BRIGHTSTAR RESOURCES LIMITED — Capital/Financing Update 2004

Aug 26, 2004

27 August 2004,

The Manager Company Announcements Australian Stock Exchange Sydney, NSW

Dear Sir / Madam.

Share issue to Wongatha People

The Directors are very pleased to announce that A1 has recently received notice from the Department of Minerals and Energy that a mining lease over its BrightStar discovery has been aranted.

Following the granting of the mining lease, and in accordance with the recently announced Agreement with the Wongatha Claim Group, the Directors have issued 531,371 ordinary fully paid shares in A1 which form part consideration for the agreement. These shares are of the same class and have the same rights as those ordinary shares currently on issue. The issue price was determined by taking the average market price for the five days preceding the issue date.

The terms of the Agreement provided for the Wongatha to enter into a voluntary escrow agreement for twelve months from the date of issue. This issue is not proposed to be made to a particular class of security holders and shareholder approval is not required and will not be sought prior to the issue.

An attached Appendix 3B makes application to ASX for the quotation of the shares.

The Directors were very pleased to have obtained the Agreement as it provides A1 with an opportunity in an area covering a greenstone belt that is seriously under explored and removes the uncertainty with respect to native title. The Director's believe that the terms of the agreement put A1 in a strategically strong position to explore this very large highly prospective land area totaling approximately 10,000 square kilometers. The removal of any uncertainty, combined with low up front exploration costs, and reasonable terms on which A1 can operate mines, will underwrite the long term future of the Company.

The Directors welcome the Wongatha as shareholders in A1.

Yours faithfully,

Mark Pitts Company Secretary

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003.

Name of entity

AI MINERALS LTD

ABN

44 100 727 491

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

$\mathbbm{I}$ $\pm$ Class of $\pm$ securities issued or to be issued

Ordinary

$\overline{2}$ Number of ⁺securities issued or to be issued (if known) or maximum number which may be issued

3 Principal terms of the ⁺securities (eg, if options, exercise price and date; if partly paid expiry *securities, the amount outstanding and due dates for payment; if *convertible securities, the conversion price and dates for conversion)

531,371

$N/A$

⁺ See chapter 19 for defined terms.

4	Do the securities rank equally in all respects from the date of allotment with an existing + class of quoted securities?	The securities for which quotation is sought will in all respects rank equally with those shares already on issue.
	If the additional securities do not rank equally, please state: the date from which they do extent to which the they participate for the next dividend, case of - (in the a trust. distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend. distribution or interest payment
5.	Issue price or consideration	\$0.414 c per share
6	Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets)	Shares issued as part consideration for the Laneway Agreement entered into between AI Minerals and the Wongatha Native Title Claimants.
7	Dates of entering *securities into uncertificated holdings or despatch of certificates	31 August 2004
		Number	* Class
8	class Number of and all securities quoted ASX. on. (including the securities in clause 2 if applicable)	25,101,731	Ordinary

$+$ See chapter 19 for defined terms.

$\mathbf{Q}$ Number and ⁺class of all *securities not quoted on ASX (including the securities in clause 2 if applicable)

Number	* Class
14,682,974 9,500,000	Ordinary Options
(These shares) and options are subject to escrow)

10 Dividend policy (in the case of a trust, distribution policy) on the $N/A$ increased capital (interests)

Part 2 - Bonus issue or pro rata issue

$\mathbb{1}$	holder security approval Is required?
12	Is the issue renounceable or non- renonnceable?
13	Ratio in which the "securities will be offered
14	Class of securities to which the offer relates
15	determine *Record date to entitlements
16	Will holdings on different registers (or subregisters) be aggregated for calculating entitlements?
17	Policy for deciding entitlements in relation to fractions
18	Names of countries in which the entity has "security holders who will not be sent new issue documents
	Note: Security holders must be told how their entifiements are to be dealt with.
	Cross reference: rule 7.7.
19	date Closing for receipt of acceptances or renunciations

⁺ See chapter 19 for defined terms.

Appendix 3B New issue announcement

20.	Names of any underwriters
21	Amount of any underwriting fee or commission
22	Names of any brokers to the issue
23.	Fee or commission payable to the broker to the issue
24	handling fee Amount of any payable to brokers who lodge acceptances or renunciations on behalf of *security holders
25.	If the issue is contingent on "security holders' approval, the date of the meeting
26	Date entitlement and acceptance form and prospectus or Product Disclosure Statement will be sent to persons entitled
27	If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders
28.	Date rights trading will begin (if applicable)
29	Date rights trading will end (if applicable)
30	How do *security holders sell their entitlements through in full a broker?
31	How do "security holders sell part of their entitlements through a broker and accept for the balance?

$+$ See chapter 19 for defined terms.

32 How do *security holders dispose of their entitlements (except by sale through a broker)?

33 *Despatch date

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities $(iick one)$
• $(a)$

Securities described in Part 1

$(b)$

All other securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

If the "securities are "equity securities, the names of the 20 largest holders of the additional "securities, and the number and percentage of additional "securities held by those holders

f the *securities are *equity securities, a distribution schedule of the additional securities setting out the number of holders in the categories $1 - 1,000$ $1,001 - 5,000$ $5,001 - 10,000$ 10,001 - 100,000 100,001 and over

37

A copy of any trust deed for the additional *securities

⁺ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

• 38 Number of securities for which ⁺quotation is sought
• 39 Class of *securities for which quotation is sought
• Do the *securities rank equally in all 40 respects from the date of allotment with an existing ⁺class of quoted *securities?

If the additional securities do not rank equally, please state:

• the date from which they do
• the extent to which they participate for the next dividend. (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
• 41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another security, clearly identify that other security)

Number and *class of all *securities 42 quoted on ASX (including the securities in clause 38)

	Number	*Class
;

$+$ See chapter 19 for defined terms.

Quotation agreement

• $\mathbf{I}$ *Ouotation of our additional *securities is in ASX's absolute discretion. ASX may quote the *securities on any conditions it decides.
• $\overline{2}$ We warrant the following to ASX.
• The issue of the *securities to be quoted complies with the law and is not for an illegal purpose.
• There is no reason why those *securities should not be granted *quotation.
• An offer of the "securities for sale within 12 months after their issue will not require disclosure under section $707(3)$ or section $1012C(6)$ of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any *securities to be quoted and that no-one has any right to return any *securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the "securities be quoted.
• We warrant that if confirmation is required under section 1017F of the $\bullet$ Corporations Act in relation to the *securities to be quoted, it has been provided at the time that we request that the "securities be quoted.
• If we are a trust, we warrant that no person has the right to return the *securities to be quoted under section 1019B of the Corporations Act at the time that we request that the "securities be quoted.

$\overline{\text{+ See chapter 19}}$ for defined terms.

• $\overline{3}$ We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• $\overline{4}$ We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before "quotation of the *securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

In Ele

(Director/Company secretary)

.......................................

Sign here:

27 August 2004 ......................................

Mark Pitts

Print name:

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⁺ See chapter 19 for defined terms.