Artemis Resources Limited

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11 May 2012

Dear Artemis Shareholder,

Acquisition of Karratha Metals Limited and Project Update

We have enclosed for your attention a Notice of Meeting seeking shareholder approval for the acquisition of Karratha Metals Limited , supported by an independent experts report.

This is an exciting stage in the development of Artemis, with the addition of a significant tenement package in the West Pilbara hosting a number of gold, base metals and iron projects.

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Figure 1: Location Map New Pilbara Tenements (outlined in red)

This acquisition reinforces Artemis’ focus on gold, complementing its existing Yandal and Mount Clement gold projects. The Directors of Artemis recommend you support this acquisition as:

the acquisition of this portfolio would give Artemis a significant position in the West Pilbara and enable a significant addition to Artemis’ existing gold assets

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Artemis Resources Limited ABN: 80 107 051 749 Telephone: +61 2 9078 7660 | Facsimile: +61 2 9078 7661 | Email: [email protected] Level 9, 50 Margaret Street, SYDNEY NSW 2000 | PO Box R933 Royal Exchange, NSW 1225 Australia

www.artemisresources.com.au

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it is one of the largest West Pilbara tenement holdings – 41 prospective tenements covering 667sq km. Total project area increases from 370 sq km’s to 1,120 sq km’s
the West Pilbara assets contain gold, base metals, and iron ore projects. JORC inferred resource 91,000 tons at 10 g./t. Gold exploration target 250,000 – 500,000 ounces at 5‐10 g/t*
the four tenements in the Yandal Greenstone Belt complementing Artemis’ existing project
the projects are close to infrastructure and processing facilities
the acquisition gives Artemis economies of scale and potentially a critical mass of projects required to support a processing mill.

Project Update

As previously announced Artemis will commence drilling 23 prospective targets on its Yandal project in May 2012. This project is similar in geological setting to a number of significant mines in the area eg Bronzewing (2.3moz) and Jundee (5.4moz).

Summary

The Board of Artemis believes that the acquisition of Karratha Metals Limited is an important and exciting milestone in the development of Artemis and our ability to increase value for shareholders.

We ask that you support this acquisition by voting for the resolutions on the proxy form attached, and forwarding this to the registry.

We look forward to the opportunity of communicating with you on the development of these projects in the year ahead.

Yours faithfully

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Guy Robertson Director

*The estimates of exploration target sizes mentioned in this release should not be misunderstood or misconstrued as estimates of Mineral Resources. The estimates of exploration target sizes are conceptual in nature and there has been insufficient results received from drilling completed to date to estimate a Mineral Resource compliant with the JORC Code (2004) guidelines. Furthermore, it is uncertain if further exploration will result in the determination of a Mineral Resource.

Competent Person’s Statement

The information in this document that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Frans Voermans, who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Voermans 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’. Mr Voermans, who is a non‐executive Director of the Company, consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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www.artemisresources.com.au

ARTEMIS RESOURCES LIMITED A B N 8 0 1 0 7 0 5 1 7 4 9

NOTICE OF GENERAL MEETING

A general meeting of the Company will be held in the Mills Oakley Boardroom at Level 34, 60 Margaret Street, Sydney NSW 2000 on 15 June 2012 at 11am (EST).

This Notice of General Meeting and Explanatory Memorandum should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

ARTEMIS RESOURCES LIMITED A B N 8 0 1 0 7 0 5 1 7 4 9

NOTICE OF GENERAL MEETING

TIME AND PLACE OF MEETING

Notice is hereby given that an extraordinary general meeting of shareholders of Artemis Resources Limited ( Company ) will be held in the Mills Oakley Boardroom at Level 34, 60 Margaret Street, Sydney NSW 2000 on 15 June 2012 at 11am (EST) ( General Meeting ).

The Explanatory Memorandum provides additional information on matters to be considered at the General Meeting and forms part of this Notice.

Terms and abbreviations used in this Notice are defined in Schedule 1.

YOUR VOTE IS IMPORTANT

The business of the Meeting affects your shareholding in the Company and your vote is important.

VOTING ELIGIBILITY

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 7pm on 13 June 2012.

VOTING IN PERSON

To vote in person, attend the Meeting at the time, date and place set out above.

VOTING BY PROXY

( Appointing a Proxy ): A Shareholder who is entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote for the Shareholder at the meeting. A Shareholder who is entitled to cast 2 or more votes at the Meeting may appoint a second proxy. The appointment of the second proxy must be done on a separate copy of the proxy form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the Shareholder’s voting rights. If a Shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a Shareholder of the Company.
( Direction to Vote ): A proxy need not vote in that capacity on a show of hands on any Resolution nor (unless the proxy is the Chairman of the Meeting) on a poll. However, if the proxy’s appointment specifies the way to vote on a Resolution, and the proxy decides to vote in that capacity on that

Resolution, the proxy must vote the way specified (subject to the other provisions of this notice of general meeting, including the voting exclusions noted below).

(Voting restrictions with respect to undirected proxies)

The Chairman of the Meeting intends to vote undirected proxies (where he has been appropriately authorised, having regard to the voting restrictions set out in this notice of general meeting) in favour of each Resolution.

( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form (and attach any authority under which it is signed or a copy which appears on its face to be an authentic copy) by:
(a) post to Artemis Resources Limited, Level 9, 50 Margaret Street, Sydney, NSW 2000; or
(b) facsimile to the Company on facsimile number +61 2 9078 7661,

so that it is received not less than 48 hours prior to commencement of the Meeting.

Proxy Forms received later than this time will be invalid.

CORPORATE REPRESENTATIVE

A body corporate which is a Shareholder, or which has been appointed as a proxy, may appoint an individual to act as its representative at the meeting. Unless it has previously been given to the Company, the representative should bring evidence of their appointment to the Meeting, together with any authority under which it is signed. The appointment must comply with section 250D of the Corporations Act 2001.

ATTORNEY

A Shareholder may appoint an attorney to vote on their behalf. To be effective for the Meeting, the instrument effecting the appointment (or a copy which appears on its face to be an authentic copy) must be received by the deadline for the receipt of proxy forms (see above), being no later than 48 hours before the Meeting.

- Inter conditional Resolutions

Resolutions 1 & 2 are inter-conditional. If one of these Resolutions is not passed, then neither of those Resolutions will be passed.

BY ORDER OF THE BOARD OF DIRECTORS

Guy Robertson Company Secretary Dated: 10 May 2012

AGENDA

1. Resolution 1 – Approval to Acquire the Karratha Metals Group

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

“That, subject to Resolution 2 being passed, approval is given for the Company to acquire the Karratha Metals Group in accordance with the terms and conditions of the KML Acquisition Agreements and otherwise as set out in the Explanatory Memorandum accompanying this Notice.”

Lawler Corporate Finance has prepared an Independent Expert’s Report which comments on whether the transactions contemplated by Resolutions 1 and 2 are fair and reasonable. The Independent Expert’s Report concludes that the transactions the subject of Resolutions 1 and 2 (which are interconditional) are fair and reasonable . Shareholders are urged to carefully consider the Independent Expert’s Report which is set out in full in the attachment to this Explanatory Statement at Annexure 1.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Karratha Metals Limited and its associates entitled to vote at the General Meeting or any other person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed. However the Company need not disregard a vote if it is cast by a person as a 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.

2. Resolution 2 - Approval to Issue Shares in connection with the acquisition of the Karratha Metals Group

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

"That, subject to Resolution 1 being passed, for the purpose of ASX Listing Rule 7.1, and for all other purposes, approval is given for the Company to allot and issue a maximum of 156,000,000 Shares in the capital of the Company in connection with the acquisition of the Karratha Metals Group in accordance with the terms of the KML Acquisition Agreements and otherwise on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice.

Lawler Corporate Finance has prepared an Independent Expert’s Report which comments on whether the transaction is fair and reasonable. The Independent Expert’s Report concludes that the transaction the subject of Resolutions 1 and 2 (which are inter-conditional) is fair and reasonable . Shareholders are urged to carefully consider the Independent Expert’s Report.

3. Resolution 3 – Approval to Issue 100,000,000 Shares

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

"That, for the purposes of ASX Listing Rule 7.1 and all other purposes, approval is given for the Directors to allot and issue 100,000,000 Shares on the terms and conditions set out in the Explanatory Memorandum."

VOTING EXCLUSION STATEMENTS

Under ASX Listing Rule 14.11, the Company will disregard any votes cast on the Resolutions by the following persons:

RESOLUTION	PERSONS EXCLUDED FROM VOTING
1. Approval to acquire the Karratha Metals Group	• As outlined above, and • Any person who may participate in the proposed issue; • Any person who might obtain a benefit (other than a benefit solely in the capacity of a holder of ordinary shares) if the resolution is passed; and • Any of their respective associates.
2. Approval to issue 156,000,000 Shares to vendors in connection with the acquisition of the Karratha Metals Group	• Any person who may participate in the proposed issue; • Any person who might obtain a benefit (other than a benefit solely in the capacity of a holder of ordinary shares) if the resolution is passed; and • Any of their respective associates.
3. Approval to issue up to 100,000,000 Shares	• Any person who may participate in the proposed issue; • Any person who might obtain a benefit (other than a benefit solely in the capacity of a holder of ordinary shares) if the resolution is passed; and • Any of their respective associates.

However, the Company need not disregard a vote if:

(a) It is cast by a person as proxy for a member who is entitled to vote, in accordance with the directions on the proxy appointment form; or
(b) 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.

NOTES

The Directors have determined that all the Shares that are quoted on the ASX at 11.00am EST on 13 June 2012 shall, for the purposes of determining voting entitlements at the General Meeting, be taken to be held by the persons registered as holding the Shares at that time. The entitlement of Shareholders to vote at the Meeting will be determined by reference to that time.

Explanatory Memorandum

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business specified to be conducted at the General Meeting to be held in the Mills Oakley Boardroom at Level 34, 60 Margaret Street, Sydney NSW 2000 on 15 June 2012 at 11am (EST).

The Directors recommend that Shareholders read this Explanatory Memorandum in full in conjunction with the accompanying Notice of which this Explanatory Memorandum forms a part.

1. Background to Resolutions 1 and 2

1.1 Summary

On 10 May 2012 the Company announced that it had made written offers to each of the shareholders of Karratha Metals Limited ( KML ) ( KML Shareholder Sale Agreements ) to acquire a minimum of 75% and up to 100% of the total issued share capital of KML ( KML Shares ) ( KML Acquisition ).

The Company also announced that it would fund the exercise of an option by KML No 2 Pty Limited ( KML No 2 ), the wholly owned subsidiary of KML, to acquire certain Pilbara tenements from Legend Mining Limited ( Legend ) by issuing to Legend 60,000,000 Shares ( Legend Share Issue ).

Resolutions 1 and 2 of this Notice seek Shareholder approval for the KML Acquisition and the issue of Artemis Shares as consideration under the terms of the KML Shareholder Sale Agreements and for the Legend Share Issue.

1.2 KML Shareholders Sale Agreements

The Company has made written offers to the shareholders of KML to acquire the KML Shares through the execution of the KML Shareholder Sale Agreements.

The consideration to be paid by the Company to each accepting KML shareholder under each of the KML Shareholder Sale Agreements is the issue of six Shares for every one KML share held by each accepting KML shareholder ( KML Consideration ).

Completion of the KML Shareholder Sale Agreements is subject to a number of conditions, including Shareholder approval by Artemis of:

(a) the KML Acquisition ( Resolution 1 of this Notice); and
(b) the issue of the Shares constituting the KML Consideration ( Resolution 2 of this Notice).

The KML Major Shareholder has accepted the offer in respect of the KML Shares held by it, which represent 64.98% of the KML Shares, and has executed a binding KML Share Sale Agreement.

The KML Consideration will be issued to KML shareholders on completion of the KML Shareholder Sale Agreements and will be freely tradeable, subject to any escrow restrictions which may be imposed by the ASX.

1.3 Legend Share Issue

As further explained in the announcement on 10 May 2012 KML No 2 has entered into an agreement with Legend ( Legend Agreement ) to acquire from Legend:

(a) a package of Western Australian mining tenements; and
(b) Armada Mining Limited ( Armada ), a wholly owned subsidiary of Legend, which has a joint venture interest with Fox Radio Hill Pty Ltd in respect of certain tenements in the Pilbara,

( Legend Assets ).

As a term of the KML Acquisition, Artemis has agreed to fund the acquisition of the Legend Assets by KML No 2, through the Legend Share Issue. These Shares form part of the Shares to be issued under Resolution 2.

The Legend Share Issue, and accordingly, completion of the Legend Agreement is conditional upon the completion by Artemis of the acquisition of the Karratha Metals Group, and is subject to Shareholder approval of Resolutions 1 and 2 of this Notice.

1.4 Completion of the KML Acquisition Agreements

On completion of the KML Acquisition Agreements, as described above:

(a) Artemis will be the 100% owner of the Karratha Metals Group, which at completion of the KML Acquisition Agreements, will comprise Armada, KML and KML No 2 Pty Limited;
(b) Artemis will thereby become the owner of a large land package (approximately 680 square kilometres) of prospective gold and base metals exploration tenements in Western Australia; and
(c) Artemis will have issued a total of 156,000,000 shares to the KML shareholders and Legend pursuant to the terms of the KML Acquisition Agreements.

1.5 Projects being acquired

On Completion, the Company will hold an interest in the followings tenements:

Carlow Castle – Project

Tenement	% Interest
E47/1745	100%
E47/1797	100%
E47/1878	40%
P47/1134	100%
P47/1380	100%
P47/1386	100%
P47/1112	100%

Mt Sholl Project

Tenement	% Interest
E47/1746	100%
E47/1747	100%
M47/177	80%
M47/288	80%
P47/1089	80%
P47/1090	80%
P47/1119	80%
*Nickol River Project*
Tenement	% Interest
P47/1126	100%
P47/1518	80%
P47/1519	80%
P47/1520	80%
*Mt Marie Project*
Tenement	% Interest
E47/1807	40%
P47/1127	100%
*Twin Table Hills Project*
Tenement	% Interest
E47/1806	40%
P47/1360	100%
P47/1361	100%
P47/1362	100%
P47/1363	100%
P47/1364	100%
P47/1365	100%
P47/1366	100%
P47/1367	100%
P47/1434	80%

Radio Hill Project

Tenement	% Interest
E47/1178	100%
P47/1131	100%
P47/1368	100%
P47/1369	100%
P47/1370	100%
P47/1371	100%
P47/1372	100%
P47/1373	100%
P47/1374	100%
P47/1375	100%
P47/1124	100%
*Yandal Central Project*
Tenement	% Interest
E53/1412	80%
E53/1413	80%
E53/1525	80%
E53/1526	80%

A summary of the projects being acquired is as follows:

Carlow Castle Project

Carlow Castle and surrounding districts, originally known as Glenroebourne, have been copper-gold producers since their discovery in the late 1860s and enjoyed a peak of mining activity from the late 1880s to about 1910. Only limited mining has occurred since that period.

Karratha’s Carlow Castle project lies just to the north of the Sholl Shear Zone and covers various Archaean greenstone lithologies which crop out within east to northeast trending, well defined zones. There are three main centres of historic activity, Carlow Castle, Good Luck and Little Fortune all of which have been copper-gold producers. A number of other prospects occur within a 500m radius of the old Carlow Castle workings. These have been subject to first pass drilling and results confirm the widespread presence of copper and gold mineralization in the area.

Modern exploration on the leases began in 1967 and since then there have been numerous programs of mapping, sampling, trenching and drilling designed to investigate the extent of the mineralization at depth. This work has been successful in producing grade tonnage estimates for a number of gold and copper-gold deposits in the area. The Carlow South Lode is estimated to contain an Inferred Mineral Resource of 91,000 tonnes at an average grade of 10 g/t Au and 1.4% Cu.

Development of the Carlow Castle group is somewhat dependent on further extending the higher grade portions of the deposits in combination with success at nearby deposits such as Nickol River. Results of historic exploration suggest that there is considerable potential to increase the size of the currently delineated mineralization.

Mt Sholl Project

The Mt Sholl Project is group of seven tenements with a combined area of about 340km[2] some 30km south of Karratha making it the largest project occupying approximately 50% of the total Karratha tenure.

The project covers large portions of both the Roebourne and Whundo Greenstone belt separated by the Sholl Shear Zone. The two principal areas of known mineralization are Golden Reef and the Orpheus Shear Zone.

The Golden Reef gold occurrence is located within M47/288 on the western edge of the Project. It has produced substantial quantities of alluvial gold since 1987.

The Orpheus Shear Zone trends west southwest through the northern part of the project area, between the Golden Reef alluvial gold occurrence and the Mooney VTEM target, a distance of over 8km. At Orpheus, gossans and mineralized shear zones to 20m wide occur in an area 250m wide by 1,000m long. Sampling by GSWA (“Geological Survey of Western Australia”) returned values of up to 6.8% Cu, 1.04% Zn, 45g/t Ag and 0.45g/t Au. More recent sampling along the entire strike length of the Orpheus Shear Zone produced high grade gold and silver assays as well as elevated base metal assays.

The Mt Sholl Project is in the early stage of exploration but its geological and structural setting indicates that it is favourable to host both base metal and gold mineralization. Further evaluation of conductive anomalies and mineralization associated with the Orpheus Shear Zone is clearly warranted as is exploration targeting the source of the Golden Reef alluvials.

Nickol River Gold Project

The Nickol River Gold Project comprises four granted prospecting licences having a total area of just over 1km[2] covering a portion of the historic Nickol River Gold Mining Centre. Gold was discovered in the lower part of the Nickol River area in 1890. Initially most gold was retrieved from auriferous elluvials and alluvials. Production from the alluvials has not been recorded but appears to have been substantial and continuous over the period 1890 to 1911. Hard rock gold was produced from around 1900 onwards.

The majority of the productions came from four localities: Tozer’s, Boiler, Nickol South and Lydia all of which are located in Karratha’s tenements. The mines appear to have been closed due to excess saline water inflow at 3m to 10m depth but based on the size of the shafts and dumps some excavations have reached depths of 20 to 30m. The principal lodes have all been drilled and estimates of grade and tonnes of gold mineralization, to depths of 70m, have been established for two of the areas. Much of the drilling was depth limited due to excessive water flows and there is opportunity, using improved drill techniques, to extend the gold mineralization at depth.

The area is located only some 12km northwest of the copper-gold deposits at Carlow Castle and there is potential for additions to the gold inventory to lead to eventual development.

Mt Marie Project

A subsidiary to be acquired, Armada Mining Pty Ltd (“Armada”), has a joint venture with Fox Radio Hill Pty Limited, in the tenements described below. Armada has earned a 40% interest in the project and will earn a further 30% by spending $150,000 on exploration by August 2012. The Mt Marie project consists of a single granted exploration licence and a prospecting licence application with a total area of 59km[2] . The Great Northern Highway passes through the northern part of the project.

One of the major structural features of the region, the Sholl Shear Zone is located along the southern boundary of the tenement. Underlying lithologies comprise mafic and ultramafic rocks of the Andover Intrusion in the east and the Karratha Granodiorite and Archaean Roebourne Group in the west.

The project is considered to have potential for black shale hosted stratigraphic copper, zinc and silver deposits as well as komatiitic volcanic nickel sulphide mineralization. Later tectonic and felsic intrusive events have also introduced mesothermal gold mineralization within and along strike from the project area.

Several high priority conducting units have been identified from a variety of airborne geophysical surveys and present as drill ready targets. Some of these are located at stratigraphic locations known to host base metal mineralization elsewhere in the region

Twin Table Hills Project

The project area is located about 15km south southwest of Karratha and 10km south of the North West Coastal Highway and has an area of 38km[2] .

The Sholl Shear Zone traverses the northern part of the tenements with varied lithologies of the Roebourne Group including tuffs, sediments, mafic volcanics and komatiite flows located in the far north. Exposure is limited in the central parts but is mapped as being underlain by rocks belonging to the Bullock Hide Intrusion and the Whundo Group.

The Twin Table Hills project may also contain occurrences of iron.

The only known substantial historical workings, Twin Table, on the project are in the central south of the area, where a 4m deep shaft has been sunk on a malachite stained shear. Two samples collected from this locality returned assays of 10.57% and 11.16% copper, 0.373 and 0.163 g/t gold and anomalous cobalt values of 135 and 172 ppm respectively.

Several geophysical and geochemical anomalous zones have been identified within the tenement area. These anomalous zones have not been adequately tested and the project is considered to have potential to host massive nickelcopper sulphide mineralization similar to the deposits at Radio Hill and Ruth Well.

The highly sheared intrusive ultramafic rocks, of the Bullock Hide intrusion are very similar to the Toorare Pool and Dingo intrusions further to the south on the Radio Hill Project which contain Platinum Group Elements (“PGE”) enrichment. The felsic intrusives in these greenstones also have potential to host gold mineralization.

Radio Hill Project

The project area is about 20km south of Karratha and less than two kilometres north of the Radio Hill nickel mine.

The area is underlain by rocks of the Whundo Group and the Cherratta Granitoid Complex which have been intruded by mafic and ultramafic rocks of the Bullock Hide and Dingo Intrusions. These intrusive lithologies host the Little Dingo and Toorare Pool prospects which are geologically similar to the Munni Munni deposit some 20km to the southwest. Munni Munni is one of Australia’s largest undeveloped platinum-palladium deposits.

Previous exploration at the Little Dingo and Toorare Pool prospects has been successful in identifying PGE enrichment associated with nickel-copper sulphides in layered ultramafic-mafic intrusive complexes. It has also been established that both complexes are of significant thickness and there remains considerable potential for the discovery of Radio Hill type massive sulphide mineralization at the base of the ultramafics.

Yandal Central Project

The Yandal Central Project comprises four Exploration Licences covering a combined 18 km[2] that lie contiguous with Artemis’ current Yandal tenement package.

