conversion Price – Stage A	The initial Conversion Price shall be A$0.070, which shall be subject to adjustment in certain
Convertible Notes	circumstances.
Conversion Price – Stage B	The initial Conversion Price shall be A$0.065, which shall be subject to adjustment in certain
Convertible Notes	circumstances.
Conversion Price adjustment	In order to maintain the relative position of Holders, the Conversion Price of Convertible Notes will be
	subject to adjustment in certain circumstances, including in respect of the Company:
	– consolidation or subdivision of Share;
	– bonus issue;
	– capital distribution;
	– rights issue of Shares or options over Shares;
	– issue of Shares at less than market price; and
	– change of control.
Final Conversion	Unless previously purchased, cancelled, redeemed or converted, the Principal Amount owing on any
	Convertible Notes on the Final Maturity Date together with any unpaid accrued interest to that date
	will be converted into Shares at the then applicable Conversion Price.
Early Redemption at the	The Company has the ability to redeem all of the outstanding Convertible Notes prior to the
Option of the Company	Final Maturity Date:
	– if the aggregate Principal Amount of Convertible Notes outstanding is less than 10% of the
	aggregate Principal Amount originally issued, for the Principal Amount owing on the Convertible
	Notes plus any unpaid accrued interest;
	– if the market price of Shares at the time of redemption is equal to or less than the relevant
	Conversion Price of the Convertible Notes, for 115% of the Principal Amount plus any unpaid
	accrued interest; and
	– if the market price of Shares at the time of redemption is more than the relevant Conversion Price of
	the Convertible Notes, for an amount determined by an independent expert to be fair market value.

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Explanatory Memorandum

Redemption at the Option	Following an event of default or on the Final Maturity Date, the Holder may require the Company to
of the Holder	redeem their Convertible Notes for the Principal Amount owing on the Convertible Notes together
	with any unpaid interest accrued to the redemption date.
Transferability	The Convertible Notes will not be transferable except where the transfer is required by law or is
	to an Associate.
Events of Default	The Holder may require their Convertible Notes to be redeemed upon an event of default, including:
	– failure to pay any amount of the Convertible Notes within 14 days of due payment;
	– breach of the terms of the Convertible Notes which is incapable of remedy or, if capable of remedy,
	is not remedied within 30 days after notice of such default is given to the Issuer by the Holder;
	– cross-default;
	– enforcement proceedings;
	– enforcement of security;
	– insolvency;
	– winding-up;
	– illegality;
	– regulator’s direction which has a material adverse effect on the f nancial position of the Company;
	and
	– other analogous events which are prejudicial to the Holder’s interest.
Status of Shares	Shares issued and allotted on conversion of the Convertible Notes will be fully paid and will rank
	_pari passu_in all respects with the fully paid Shares in issue on the Conversion Date.
Listing of the	The Convertible Notes will not be listed on a stock exchange.
Convertible Notes
Listing of Shares	The Issuer must make an application to ASX for quotation of the Shares issued upon conversion of the
	Convertible Notes.

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