The Company will acquire 80% of the Yandal Central Project through the acquisition of KML, which in turn holds these tenements in Denarii. The Company will pay a royalty of 1.75% on net smelter revenues on product eminating from the Yandal Central tenements.

The tenements cover potential gold targets between the drilled Slav Well and Lowlands prospects, and possible extensions to the Sandalwood nickel prospect.

Field traverses carried out by Artemis in 2011 under agreement with Denarii located historical workings on line and to the north of Forked Stick prospect and also workings associated with an apparent parallel structure some 800m to the east. These lines of workings correlate with the Lowlands Corridor – Target A and the Dolerite Corridor – Target B as defined by Artemis’ ASX release of 23[rd] February 2012.

Four of the Induced Polarisation lines produced during recent exploration by Artemis have been within the Yandal Central Project area and IP anomalies have been identified beneath palaeochannels in this area. These anomalies could reflect structurally controlled gold-bearing sulphide mineralisation as found elsewhere in the Yandal Greenstone Belt.

Grab samples from workings to the north of Forked Stick returned grades of 2.3, 3.0 and 17.4g/tAu and up to 1.5g/tAu was returned from the eastern line of workings. Soil, auger and RAB anomalies are also associated with this eastern line.

These targets warrant further exploration as part of a systematic approach to the broader Yandal Project area.

1.6 Map of tenements being acquired

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1.7 Competent Person’s Statement

The information in this document that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Frans Voermans, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Voermans 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’. Mr Voermans, who is a nonexecutive Director of the Company, consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

1.8 Effect of the KML Acquisition on the Capital Structure of Artemis

Pro Forma Capital Structure

Shares	Number	%
Current	325,390,396	67.6%
To be Issued	156,000,000	32.4%
Total shares	481,390,396	100.0%

There will be no change to the unlisted options on issue which are as follows:

Options	Options
Number	+Class
10,000,000 3,562,500 250,000 1,000,000 1,350,000 3,100,000 833,333 10,000,000	4c options exercisable before 14 December 2014 15c options exercisable before 30 June 2012 10c options exercisable before 30 June 2012 7c options exercisable before 30 June 2013, with varying vesting dates and conditions 7c options exercisable before 30 June 2012, with varying vesting dates and conditions 7c options exercisable before 30 September 2013 8c options exercisable before 30 September 2013 4c options exercisable before 30 November 2014

1.9 Pro Forma Balance Sheet of Artemis pre and post acquisition

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other financial assets Total current assets NON‐CURRENT ASSETS Other financial assets Plant and equipment Evaluation and exploration expenditure Total non‐current assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Total current liabilities NON CURRENT LIABILITIES Deferred tax liability Total non‐current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Share Capital Reserves Accumulated losses Parent interests Non‐controlling interest TOTAL EQUITY	Consolidated Actual Pro Forma Adjustments Note Consolidated Pro Forma 31 December 2011 31 December 2011 $ $
	2,737,294 (54,300) 1 2,682,994 1,169,823 (300,000) 2 869,823 ‐ ‐ ‐
	3,907,117 (354,300) 3,552,817
	240,000 300,000 2 540,000 61,559 ‐ 61,559 4,404,074 3,517,631 3 7,921,705
	4,705,633 3,817,631 8,523,264
	8,612,750 3,463,331 12,076,081
	314,036 609,331 4 923,367
	314,036 609,331 923,367
	70,500 ‐ 70,500
	70,500 ‐ 70,500
	384,536 609,331 993,867
	8,228,211 2,854,000 11,082,211
	25,120,128 2,964,000 5 28,084,128 966,962 ‐ 966,962 (17,400,075) (110,000) 4 (17,510,075)
	8,687,015 2,854,000 11,541,015 (458,804) ‐ (458,804)
	8,228,211 2,854,000 11,082,211

Notes

Note 1: Cash and cash equivalents

The movement in cash and cash equivalents is made up of the following:

Cash acquired on acquisition of KML	45,700
Cost of the Proposed Acquisition	‐100,000
Total	‐54,300

Note 2: Trade and other receivables / Other financial assets

The movement in trade and other receivables is made up of the following:

Issue of 3 million Hastings shares at $0.10 per share as
part repayment of the loan payable by Hastings to ARV	‐300,000
Total	‐300,000

Note 3: Evaluation and exploration costs

The movement in evaluation and exploration costs is made up of the following:

Total consideration payable by ARV of 156 million shares
at $0.019 per share (closing price on 27 April 2012)	2,964,000
Add: Book value of the consolidated pro‐forma net
liabilities of KML (exc. Mining assets)	453,631
Add: Costs of the Proposed Acquisition	100,000
Total	3,517,631

Note 4: Trade and other payables / retained

earnings

The movement in trade and other payables is made up of the following:

Trade and other payables acquired on acquisition of KML	499,331
Additional accrual relating to expected costs to
close the Niger Project	110,000
Total	609,331
Note 5: Issued capital
The movement in issued capital is made up of the following:
Consideration of 156 million ARV shares on acquisition
of KML @ $0.019 per share (closing price on 27 Apr 12)	2,964,000
Total	2,964,000

1.10 Summary of the benefits of the KML Acquisition

In summary, the potential benefits to Artemis of the KML Acquisition are as follows:

(a) it will result in the consolidation of a number of mining assets in the Pilbara mining region;
(b) it will result in an increase in the scale of Artemis’ activities, which should result in a number of administrative cost savings;
(c) it diversifies the risk from the existing tenements;
(d) it potentially makes Artemis more attractive to brokers and other institutions due to its increased size; and
(e) the acquisition of the Yandal Central Tenements will result in a key part of the Yandal Gold Project being consolidated under the control of the Company.

1.11 Disadvantages of the Proposed Acquisition

(a) It will result in dilution to the existing Shareholders who are not associated with KML.
(b) There may be an adverse effect on liquidity due to the increased holding of the major KML shareholder whose shareholding in Artemis will increase from 7.9% to 18.3%.
(c) It results in the emergence of the major KML shareholder as a major shareholder of Artemis which will result in one shareholder having a significant influence over the operations of the Company.

1.12 Role of the Independent Expert

An Independent Expert’s Report has been prepared by Lawler Corporate Finance to consider whether the transactions the subject of Resolutions 1 and 2 are fair and reasonable to Shareholders. Shareholders should note the Independent Expert has concluded that the transactions the subject of Resolutions 1 and 2 are fair and reasonable to Shareholders.

The Independent Expert’s Report also contains an assessment of the advantages and disadvantages of the transactions contemplated by Resolutions 1 and 2, which is designed to assist Shareholders in reaching their voting decision in relation to those Resolutions.

The Directors recommend that all Shareholders read the Independent Expert’s Report in full.

1.13 Conditionality of Resolutions

Resolution 1 is conditional upon the passing of Resolution 2, and vice versa, so that neither Resolution will be passed unless and until the other is passed.

1.14 Recommendations of Directors

Based on the information available, including that contained in this Explanatory Memorandum and the Independent Expert’s Report, the Directors are of the opinion that the acquisition of Karratha Metals Limited on the terms and conditions of the KML Acquisition Agreements is in the best interests of the Company and its Shareholders and accordingly recommend that Shareholders vote in favour of Resolutions 1 and 2.

2. Resolution 1 – Acquisition of the Karratha Metals Group

2.1 Shareholder approval

Resolution 1 seeks Shareholder approval to allow the Company to acquire the Karratha Metals Group in accordance with the terms of the KML Acquisition Agreements.

2.2 Information regarding the acquisition

Information regarding the acquisition of the Karratha Metals Group and the terms of the KML Acquisition are set out above, under “ Background to Resolutions 1 and 2 ”.

As stated above, in order to assist Shareholders in making their decision, the Directors have commissioned an Independent Expert’s Report to consider whether the transactions contemplated by the KML Acquisition Agreements are fair and reasonable. The Independent Expert’s Report is attached to this Explanatory Statement at Annexure 1.

The Independent Expert has concluded that the acquisition of the Karratha Metals Group on the terms and conditions of the KML Acquisition Agreements are fair and reasonable to the Shareholders.

2.3 Directors’ recommendation

The Directors recommend that Shareholders vote in favour of Resolution 1.

If Resolution 1 is approved, its implementation will be conditional upon the passing of Resolution 2.

3. Resolution 2 – Issue of Shares in connection with the acquisition of the Karratha Metals Group

3.1 Background

Resolution 2 seeks Shareholder approval to the issue of 156,000,000 shares in connection with the acquisition of the Karratha Metals Group in accordance with the terms of the KML Acquisition Agreements.

Information regarding the acquisition of the Karratha Metals Group and the terms of acquisition are set out above, under “Background to Resolutions 1 and 2”.

3.2 ASX Listing Rule Requirements

ASX Listing Rule 7.1 provides, in summary, that a listed company must not, subject to specified exceptions, issue equity securities in any 12 month period which, when aggregated with the equity securities issued by the company during the previous 12 months, will exceed 15% of the total number of fully paid ordinary shares on issue in the company at the beginning of the 12 month period, except with the prior approval of shareholders.

Resolution 2 seeks Shareholder approval under ASX Listing Rule 7.1 for the issue of 156,000,000 Shares. The effect of such approval is that any such Shares will not be counted as reducing the number of equity securities which the Company can issue without Shareholder approval under the limit imposed by ASX Listing Rule 7.1.

3.3 ASX Listing Rule Disclosure Requirements

The following information is provided in accordance with Listing Rule 7.3:

(a) The maximum number of securities the entity is to issue
The maximum number of Shares to be issued is 156,000,000.
(b) The date by which the entity will issue the securities
Subject to Shareholder approval, the Shares will be allotted and issued no later than three months after the date of the Meeting, or such later date as may be approved by the ASX.
(c) Issue price of securities

The Shares will be issued as consideration to KML shareholders and to Legend pursuant to the terms of the KML Acquisition Agreements.

(d) Terms of the securities

The Shares issued rank equally with all other Shares on issue and in all other respects the rights and entitlements of the holders of the Shares are identical to the rights and entitlements of the holders of other issued Shares.

(e) Names of the allottees or basis on which allottees were determined

The names of the allottees of the Shares are the vendors of the KML shares and the Legend Assets as set out in the KML Acquisition Agreements. None of these parties are related parties or Associates of the Company.

(f) The use or intended use of the funds raised

No funds are to be raised by issue of the Shares.

(g) The dates of allotment or a statement that allotment will occur progressively

See paragraph 3.3(b).

(h) Voting Exclusion

A voting exclusion statement forms part of this Notice.

3.4 Directors’ recommendation

The Directors recommend that Shareholders vote in favour of Resolution 2.

If Resolution 2 is approved, its implementation will be conditional on the passing of Resolution 1.

4. Resolution 3 – Approval to issue 100,000,000 Shares

4.1 Background

Resolution 3 seeks Shareholder approval for the allotment and issue of up to 100,000,000 Shares.

The Company may wish to undertake a capital raising by way of a placement to raise further funds. The Company seeks Shareholder approval under ASX Listing Rule 7.1 for a possible placement involving the issue of Shares.

The purpose of the placement would be to provide the Company with additional funding to enable the Company to continue with its planned exploration programs and to meet the Company’s working capital requirements.

4.2 ASX Listing Rule Requirements

ASX Listing Rule 7.1 provides, in summary, that a listed company may not issue equity securities in any 12 month period which, when aggregated with the equity securities issued by the company during the previous 12 months, will exceed 15% of the total number of fully paid ordinary shares on issue in the company at the beginning of the 12 month period, except with the prior approval of shareholders.

Resolution 3 seeks Shareholder approval under ASX Listing Rule 7.1 for the issue of 100,000,000 Shares.

The effect of the approval is that the Shares referred to in Resolution 3 will be not be counted as reducing the number of equity securities which the Company can issue without Shareholder approval under the limit imposed by ASX Listing Rule 7.1.

4.3 ASX Listing Rule Disclosure Requirements

The following information is provided in accordance with ASX Listing Rule 7.3:

(a) The maximum number of equity securities the entity is to issue

The maximum number of Shares to be allotted and issued will be 100,000,000.

(b) The date by which the entity will issue the equity securities

It is anticipated that, subject to Shareholder approval, the Shares will be allotted and progressively issued no later than three months after the date of the General Meeting, or such later date as approved by the ASX by way of the ASX granting a waiver under the ASX Listing Rules.

The Shares will be issued at a price that is at least 80% of the volume weighted average market price for Shares, where the average is calculated, in accordance with ASX Listing Rule 7.3.3, over the last five days on which sales in Shares were recorded before the day on which the issue was made or, if there was a prospectus, Product Disclosure Statement or offer information statement relating to the issue, over the last 5 days on which sales in the Shares were recorded before the date the prospectus, Product Disclosure Statement or offer information statement is signed.

(d) The names of the allottees (if known) or the basis upon which the allottees will be identified or selected

The allottees of the Shares are not currently known but will be institutional and sophisticated investors and will be selected on the basis of their ability to provide funding to the Company pursuant to the placement, if undertaken. None of these parties will be related parties or Associates of the Company.

(e) The terms of the equity securities

The Shares will rank equally in all respects with existing Shares on issue.

(f) The intended use of the funds raised

If undertaken, the funds to be raised by the Company in the placement would be intended to be used for the following purposes:

(i) exploration expenditure in relation to the Company’s projects; and
(ii) general working capital requirements of the Company.
(g) The dates of allotment or a statement that allotment will occur progressively

See paragraph 4.3(b).

4.4 Directors’ Recommendation

The Directors recommend that Shareholders vote in favour of Resolution 3, as the placement, if undertaken, would provide the Company with necessary funds to enable it to continue with its exploration program and additional funding to meet the Company’s working capital requirements.

Schedule 1 – Definitions

In this Explanatory Memorandum and Notice of General Meeting:

ASIC means Australian Securities and Investments Commission.

ASX means ASX Limited ACN 008 624 691 and the market operated by it, as the context requires.

ASX Listing Rules means the Listing Rules of ASX and any other rules of ASX which are applicable while the entity is admitted to the official list of ASX, each as amended or replaced from time to time except to the extent of any express written waiver by ASX. Board means the Board of Directors.

Company or Artemis means Artemis Resources Limited ABN 80 107 051 749.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company.

EST means Eastern Standard Time, in Sydney, New South Wales.

Explanatory Memorandum means the explanatory memorandum which accompanies and forms part of this Notice.

General Meeting or Meeting means the extraordinary general meeting of the Company to be held on 15 June 2012 at 11am (EST), convened by this Notice.

Karratha Metals Group means the group of companies comprising, KML and its whollyowned subsidiary, KML No 2.

KML means Karratha Metals Limited (ACN 150 289 866).

KML Acquisition means the acquisition by the Company of a minimum of 75% and up to 100% of the total issued share capital of KML.

KML Acquisition Agreements means:

(a) the KML Shareholder Sale Agreements; and

(b) the Legend Agreement, and all ancillary agreements entered into pursuant to or in connection with those agreements.

KML Consideration means has the meaning given in paragraph 1.2 of the Explanatory Memorandum.

KML Major Shareholder means Black Swan Global Pty Limited.

KML No 2 means KML No 2 Pty Limited (ACN 150 291 839).

KML Shareholder Sale Agreements means the agreements between the Company and each of the Shareholders of KML dated on or about the date of this Notice for the acquisition by the Company of a total of 100% of the total issued share capital of KML.

KML Shares means a minimum of 75% and up to a total of 100% of the total issued capital of KML.

Legend means Legend Mining Limited.

Legend Agreement means the agreement between the Company, KML No 2 and Legend for the acquisition by KML No 2 of certain tenements and other assets from Legend, as amended from time to time.

Legend Assets has the meaning given in paragraph 1.3 of the Explanatory Memorandum.

Legend Share Issue has the meaning given in paragraph 1.1 of the Explanatory Memorandum

Notice means this Notice of General Meeting.

Option means an option to subscribe for a Share.

Resolution means a resolution referred to in this Notice.

Securities means Shares and/or Options.

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

Shareholder means a holder of a Share.

In this Notice, words importing the singular include the plural and vice versa.

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PROXY FORM

THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH IT, PLEASE CONTACT YOUR STOCK BROKER OR LICENSED PROFESSIONAL ADVISOR.

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ARTEMIS RESOURCES LTD

REGISTERED OFFICE:

ABN: 80 107 051 749

LEVEL 9 50 MARGARET STREET SYDNEY NSW 2000

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SHARE REGISTRY: Security Transfer Registrars Pty Ltd All Correspondence to: PO BOX 535, APPLECROSS WA 6953 AUSTRALIA 770 Canning Highway, APPLECROSS WA 6153 AUSTRALIA T: +61 8 9315 2333 F: +61 8 9315 2233 E: [email protected] W: www.securitytransfer.com.au

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Code:

ARV

Holder Number:

SECTION A: Appointment of Proxy

I/We, the above named, being registered holders of the Company and entitled to attend and vote hereby appoint:

OR

The meeting Chairperson The name of the person you are appointing (mark with an "X") (if this person is someone other than the Chairperson of the meeting).

or failing the person named, or if no person is named, the Chairperson 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 the Company to be held at 11.00am EST on Friday 15 June 2012 at Mills Oakley Boardroom at Level 34, 60 Margaret Street, Sydney NSW 2000 and at any adjournment of that meeting.

SECTION B: Voting Directions to your Proxy

Please mark "X" in the box to indicate your voting directions to your Proxy.

Resolution

For Against Abstain*

Approval to Acquire the Karratha Metals Group
Approval to Issue Shares in connection with the acquisition of the Karratha Metals Group
Approval to Issue 100,000,000 Shares

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If no directions are given my proxy may vote as the proxy thinks fit or may abstain.

If you mark the Abstain box for a particular item, you are directing your Proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

SECTION C: Please Sign Below

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Security Holder Security Holder 2 Security Holder 3 Sole Director and Sole Company Secretary Director Director / Company Secretary 9353314356 Reference Number:

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ARV

My/Our contact details in case of enquiries are:

NAME

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TELEPHONE NUMBER ( )

NOTES

1. Name and Address

This is the name and address on the Share Register of ARTEMIS RESOURCES LTD. If this information is incorrect, please make corrections on this form. Shareholders sponsored by a broker should advise their broker of any changes. Please note that you cannot change ownership of your shares using this form.

2. Appointment of a Proxy

If you wish to appoint the Chairperson of the Meeting as your Proxy please mark "X" in the box in Section A.

If the person you wish to appoint as your Proxy is someone other than the Chairperson of the Meeting please write the name of that person in Section A. If you leave this section blank, or your named Proxy does not attend the meeting, the Chairperson of the Meeting will be your Proxy. A Proxy need not be a Shareholder of ARTEMIS RESOURCES LTD.

3. Directing your Proxy how to vote

To direct the Proxy how to vote place an "X" in the appropriate box against each item in Section B. Where more than one Proxy is to be appointed and the proxies are to vote differently, then two separate forms must be used to indicate voting intentions.

5. Signing Instructions Individual: where the holding is in one name, the Shareholder must sign.

Joint Holding: where the holding is in more than one name, all of the Shareholders must sign.

Power of Attorney: to sign under Power of Attorney you must have already lodged this document with the Company's share registry. If you have not previously lodged this document for notation, 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 may sign alone. Otherwise this form must be signed by a Director jointly with either another Director or Company Secretary. Please indicate the office held in the appropriate place.

If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be lodged with the Company before the meeting or at the registration desk on the day of the meeting. A form of the certificate may be obtained from the Company's share registry.

6. Lodgement of Proxy

4. Appointment of a Second Proxy

You are entitled to appoint up to two (2) persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second Proxy, an additional Proxy form may be obtained by telephoning the Company's share registry +61 8 9315 2333 or you may photocopy this form.

To appoint a second Proxy you must:

(a) On each of the Proxy forms, state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each Proxy may exercise, each Proxy may exercise half of your votes; and
(b) Return both forms in the same envelope.

Proxy forms (and any Power of Attorney under which it is signed) must be received by Security Transfer Registrars Pty Ltd no later than 11.00am EST on Wednesday 13 June 2012, being 48 hours before the time for holding the meeting. Any Proxy form received after that time will not be valid for the scheduled meeting.

Security Transfer Registrars Pty Ltd PO BOX 535 Applecross, Western Australia 6953

Street Address: Alexandrea House, Suite 1 770 Canning Highway Applecross, Western Australia 6153

Telephone +61 8 9315 2333 Facsimile +61 8 9315 2233 Email [email protected]

PRIVACY STATEMENT

Personal information is collected on this form by Security Transfer Registrars Pty Ltd as the registrar for securities issuers for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal details may be disclosed to related bodies corporate, to external service providers such as mail and print providers, or as otherwise required or permitted by law. If you would like details of your personal information held by Security Transfer Registrars Pty Ltd or you would like to correct information that is inaccurate please contact them on the address on this form.

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4108314359

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Independent Expert’s Report

4 May 2012

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4 May 2012

The Directors

Artemis Resources Limited Level 9, 50 Margaret Street

SYDNEY NSW 2000

Dear Sirs,

INDEPENDENT EXPERT’S REPORT

PROPOSED ACQUISITION OF 100% OF THE ISSUED SHARES OF KARRATHA METALS LIMI T ED

Introduction

Artemis Resources Limited (“Arte m is” or the “Company”) is an Australian based public company listed on the Australian Securities Exchange (“ASX”). As at 31 March 2012, the Company had a m arket capitalisation of approximately $8.13 million.

Proposed Acquisition

It is proposed that Artemis will acq u ire 100% of the issued shares of Karratha Metals Li m ited (“KML”) from the shareholders of KML for a total consideration of 156 million new fully-paid ordinary shares in Artemis (“Consideration Shares”) (the “Pro p osed Acquisition”). The Proposed Acquisition is conditional on a series of preceding transactions being completed as follows:

Firstly, it is proposed tha t KML No.2 Pty Limited (“KML2”), a wholly-owned s ubsidiary of KML, will acquire from Legend Mini n g Limited (“Legend Mining”), the following assets:
a portfolio of teneme n ts (the “Legend Tenements”); and
100% of the issued s h ares of Armada Mining Limited (“Armada”). Armad a is currently a whollyowned subsidiary of L egend Mining and holds its own tenements, as w ell as an existing 40% interest and the abilit y to earn up to a 70% interest, in the Mt Marie joint v e nture.

The consideration to be paid for the above assets may comprise either:

10 million fully-paid o r dinary shares in KML; or
60 million fully-paid o r dinary shares in Artemis.

We have been advised th a t KML has requested that the consideration be sati s fied by the issue of 60 million fully-paid shares in Artemis.

The above transaction shall be referred to as “Transaction 1” throughout the remainder of this Report.

In addition, Artemis is to reimburse Legend Mining by way of a cash pay m ent in the amount of $200,000 in respect of leg a l costs and management fees incurred by Legend M ining in relation to the negotiation and implementation of the agreements in relation to this Transact i on 1 (the “Transaction 1 Agreements”).

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Secondly, it is proposed that Denarii Exploration Pty Limited (“Denarii”) will acquire four (4) tenements (the “Yandal Tenements”) from Aureus Investment Pty Limited (“Aureus”)(“Transaction 2”).
Thirdly, on completion of Transaction 2, it is proposed that KML will acquire:
80% of the issued shares in Denarii (the “Initial Interest”) for a total cash consideration of $250,000 plus an ongoing royalty as set out in the Royalty Agreement; and
an option to acquire the remaining 20% of the issued shares in Denarii (the “Final Interest”), at a price to be agreed to between the parties or, at independent valuation.

In broad terms, the Royalty Agreement provides for a royalty of 1.75% of Net Smelter Revenues to be paid by Denarii for the Royalty Period.

The above transaction shall be referred to as “Transaction 3” throughout the remainder of this Report.

The Proposed Acquisition is conditional upon:

Transaction 2 and Transaction 3 being implemented;
the execution of documents relating to Transaction 1;
all other conditions precedent under Transaction 1 being satisfied; and
Artemis shareholder approval being obtained.

Further details of the above transactions are set out in the Explanatory Statement accompanying the Notice of Meeting to be sent to respective shareholders (together the “Documents”).

Requirement for an Independent Expert’s Report

Lawler Corporate Finance Pty Limited (“LCF”, “we” or “us” as applicable) has been instructed that Artemis shareholder approval for the Proposed Acquisition is required under ASX Listing Rule 7.1 and may be required under ASX Listing Rule 11.1.

We are instructed that approval for the Proposed Acquisition is not required under any of ASX Listing Rule 10.1 or section 606 or Chapter 2E of the Corporations Act 2011 (Cth) (“Corporations Act”). Our instructions as to the reasoning behind these conclusions are summarised in Appendix 4.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 prohibits an entity from issuing new equity securities within a 12 month period exceeding 15% of the issued securities on issue by an entity at the start of the 12 month period, without shareholder approval.

While there is no express requirement for an independent expert report under ASX Listing Rule 7.1, an independent expert report may assist directors in satisfying their disclosure requirements under ASX Listing Rule 7.3.

ASX Listing Rule 11.1

ASX listing 11.1 requires shareholder approval of a transaction in the circumstance where an acquisition or disposal results in a significant change in the nature and scale of a company’s activity. We understand that the Proposed Acquisition does not result in a change in the nature of Artemis activities. However, it is a substantial increase in the scale of the activities. Accordingly, the Proposal may be subject to listing rule 11.1. ASX listing rule 11.1 does not require an independent expert report to accompany the notice of meeting, unless requested by the ASX.

Despite the fact that ASX listing rule 11.1 does not necessarily require the preparation of an independent expert’s report, the Directors have requested us to prepare same as if it was to apply, in light of the significance of the Proposed Acquisition to Artemis.

Artemis Resources Limited - Independent Expert Report – May 2012

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Summary of Conclusions

In summary, in our opinion, the Proposed Acquisition is “fair” and “reasonable” to the Non-associated Shareholders of Artemis as a whole.

Our reasons for reaching these conclusions are set out below.

Assessment of Fairness

We have compared the fair market value of all the issued shares in KML (i.e. on a controlling interest basis) to the fair market value of Consideration Shares, on both a controlling interest and a significant influence basis. The Consideration Shares represent an investment in the merged entity of KML and Artemis (‘Merged Entity”).

In our opinion, the fair market value of all the issued shares in KML is greater than the fair market value of the Consideration Shares (whether assessed on a controlling interest or a significant influence basis).

We note that the Proposed Acquisition does not result in a change in control of Artemis. Nonetheless, we have assessed the Proposed Acquisition on a control basis (as well as a significant influence basis), as it represents the highest test for the purposes of meeting the ‘fair’ test.

Our assessment of whether the Proposed Acquisition is ‘fair’ or ‘not fair’ on a control basis is set out in the following table:

Table 1: Fairness Assessment – Control Basis

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Fair Market Value of Consideration Shares Artemis Resources Limited Karratha Metals Limited	Section 6.1 Section 7.1	4,084,173 2,153,079	4,659,623 3,266,156	4,371,898 2,709,618
Total		6,237,252	7,925,779	7,081,516
Current Shares on Issue Shares to be Issued to Vendors Total Shares on Issue Post Proposed Acquisition	Section 3.6.1 Section 1	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396
Fair Market Value of Consideration Shares (On a Control Basis)		2,021,252	2,568,438	2,294,845
Fair Market Value of What is Being Acquired (100% of KML) Karratha Metals Limited	Section 7.1	2,153,079	3,266,156	2,709,618
Fair Market Value of What is BeingAcquired		2,153,079	3,266,156	2,709,618
Fair /(Unfair)		131,827	697,718	414,772

Source: LCF analysis

iii

Artemis Resources Limited - Independent Expert Report – May 2012

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We have also reviewed the fair market value of an Artemis share on a control basis pre and post the Proposed Acquisition and assessed that the Non-associated Shareholders of Artemis would be more advantaged by implementing the Proposed Acquisition, as the assessed value of an Artemis share after the Proposed Acquisition is greater than the assessed value before the Proposed Acquisition:

Table 2: Fairness Assessment – Control Basis Value of Artemis pre and post Proposed Acquisition

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Value of Artemis Share Pre-Transaction Value of Artemis Share Post-Transaction	Section 6.6.1	0.0126 0.0130	0.0143 0.0165	0.0134 0.0147
Fair /(Unfair)		0.0004	0.0021	0.0013

Source: LCF analysis

We note that the above assessed fair market value of an Artemis share on a control basis before the Proposed Acquisition (of between $0.0126 and $0.0143) compares with recent share trading on the ASX of around $0.020-$0.025 (1 month VWAP and 3 months VWAP, respectively) (refer Section 3.6.5).

The fact that the recent market trading price of Artemis shares (which would be expected to represent a noncontrolling interest value) exceeds our assessed fair market values (on a control basis) may be explained by market traders taking a more optimistic view of the assets and prospects of Artemis than our valuation.

In any event, our assessed value of an Artemis share on a control basis before the Proposed Acquisition is less than our assessed value of an Artemis share on a control basis after the Proposed Acquisition. Therefore, we conclude that implementing the Proposed Acquisition should not, of itself, adversely impact any factors that cause market traders to take a more optimistic view of the assets and prospects of Artemis.

As a result of the Proposed Acquisition, the major shareholder of KML (Black Swan Global Pty Limited (“Black Swan”)) will increase its shareholding in Artemis from its current holding of 7.92% to 18.9%. Accordingly, it is our view, that there is not likely to be a change in control of Artemis as a result of the Proposed Acquisition, but rather, Black Swan will achieve significant influence over Artemis.

Artemis Resources Limited - Independent Expert Report – May 2012

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Our assessment of whether the Proposed Acquisition is ‘fair’ or ‘not fair’ on a significant influence basis is set out in the following table:

Table 3: Fairness Assessment – Significant Influence Basis

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Fair Market Value of Consideration Shares Artemis Resources Limited Karratha Metals Limited	Section 6.1 Section 7.1	4,084,173 2,153,079	4,659,623 3,266,156	4,371,898 2,709,618
Total		6,237,252	7,925,779	7,081,516
Current Shares on Issue Shares to be Issued to Vendors Total Shares on Issue Post Proposed Acquisition	Section 3.6.1 Section 1	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396
Fair Market Value of Consideration Shares (On a Control Basis)		2,021,252	2,568,438	2,294,845
Less: Signifcant Influence Discount		-15.0%	-10.0%	-12.5%
Fair Market Value of What is Being Retained by Vendors (On a Significant Influence Basis)		1,718,064	2,311,594	2,007,990
Fair Market Value of What is Being Acquired (100% KML) Karratha Metals Limited	Section 7.1	2,153,079	3,266,156	2,709,618
Fair Market Value of What is BeingAcquired		2,153,079	3,266,156	2,709,618
Fair /(Unfair)		435,015	954,561	701,628

Source: LCF analysis

We have also reviewed the fair market value of an Artemis share on a significant influence basis pre and post the Proposed Acquisition and assessed that the Non-associated Shareholders of Artemis would be more advantaged by implementing the Proposed Acquisition, as the assessed value of an Artemis share after the Proposed Acquisition is greater than the assessed value before the Proposed Acquisition:

Table 4: Fairness Assessment – Significant Influence Basis Value of Artemis pre and post Proposed Acquisition

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Value of Artemis Share Pre-Transaction Value of Artemis Share Post-Transaction	Section 6.6.1	0.0107 0.0110	0.0129 0.0148	0.0118 0.0129
Fair /(Unfair)		0.0003	0.0019	0.0011

Source: LCF analysis

Again, we note that above assessed fair market value of an Artemis share on a significant influence basis before the Proposed Acquisition (of between $0.0107 and $0.0129) compares with recent share trading on the ASX of around $0.020-$0.025 (1 month VWAP and 3 months VWAP, respectively) (refer Section 3.6.5).

As discussed above, the fact that the recent market trading price of Artemis shares (which would be expected to represent a non-controlling interest value) exceeds our assessed fair market values (on a significant influence) may be explained by market traders taking a more optimistic view of the assets and prospects of Artemis than our valuation.

Artemis Resources Limited - Independent Expert Report – May 2012

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In any event, our assessed value of an Artemis share on a significant influence basis before the Proposed Acquisition is less than our assessed value of an Artemis share on a control basis after the Proposed Acquisition. Therefore, we conclude that implementing the Proposed Acquisition should not, of itself, adversely impact any factors that cause market traders to take a more optimistic view of the assets and prospects of Artemis.

Assessment of Reasonableness

In accordance with RG 111, as it is our opinion that the Proposed Acquisition is ‘fair’, we are also of the opinion that it is ‘reasonable’.

Nevertheless, we have also considered various factors that we believe Non-associated Shareholders should consider when deciding whether or not to accept the Proposed Acquisition.

A summary of the matters that we have considered is set out below.

Advantages of the Proposed Acquisition

In our opinion, the Proposed Acquisition has a number of potential positive implications for the Non-associated Shareholders, including:

it will result in the consolidation of a number of mining assets in the Pilbara mining region;
it will result in an increase in the scale of Artemis’ activities, which should result in a number of administrative cost savings;
it diversifies the risk from the existing tenements;
it potentially makes Artemis more attractive to brokers and other institutions due to its increased size; and
the acquisition of the Yandal Central Tenements will result in a key part of the Yandal Gold Project being consolidated under the control of the Company.

Disadvantages of the Proposed Acquisition

In our opinion, the Proposed Acquisition has a number of potential negative implications for the Nonassociated Shareholders, including:

it will result in dilution to the existing Non Associated Shareholders;
there may be an adverse effect on liquidity due to the increased holding of Black Swan; and
it results in the emergence of Black Swan as a major shareholder of Artemis which will result in one shareholder having a significant influence over the operations of the Company.

Implications for Non-associated Shareholders of Rejecting the Proposed Acquisition

Set out below are the key implications for Non-associated Shareholders of rejecting the Proposed Acquisition. In our opinion, in the event the Proposed Acquisition was rejected, Non-associated Shareholders would need to consider Artemis’ position, as the existing assets of Artemis have not been able to attract suitable investment capital.

Other Matters

Fair Market Value

For the purposes of our opinion, the term “fair market value” is 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.

Artemis Resources Limited - Independent Expert Report – May 2012

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Special Value

We have not considered special value in forming our opinion as to whether the Proposed Acquisition is “fair”. Special value is the amount that a potential acquirer may be prepared to pay for an asset in excess of the fair market value. This premium represents the value to the particular potential acquirer of various factors that may include potential economies of scale, reduction in competition, other synergies and cost savings arising from the acquisition under consideration not available to likely purchasers generally. Special value is not normally considered in the assessment of fair market value as it relates to the individual circumstances of special purchasers.

Valuation Date

The valuation assessment and our opinion are made as at 31 March 2012 (“Valuation Date”).

Current Market Conditions

Our opinion is based on economic, market and other conditions prevailing at the Valuation Date. Such conditions can change significantly over relatively short periods of time. Changes in those conditions may result in any valuation or other opinion becoming quickly outdated and in need of revision. LCF reserves 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 LCF.

Scope

The scope of the procedures undertaken in preparing the Report did not include verification work nor constitute an audit in accordance with Australian Auditing and Assurance Standards.

The Report was prepared in accordance with APES 225 Valuation Services issued by the Accounting Professional and Ethical Standards Board Limited.

Investors’ Individual Circumstances

Our analysis has been undertaken, and our conclusions are expressed, at an aggregate level. LCF has not considered the effects of the Proposed Acquisition on the particular circumstances of individual Non-associated Shareholders. Some individual Non-associated Shareholders may place a different emphasis on various aspects of the Proposed Acquisition from that adopted in this Report. Accordingly, individual Non-associated Shareholders may reach different conclusions as to whether or not the Proposed Acquisition is fair and reasonable in their individual circumstances. As the decision of individual Non-associated Shareholders in relation to the Proposed Acquisition may be influenced by their particular circumstances (including their taxation position), Non-associated Shareholders are advised to seek their own independent advice.

Sources of Information

Appendix 1 identifies the information referred to, and relied upon, by LCF during the course of preparing this Report and forming our opinion.

Use of Report

This Report has been prepared by LCF to assist the directors of Artemis in making their recommendation to the Non-associated Shareholders of Artemis in relation to the Proposed Acquisition and to assist the Nonassociated Shareholders in their consideration of whether or not to vote to approve the Proposed Acquisition. This Report is intended to accompany the Documents.

LCF does not accept any responsibility to any person other than the independent directors and Non-associated Shareholders of Artemis or for the use of the Report outside the stated purpose without the written consent of LCF. Except in accordance with the stated purpose, no extract, quote or copy of our Report, in whole or in part, should be reproduced without our written consent, as to the form and context in which it may appear.

The statements and opinions contained in this Report are given in good faith and are based upon LCF’s consideration and assessment of information provided by the directors, executives and management of Artemis.

vii

Artemis Resources Limited - Independent Expert Report – May 2012

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LCF has provided its consent to the Report accompanying the Documents. Apart from the Report, LCF is not responsible for the contents of the Documents, or any other document or announcement associated with the Proposed Acquisition. LCF acknowledges that its Report may be lodged with regulatory bodies.

Approval or rejection of the Proposed Acquisition is a matter for individual Non-associated Shareholders based on their expectations as to the value and future prospects of Artemis, market conditions and their particular circumstances, including risk profile, liquidity preference, portfolio strategy and tax position. Non-associated Shareholders should carefully consider the Documents. Non-associated Shareholders who are in doubt as to the action they should take in relation to the Proposed Acquisition should consult their professional adviser.

Capitalised and abbreviated terms used in this Report have the meanings set out in the Glossary in Appendix 2.

Financial Services Guide

A financial services guide is attached to this Report.

Yours faithfully,

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Peter Cornell Director

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Vince Fayad Director

viii

Artemis Resources Limited - Independent Expert Report – May 2012

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1	The	Proposed Acquisition ...................................................................................................................... 1
2	Scope and Limitations ............................................................................................................................ 3
	2.1	PURPOSE OF THEREPORT..................................................................................................................................... 3
	2.2	SCOPE.............................................................................................................................................................. 3
	2.3	LIMITATIONS...................................................................................................................................................... 3
	2.4	BASIS OFASSESSMENT......................................................................................................................................... 4
3	Profile of Artemis Resources Limited ..................................................................................................... 7
	3.1	BACKGROUND.................................................................................................................................................... 7
	3.2	OPERATIONS...................................................................................................................................................... 7
	3.3	HISTORICALINCOMESTATEMENTS........................................................................................................................ 11
	3.4	HISTORICALSTATEMENTS OFFINANCIALPOSITION.................................................................................................... 12
	3.5	HISTORICALSTATEMENTS OFCASHFLOW............................................................................................................... 13
	3.6	OWNERSHIP.................................................................................................................................................... 14
4	Profile of Karratha Metals Limited ....................................................................................................... 17
	4.1	KARRATHAMETALSLIMITED............................................................................................................................... 17
	4.2	KML NO2 PTYLTD.......................................................................................................................................... 18
	4.3	ARMADAMININGLIMITED.................................................................................................................................. 18
5	Industry Overview ................................................................................................................................ 19
	5.1	INTRODUCTION................................................................................................................................................. 19
	5.2	INDUSTRY OVERVIEW......................................................................................................................................... 19
	5.3	DEMAND DETERMINANTS................................................................................................................................... 20
	5.4	SUPPLY CONDITIONS.......................................................................................................................................... 22
	5.5	GOLD PRICES.................................................................................................................................................... 22
	5.6	CRITICAL SUCCESS FACTORS AND BARRIERS TO ENTRY................................................................................................. 24
6	Valuation of Artemis Resources Limited .............................................................................................. 25
	6.1	VALUATIONSUMMARY...................................................................................................................................... 25
	6.2	APPROACH...................................................................................................................................................... 26
	6.3	NETREALISABLEVALUE OFASSETS ON AGOINGCONCERNBASIS................................................................................ 26
	6.4	PRO-FORMABALANCESHEET OFARTEMIS............................................................................................................. 27
	6.5	CAPITALISEDCORPORATEOVERHEADCOSTS........................................................................................................... 30
	6.6	VALUATIONCROSS-CHECK.................................................................................................................................. 31
7	Valuation of Karratha Metals Limited .................................................................................................. 32
	7.1	VALUATIONSUMMARY...................................................................................................................................... 32
	7.2	APPROACH...................................................................................................................................................... 32
	7.3	NETREALISABLEVALUE OFASSETS ON AGOINGCONCERNBASIS................................................................................ 33
	7.4	PRO-FORMABALANCESHEET OFKML .................................................................................................................. 34
	7.5	CAPITALISEDCORPORATEOVERHEADCOSTS........................................................................................................... 35
	7.6	BOOKVALUE OFKML’SINVESTMENT INDENARII.................................................................................................... 36
	7.7	PRO-FORMABALANCESHEET OFARMADA............................................................................................................. 37

Artemis Resources Limited - Independent Expert Report – 4 May 2012

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	7.8	PRO-FORMABALANCESHEET OFDENARII.............................................................................................................. 38
	7.9	VALUATIONCROSS-CHECK.................................................................................................................................. 39
8	Assessment of the Proposed Acquisition ............................................................................................. 40
	8.1	APPROACH...................................................................................................................................................... 40
	8.2	FAIRNESS........................................................................................................................................................ 40
	8.3	REASONABLENESS............................................................................................................................................. 43
	8.4	OVERALLCONCLUSION....................................................................................................................................... 43
9	Qualifications and Independence ........................................................................................................ 44
	9.1	QUALIFICATIONS............................................................................................................................................... 44
	9.2	INDEPENDENCE................................................................................................................................................. 44
Appendix	1	Sources of Information ............................................................................................................... 45
Appendix	2	Glossary of Terms ....................................................................................................................... 46
Appendix	3	Valuation Methods ..................................................................................................................... 47
Appendix	4	Regulatory Matters ..................................................................................................................... 49
Financial Services Guide ........................................................................................................................................ 52

Artemis Resources Limited - Independent Expert Report – 4 May 2012

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1 The Proposed Acquisition

Artemis Resources Limited (“Artemis” or the “Company”) is a maturing exploration company, predominantly focused on Gold. The Company also has rare element and uranium Projects. The Projects include:

Gold (Mt Clement and Yandal in Western Australia);
Rare Metals (Buchanan's Creek in Queensland); and
Uranium (Mundong Well and Cambridge Creek in Western Australia).

Artemis proposes to acquire 100% of the issued shares in Karratha Metals Limited ("KML") including certain tenements currently owned by Legend Mining in return for the issue of 156 million new shares in Artemis (“Proposed Acquisition”). KML holds (or will hold at the time of the Proposed Acquisition) a number of gold tenements around Artemis' current Yandal gold Project located 95 km southeast of the township of Wiluna in North Western Australia.

The Proposed Acquisition is conditional on the following taking place:

Transaction 1: Firstly, it is proposed that KML No.2 Pty Limited (“KML2”), currently a wholly-owned subsidiary of KML, will acquire from Legend Mining Limited (“Legend Mining”), the following assets:

a portfolio of tenements (the “Legend Tenements”); and
100% of the issued shares of Armada Mining Limited (“Armada”). Armada is a wholly-owned subsidiary of Legend Mining and holds its own tenements, as well as the ability to earn up to a 70% interest under the Mt Marie joint venture.

The consideration to be paid for the above assets may comprise either:

10 million fully-paid ordinary shares in KML; or
60 million fully-paid ordinary shares in Artemis.

We have been advised that KML has requested that the consideration be satisfied by the issue of 60 million fully-paid shares in Artemis. Accordingly, we have undertaken our analysis on the basis that the consideration to be paid in relation to Transaction 1 will be 60 million fully-paid ordinary shares in Artemis.

In addition, Artemis is to reimburse Legend Mining by way of a cash payment in the amount of $200,000 in respect of legal costs and management fees incurred by Legend Mining in relation to the negotiation and implementation of the agreements in relation to this Transaction 3 (the “Transaction 3 Agreements”).

Transaction 2: Secondly, it is proposed that Denarii Exploration Pty Limited (“Denarii”) will acquire four tenements (the “Yandal Central Tenements”) from Aureus Investment Pty Limited (“Aureus”).

Transaction 3: Thirdly, on completion of Transaction 2, it is proposed that KML will acquire:

80% of the issued shares in Denarii (the “Initial Interest”) for a total cash consideration of $250,000, plus an ongoing royalty as set out in the Royalty Agreement; and
an option to acquire the remaining 20% of the issued shares in Denarii (the “Final Interest”) at a price to be agreed to between the parties or at the average of two independent valuations to be commissioned by each party.

In broad terms, the Royalty Agreement provides for a royalty of 1.75% of Net Smelter Revenues to be paid by Denarii for the Royalty Period.

This transaction is conditional on the completion of Transaction 2.

Artemis Resources Limited - Independent Expert Report – May 2012

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The Proposed Acquisition is conditional upon:

Transaction 2 and Transaction 3 being implemented;
the execution of documents relating to Transaction 1;
all other conditions precedent under Transaction 1 being satisfied; and
approval of the Proposed Acquisition by Shareholders of Artemis who are entitled to vote on the matter (“Non-associated Shareholders”).

Set out below is a diagrammatic overview of the Proposed Acquisition:

Figure 1: Diagrammatic Overview of the Proposed Acquisition

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

Artemis Resources Limited
100%
Subsidiaries and
Subsidiaries and
tenements held by Karratha Metals tenements held by
Artemis Resources
Limited Karratha Metals Limited
Limited prior to the
prior to the transactions
transactions
100% - acquired through T1.
80% - acquired through
T3. Option to acquire
remaining 20%
Armada Mining Limited
Denarii Exploration Pty
and other Legend
Limited
Tenements
100% - acquired through Transaction 2.
Yandal Central
Tenements
----- End of picture text -----

Source: LCF analysis

Further details of the above transactions are set out in the Explanatory Statement accompanying the Notice of Meeting to be sent to respective shareholders (together the “Documents”).

Artemis Resources Limited - Independent Expert Report – May 2012

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2 Scope and Limitations

2.1 Purpose of the Report

The Report is to accompany the Documents to be provided to the shareholders of Artemis and is prepared to assist the independent directors of Artemis in fulfilling their obligation to provide shareholders with full and proper disclosure to enable them to assess the merits of the Proposed Acquisition and to decide whether to agree by resolution to the Proposed Acquisition.

2.2 Scope

The scope of the procedures LCF undertook in forming our opinions was limited to those procedures we believe are required in order to form our opinion. Our procedures did not include verification work nor constitute a review, audit or other assurance engagement in accordance with Australian Auditing and Assurance Standards.

The assessment of whether the Proposed Acquisition is fair and reasonable necessarily involves determining the “fair market value” of various securities, assets and interests.

By its very nature, the formulation of a valuation assessment necessarily contains significant uncertainties and the conclusions arrived at in many cases will be subjective and dependent on the exercise of individual judgement. There is therefore no indisputable value, and we normally express our opinion as falling within a likely range.

2.3 Limitations

2.3.1 Reliance on Information

This Report is based upon financial and other information provided by Artemis. LCF has considered and relied upon this information. LCF believes the information provided to be reliable, complete and not misleading, and we have no reason to believe that any material facts have been withheld.

The information provided has been evaluated through analysis, inquiry and review for the purpose of forming our opinion. The procedures adopted by LCF in forming our opinion may have involved an analysis of financial information and accounting records. This did not include verification work nor constitute an audit or review in accordance with Australian Auditing and Assurance Standards and consequently does not enable us to become aware of all significant matters that might be identified in an audit or review. Accordingly, we do not express an audit or review opinion.

It was not LCF’s role to undertake, and LCF has not undertaken, any commercial, technical, financial, legal, taxation or other due diligence, or other similar investigative activities in respect of the Proposed Acquisition. LCF understands that the Directors have been advised by legal, accounting and other appropriate advisors in relation to such matters, as necessary. LCF does not provide any warranty or guarantee as to the existence, extent, adequacy, effectiveness and/or completeness of any due diligence or other similar investigative activities by the Directors and/or their advisors.

An opinion as to whether a corporate transaction is “fair” and/or “reasonable” is in the nature of an overall opinion, rather than an audit or detailed investigation and it is in this context that LCF advises that it is not in a position, nor is it practical for LCF, to undertake such an extensive verification exercise.

Artemis Resources Limited - Independent Expert Report – May 2012

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It is understood that, except where noted, the accounting information provided to LCF was prepared in accordance with generally accepted accounting principles (including adoption of Australian Equivalents to International Financial Reporting Standards) and prepared in a manner consistent with the method of accounting used by Artemis in previous accounting periods.

In accordance with normal practice, prior to finalising the Report, we confirmed facts with the client. This was undertaken by means of providing the client with a draft report. LCF obtained a representation letter from the client confirming that, to the best knowledge of the client, the information provided to, and relied upon by, LCF was complete and accurate, and that no significant information essential to the Report was withheld.

The client indemnified LCF and Lawler Partners and their partners, directors, employees, officers and agents (as applicable) against any claim, liability, loss or expense, costs or damage, arising out of reliance on any information or documentation provided to LCF by the client, which is false and misleading or omits any material particulars, or arising from failure to supply relevant documentation or information.

2.3.2 Assumptions

In forming our opinion, we made certain assumptions, including:

other than as publicly disclosed, all relevant parties have complied, and will continue to comply, with all applicable laws and regulations and existing contracts are in good standing, and will remain so and there is no alleged or actual material breach of the same or dispute in relation thereto (including, but not limited to, legal proceedings), 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;
that matters such as retention of key personnel and ownership of assets are in good standing, and will remain so;
any public information used in relation to Artemis and any other publicly available information relied on by us, is accurate and not misleading and up to date;
information in relation to the Proposed Acquisition that is distributed to Shareholders, or any information issued by a statutory body is complete, accurate and fairly presented in all material respects;
the legal mechanisms required to implement the Proposed Acquisition are valid and effective; and
if the Proposed Acquisition is implemented, it will be implemented in accordance with the draft transaction documents provided to us.

2.4 Basis of Assessment

2.4.1 The Tests to be Applied

In preparing this Report we considered the Regulatory Guides issued by ASIC and in particular, Regulatory Guide 76 Related Party Transactions (“RG 76”) and Regulatory Guide 111 Content of Expert Reports (“RG 111”).

The ‘fair’ and ‘reasonable’ tests to be applied will be the type of opinion required in relation to ASX Listing Rule 10.10.2.

Artemis Resources Limited - Independent Expert Report – May 2012

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2.4.2 Fair and Reasonable

RG 111 indicates that, when assessing a transaction with a person in a position of influence that requires member approval under ASX Listing Rule 10, (a “related party transaction”), it is important that an expert focuses on the substance of the related party transaction, rather than the legal mechanism (RG 111.53).

RG 111 indicates that, where an expert assesses whether a related party transaction is ‘fair and reasonable’ for the purposes of ASX Listing Rule 10.1, there should be a separate assessment of whether the transaction is ‘fair’ and ‘reasonable’, as in a control transaction (RG 111.56).

RG 111 indicates that, when assessing a “control transaction”, the words ‘fair’ and ‘reasonable’ establish two distinct criteria:

is the proposal ‘fair’; and
is it ‘reasonable’.

Fair

Under RG 111, where the proposed transaction consists of an asset acquisition by the entity, it is ‘fair’ if the value of the financial benefit being offered by the entity to the related party is equal to or less than the value of the assets being acquired. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length (RG 111.57; RG 111.58).

Where the financial benefit given by the entity is securities in the entity and the consideration is securities in another entity held by a related party, the value of the entity’s securities should be compared to the value of the securities it is purchasing. If the expert uses the market price of either of the securities as a measure of their value, it should consider, among other things:

the depth of the market for those securities; and
the volatility of the market price (RG 111.58).

Therefore, under RG 111, the Proposed Acquisition will be ‘fair’ if the fair market value of the Consideration Shares is equal to or less than the fair value of the securities of KML being acquired by Artemis.

We have assessed the above as follows:

in the case of the Consideration Shares, the fair market value of the 156 million new fully-paid ordinary shares in Artemis has been assessed on a control basis. We note that the Proposed Acquisition does not involve a change in control on the basis that the Transactions 1, 2 and 3 and the Proposed Acquisition have been completed. However, by applying the control test, the Proposed Acquisition meets the highest test. We have also indicated the effect of the Proposed Acquisition on a significant influence basis, on the basis that Black Swan will hold just under 19% of Artemis issued capital; and
in the case of the issued shares of KML, the fair market value of 100% of the issued shares of KML has been assessed on a control basis and on the assumption that Transactions 1, 2 and 3 have been completed.

2.4.3 Reasonable

Under RG 111, the Proposed Acquisition will be ‘reasonable’ if it is ‘fair’. It might also be ‘reasonable’ if, despite being ‘not fair’, the expert believes that there are sufficient reasons for the Non-associated Shareholders to sufficient reasons for members to vote for the proposal (RG 111.60).

Artemis Resources Limited - Independent Expert Report – May 2012

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RG 111.62 indicates that when deciding whether an offer is reasonable, an expert might consider factors such as the following:

the financial situation and solvency of the entity, including the factors set out in RG 111.26, if the consideration for the financial benefit is cash;
opportunity costs;
the alternative options available to the entity and the likelihood of those options occurring;
the entity’s bargaining position;
whether there is selective treatment of any security holder, particularly the related party;
any special value of the transaction to the purchaser, such as particular technology or the potential to write off outstanding loans from the target; and
the liquidity of the market in the entity’s securities.

Artemis Resources Limited - Independent Expert Report – May 2012

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3 Profile of Artemis Resources Limited

3.1 Background

Artemis is an Australian based public company which was first listed on the Australian Securities Exchange (“ASX”) on March 2007. As at 31 March 2012, the Company had a market capitalisation of approximately $8.13 million.

Artemis is an Australian based gold and base metal exploration company established primarily to acquire, explore, evaluate and exploit gold and base metal deposits and explore prospective gold and base metal tenements.

Artemis currently holds tenements in the following areas:

Yandal (gold);
Mount Clement (gold & silver);
Buchanan's Creek (lithium, tantalum, niobium and gold);
Cambridge Creek (uranium);
Mundong Well (uranium);
Bali Hi (uranium); and
Niger (uranium).

Artemis’ corporate strategy is to maximise shareholder returns through growth of the Company. This growth will be achieved through exploration success and project acquisition.

3.2 Operations

3.2.1 Yandal Gold Project (Held 100% by Artemis)

The Yandal Gold Project covers the following tenements:

Table 5: Yandal Gold Project Tenements

Tenement	Interest Held by Artemis
E53/1026	100%
E53/1213	100%
E53/1214	100%
E53/1574	100%
E53/1575	100%
E53/1626	100%
E53/1627	100%
ELA53/1662	100%

Source: Management of Artemis

The Yandal Gold Project covers a total area of 238 km² and is located 95 km southeast of the township of Wiluna. The Project area lies in the highly productive Yandal Greenstone Belt in the northern part of the Eastern Goldfields province of Western Australia which has produced more than 12 million ounces of gold to date. The Project lies 30km north of the 2mtpa Bronzewing gold mine and adjacent to Echo Resources Limited's Julius discovery.

Artemis Resources Limited - Independent Expert Report – May 2012

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The Yandal Gold Project is host to the Lowlands, Slav Well, Forked Stick, 6 Mile Well and International Gold Deposits, each of which has been drilled by previous explores with encouraging gold intersections. These previous explorers include Great Central Mines ("GCM"), M.I.M. Holdings Limited (“MIM”), Dominion Mining Limited (“Dominion”), Tectonic Resources NL (“Tectonic Resources”), Sandstone Resources Limited and Chartfield Limited. GCM discovered the multi million ounce Bronzewing and Jundee deposits. During this period GCM did not have access to large parts of the area comprising the Artemis Yandal Project.

Gold mineralisation has been encountered at numerous locations within Artemis' Yandal Project including Slav Well and Lowlands where historic non - JORC resources were identified by previous explorers. Following a comprehensive review and further supporting geophysical work, Artemis identified 47 drill targets which will commence to be drilled in April / May 2012.

3.2.2 Mt Clement Gold/ Silver Project

The Mt Clement Project covers the following tenements:

Table 6: Mt Clement Project Tenements

Tenement	Interest Held by Artemis
E09/1841	100%
E08/1606	100%
M08/191	80% (remaining 20% held by Northern Star Resources Limited)
M08/192
M08/193
Source: Management of Artemis

The Mt Clement Project comprises three granted mining leases (valid to 2020) and two granted exploration licences that cover a total area of 14km² in the Ashburton area of Western Australia. The Project lies roughly 30km south east of the operating Paulsen's Mine owned Northern Star Resources Limited.

Following an extensive drilling program in during the year ended 30 June 2011, the Company commissioned independent consultants Apex Geoscience Limited to undertake new JORC compliant resource estimate. This estimate indicated a total inferred resource of 1,131,600 tonnes at 1.77g/tAu and 17.0g/tAg, containing almost 64,000 ounces of gold and 620,000 ounces of silver, for a total of 80,000 ounces of gold equivalent at current commodity prices. This represents a 58% increase in contained gold over the historical resource estimate for the project and a doubling of the precious metal content.

A versatile time domain electro-magnetic (“VTEM”) survey is planned to characterise the known high grade sulphide zone to determine whether extensions and/or repetitions occur which would provide immediate drill targets and potentially additional resources. The survey will be carried out over the whole of the Mt Clement Project area.

Artemis Resources Limited - Independent Expert Report – May 2012

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3.2.3 Mundong Well Uranium Project

The Mundong Well Uranium Project covers the following tenements:

Table 7: Mundong Well Uranium Project Tenements

Tenement	Interest Held by Artemis
E08/1609	100%
E08/1892	100%
E08/2273	100%
E09/2129	100%
E08/2104	100%
E082105	100%
E 08/1372	80%
E 08/1561	60%
E 08/1792	60%
E 08/1834	60%
Source: Management of Artemis

Mundong Well is located in the Ashburton region of Western Australia, 300km south west of Karratha. The project covers an area of 169km[2] and includes the Mundong West, Cambridge Creek and Bali Hi tenements. The project hosts a variety of uranium style of mineralisation, including vein type, palaeochannel and calcrete uranium occurrences. There is currently no activity on this project.

3.2.4 Buchanan's Creek Rare Metals Project

The Buchanan’s Creek Rare Metals Project covers the following tenements:

Table 8: Buchanan’s Creek Rare Metals Project Tenements

Tenement	Interest Held by Artemis
ML3311	100%
ML30123	100%
ML30208	100%
EPM13694	100%
EPM14988	100%
EPM18490	100%
Source: Management of Artemis

Artemis holds tenements in Buchanan's Creek/ Grants Gully containing known lithium and niobium mineralisation.

Buchannan's Creek Prospect is located south of Georgetown, North Queensland. During the year ended 30 June 2011, Artemis gained exploration permits for a further 93km[2] of exploration ground considered highly prospective for tantalum, lithium, niobium and gold. This area (EPM18490 "Mosquito Creek") lies to the west of the Buchannan's Creek Prospect in North Queensland.

During the year ended 30 June 2011, Artemis undertook regional assessments of the main targets with encouraging results achieved from grab samples collected in the vicinity of the drilled pegmatite. The results indicated that rare metal mineralisation was widespread in this area and is not confined to the four previously drilled pegmatite bodies.

Artemis Resources Limited - Independent Expert Report – May 2012

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3.2.5 Niger Uranium

The Niger Uranium assets cover the following tenements:

Table 9: Niger Uranium Project Tenements

Tenement	Interest Held by Artemis
Tagaza II	49%
Tagaza IV	49%

Source: Management of Artemis

Artemis holds 49% interest in uranium exploration tenements in Niger, West Africa. The Tagaza Project is located within the highly productive Tim Mersoi Basin in North East Niger, which hosts uranium mines producing 12% of the worlds uranium supply. However, given the complexities and difficulties of this project, the company has written down its investment in this Project to $nil.

3.2.6 Directors

The Directors of Artemis are as follows:

Mr Guy Robertson – Chief Operating Officer/Executive Director: Mr Robertson was appointed as a Director of Artemis in September 2011. Mr Robertson has over five (5) years experience in the mineral exploration industry. Mr Robertson has over 25 years' experience in both public and private companies in Australia and Hong Kong. For 16 years he was Finance Director/CFO of various companies within the Jardine Matheson Group. Mr Robertson has a Bachelor of Commerce (Hons.) and is a Chartered Accountant.

Mr Frans Voermans – Non Executive Director: Mr Voermans was appointed as a Director of Artemis in August 2009. Mr Voermans has over 40 years experience in a broad variety of exploration, development and mining of projects in Southern Europe, Africa (Zambian Copperbelt) and Australia. Mr Voermans holds a BSc (1968) and MSc (1973) in Geology from the University of Amsterdam, The Netherlands. Mr Voermans is a Fellow of the Australasian Institute of Mining and Metallurgy and a Chartered Professional (Geology) since October 2000. He is also a Member of the Australian Institute of Geoscientists.

Shannon Coates – Non-Executive Director: Ms Coates was appointed as a Director of Artemis in September 2009. Ms Coates is a corporate adviser to the mineral exploration sector, and has acted as a Director and Company Secretary for a number of ASX, JSE and AIM mineral exploration companies. Ms Coates has a Bachelor of Law and a Post Graduate Diploma in Applied Corporate Governance, Chartered Secretaries of Australia.

Artemis Resources Limited - Independent Expert Report – May 2012

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3.3 Historical Income Statements

The historical audited consolidated income statements of Artemis for the years ended 30 June 2010 and 2011, and the unaudited consolidated income statement for the nine months ended 31 March 2012 are summarised in the table below.

Table 10: Historical Consolidated Income Statements of Artemis

	Year Ended 30 June	Year Ended 30 June	Nine Months to 31 March 2012 (Unaudited)
	2010 (Audited)	2011 (Audited)
Revenue Other income Administration expenses Personel costs Consultancy costs Occupancy costs Compliance & regulatory expenses Depreciation Payments to directors Exploration expenditure written off Consulting & technical Legal Travel Share based payments Impairment loss Net change in fair value of available for sale investments	305,202 97,416 ( 407,803) - ( 533,986) ( 158,836) ( 144,463) ( 4,409) ( 158,020) ( 619,237) ( 185,625) ( 106,055) ( 124,638) ( 193,657) ( 2,104,394) ( 725,000)	310,000 1,667,347 ( 387,654) ( 282,153) ( 698,069) ( 106,876) ( 139,438) ( 24,465) ( 161,978) ( 4,178,676) ( 660,000) ( 133,059) ( 127,242) ( 188,939) - ( 275,000)	194,406 76,969 ( 86,813) ( 17,359) ( 645,927) ( 12,400) ( 35,743) ( 13,896) - ( 52,648) - - ( 39,806) ( 10,726) ( 371,307) -
Profit before tax	( 5,063,505)	( 5,386,202)	( 1,015,250)
Income tax benefit/(expense)	217,500	82,500	-
Profit for theyear	(4,846,005)	(5,303,702)	(1,015,250)
Attributable to: Owners of the parent Non-controlling interests	( 4,666,212) ( 179,793)	( 5,163,387) ( 140,315)	( 1,015,250) -
Total	(4,846,005)	(5,303,702)	(1,015,250)

Source: Annual Report of Artemis for the year ended 30 June 2011, Management Accounts of Artemis for the nine months ended 31 March 2012, LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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3.4 Historical Statements of Financial Position

The historical audited consolidated statements of financial position of Artemis as at 30 June 2010 and 2011, and the unaudited consolidated statement of financial position as at 31 March 2012 is presented in the table below.

Table 11: Historical Consolidated Statements of Financial Position of Artemis

As at	30-Jun-2010 (Audited)	30-Jun-2011 (Audited)	31-Mar-2012 (Unaudited)
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other financial assets	1,064,093 184,682 26,250	3,940,243 1,146,815 -	2,447,583 1,123,461 -
Total Current Assets	1,275,025	5,087,058	3,571,044
Non-Current Assets Other financial assets Property, plant and equipment Evaluation and exploration expenditure	550,000 88,326 6,707,287	275,000 70,823 4,407,895	418,419 56,927 4,205,130
Total Non-Current Assets TOTAL ASSETS	7,345,613 8,620,638	4,753,718 9,840,776	4,680,476 8,251,520
LIABILITIES Current Liabilities Trade and other payables	493,212	612,897	160,492
Total Current Liabilities	493,212	612,897	160,492
Non-Current Liabilities Deferred tax liability	163,500	81,000	70,500
Total Non-Current Liabilities TOTAL LIABILITIES	163,500 656,712	81,000 693,897	70,500 230,992

NET ASSETS	7,963,926	9,146,879	8,020,528
EQUITY Share capital Reserves Accumulated losses Parent interests Non-controlling interests	18,789,072 1,112,964 (11,620,044)	25,120,128 1,076,063 (16,590,931)	25,120,128 966,962 (18,066,562)
	8,281,992 ( 318,066)	9,605,260 ( 458,381)	8,020,528 -
TOTAL EQUITY	7,963,926	9,146,879	8,020,528

Source: Annual Report of Artemis for the year ended 30 June 2011, Management Accounts of Artemis for the nine months ended 31 March 2012, LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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3.5 Historical Statements of Cash Flow

The historical audited consolidated cash flow statements of Artemis for the years ended 30 June 2010 and 2011, and the unaudited consolidated cash flow statement for the nine months ended 31 March 2012 are summarised in the table below.

Table 12: Historical Consolidated Statements of Cash Flow of Artemis

	Year Ended	Year Ended	Nine Months to 31 March 2012 (Unaudited)
	2010 (Audited)	2011 (Audited)
Cash Flows from Operating Activities Receipts from operations Payments to suppliers and and employees Interest received	305,202 ( 2,326,771) 97,416	170,000 ( 2,720,155) 141,882	n/a n/a n/a
Net Cash Generated by Operating Activities	( 1,924,153)	( 2,408,273)	n/a
Cash Flows from Investing Activities Payments for plant and equipment Proceeds on sale of plant and equipment Proceeds on sale of available for sale financial assets Proceeds from sale of subsidiary Proceeds from sale of tenements Payments for exploration and evaluation	( 68,062) 438 ( 2,801,286)	( 6,962) 111,815 1,000,000 140,000 ( 2,141,737)	n/a n/a n/a n/a n/a n/a
Net Cash Used in Investing Activities	( 2,868,910)	( 896,884)	n/a
Cash Flows from Financing Activities Proceeds from issue of shares and options Cost of issue of shares and options	4,353,822 ( 395,754)	6,779,371 ( 598,065)	n/a n/a
Net Cash Provided by Financing Activities	3,958,068	6,181,306	n/a
Net increase/(decrease) in cash and cash equivalents Cash and cash euivalents and the beginning of the financial year	( 834,995) 1,899,088	2,876,150 1,064,093	n/a n/a
Cash and Cash Equivalents at the end of the Financial Year	1,064,093	3,940,243	n/a

Source: Annual Report of Artemis for the year ended 30 June 2011, Management Accounts of Artemis for the nine months ended 31 March 2012, LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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3.6 Ownership

3.6.1 Overview

As at 16 April 2012, Artemis had the following securities on issue:

Table 13: Issued Securities of Artemis

Description	Number

Fully paid ordinary shares Unlisted options	325,390,396 30,095,833

Source: Shareholders register as at 16 April 2012

Further details regarding each of the above securities on issue is set out below.

3.6.2 Top Twenty Ordinary Shareholders of Artemis

Presented below are the top twenty ordinary shareholders of Artemis as at 16 April 2012:

Table 14: Top 20 Ordinary Shareholders of Artemis as at 16 April 2012

#	Ordinary Shareholder	Number of Ordinary Shares Held	% Held of Ordinary Capital
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20	JP MORGAN NOM AUST LTD BLACK SWAN GLOBAL PL NATIONAL NOM LTD CITICORP NOM PL HSBC CUSTODY NOM AUST LTD MEGALOCONOMOS PL GROSVENOR PIRIE MGNT LTD GRAF SIEGFRED CONOMOS ARTHUR JOHN PETROVIC MIROSLAV M GTI RES LTD CORA BIKE RACK PL HILL STUART PAUL TRENDFIELD HLDGS LTD NEFCO NOM PL ARCHEM TRADING NZ LTD STOEBICH FRIEDRICH SANPEREZ PL AURALANDIA NL CHAN VITUS	34,187,276 25,756,887 7,669,174 6,915,546 6,883,085 6,200,000 5,100,000 4,000,000 3,633,174 3,517,500 3,500,000 2,491,941 2,428,000 2,210,000 2,120,000 2,100,000 2,074,978 2,021,863 2,000,000 2,000,000	10.51% 7.92% 2.36% 2.13% 2.12% 1.91% 1.57% 1.23% 1.12% 1.08% 1.08% 0.77% 0.75% 0.68% 0.65% 0.65% 0.64% 0.62% 0.61% 0.61%
	Total Top 20 Shareholders Total Shares	126,809,424 325,390,396	38.97%

Source: Shareholders register as at 16 April 2012

Artemis Resources Limited - Independent Expert Report – May 2012

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3.6.3 Unlisted Options

The following unlisted options were in existence as at as at 16 April 2012:

Table 15: Unlisted Options on Issue by Artemis

Option Details	Number	Expiry Date	Exercise Price
Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options Unlisted options	10,000,000 3,562,500 250,000 1,000,000 1,350,000 3,100,000 833,333 10,000,000	14/12/2014 30/06/2012 30/06/2012 30/06/2013 30/06/2012 30/09/2013 30/09/2013 30/11/2014	0.04 0.15 0.10 0.07 0.07 0.07 0.08 0.04
Total	30,095,833
Source: Appendix 3B lodged by Artemis Resources

No amounts were paid or became payable by the option holder on receipt of the option.

The unlisted options carry no right (without exercising the option) to participate in any rights issue which may be offered by Artemis to its Shareholders. Option holders have no rights to dividends.

Unlisted options may be exercised at any time from the date of issue to the date of their expiry. There are no vesting conditions attached to the unlisted options.

3.6.4 Major Investors

JP Morgan Nominees Australia Limited

As at 16 April 2012 JP Morgan Nominees Australia Limited ("JP Morgan") held 34,187,246 (10.51%) of the issued shares in Artemis. Of these shares, JP Morgan holds as trustee for EFG Trust Company Limited re CL 11263 holding 30,216, 665 of the issued ordinary shares (9.286%).

Black Swan Global Pty Limited

As at 16 April 2012 JP Black Swan held 25,756,887 (7.92%) of the issued shares in Artemis.

Artemis Resources Limited - Independent Expert Report – May 2012

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3.6.5 Artemis Security Trading Analysis

Set out below is a chart setting out movements in the share price and trading volumes pertaining to the ordinary shares of Artemis during the period 1 May 2011 to 30 April 2012:

Figure 2 Artemis Share Price and Trading Volumes

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

Artemis Resources Limited
Share Price & Trading Analysis - 1 May 2011 to 30 April 2012
0.06 6,000,000
Volume
0.05 5,000,000
Share Price
0.04 4,000,000
0.03 3,000,000
0.02 2,000,000
0.01 1,000,000
0 0
Source: Capital IQ
Volume
Share Price
----- End of picture text -----

During the period 1 May 2011 to 30 April 2012, we note that the trading volumes of Artemis shares have been low when compared to those of larger companies listed on the ASX.

For the period 1 May 2011 to 30 April 2012, the total number of Artemis shares traded was 156,254,140, representing approximately 48.02% of the total number of shares on issue by Artemis during the period. Trading volumes in this range indicate that Artemis' shares are reasonably liquid. Trading volumes as a percentage of issued shares have fallen substantially in recent years and the average buy/ sell spread has widened (refer to Table 17).

Set out below in Table 16 is a summary of the trading volumes, volume weighted average trading prices (“VWAP”) and turnover of ARV’s securities during the period 1 May 2011 to 30 April 2012:

Table 16: Artemis Trading Analysis

Period	Volume	Value $	VWAP	Shares on Issue	Turnover
1 Month 3 Months 6 Months 12 Months	5,775,740 50,292,220 71,019,780 156,254,140	117,810 1,242,140 1,600,020 4,938,060	0.020 0.025 0.023 0.032	325,390,400 325,390,400 325,390,400 325,390,400	1.78% 15.46% 21.83% 48.02%

Source: Capital IQ

Table 17: Artemis Trading Liquidity

	2010	2011	2012
Avg Buy/Sell Spread	5.30%	6.30%	9.20%
Annual Turnover	235.60%	71.80%	52.70%

Based on the above, it is our view that Artemis shares are considered to be reasonably liquid.

Artemis Resources Limited - Independent Expert Report – May 2012

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4 Profile of Karratha Metals Limited

4.1 Karratha Metals Limited

Karratha Metals Limited ("KML") is a public company incorporated in April 2011. KML was established for the purpose of acquiring gold and rare metal tenements.

Subject to the implementation of Transaction 1 and Transaction 2 as described in Section 1, at the time of the Proposed Acquisition, KML will hold the following interests:

80% (the Initial Interest) of the issued shares of Denarii. Subject to the proposed Transaction 2 detailed in Section 1, Denarii will hold the following Yandal gold tenements situated in the Northern part of the Eastern Goldfields province of Western Australia 95 km southeast of the township of Wiluna, subject to a royalty as set out in the Royalty Agreement:

Table 18: Denarii - Yandal Gold Tenements

Tenement	Interest Held by KML
E53/1412	80%
E53/1413	80%
E53/1525	80%
E53/1526	80%

KML will hold an option to acquire the remaining 20% of the issued shares in Denarii (the Final Interest), (subject to a royalty as set out in the Royalty Agreement) at a price to be determined by both parties or at the average of two independent valuations to be commissioned by each party.

4.1.1 Ownership

As at 16 April 2012, KML had the following securities on issue:

Table 19: Issued Securities of KML

Description	Number
Fully paid ordinary shares	20,000,001

Source: ASIC Historical Company Extract

Prior to the Proposed Acquisition, 4,000,000 Promoter shares in KML currently on issue will be cancelled.

4.1.2 Directors

The Directors of KML are as follows:

Mr David Nolan: Mr Nolan was appointed as a Director of KML in April 2011.

Mr George Frangeskides: Mr Frangeskides was appointed as a Director of KML in September 2011.

Mr Max Heinz: Mr Heinz was appointed as a Director of KML in September 2011.

Artemis Resources Limited - Independent Expert Report – May 2012

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4.2 KML No 2 Pty Ltd

KML No 2 Pty Ltd (KML2) was incorporated in April 2011. KML is a wholly-owned subsidiary of KML. Mr David Nolan is the sole director of KML2.

Subject to the implementation of the proposed Transaction 1 and Transaction 2 detailed in Section 1 of this Report, KML2 will acquire interests in gold and base metals tenements in the Mt. Welcome area, approximately 10 Km from the town of Karratha and 100% of the issued shares of Armada. The tenements to be acquired from Legend Mining are detailed in the following table:

Table 20: Tenements to be acquired from Legend Mining

Tenement	Tenement	Tenement	Tenement
E47/1797	P47/1365	P47/1370	P47/1375
P47/1360	P47/1365	P47/1371	P47/1380
P47/1361	P47/1365	P47/1372	P47/1386
P47/1362	P47/1365	P47/1373	P47/1112
P47/1363	P47/1365	P47/1374	P47/1124
P47/1364			P47/1126

In each case, KLM2’s interest in the above tenements will be 100%.

4.3 Armada Mining Limited

4.3.1 Background

Armada was incorporated in March 2002. Armada is currently a wholly-owned subsidiary of Legend Mining. Subject to the implementation of the proposed Transaction 1 detailed in Section 1 of this Report, all the issued shares of Armada will be sold to KML2.

As at 31 March 2012 Armada had a loan payable to Legend Mining of $566,827. As a part of the proposed Transaction 1 this amount will be forgiven. Armada also has capitalised exploration costs of $857,790 and a corresponding deferred tax liability of $257,338.

Armada has mining tenements in north-western Western Australia. These are detailed in the following table:

Table 21: Armada Mining Tenements

Tenement	Interest Held by KML2
E47/1178	100%
E47/1745	100%
E47/1746	100%
E47/1747	100%
P47/1127	100%
P47/1131	100%

Armada also holds an existing 40% interest, and the ability to earn up to a 70% interest, in the Mt Marie joint venture.

4.3.2 Directors

The current directors of Armada are as follows:

Mr Michael Atkins: Mr Atkins was appointed as a Director of Armada Mining in May 2005.

Mr Mark Wilson: Mr Wilson was appointed as a Director of Armada Mining in May 2005.

Mr Dermot Ryan: Mr Ryan was appointed as a Director of Armada Mining in May 2005.

Artemis Resources Limited - Independent Expert Report – May 2012

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5 Industry Overview

5.1 Introduction

Artemis and KML are exploration companies operating predominantly within the Australian gold mining industry, through projects in Western Australia. Artemis also has rare element (Buchanan’s Creek in Queensland) and uranium projects (Mundong Well and Cambridge Creek in Western Australia).

Artemis completed Diamond drilling at Mt Clement and JORC-compliant inferred resources were identified. In Yandal, drilling is planned to commence in April / May 2012. There has been limited activity to date in relation to projects other than gold. We have therefore focused our analysis on the gold industry.

The fact that the companies are at an early exploration stage impacts the key success factors, barriers to entry and key external drivers of the companies as detailed later in this section.

5.2 Industry overview

5.2.1 Product

Gold is an internationally traded precious metal. Due to its history, symbolism and chemical characteristics, it has had many applications over the ages, including as a store of value in many human societies through history. Other popular applications include use in jewellery, medicine and dental applications for implants, food and drinks under the form of gold leaf as well as electronics due to characteristic of highly conducting electricity. Other marginal industry applications include soldering, hand crafting, photography, colouring, productive coating and heat shielding.

5.2.2 Gold production in Australia

Most of Australia’s gold production comes from open-cut mines which involves large capacity earthmoving equipment. The rapid growth in gold production through the late 1980s and 1990s was based on the open-cut mining of large, low-grade deposits and the use of chemicals for gold extraction in a process known has heap leaching, which enabled gold to be produced from previously uneconomic tailings and deposits.

Australia’s gold production was 266 tonnes during the year ended 30 June 2011 and according to both IBIS world and the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), is expected to expand over the five years through 2016-17 to 316 tonnes per annum. This growth is supported by a significant contribution of larger projects such as the Tropicana joint venture involving AngloGold Ashanti, a leading global gold producer operating in 11 countries and listed on five stock exchanges, (10 to 13 tonnes per annum), the Mungana Goldmine’s Mungana Gold Project, located in the Chillagoe district in Northern Queensland (5 tonnes per annum) and the Tanami Gold’s Central Tanami project (5 tonnes per annum).

A number of smaller projects are also expected to come on-stream, however the surge of smaller actors in the industry will be mainly dependent on maintenance of the currently relatively high gold price which is required to compensate for the large amounts of capital required and higher costs involved in processing deeper sulphide ores rather than shallow oxide ores.

These external forces will be determinant for any smaller player in counter-acting the long-term trends which, due to funding requirements, suggest that gold exploration and production will remain the province of large companies.

Artemis Resources Limited - Independent Expert Report – May 2012

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The gold ore mining industry is classified as moderately concentrated with industry concentration having happened in the 1990’s concomitantly to low gold prices and falling exploration efforts. The four largest players currently account for approximately 60% of the industry output, with a gap between large and small-capitalisation listed companies with no mid-tier or intermediate participants. Growing average discovery costs could potentially, over the long term, make the Australian gold production market less attractive to global investors.

5.3 Demand determinants

The key demand determinants for gold are fabrication needs and investment. Demand for gold rests essentially on its traditional role as a store of wealth. According to the World Gold Council, global gold demand volume grew by 0.4% to 4,067.1 tonnes in 2011, worth an estimated US$205.5bn. Investment was the main driver for growth, although jewellery and technology were resilient despite the increase in gold prices. Evolution in global gold demand over the past two calendar years is presented below with further insight on the demand in each major market:

Table 22: Quarterly global gold demand in 2010 and 2011

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1,400 1,800
1,200 1,600
1,400
1,000
1,200
800
1,000
600
800
400
600
200
400
0 200
Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
-200 0
Official purchases Technology Investment Jewellery London PM fix (US$/oz)
US$
Tonnes
----- End of picture text -----

Source: The London Bullion Market Association (“LBMA”), Thomson Reuters GFMS, World Gold Council, LCF analysis

In 2011 the investment sector combined with official purchases from central banks was the main sector with 2,080 tonnes, followed by the jewellery sector with 1,963 tonnes and the technology sector with 464 tonnes.

5.3.1 Investment sector – gold, a safe haven asset

The investment sector was the driving force behind gold demand throughout 2011 with investments and official purchases from central banks growing by 26.5% from 1,644 tonnes in 2010 to 2,080 tonnes in 2011 with the annual increase in purchases of gold from central bank representing 83% of the increase with 363 tonnes more than the 2010 level of 77 tonnes.

Artemis Resources Limited - Independent Expert Report – May 2012

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Volatility on financial markets and ongoing uncertainty about economic growth prospects in many developed economies due to both sovereign debt in Europe and social movements in the Middle East possibly re-charting geopolitical influences and impacting global petrol and food prices is expected to continue encouraging demand for gold from investors.

According to the World Gold Council in its report Gold Demand Trends Full Year 2011, during 2011, net investment demand was the result of a mixture of liquidity-driven selling and store-of wealth based buying together with speculation. Current drivers for investment demand to be considered include:

threat of inflation from increase in food and oil prices;
low real deposit rates in emerging markets;
deflation threats in Western markets due to credit crunch and the sovereign debt crisis;
volatility in global currencies and impact of carry trade on the relationship between Australian and US dollars.

We are not expecting these factors to change in short to medium term and demand for gold in the investment sector should remain steady.

5.3.2 Jewellery sector – Increasing Dependence on China as demand from India decreases

Global demand for Jewellery decreased by 2.7 % between 2010 and 2011 from 2,017 tonnes to 1,963 tonnes but increased by 4.7% in value between Q4’10 and Q4’11 from US$24.7bn to US$25.9bn. The increase was fuelled by greater China (including Hong Kong), increasing its demand by 27.4% over the period, while Indian demand decreased by 31.4%.

Historically, India has been the largest gold consumer and according to the World Gold Council sharply lowered its demand for Jewellery in 2011 due to increased food prices. Should gold and food prices continue to rise, we expect the jewellery market to possibly face more and more difficulties as the bargaining power of China increases.

5.3.3 Technology sector – resisting head winds

Electronic applications represent approximately 70% of the demand in the technology sector. In electronics, gold is a key component in the manufacture of semi-conductors. Hence, demand is dependent on global semi-conductor sales. According to the Semiconductor Industry Association (“SIA”), global conductor sales were $22.9bn in February 2012, decreasing by 7.3 percent year over year. The sector could be expected to face some challenges should the trends in the global markets continue.

5.3.4 Key external factors

The key external factors are as detailed below:

industry revenue is sensitive to world gold prices, when value of gold is high, returns and ability to perform further exploration are enhanced;
The US-to-Australian dollar exchange rate has a direct impact on Australian dollar returns received by local producers;
higher interest rates tend to make other types of investment more attractive than gold stocks.

Artemis Resources Limited - Independent Expert Report – May 2012

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5.4 Supply conditions

Gold supply globally is sou r ced from the following two categories:

Table 23: Quarterly global gold supply in 2010 and 2011

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1,400
1,200
1,000
440
440 411 415
454
377 346
800 370
600
400
606 681 663 651 666 707 737 711
200
0
Q1'10 Q 2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
Mine supply Recycled gold
Tonnes
----- End of picture text -----

Source: LBMA, Thomson Reuters GFMS, World Gold Council, LCF analysis

Mine supply represents a p proximately two third of global supply and rises in g old production mainly come from China, which r e mains the largest gold producer.

5.5 Gold prices

Gold prices rallied in Sept e mber 2011 and reached historic highs of US$1,895 p er oz. This followed a bumpy decline trend anim a ted by both the concerns about the sovereign debt c risis in Europe and the social movements in the Middle East and the impacts they may have o n oil prices and other commodities. On April 17, 2012, gold prices were down 13.7% from the histori c highs, at US$1,635.5 / oz as presented in the cha r t below.

Artemis Resources Limited - Independent Ex p ert Report – May 2012

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Figure 3: Daily Gold Price from April 2007

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

5 Sep 2012
2,000
US$ 1,895
1,800
1,600
17 April 2012
1,400
US$ 1,653
1,200
1,000
800
600
400
200
0
Gold - London P.M. (US$ / oz.)
US$
----- End of picture text -----

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

Source: S&P Capital IQ
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Figure 4: Future Contracts on Gold up to February 2018

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

1,850
1,800
1,750
1,700
1,650
1,600
1,550
Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18
Futures Gold - London P.M. (US$ / oz.)
US$
----- End of picture text -----

Source: Thomson Reuters

From consensus estimates, it is estimated that gold prices will remain above US$1,050 per oz with a mean price remaining above US$1,600 per oz in the short to medium term.

Investment demand for gold is expected to remain relatively high as factored in by the gold futures contract market with gold prices expected to continue to increase toward US$1,791 by 2018.

Artemis Resources Limited - Independent Expert Report – May 2012

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Table 24: Consensus Estimate Forecast Gold Price – April 2012

US$ / oz	FY2012	FY2013	FY2014	FY2015	FY2016
High estimate	2,300	2,125	2,200	1,950	1,821
Low estimate	1,161	1,050	1,100	1,200	1,100
Mean	1,711	1,729	1,623	1,449	1,347
Number of estimates	57	55	45	33	24

Source: S&P Capital IQ

It is expected that future gold prices will be influenced by a number of factors:

gold purchases by central banks will be limited;
the growing influence of China is expected to continue boosting demand; and
volatility is expected to continue due to uncertainties both in the Middle East and Europe.
5.6 Critical success factors and barriers to entry

Most critical success factors for junior mining explorers within the gold mining industry include the followings:

quality and experience of management. The ability to attract and retain the necessary personnel could have a material effect upon the Company’s business, results of operations and financial position;
interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to, or its interest in, tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments. In Australia, it is also possible that there may be areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the Company to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations may be adversely affected;
exploration involves a high degree of risk, because of the level of capital necessary to explore and the fact that commodities discovered may not be sufficiently productive to provide economic return;
location of the potential mining activities, including accessibility of infrastructure, access to previous mining records and ability to access large high grade reserves are essential to the business’s success. The estimation of natural reserves involves subjective judgments and is not an exact calculation. The estimate may change because of new information from production or drilling activities or changes in economic factors, such as assumptions regarding commodity price;
mining is subject to numerous stringent and complex laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Environmental concerns could halt mining projects or include further costs and firms must be able to gain environmental approval to open or expand the mines;
in order to proceed with the development of any of projects, an exploration company requires funding, such as raising additional equity or debt capital; and
changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. The market price of shares can be expected to rise and fall in accordance with general market conditions and factors specifically affecting the Australian resources sector and exploration companies in particular.

Artemis Resources Limited - Independent Expert Report – May 2012

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6 Valuation of Artemis Resources Limited

6.1 Valuation Summary

6.1.1 Control Basis

Based on the following analysis, in our opinion, the fair market value of 100% of the issued shares on a control basis of Artemis as at 31 March 2012 falls within the range of $4.08 million to $4.66 million with an average of $4.37 million, which has been calculated as follows:

Table 25: Fair Market Value of Artemis Resources Limited (On a Control Basis)

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Pro-Forma Net Assets as at 31 March 2012 Capitalised Corporate Costs	Section 6.4 Section 6.5	8,804,173 ( 4,720,000)	10,559,623 ( 5,900,000)	9,681,898 ( 5,310,000)
Fair Market Value of Artemis Resources Limited (On a Control Basis)		4,084,173	4,659,623	4,371,898
Shares on Issue as at 31 March 2012		325,390,396	325,390,396	325,390,396
Fair Market Value of Artemis Resources Limited (Per Share on a Control Basis)		0.0126	0.0143	0.0134
Source: LCF analysis

Our assessment of the fair market value of 100% of the issued shares of Artemis is set out below.

6.1.2 Significant Influence Basis

As noted in paragraph 2.4.2 above, we have also undertaken a valuation on a significant influence basis, the rational being that Black Swan increasing its shareholding from approximately 8% to 19%. We have assessed the significant influence value by discounting the control of Artemis value by 15% (low) to 10% high. Based on the above analysis, in our opinion, the fair market value of 100% of the issued shares on a significant influence basis of Artemis as at 31 March 2012 falls within the range of $3.47 million to $4.19 million with an average of $3.83 million, which has been calculated as follows:

Table 26: Fair Market Value of Artemis Resources Limited (On a Significant Influence Basis)

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Pro-Forma Net Assets as at 31 March 2012 Capitalised Corporate Costs	Section 6.4 Section 6.5	8,804,173 ( 4,720,000)	10,559,623 ( 5,900,000)	9,681,898 ( 5,310,000)
Fair Market Value of Artemis Resources Limited (On a Control Basis)		4,084,173	4,659,623	4,371,898
Significant Influence Discount		-15.0%	-10.0%	-12.5%
Fair Market Value of Artemis Resources Limited (On a Significant Influence Basis)		3,471,547	4,193,661	3,825,411
Shares on Issue as at 31 March 2012		325,390,396	325,390,396	325,390,396
Fair Market Value of Artemis Resources Limited (Per Share on a Control Basis)		0.0107	0.0129	0.0118

Source: LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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6.2 Approach

In selecting an appropriate methodology to estimate the fair market value of 100% of the issued shares of Artemis, we considered common market practice and the valuation methodologies recommended by RG 111, which are summarised in Appendix 1.

Our estimate of the fair market value of 100% of the issued shares of Artemis on a control basis has been assessed using the net realisable value of assets on a going concern basis. We are of the view that this valuation methodology is the most appropriate methodology to apply in the case of Artemis for the following reasons:

Artemis is primarily a gold and base metal exploration company which does not currently undertake any active trading activities, including any mining operations. Accordingly, LCF is of the view that an earnings based or discounted cash flow (“DCF”) based valuation methodology is not appropriate;
while Artemis’ securities are listed on the ASX and do trade, LCF considers the liquidity of trading of Artemis’ securities to be too low to allow sufficient weight to be placed on the value of these trades as a true indication of the fair value of Artemis shares. Further, we note that any trades that do take place are for minority parcels of shares only. Accordingly, LCF is of the view that a valuation based on the trading prices of Artemis’ shares is not appropriate; and
LCF has not been made aware of any genuine offers for Artemis securities which may provide an indication as to the fair market value of Artemis’ securities. Accordingly, a valuation based on genuine offers is not possible.

Our valuation has not been prepared on the basis of the existence of a special purchaser. This has been considered in our assessment of whether the Proposed Acquisition is reasonable.

In arriving at the value of Artemis on a significant influence basis, we have taken the control value and discounted it by a low of 15% and a high of 10%. In our view, these discounts represent a fair assessment of the value for a strategic block to be held by Black Swan assuming that the Proposed Acquisition is approved.

6.3 Net Realisable Value of Assets on a Going Concern Basis

The net realisable value of assets on a going concern basis estimates the market value of the net assets but does not take into account any realisation costs, including selling costs or losses due to a distress sale.

This method is often considered appropriate for the valuation of an investment or property holding entity or where the capitalisation of the estimated future maintainable earnings or DCF methodologies result in a lower value than the net realisable value of an entity’s assets. This method may also be appropriate for mineral exploration companies that do not carry on any mining operations.

We have reviewed Artemis’ net assets at 31 March 2012 as set out in its management accounts and have made pro forma adjustments to reflect the fair market value of assets and liabilities that are not held in the financial statements at values consistent with fair market value based on appropriate valuation methodologies.

Details of the pro-forma adjustments made and the resulting net asset position have been set out in the following sections.

A material component of our valuation opinion has been based on a number of valuation reports prepared by Minnelex Pty Limited (“Minnelex”). Summaries of Minnelex’s opinions are contained in the relevant sections below. Full copies of Minnelex’s reports will be available on-line as follows: http://artemisresources.com.au/IRM/content/investor_welcome.html.

Artemis Resources Limited - Independent Expert Report – May 2012

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6.4 Pro-Forma Balance Sheet of Artemis

The following table sets out the unaudited balance sheet of Artemis as at 31 March 2012, the proforma adjustments made by LCF and the resulting pro-forma balance sheet as at 31 March 2012:

Table 27: Pro-Forma Balance Sheet of Artemis as at 31 March 2012

As at	31-Mar-2012 (Unaudited)	Pro-Forma Adjustments	Note	31-Mar-2012 (Pro-Forma)
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other financial assets	2,447,583 1,123,461 -	( 100,000) ( 300,000) -	1 2	2,347,583 823,461 -
Total Current Assets	3,571,044	( 400,000)		3,171,044
Non-Current Assets Other financial assets Property, plant and equipment Evaluation and exploration expenditure	418,419 56,927 4,205,130	525,000 - 1,646,370	3 4	943,419 56,927 5,851,500
Total Non-Current Assets TOTAL ASSETS	4,680,476 8,251,520	2,171,370 1,771,370		6,851,846 10,022,890
LIABILITIES Current Liabilities Trade and other payables	160,492	110,000	5	270,492
Total Current Liabilities	160,492	110,000		270,492
Non-Current Liabilities Deferred tax liability	70,500	-		70,500
Total Non-Current Liabilities TOTAL LIABILITIES	70,500 230,992	- 110,000		70,500 340,992

NET ASSETS	8,020,528	1,661,370		9,681,898
EQUITY Share capital Reserves Accumulated losses Parent interests Non-controlling interests	25,120,128 966,962 (18,066,562)	- 1,871,370 (210,000)	3, 4 1	25,120,128 2,838,332 (18,276,562)
	8,020,528 -	1,661,370 -		9,681,898 -
TOTAL EQUITY	8,020,528	1,661,370		9,681,898

Source: Annual Report of Artemis for the year ended 30 June 2011, Management Accounts of Artemis for the nine months ended 31 March 2012, LCF analysis

Set out below is our review of relevant balances contained in the pro-forma balance sheet of Artemis as at 31 March 2012:

Note 1: Cash & Cash Equivalents

As at 31 March 2012, the balance of cash and cash and cash equivalents was $2,447,583.

We have been advised by management of Artemis that the Company will incur costs associated with the Proposed Acquisition of approximately $100,000. These costs relate to legal fees, geologist’s valuation fees and fees associated with the preparation of this Report.

These costs will be incurred by Artemis even if the Proposed Acquisition does not proceed.

Artemis Resources Limited - Independent Expert Report – May 2012

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Accordingly, we have taken up a pro-forma adjustment in the amount of $100,000 to reflect the future payment of these costs. A corresponding pro-forma adjustment has been taken against retained earnings.

Note 2: Trade & Other Receivables

Included in trade and other receivables is a balance owed to Artemis from Hastings Rare Metals Limited (“Hastings”) for the sale of Gascoyne Metals Pty Limited during the year ended 30 June 2011. The original amount of this receivable was $1 million and was payable at the earlier of Hastings raising capital of at least $1 million or 31 October 2011.

The repayment of this loan was subsequently amended to 31 January 2012 by agreement. Prior to 31 January 2012, a further agreement was entered into for payment as follows:

i) $300,000 to be paid via the issue of three (3) million shares in Hastings on or around 11 April 2012, subject to approval by Hastings shareholders; and
ii) the remaining balance to be paid in three (3) instalments as follows:
$250,000 on or before 30 June 2012;
$250,000 on or before 30 September 2012; and
$250,000 on or before 31 December 2012.

On 3 May 2012, Artemis was issued with three (3) million shares in Hastings at an issue price of $0.10 per share.

We have been advised by the Directors of Artemis that no matters have come to their attention which would suggest that Hastings would not have the capacity to meet their remaining obligations in relation to the repayment of this loan. In this regard, LCF notes the following:

a) Hastings’ half year financial report for the six months ended 31 December 2011, which was signed on 14 march 2012, was prepared on a going concern basis and the auditor, HLB Mann Judd, did not provide any qualification or emphasis of matter in their review report relating to this matter; and
b) on 16 April 2012 Hastings announced to the ASX that it had completed a capital raising previously announced and the total capital raised was $5.4 million before costs.

Based on the above, LCF is of the view that there are no reasons to believe Hastings will not satisfy their remaining obligations in relation to the repayment of the loan to Artemis.

Accordingly, we have taken up a pro-forma adjustment in the amount of ($300,000) as at 31 March 2012 to take into account the issue of 3 million shares to Artemis in Hastings on 3 May 2012 in part satisfaction of the loan. A corresponding pro-forma adjustment has been taken up against other financial assets (see Note 3 below).

We have not taken up any adjustment to reflect the present value of the loan receivable on the basis that repayment of this loan is expected to be completed with nine months of 31 March 2012.

Artemis Resources Limited - Independent Expert Report – May 2012

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Note 3: Other Financial Assets

As at 31 March 2012, other financial assets comprised the following:

Table 28: Other Financial Assets of Artemis as at 31 March 2012

Description	Quantity Held	Book Value
Apollo Minerals Limited	5,000,000	$240,000
Yangibana Project	10% interest	$178,419
Total		$418,419

In relation to other financial assets, we have taken up the following:

a) a pro-forma adjustment in the amount of $300,000 in relation to the issue of three million shares in Hastings to Artemis in 3 May 2012 at an issue price of $0.10 per share in part satisfaction of a loan payable by Hastings to Artemis. An opposite pro-forma adjustment has been taken up against trade and other receivables (see Note 2 above); and
b) a pro-forma adjustment in the amount of $225,000 to reflect movements in the fair market values of shares held in Apollo Minerals Limited and Hastings as at 31 March 2012 based on the closing share prices of these companies on 31 March 2012. An opposite pro-forma adjustment has been taken up against reserves.

The 10% interest held in the Yangibana Project is not listed. However, we have been advised by the Directors of Artemis that the value of this project has not materially changed since it was acquired in an arm’s-length transaction in June 2011. Given the short period of time since this investment was acquired by Artemis, this appears reasonable.

Note 4: Exploration & Evaluation Expenditure

As set out in Section 3.2 of this Report, Artemis held interests in a portfolio of mining assets, predominately mining exploration tenements.

LCF engaged Minnelex to undertake a valuation of these mining assets for the purpose of this Report. Minnelex has assessed the fair market value of the mining assets held by Artemis to be approximately $5.85 million. LCF has reviewed the Minnelex report and are satisfied with the conclusions reached in that report.

In view of the above, we have taken up a fair value adjustment in the amount of $1.65 million to reflect the difference between the book value of exploration and evaluation expenditure and the fair market value of the tenements as determined by Minnelex. An opposite pro-forma adjustment has been taken up against reserves.

For the purposes of this Report, LCF has undertaken a sensitivity analysis in relation to the valuations determined by Minnelex by assuming a movement in the assessed valuation of +/- 15%. This sensitivity analysis is reflected in the high and low values of the pro-forma net assets of Artemis as at 31 March 2012 as presented in Section 6 of this Report.

Note 5: Trade & Other Payables

As at 31 March 2012, the balance of trade and other payables was $160,492.

We have been advised by management of Artemis, that the Company will incur costs associated with the closure of activities associated with the Niger project of approximately $110,000. We have been advised that these costs had not been accrued by Artemis as at 31 March 2012.

Accordingly, we have taken up a pro-forma adjustment in the amount of $110,000 to reflect these unrecognised liabilities. An opposite pro-forma adjustment has been taken against retained earnings.

Artemis Resources Limited - Independent Expert Report – May 2012

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6.5 Capitalised Corporate Overhead Costs

6.5.1 Generally

In assessing the fair market value of Artemis on the basis of net assets on a going concern, an appropriate capitalised allowance for future corporate overheads is required in order to recognise the ongoing costs associated with maintaining the operations of the Company. These costs include, but are not limited to:

compliance and reporting costs, such as audit and accounting fees;
professional fees, such as legal fees;
occupancy costs; and
wages and salaries to staff and directors.

Based on our review of the forecast for Artemis’ expenditures for the 12 months to 31 December 2012, we have assessed the required ongoing corporate overheads to be approximately $1.18 million on an annualised basis (pre-tax).

6.5.2 Capitalisation Multiple

The appropriate capitalisation rate is usually assessed by collecting market evidence with respect to the earnings multiples of companies that operate in the same or similar industries.

In our opinion, the appropriate earnings multiple to adopt in capitalising ongoing overheads of Artemis is usually based on an EBITDA multiple for the following reasons:

EBITDA disregards factors that may not be relevant to the ownership of assets, such as the cost of financing those assets and differing tax rates; and
EBITDA disregards depreciation and amortisation charges.

Having said that, we note that comparable companies operating within this industry are in the exploration stage and as such, do not have any reportable revenue, and tend to have negative EBITDA. As such, a capitalisation rate derived from comparable EBITDA multiples is not readily available.

Having regard to capitalisation rates used in other contexts, we believe that an appropriate capitalisation multiple to apply to estimated ongoing corporate overhead costs of Artemis is between 4 to 5 times.

6.5.3 Assessment

Set out below is a summary of the assessed capitalised ongoing corporate overhead costs of Artemis:

Table 29: Capitalised Ongoing Corporate Overhead Costs of Artemis

	Low	High	Average
Assessed Level of Ongoing Corporate Overhead Costs Capitalisation Multiple	1,180,000 4.0	1,180,000 5.0	1,180,000 4.5
Capitalised OngoingCorporate Overhead Costs	4,720,000	5,900,000	5,310,000
Source: Management of Artemis, LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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6.6 Valuation Cross-Check

We are of on the view that there is no alternative valuation methodology suitable in relation to the valuation of the issued shares of Artemis. Accordingly, we have relied entirely on our valuation conclusion derived using the net realisable value of assets on a going concern basis.

Notwithstanding the above, we have attempted to reconcile the value arrived at for Artemis prior to the Proposed Acquisition from a control basis to that of a minority basis and have compared that to the share price of Artemis prior to the announcement of the Proposed Acquisition. Set out below is our reconciliation of Artemis from a control basis to a minority basis:

Table 30: Reconciliation of the Value of an Artemis Share – From Control to Minority Basis

		Low	High	Average
Valuation Cross Check Fair Market Value of Artemis Resources Limited (Per Share on a Control Basis) Minority Interest Discount	Section 6.6.1	0.0126 -35.0%	0.0143 -25.0%	0.0134 -30.0%
Fair Market Value of Artemis Resources Limited (Per Share on a MinorityInterest Basis)		0.0082	0.0107	0.0094
Source: LCF analysis

Based on the above, the fair value assessed share price of an Artemis share on a minority basis is approximately 1 cent per share. This compares to a market price of approximately 2.0 cents – refer to Section 3.6.5. In our view, the reason for the difference relates to the market anticipation of results from exploration and/or other corporate activity where as our assessed value of Artemis only takes into consideration the underlying value of the assets of the Company.

Further, the current Artemis share price does not reflect the position of Artemis following implementation of the Proposed Acquisition, which will significantly increase the size of Artemis operations.

Based on the above, we have not considered the current share price of Artemis is a suitable cross check of the valuation result.

Artemis Resources Limited - Independent Expert Report – May 2012

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7 Valuation of Karratha Metals Limited

7.1 Valuation Summary

Based on the following analysis, in our opinion, the fair market value of 100% of the issued shares of KML as at 31 March 2012 falls within the range of $2.15 million to $3.27 million, with an average of $2.71 million, which has been calculated as follows:

Table 31: Fair Market Value of Karratha Metals Limited

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Karratha Metals Limited on a Stand Alone Basis Pro-Forma Net Assets as at 31 March 2012 Capitalised Corporate Costs Less: Book Value of KML's Investment in Denarii Add: Armada Mining Limited Add: Denarii Exploration @ 80%	Section 7.4 Section 7.5 Section 7.6 Section 7.7 Section 7.8	899,281 ( 1,000,000) ( 250,000) 2,176,550 327,248	1,285,019 ( 1,250,000) ( 250,000) 3,035,569 445,568	1,092,150 ( 1,125,000) ( 250,000) 2,606,060 386,408
Fair Market Value of Karratha Metals Limited (On a Control Basis)		2,153,079	3,266,156	2,709,618

Source: LCF analysis

Our assessment of the fair market value of 100% of the issued shares of KML, which has been based on the assumption that Transactions 1, 2 and 3 have been completed, is set out below.

7.2 Approach

As the Proposed Acquisition will only take place upon successful completion of Transactions 1, 2 and 3 as set out in Section 1 of this Report, our valuation of KML has been undertaken on the assumption that these transactions have been completed.

Accordingly, in order to determine the fair market value of the issued shares of KML, LCF has also been required to determine the fair market value of the issued shares of Denarii and Armada. In the remainder of this section, KML, Denarii and Armada have collectively been referred to as the “Target Companies”.

Each of the Target Companies has been valued on the assumption that Transactions 1, 2 and 3 have been completed.

In our selection of an appropriate methodology to estimate the fair market value of 100% of the issued shares of the Target Companies, we have considered common market practice and the valuation methodologies recommended by RG 111, which are summarised in Appendix 1.

Our estimate of the fair market value of 100% of the issued shares of the Target Companies has been assessed using the net realisable value of assets on a going concern basis. We are of the view that this valuation methodology is the most appropriate methodology to apply in the case of the Target Companies for the following reasons:

the Target Companies are primarily gold and base metal exploration companies that do not currently undertake any active trading activities, including any mining operations. Accordingly, LCF is of the view that an earnings based or DCF based valuation methodology is not appropriate in the case of the Target Companies;
the securities of the Target Companies are not currently traded on any public exchange such as the ASX. Accordingly, a valuation based on the trading prices of the Target Companies’ shares is not possible; and

Artemis Resources Limited - Independent Expert Report – May 2012

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LCF has not been made aware of any genuine offers for the securities of any of the Target Companies’ securities (apart from those proposed in Transactions 1, 2 3 & 4) which may provide an indication as to the fair market value of their securities. Accordingly, a valuation based on genuine offers is not possible.

Our valuation has not been prepared on the basis of the existence of a special purchaser. This has been considered in our assessment of whether the Proposed Acquisition is reasonable.

7.3 Net Realisable Value of Assets on a Going Concern Basis

This method is often considered appropriate for the valuation of an investment or property holding entity or where the capitalisation of the estimated future maintainable earnings or DCF methodologies result in a lower value than the net realisable value of an entities assets. This method may also be appropriate for mineral exploration companies which do not carry on any mining operations.

We have reviewed the Target Companies’ net assets at 31 March 2012 and have made pro forma adjustments to reflect the fair market value of assets and liabilities that are not held at values consistent with appropriate valuation methodologies.

Details of the pro-forma adjustments made and the resulting net asset positions have been set out in the following sections.

A material component of our valuation opinion has been based on a number of valuation reports prepared by Minnelex. Summaries of Minnelex’s opinions are contained in the relevant sections below. Full copies of Minnelex’s reports will be available on-line as follows: http://artemisresources.com.au/IRM/content/investor_welcome.html.

Artemis Resources Limited - Independent Expert Report – May 2012

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7.4 Pro-Forma Balance Sheet of KML

The following table sets out the unaudited balance sheet of KML as at 31 March 2012, the pro-forma adjustments made by LCF and the resulting pro-forma balance sheet as at 31 March 2012:

Table 32: Pro-Forma Balance Sheet of KML as at 31 March 2012

As at	31-Mar-2012 (Unaudited)	Pro-Forma Adjustments	Note	31-Mar-2012 (Pro-Forma)
ASSETS Current Assets Cash and cash equivalents Trade and other debtors	45,689 -	- -		45,689 -
Total Current Assets	45,689	-		45,689
Non-Current Assets Evaluation and exploration expenditure Other financial assets	194,836 -	1,090,956 250,000	1 2	1,285,792 250,000
Total Non-Current Assets TOTAL ASSETS	194,836 240,525	1,340,956 1,340,956		1,535,792 1,581,481
LIABILITIES Current Liabilities Trade and other payables	39,331	450,000	3	489,331
Total Current Liabilities	39,331	450,000		489,331
Non-Current Liabilities -	-	-		-
Total Non-Current Liabilities TOTAL LIABILITIES	- 39,331	- 450,000		- 489,331

NET ASSETS	201,194	890,956		1,092,150
EQUITY Share capital Reserves Accumulated losses	241,343 - ( 40,149)	- 1,090,956 ( 200,000)	1 3	241,343 1,090,956 ( 240,149)
TOTAL EQUITY	201,194	890,956		1,092,150

Source: Annual Financial Report of Karratha for the year ended 30 June 2011, Management Accounts of Karratha for the nine months ended 31 March 2011, LCF analysis

Set out below is our review of relevant balances contained in the pro-forma balance sheet of KML as at 31 March 2012:

Note 1: Exploration & Evaluation Expenditure

As set out in Section 4.1 of this Report, KML held interests in a portfolio of mining assets, predominately mining exploration tenements. In addition, as set out in Section 1 of this Report, under Transaction 1, KML will acquire from Legend Mining a number of mining assets.

LCF engaged Minnelex to undertake a valuation of these mining assets for the purpose of this Report. Minnelex has assessed the fair value of the mining assets held and to be held by KML to be approximately $1.29 million.

Accordingly, we have taken up a fair value adjustment in the amount of $1.09 million to reflect the difference between the book value of exploration and evaluation expenditure and the fair market value of the tenements as determined by Minnelex. An opposite pro-forma adjustment has been taken up against reserves.

Artemis Resources Limited - Independent Expert Report – May 2012

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For the purposes of this Report, LCF undertook a sensitivity analysis in relation to the valuations determined by Minnelex by assuming a movement in the assessed valuation of +/- 15%. This sensitivity analysis is reflected in the high and low values of the pro-forma net assets of KML as at 31 March 2012 as presented in Section 7.1 of this Report.

Note 2: Other Financial Assets

As at 31 March 2012, the balance of other financial assets was $nil.

As set out in Section 1 of this Report, KML will acquire 80% of the shares of Denarii for a total cash consideration of $250,000. Accordingly, we have taken up a pro-forma adjustment in the amount of $250,000 to reflect this acquisition. An opposite entry has been taken up against trade and other payable to reflect the outstanding liability to the shareholders of Denarii.

As set out in Section 1 of this Report, KML also will acquire an option to acquire the remaining 20% of the issued shares in Denarii (the Final Interest), at a price to be agreed to between the parties or, at independent valuation. Given that the price to be paid for the Final Interest is to be agreed, or at independent valuation, in our opinion, the price that will be paid is likely to be at a fair market value. In those circumstances, determining a value for the option is difficult, if not impossible and in any event, commercially, in our opinion, the value of such an option would be minimal. Accordingly, for present purposes we have not ascribed a separate value to the option.

Note 3: Trade & Other Payables

As set out in Note 2 above, KML will be acquiring 80% of the shares of Denarii for a total cash consideration of $250,000. Accordingly, we have taken up a pro-forma adjustment in the amount of $250,000 to reflect the consideration payable by KML.

In addition, as set out in Section 1 of this Report, KML is liable to reimburse Legend Mining $200,000 in respect of legal costs and management fees incurred by Legend Mining in relation to the negotiation and implementation of the agreements in relation to this Transaction 3. Accordingly, we have taken up a pro-forma adjustment to reflect this reimbursement payable by KML. An opposite adjustment has been taken against retained earnings.

In broad terms, the Royalty Agreement provides for a royalty of 1.75% of Net Smelter Revenues to be paid by Denarii for the Royalty Period.

As set out in Section 1 of this Report, under the Royalty Agreement KML/Denarii will undertake to pay a royalty of 1.75% of Net Smelter Revenues for the Royalty Period in respect the tenements held by Denarii.

Given that the royalty will only paid upon commencement of production from the tenements and the current stage of exploration, in our opinion, the commercial value of such a potential liability is difficult, if not impossible to determine at this time. If the tenements develop to a point where production commences, the royalty could then have material value. However, the value of the tenements would also have increased materially in value, beyond their current value. In any event, commercially, in our opinion, the value of such a royalty would be minimal at this time. Accordingly, for present purposes we have not ascribed a separate value to the option

7.5 Capitalised Corporate Overhead Costs

7.5.1 Generally

In assessing the fair market value of KML, an appropriate capitalised allowance for future corporate overheads is required in order to recognise the ongoing costs associated with maintaining the operations of KML. These costs include, but are not limited to:

Artemis Resources Limited - Independent Expert Report – May 2012

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compliance and reporting costs, such as audit and accounting fees;
professional fees such as legal fees;
occupancy costs; and
wages and salaries to staff and directors.

We have been advised by management of KML that ongoing corporate overhead costs are expected to range between $200,000 and $300,000 per annum. For the purpose of this Report, we have assessed the required ongoing corporate overheads to be approximately $250,000, on an annualised basis (pretax).

7.5.2 Capitalisation Multiple

The appropriate capitalisation rate is usually assessed by collecting market evidence with respect to the earnings multiples of companies that operate in the same or similar industries.

In our opinion, the appropriate earnings multiple to adopt in capitalising ongoing overheads of KML is usually based on an EBITDA multiple for the following reasons:

EBITDA disregards factors that may not be relevant to the ownership of assets, such as the cost of financing those assets and differing tax rates; and
EBITDA disregards depreciation and amortisation charges.

7.5.3 Assessment

Set out below is a summary of the assessed capitalised ongoing corporate overhead costs of KML:

Table 33: Capitalised Ongoing Corporate Overhead Costs of KML

	Low	High	Average
Assessed Level of Ongoing Corporate Overhead Costs Capitalisation Multiple	250,000 4.0	250,000 5.0	250,000 4.5
Capitalised OngoingCorporate Overhead Costs	1,000,000	1,250,000	1,125,000

Source: Management of KML, LCF analysis

7.6 Book Value of KML’s Investment in Denarii

As set out in Note 2 under Section 6.4 of this Report, we have taken up a pro-forma adjustment in the amount of $250,000 to reflect the consideration payable by KML in relation to the acquisition of 80% of the issued shares in Denarii.

As we have valued the interest in Denarii to be acquired by Artemis separately (refer to Section 7.8 of this Report), we have reversed the pro-forma book value of KML’s investment in Denarii.

Artemis Resources Limited - Independent Expert Report – May 2012

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7.7 Pro-Forma Balance Sheet of Armada

The following table sets out the unaudited balance sheet of Armada as at 31 March 2012, the proforma adjustments made by LCF and the resulting pro-forma balance sheet as at 31 March 2012:

Table 34: Pro-Forma Balance Sheet of Armada as at 31 March 2012

As at	31-Mar-2012 (Unaudited)	Pro-Forma Adjustments	Note	31-Mar-2012 (Pro-Forma)
ASSETS Current Assets Cash and cash equivalents	1	-		1
Total Current Assets	1	-		1
Non-Current Assets Deferred exploration costs	857,790	2,005,607	1	2,863,397
Total Non-Current Assets TOTAL ASSETS	857,790 857,791	2,005,607 2,005,607		2,863,397 2,863,398
LIABILITIES Current Liabilities Trade and other payables	-	-		-
Total Current Liabilities	-	-		-
Non-Current Liabilities Intercompany payables Deferred tax liability	566,827 257,338	( 566,827) -	2	- 257,338
Total Non-Current Liabilities TOTAL LIABILITIES	824,165 824,165	( 566,827) ( 566,827)		257,338 257,338

NET ASSETS	33,626	2,572,434		2,606,060
EQUITY Share capital Reserves Retained Earnings / (Losses)	1 - 33,625	- 2,005,607 566,827	1 2	1 2,005,607 600,452
TOTAL EQUITY	33,626	2,572,434		2,606,060
Source: Annual Financial Report of Armada for the year ended 31 December 2010, Management of Armada, LCF analysis

Set out below is our review of relevant balances contained in the pro-forma balance sheet of Armada as at 31 March 2012:

Note 1: Exploration & Evaluation Expenditure

As set out in Section 4.3 of this Report, Armada held interests in a portfolio of mining assets, predominately mining exploration tenements.

LCF engaged Minnelex to undertake a valuation of these mining assets for the purpose of this Report. Minnelex has assessed the fair value of the mining assets held by Armada to be approximately $2.86 million.

Accordingly, we have taken up a fair value adjustment in the amount of $2.01 million to reflect the difference between the book value of exploration and evaluation expenditure to date and the fair market value of the tenements as determined by Minnelex. An opposite pro-forma adjustment has been taken up against reserves.

Artemis Resources Limited - Independent Expert Report – May 2012

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For the purposes of this Report, LCF have undertaken a sensitivity analysis in relation to the valuations determined by Minnelex by assuming a movement in the assessed valuation of +/- 15%. This sensitivity analysis is reflected in the high and low values of the pro-forma net assets of KML as at 31 March 2012 as presented in Section 7.1 of this Report.

Note 2: Intercompany Payables

As at 31 March 2011, Armada owed Legend Mining an amount of $566,827. Under the terms of Transaction 3, this loan is to be forgiven.

Accordingly, we have taken up a pro-forma adjustment in the amount of $566,827 to reflect the forgiveness of this loan. An opposite pro-forma adjustment has been taken up against retained earnings.

7.8 Pro-Forma Balance Sheet of Denarii

The following table sets out the unaudited balance sheet of Denarii as at 31 March 2012, the proforma adjustments made by LCF and the resulting pro-forma balance sheet as at 31 March 2012:

Table 35: Pro-Forma Balance Sheet of Denarii as at 31 March 2012

As at	31-Mar-2012 (Unaudited)	Pro-Forma Adjustments	Note	31-Mar-2012 (Pro-Forma)
ASSETS Current Assets Cash and cash equivalents	10	-		10
Total Current Assets	10	-		10
Non-Current Assets Evaluation and exploration expenditure	-	493,000	1	493,000
Total Non-Current Assets TOTAL ASSETS	- 10	493,000 493,000		493,000 493,010
LIABILITIES Current Liabilities Trade and other payables	-	10,000	2	10,000
Total Current Liabilities	-	10,000		10,000
Non-Current Liabilities -	-	-		-
Total Non-Current Liabilities TOTAL LIABILITIES	- -	- 10,000		- 10,000

NET ASSETS	10	483,000		483,010
EQUITY Share capital Reserves Accumulated losses	10 - -	- 483,000 -		10 483,000 -
TOTAL EQUITY	10	483,000		483,010
Source: Management of Denarii, LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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Set out below is our review of relevant balances contained in the pro-forma balance sheet of Denarii as at 31 March 2012:

Note 1: Exploration & Evaluation Expenditure

As set out in Section 1 of this Report, under Transaction 1, Denarii will acquire from Aureus a number of mining assets for a total cash consideration of $10,000.

LCF engaged Minnelex to undertake a valuation of these mining assets for the purpose of this Report. Minnelex has assessed the fair value of the mining assets to be acquired by Denarii to be approximately $493,000. We note that the fair value is greater than the amount paid. We understand that the reason for this is that agreed amount represents a factor for consummating the Proposed Acquisition.

Accordingly, we have taken up a fair value adjustment in the amount of $493,000 to reflect the fair value of the mining asset to be acquired. Opposite pro-forma adjustments in the amount of $10,000 and $483,000 have been taken up against trade and other payable and reserves respectively.

For the purposes of this Report, LCF has undertaken a sensitivity analysis in relation to the valuations determined by Minnelex by assuming a movement in the assessed valuation of +/- 15%. This sensitivity analysis is reflected in the high and low values of the pro-forma net assets of Denarii as at 31 March 2012 as presented in Section 7.1 of this Report.

Note 2: Trade & Other Payables

As set out in Note 1 above, under Transaction 1, Denarii will acquire from Aureus a number of mining assets for a total cash consideration of $10,000.

Accordingly, we have taken up a pro-forma adjustment in the amount of $10,000 to reflect the consideration payable by Denarii to Aureus.

7.9 Valuation Cross-Check

We are of on the view that there is no alternative valuation methodology suitable in relation to the valuation of the issued shares of KML, Denarii or Armada. Accordingly, we have relied entirely on our valuation conclusions derived using the net realisable value of assets on a going concern basis.

Artemis Resources Limited - Independent Expert Report – May 2012

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8 Assessment of the Proposed Acquisition

8.1 Approach

We have been requested to prepare a Report advising whether, in our opinion, the Proposed Acquisition is fair and reasonable with respect to the Non-associated Shareholders of Artemis as a whole.

We have assessed whether the Proposed Acquisition is fair to the Non-associated Shareholders by comparing the fair market value of the consideration being offered by Artemis to the fair market value of KML to be acquired by Artemis.

In order to assess whether the Proposed Acquisition is reasonable, we considered whether the Proposed Acquisition is “fair” and if it is not, whether we consider that there are sufficient reasons for the Non-associated Shareholders of Artemis to accept the Proposed Acquisition. This assessment has largely been undertaken by considering whether in our opinion, the advantages of the Proposed Acquisition sufficiently outweigh its disadvantages for the Non-associated Shareholders of Artemis.

8.2 Fairness

Our assessment of whether the Proposed Acquisition is ‘fair’ or ‘not fair’ is set out below.

Our assessment of whether the Proposed Acquisition is ‘fair’ or ‘not fair’ on a control basis is set out in the following table:

Artemis Resources Limited - Independent Expert Report – May 2012

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Table 36: Fairness Assessment – Control Basis

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Fair Market Value of Consideration Shares Artemis Resources Limited Karratha Metals Limited	Section 6.1 Section 7.1	4,084,173 2,153,079	4,659,623 3,266,156	4,371,898 2,709,618
Total		6,237,252	7,925,779	7,081,516
Current Shares on Issue Shares to be Issued to Vendors Total Shares on Issue Post Proposed Acquisition	Section 3.6.1 Section 1	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396
Fair Market Value of Consideration Shares (On a Control Basis)		2,021,252	2,568,438	2,294,845
Fair Market Value of What is Being Acquired (100% of KML) Karratha Metals Limited	Section 7.1	2,153,079	3,266,156	2,709,618
Fair Market Value of What is BeingAcquired		2,153,079	3,266,156	2,709,618
Fair /(Unfair)		131,827	697,718	414,772
Source: LCF analysis

Table 37: Fairness Assessment – Control Basis Value of Artemis Pre and Post Proposed Acquisition

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Value of Artemis Share Pre-Transaction Value of Artemis Share Post-Transaction	Section 6.6.1	0.0126 0.0130	0.0143 0.0165	0.0134 0.0147
Fair /(Unfair)		0.0004	0.0021	0.0013
Source: LCF analysis

We note that above assessed fair market value of an Artemis share on a control basis before the Proposed Acquisition (of between $0.0126 and $0.0143) compares with recent share trading on the ASX of around $0.020-$0.025 (1 month VWAP and 3 months VWAP, respectively) (refer Section 3.6.5).

The fact that the recent market trading price of Artemis shares (which would be expected to represent a non-controlling interest value) exceeds our assessed fair market values (on a control basis) may be explained by market traders taking a more optimistic view of the assets and prospects of Artemis than our valuation.

Artemis Resources Limited - Independent Expert Report – May 2012

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As a result of the Proposed Acquisition, the major shareholder of KML (Black Swan) will increase its shareholding in Artemis from 7.92% to 18.9%. Accordingly, it is our view, that there is not likely to be a change in control of Artemis as a result of the Proposed Acquisition, but rather, Black Swan will achieve significant influence over Artemis.

Our assessment of whether the Proposed Acquisition is ‘fair’ or ‘not fair’ on a significant influence basis is set out in the following table:

Table 38: Fairness Assessment – Significant Influence Basis

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Fair Market Value of Consideration Shares Artemis Resources Limited Karratha Metals Limited	Section 6.1 Section 7.1	4,084,173 2,153,079	4,659,623 3,266,156	4,371,898 2,709,618
Total		6,237,252	7,925,779	7,081,516
Current Shares on Issue Shares to be Issued to Vendors Total Shares on Issue Post Proposed Acquisition	Section 3.6.1 Section 1	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396	325,390,396 156,000,000 481,390,396
Fair Market Value of Consideration Shares (On a Control Basis)		2,021,252	2,568,438	2,294,845
Less: Signifcant Influence Discount		-15.0%	-10.0%	-12.5%
Fair Market Value of What is Being Retained by Vendors (On a Significant Influence Basis)		1,718,064	2,311,594	2,007,990
Fair Market Value of What is Being Acquired (100% KML) Karratha Metals Limited	Section 7.1	2,153,079	3,266,156	2,709,618
Fair Market Value of What is BeingAcquired		2,153,079	3,266,156	2,709,618
Fair /(Unfair)		435,015	954,561	701,628
Source: LCF analysis

Table 39: Fairness Assessment – Significant Influence Basis Value of Artemis pre and post Proposed Acquisition

	Report Reference	Fair Market Value	Fair Market Value	Fair Market Value
		Low	High	Average
Value of Artemis Share Pre-Transaction Value of Artemis Share Post-Transaction	Section 6.6.1	0.0107 0.0110	0.0129 0.0148	0.0118 0.0129
Fair /(Unfair)		0.0003	0.0019	0.0011
Source: LCF analysis

Artemis Resources Limited - Independent Expert Report – May 2012

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8.3 Reasonableness

In accordance with RG 111, as it is our opinion that the Proposed Acquisition is ‘fair’ we are also of the opinion that it is ‘reasonable’.

Nevertheless, we have also considered various factors that we believe Non-associated Shareholders should consider when deciding whether or not to accept the Proposed Acquisition.

A summary of the matters that we have considered are set out below.

Advantages of the Proposed Acquisition

In our opinion, the Proposed Acquisition has a number of potential positive implications for the Nonassociated Shareholders of Artemis, including:

it will result in the consolidation of a number of mining assets in the Pilbara mining region;
it will result in an increase in the scale of Artemis’ activities, which should result in a number of administrative cost savings;
It diversifies the risk from the existing tenements;
it potentially makes Artemis more attractive to brokers and other institutions due to its increased size; and
the acquisition of the Yandal Central Tenements will result in a key part of the Yandal Gold Project being consolidated under the control of the Company.

Disadvantages of the Proposed Acquisition

In our opinion, the Proposed Acquisition has a number of potential negative implications for the Nonassociated Shareholders of Artemis, including:

it will result in dilution to the existing Non Associated Shareholders;
there may be an adverse effect on liquidity due to the increased holding of Black Swan; and
it results in the emergence of Black Swan as a major shareholder of Artemis which will result in one shareholder having a significant influence over the operations of the Company.

Implications for Non-associated Shareholders of Rejecting the Proposed Acquisition

Set out below are the key implications for Non-associated Shareholders of Artemis of rejecting the Proposed Acquisition. In our opinion, in the event the Proposed Acquisition was rejected, Nonassociated Shareholders would need to consider Artemis’ position as the existing assets of Artemis have not been able to attract suitable investment capital.

8.4 Overall Conclusion

In our opinion, for the reasons stated above, the Proposed Acquisition is ’fair’ and ’reasonable’ to the Non-associated Shareholders of Artemis.

Artemis Resources Limited - Independent Expert Report – May 2012

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9 Qualifications and Independence

9.1 Qualifications

LCF is the licensed corporate advisory arm of Lawler Partners. LCF provides advice in relation to all aspects of valuations and its personnel have extensive experience in the valuation of corporate entities.

Mr Vince Fayad B.Bus, CA, is a Director of LCF. Mr Fayad has been actively involved in the review of this Report. Mr Fayad has over 30 years experience in a number of specialist corporate advisory activities including company valuations, due diligence investigations, preparation and review of business feasibility studies, public company floats, accounting, advising on mergers and acquisitions, advising on independence expert reports, preparation of information memoranda and other corporate investigations.

Mr Peter Cornell B.Com, LLB, is a Director of LCF. Mr Cornell has been actively involved in the review of this Report. Mr Cornell has over 30 years experience in law, business valuation, corporate planning and corporate advisory activities. He has had extensive experience in the areas of preparation and review of independent expert’s reports, litigation support activities, business feasibility studies, financial investigations, business valuations and due diligence reviews.

Mr Nick Navarra B.Bus, CA is a Manager of LCF. Mr Navarra assisted Messrs Cornell and Fayad and was actively involved in the preparation of this Report. Mr Navarra has over 11 years experience in accounting, audit and corporate advisory activities including business, company and intangible asset valuations, the preparation of independent expert’s reports, due diligence reviews, litigation support activities, capital raisings and the provision of advice in relation to merger, acquisition and divestment transactions.

Based on their experience, Messrs Fayad, Cornell, and Navarra are considered to have the appropriate experience and professional qualifications to provide the advice offered.

9.2 Independence

LCF 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.

LCF does not have any shareholding in, or other relationship with Artemis, (including any of their related parties or associates) that could be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Proposed Acquisition.

LCF considers itself to be independent in terms of ASIC Regulatory Guide 112 Independence of Experts (“RG 112”), issued by ASIC.

LCF will receive a fee based on the time spent in the preparation of this Report in the amount of approximately $32,000 (plus GST and disbursements). LCF will not receive any fee contingent upon the outcome of the Proposed Acquisition.

Drafts of this Report were provided to the Directors of Artemis for review of factual accuracy. Certain changes were made to the Report as a result of the circulation of the drafts of the Report. However, our approach, valuation method and overall conclusions were not affected by the circulation of the draft reports.

Artemis Resources Limited - Independent Expert Report – May 2012

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Appendix 1 Sources of Information

In preparing this Report we have had access to, and relied upon, the following principal sources of information:

Annual Report of Artemis Resources Limited for the year ended 30 June 2011;
Unaudited management accounts of Artemis Resources Limited for the nine months ended 31 March 2012;
Cash flow forecast of Artemis Resources Limited for the year ending 31 December 2012;
Annual Financial Report of Karratha Metals Limited for the year ended 30 June 2011;
Unaudited management accounts of Karratha Metals Limited for the nine months ended 31 March 2012;
Financial Report of Armada Mining Limited for the year ended 31 December 2011;
Draft Notices of General Meeting and Explanatory Statement prepared in relation to the Proposed Acquisition;
Copy of the draft Agreement for Sale of Mining Tenements between Aureus Investment Pty Limited and Denarii Exploration Pty Limited in relation to the acquisition of the Yandal Tenements;
Copy of the draft Share Sale and Purchase Agreement in relation to the acquisition of Denarii Exploration Pty Limited by Karratha Metals Limited;
Copy of the draft Royalty Deed between Aureus Investment Pty Limited, Denarii Exploration Pty Limited and Karratha Metals Limited;
Copy of the Option and Sale Agreement between Legend Mining Limited and KML No 2 Pty Limited in relation to the acquisition of certain mining tenements and Armada Mining Limited;
Copy of the Extension Letter confirming the extension of the term under the Option and Sale Agreement between Legend Mining and KML No 2 Pty Limited;
Copy of the draft Second Agreement between Legend Mining Limited, KML No 2 Pty Limited and Artemis Resources Limited amending the terms of the Option and Sale Agreement between Legend Mining Limited and KML No 2 Pty Limited;
Copy of the draft share sale agreement between Artemis Resources Limited and Black Swan Global Pty Limited in relation to the acquisition of Karratha Metals Limited;
Copy of the draft share sale agreement between Artemis Resources Limited an minority shareholders of Karratha Metals Limited in relation to the acquisition of Karratha Metals Limited;
Independent Valuation Reports prepared by Minnelex Pty Limited in relation to mineral assets held by Artemis Resources Limited, Karratha Metals Limited and Armada Mining as well as the Yandal Tenements and tenements to be acquired by KML from Legend Mining Limited;
Information available on the website of Artemis Resources Limited, www.artemisresources.com.au;
Publicly available information available from the ASX and/or ASIC regarding Artemis Resources Limited including various ASX announcements, ASIC company extracts and information available from S&P Capital IQ;
Publicly available information available from the ASX and/or ASIC regarding Karratha Metals Limited, KML No 2 Pty Limited, Armada Mining Limited and Denarii Exploration Pty Limited, including various ASX announcements and ASIC company extracts;
Publicly available information available from the ASX and/or ASIC regarding Hastings Rare Metals Limited, including various ASX announcements and ASIC company extracts; and
other publicly available information.

In addition to the above, LCF has had various discussions with the management of Artemis Resources Limited and Karratha Metals Limited regarding the nature and prospects of their respective businesses and financial position.

Artemis Resources Limited - Independent Expert Report – May 2012

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Appendix 2 Glossary of Terms

Set out below is a glossary of terms used in this Report.

Table 40: Glossary

Term	Definition
$	Australian dollar
Armada	Armada Mining Limited, (ACN 099 807 333)
Artemis or the Company	Artemis Resources Limited, (ACN 107 051 749)
ASIC	Australian Securities & Investments Commission
ASX	Australian Securities Exchange
ASX Listing Rules	Australian Securities Exchange Listing Rules
Aureus	Aureus Investment Pty Limited, (ACN 111 420 805)
Black Swan	Black Swan Global Pty Limited, (ACN 150 204 792)
Consideration Shares	156 million new fully-paid ordinary shares in Artemis
Corporations Act	Corporations Act 2001 (Cth)
DCF	Discounted cash flow
Denarii	Denarii Exploration Pty Limited, (ACN 156 273 639)
Documents	Notice of Meeting and Explanatory Statement
EBITDA	Earnings before interest, tax, depreciation and amortisation
Explanatory Statement	Explanatory Statement to be issued by Artemis in relation to the Proposed Acquisition
FME	Future maintainable earnings
FOS	Financial Ombudsman Service Limited
FSG	Financial Services Guide
FY20XX	Financial year ended/ing 30 June 20XX
Hastings	Hastings Rare Metals Limited, (ACN 122 911 399)
IER	Independent Expert’s Report
IPO	Initial Public Offering
KML	Karratha Metals Limited, (ACN 150 289 866)
KML2	KML No 2 Pty Limited, (ACN 150 291 839)
LCF	Lawler Corporate Finance Pty Limited (ABN 65 097 893 957)
Legend Mining	Legend Mining Limited, (ACN 060 966 145)
Merged Entity	Means the company formed from the merger between KML and Artemis
Non-associated Shareholders	Shareholders of Artemis who are not associated with KML and any other associated parties of KML. Non- associated Shareholders are the only shareholders of Artemis who are entitled to vote in relation to the Proposed Acquisition.
Notice of Meeting	Notice of meeting to be issued by Artemis in relation to the Proposed Acquisition
NPV	Net present value
Proposed Acquisition	The proposed acquisition by Artemis of 100% of the issued shares of KML for a consideration of 156 million new fully-paid ordinary shares in Artemis.
Report	This Independent Expert Report prepared by LCF and dated 10 May 2012.
RG 76	ASIC Regulatory Guide 76Related Party Transactions
RG 111	ASIC Regulatory Guide 111Content of Expert Reports
RG 112	ASIC Regulatory Guide 112Independence of Experts
Shareholders	Shareholders of Artemis Resources Limited
Target Companies	Collectively, KML, Denarii and Armada
Valuation Date	31 March 2012
Yandal Tenements	The tenements to be acquired by Denarii from Aureus under Transaction 2 as follows: E53/1412; E53/1413; E53/1525; and E53/1526.

Artemis Resources Limited - Independent Expert Report – May 2012

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Appendix 3 Valuation Methods

In conducting our assessment of the fair market value of Artemis and the Target Companies, the following commonly used business valuation methods have been considered:

Discounted Cash Flow Method

The discounted cash flow (“DCF”) method is based on the premise that the value of a business or any asset is represented by the present value of its future cash flows. It requires two essential elements:

the forecast of future cash flows of the business asset for a number of years (usually five to 10 years); and
the discount rate that reflects the riskiness of those cash flows used to discount the forecast cash flows back to net present value (“NPV”).

DCF is appropriate where:

the businesses’ earnings are capable of being forecast for a reasonable period (preferably five to 10 years) with reasonable accuracy;
earnings or cash flows are expected to fluctuate significantly from year to year;
the business or asset has a finite life;
the business is in a 'start up' or in early stages of development;
the business has irregular capital expenditure requirements;
the business involves infrastructure Projects with major capital expenditure requirements; or
the business is currently making losses but is expected to recover.

Capitalisation of Future Maintainable Earnings Method

This method involves the capitalisation of estimated future maintainable earnings by an appropriate multiple. Maintainable earnings are the assessed sustainable profits that can be derived by the vendor’s business and excludes any one off profits or losses. An appropriate earnings multiple is assessed by reference to market evidence as to the earnings multiples of comparable companies.

This method is suitable for the valuation of businesses with indefinite trading lives and where earnings are relatively stable or a reliable trend in earnings is evident.

Net Realisable Value of Assets

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 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

Artemis Resources Limited - Independent Expert Report – May 2012

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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 realisable 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 net realisable value of assets is relevant where a company is making sustained losses or profits but at a level less than the required rate of return, where it is close to liquidation, where it is a holding company, or where all its assets are liquid. It is also relevant to businesses that 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.

Security Market Trading History

The application of the price that a company’s shares trade on the ASX 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.

Constant Growth Dividend Discount Model

The dividend discount model works best for:

firms with stable growth rates;
firms which pay out dividends that are high and approximate free cash flow to equity;
firms with stable leverage; and
firms where there are significant or unusual limitations to the rights of Investors.

Special Value

Special value is the amount that 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 purchases.

Artemis Resources Limited - Independent Expert Report – May 2012

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Appendix 4 Regulatory Matters

Corporations Act Requirements

We have been advised that neither Section 606 nor Chapter 2E of the Corporations Act will apply to the Proposed Acquisition.

Section 606 of the Corporations Act

Subsection 606(1) of the Corporations Act (“Section 606”) prohibits a person acquiring a relevant interest in voting securities of a listed entity if the acquisition would increase a person’s voting power in the entity:

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

Section 611, Item 7 of the Corporations Act allows a person to acquire a relevant interest in voting securities in an entity that would otherwise be prohibited by section 606 of the Corporations Act if:

approved by a resolution passed at a general meeting of members where the person acquiring the relevant interest (and associates) casts no votes in favour of the resolution; and
the members were given all information known to the person proposing to make the acquisition (and associates), or known to the company, that was material to the decision on how to vote on the resolution.

If the Proposed Acquisition proceeds, the KML vendor shareholders will increase their collective shareholding in Artemis from 0% to 32.41%, consequently, increasing their collective relevant interest in Artemis shares from below 20% to more than 20%.

However, we are advised that for the purposes of Subsection 606(1):

the KML vendor shareholders are not associated; and
the KML vendor shareholder that will have the largest shareholding in the expanded number of voting shares of Artemis will be Black Swan Global Pty Limited (“Black Swan”). Black Swan will increase its relevant interest in Artemis from 7.92% to 18.9%, thereby remaining below the 20% voting shareholding limit in subsection 606(1); and
Black Swan is not associated with any other Artemis shareholder.

No other individual KML vendor shareholder will have a relevant interest in Artemis which will be more than 20% of the voting shares in Artemis following the Proposed Acquisition.

We are advised that, accordingly Section 606 will not apply to the Proposed Acquisition.

Related Party Matters

Chapter 2E of the Corporations Act

Under Chapter 2E of the Corporations Act (refer sections 208 and 210 of the Corporations Act) the giving of a financial benefit (as defined) by Artemis to a related party of Artemis (as defined) is prohibited, except in certain circumstances, including:

approval by Artemis’ shareholders other than any related party of Artemis who would obtain a financial benefit or any associate of such person; or
the arrangement is on arm’s length terms (or less favourable to the related party than arm’s length terms).

Artemis Resources Limited - Independent Expert Report – May 2012

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Section 228 of the Corporations Act defines a related party of a public company as including:

(1) an entity that controls a public company;
(2) (a) directors of the public company;
(b) directors of an entity that controls the public company;
(c) if the public company is controlled by an entity that is not a body corporate--each of the persons making up the controlling entity; and
(d) spouses of the persons referred to in paragraphs (a), (b) and (c).
(3) The following relatives of persons referred to in subsection (2):
(a) parents;
(b) children.
(4) an entity controlled by a related party referred to in subsection (1), (2) or (3) is a related party of the public company unless the entity is also controlled by the public company.
(5) an entity (including an individual) that was a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time within the previous 6 months.
(6) an entity (including an individual) that believes or has reasonable grounds to believe that it is likely to become a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time in the future; and
(7) an entity (including an individual) that acts in concert with a related party of the public company on the understanding that the related party will receive a financial benefit if the public company gives the entity a financial benefit.

Section 229 of the Corporations Act states that in determining whether a financial benefit is given for the purposes of Chapter 2E "a broad interpretation" is to be given to the term and any consideration that is or may be given for the benefit is to be disregarded, even if the consideration is adequate.

Among examples of giving a financial benefit to a related party set out in section 229, are the following:

giving or providing the related party finance or property;
buying an asset from or selling an asset to the related party;
leasing an asset from or to the related party;
supplying services to or receiving services from the related party;
issuing securities or granting an option to the related party; and
taking up or releasing an obligation of the related party.

Any director of Artemis would be deemed to be a “related party” for the purposes of Chapter 2E of the Corporations Act.

The issue of new Artemis shares as consideration in relation to the Proposed Acquisition would constitute the giving of a financial benefit, as defined.

We understand that:

no director of Artemis will obtain a financial benefit, as defined; and
Black Swan, whilst a substantial shareholder of Artemis, is not a related party of Artemis.

We are advised that, accordingly no approval under Chapter 2E is required in relation to the Proposed Acquisition.

Artemis Resources Limited - Independent Expert Report – May 2012

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ASX Listing Rule 10.1

Without the approval of holders of the entity’s ordinary securities, ASX Listing Rule 10.1 prohibits a listed entity from acquiring a substantial asset (as defined in the ASX Listing Rules) from, or disposing of a substantial asset to:

a related party (as defined in the ASX Listing Rules);
a subsidiary;
a substantial holder, if the person and the person’s associates have a relevant interest, or had a relevant interest at any time in the 6 months before the transaction, in at least 10% of the total votes attached to the voting securities; and
an associate of a person referred to above; and
a person whose relationship to the entity or a person referred to in rules 10.1.1 to 10.1.4 is such that, in ASX’s opinion, the transaction should be approved by security holders.

A substantial asset is defined by ASX Listing Rule 10.2 as an asset with a value of 5% or more of the equity interests of the entity, as set out in the latest accounts given to ASX under the listing rules (i.e. the financial statements of Artemis for the 6 months ended 31 December 2011).

A related party for the purposes of the ASX Listing Rules is as defined in section 228 of the Corporations Act (refer above for the definition).

We understand that the value of the assets or the consideration being given for the assets comprising each of Transaction 3 and Transaction 4 (i.e. the 60 million and 96 million new shares in Artemis, respectively) represent more than 5% of Artemis’ relevant equity interests (i.e. the total number of Artemis’ current issued shares).

Approval is not required under ASX Listing Rule 10.1 for each of Transactions 3 and 4 above because, in each case, while the substantial assets test is met, there is no relevant related party or substantial holder that had a relevant interest at any time in the 6 months before the transaction in at least 10% of the total votes attached to the voting securities, or any associate of such.

In this regard, we are instructed that Black Swan currently holds 7.92% of the issued voting shares of Artemis and has held less than 10% in the previous 6 months.

Artemis Resources Limited - Independent Expert Report – May 2012

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Financial Services Guide

4 May 2012

What is a Financial Services Guide?

This Financial Services Guide (“FSG”) is an important document the purpose of which is to assist you in deciding whether to use any of the general financial product advice provided in the form of an independent expert report by Lawler Corporate Finance Pty Limited (ABN 65 097 893 957) (“Lawler Corporate Finance”). The use of "we", "us" or "our" is a reference to Lawler Corporate Finance as the holder of Australian Financial Services Licence (“AFSL”) No. 295872.

The contents of this FSG include:

who we are and how we can be contacted;
what services we are authorised to provide under our AFSL;
how we (and any other relevant parties) are remunerated in relation to any general financial product advice we may provide;
details of any potential conflicts of interest; and
details of our internal and external dispute resolution systems and how you can access them.

Information about us

We have been engaged by the Directors of Artemis Resources Limited (“Artemis”) to prepare an Independent Expert’s Report providing our opinion as to whether a proposal to acquire 100% of the issued shares of Karratha Metals Limited (“KML”) (the “Proposed Acquisition”) is fair and reasonable to the Non-associated Shareholders of Artemis (the “Report”).

The Proposed Acquisition is set out in the Explanatory Statement accompanying the Notice of General Meeting to be dated on or around the date of our Report. You are not the party or parties who engaged us to prepare the Report. We are not acting for any person other than the party or parties who engaged us. We are required by law to give you an FSG because our Report is being provided to you. You may contact us using the details located below.

Lawler Corporate Finance provides services primarily in the area of corporate finance and is partly owned by partners of the Australian partnership of Lawler Partners. Lawler Partners and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services. Our directors may be partners in the partnership of Lawler Partners.

The financial product advice in our Report is provided by Lawler Corporate Finance and not by the partnership of Lawler Partners.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and the partnership of Lawler Partners (and its related bodies corporate) may from time to time provide professional services to financial product issuers in the ordinary course of business.

What financial services are we licensed to provide?

The AFSL we hold authorises us to provide the following financial services to both retail and wholesale clients:

Provide financial product advice for the following classes of financial products:
deposit and payment products limited to:
- basic deposit products;
- deposit products other than basic deposit products;

Artemis Resources Limited - Independent Expert Report – May 2012

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debentures, stocks or bonds issued or Proposed to be issued by a government;
interests in managed investment schemes excluding investor directed portfolio services; and
securities

Information about the general financial product advice we provide

The financial product advice provided in our Report is known as "general advice" because it does not take into account your personal objectives, financial situation or needs. You should consider whether the general advice contained in our Report is appropriate for you, having regard to your own personal objectives, financial situation or needs.

If our advice is being provided to you in connection with the acquisition or potential acquisition of a financial product issued by another party, we recommend you obtain and read carefully the relevant offer document provided by the issuer of the financial product. The purpose of the offer document is to help you make an informed decision about the acquisition of a financial product. The contents of the offer document will include details such as the risks, benefits and costs of acquiring the particular financial product.

How are we and our employees remunerated?

We charge fees for providing Reports. Fees are agreed with the party or parties who actually engage us, and we confirm our remuneration in a written letter of engagement to the party or parties who actually engage us.

Our fees are usually determined on an hourly basis, however they may be a fixed amount or derived using another basis. We may also seek reimbursement of any out-of-pocket expenses incurred in providing the services.

Neither Lawler Corporate Finance, nor its directors and officers, receive any commissions or other benefits arising directly from providing Reports to you. The remuneration paid to our directors and staff reflects their individual contribution to the company and covers all aspects of performance.

We do not pay commissions or provide other benefits to other parties for referring prospective clients to us.

The estimated fee for this Report is $32,000 (exclusive of GST and out-of-pocket expenses).

Responsibility

The liability of Lawler Corporate Finance is limited to the contents of this FSG and our Report referred to in this FSG.

What should you do if you have a complaint?

If you have any concerns regarding our Report, you may wish to advise us. Our internal complaint handling process is designed to respond to your concerns promptly and equitably. Please address your complaint in writing to:

AFS Compliance Manager

Lawler Corporate Finance Pty Limited

GPO Box 5446

SYDNEY NSW 2001

Telephone: +61 2 9008 1404 Fax: +61 2 8346 6099

If you are not satisfied with the steps we have taken to resolve your complaint, you may contact the Financial Ombudsman Service (“FOS”). FOS provides free advice and assistance to consumers to help them resolve complaints relating to members of the financial services industry.

Artemis Resources Limited - Independent Expert Report – May 2012

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Complaints may be submitted to FOS at:

Financial Ombudsman Service

GPO Box 3

Melbourne VIC 3001

Telephone: (03) 9613 7366 Fax: (03) 9613 6399

Internet: http://www.fos.org.au

If your complaint relates to the professional conduct of a person who is a Chartered Accountant, you may wish to lodge a complaint in writing with the Institute of Chartered Accountants in Australia ("ICAA”). The ICAA is the professional body responsible for setting and upholding the professional, ethical and technical standards of Chartered Accountants and can be contacted at:

The Institute of Chartered Accountants

GPO Box 9985

Sydney NSW 2001 Telephone: +61 2 9290 1344 Fax: +61 2 9262 1512

Specific contact details for lodging a complaint with the ICAA can be obtained from their website at http://www.charteredaccountants.com.au/The-Institute/Member-complaints-and-discipline/How-to-make-acomplaint.aspx

The Australian Securities and Investments Commission ("ASIC") regulates Australian companies, financial markets, financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit. Their website contains information on lodging complaints about companies and individual persons and sets out the types of complaints handled by ASIC. You may contact ASIC as follows:

Info line: 1 300 300 630

Email: [email protected]

Internet: http://www.asic.gov.au/asic/asic.nsf

Artemis Resources Limited - Independent Expert Report – May 2012

AI assistant

Artemis Resources Limited — Proxy Solicitation & Information Statement 2012

10429_rns_2012-05-15_5b276e1d-504a-4979-b2b8-9631952ae334.pdf

Acquisition of Karratha Metals Limited and Project Update

Project Update

Summary

Competent Person’s Statement

NOTICE OF GENERAL MEETING

NOTICE OF GENERAL MEETING

TIME AND PLACE OF MEETING

YOUR VOTE IS IMPORTANT

VOTING ELIGIBILITY

VOTING IN PERSON

VOTING BY PROXY

Proxy Forms received later than this time will be invalid.

CORPORATE REPRESENTATIVE

ATTORNEY

- Inter conditional Resolutions

BY ORDER OF THE BOARD OF DIRECTORS

AGENDA

1. Resolution 1 – Approval to Acquire the Karratha Metals Group

2. Resolution 2 - Approval to Issue Shares in connection with the acquisition of the Karratha Metals Group

3. Resolution 3 – Approval to Issue 100,000,000 Shares

VOTING EXCLUSION STATEMENTS

NOTES

Explanatory Memorandum

1. Background to Resolutions 1 and 2

1.1 Summary

1.2 KML Shareholders Sale Agreements

1.3 Legend Share Issue

( Legend Assets ).

1.4 Completion of the KML Acquisition Agreements

1.5 Projects being acquired

Carlow Castle – Project

Mt Sholl Project

Radio Hill Project

Carlow Castle Project

Mt Sholl Project

Nickol River Gold Project

Mt Marie Project

Twin Table Hills Project

Radio Hill Project

Yandal Central Project

1.6 Map of tenements being acquired

1.7 Competent Person’s Statement

1.8 Effect of the KML Acquisition on the Capital Structure of Artemis

Pro Forma Capital Structure

1.9 Pro Forma Balance Sheet of Artemis pre and post acquisition

Notes

Note 1: Cash and cash equivalents

Note 3: Evaluation and exploration costs

Note 4: Trade and other payables / retained

earnings

1.10 Summary of the benefits of the KML Acquisition

1.11 Disadvantages of the Proposed Acquisition

1.12 Role of the Independent Expert

1.13 Conditionality of Resolutions

1.14 Recommendations of Directors

2. Resolution 1 – Acquisition of the Karratha Metals Group

2.1 Shareholder approval

2.2 Information regarding the acquisition

2.3 Directors’ recommendation

3. Resolution 2 – Issue of Shares in connection with the acquisition of the Karratha Metals Group

3.1 Background

3.2 ASX Listing Rule Requirements

3.3 ASX Listing Rule Disclosure Requirements

(h) Voting Exclusion

3.4 Directors’ recommendation

4. Resolution 3 – Approval to issue 100,000,000 Shares

4.1 Background

4.2 ASX Listing Rule Requirements

4.3 ASX Listing Rule Disclosure Requirements

4.4 Directors’ Recommendation

Schedule 1 – Definitions

PROXY FORM

ARTEMIS RESOURCES LTD

REGISTERED OFFICE:

SECTION A: Appointment of Proxy

OR

SECTION B: Voting Directions to your Proxy

Artemis Resources Limited Proxy Solicitation & Information Statement 2012