BUXTON RESOURCES LIMITED — Capital/Financing Update 2011

Jan 23, 2011

BUXTON RESOURCES LIMITED ABN 86 125 049 550

PROSPECTUS

For the non-renounceable rights issue of approximately 8,010,002 Shares at 22 cents per Share, on the basis of 1 Share for every 4 Shares held by Shareholders as at 5.00 pm WST on 3 February 2011, to raise up to approximately $1,762,200 and the issue of Options for no consideration on the basis of 1 free Option for every 2 Shares subscribed for under the Prospectus.

Offer closes at 5.00 pm WST on 23 February 2011

Underwritten by Mac Equity Partners Pty Ltd

This Prospectus is a transaction specific prospectus issued in accordance with section 713 of the Corporations Act 2001. This document is important and should be read in its entirety, together with the Entitlement and Acceptance Form attached to this Prospectus. If, after reading this Prospectus, you have any questions about the Shares or Options being offered under this Prospectus, or any other matter relating to an investment in the Company, you should consult your professional adviser.

The Shares and Options offered under this Prospectus should be considered speculative.

TABLE OF CONTENTS

1.	TIMETABLE AND IMPORTANT DATES .......................................................................... 4
2.	DETAILS OF THE OFFER ................................................................................................ 5
3.	PURPOSE AND EFFECT OF THE OFFER .................................................................... 10
4.	RISK FACTORS .............................................................................................................. 13
5.	RIGHTS AND LIABILITIES ATTACHING TO SHARES AND TERMS OF OPTIONS .... 17
6.	ADDITIONAL INFORMATION ........................................................................................ 20
7.	DIRECTORS' AUTHORISATION AND CONSENT ......................................................... 27
8.	GLOSSARY .................................................................................................................... 28

IMPORTANT NOTICE

This Prospectus is dated 24 January 2011 and was lodged with ASIC on that date. Neither ASIC, ASX nor any of their respective officers take any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No Securities will be allotted or issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Application will be made to ASX within 7 days after the date of this Prospectus for the quotation of the Securities the subject of this Prospectus.

The Company is an ASX listed company whose securities are granted official quotation by ASX.

In preparing this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and that certain matters may reasonably be expected to be known to investors and professional advisers who investors may consult.

No person is authorised to give any information or to make any representations in connection with this Offer that is not contained in this Prospectus. Any information or representation that is not contained in this Prospectus may not be relied upon as having been authorised by the Company or its Directors.

A copy of this Prospectus can be downloaded from the website at www.buxtonresources.com.au. Any person accessing the electronic version of the Prospectus within Australia or anywhere outside of Australia should note that this Prospectus does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Prospectus or make the Offer. It is the responsibility of any Shareholder with a registered address outside Australia to ensure compliance with all laws of any country relevant to accepting or dealing with their Entitlement, and any such Shareholder should consult their professional advisers as to whether any government or other consents are required or whether any formalities need to be observed to enable them to accept or deal with their Entitlement.

The Corporations Act prohibits any person passing onto another person an application form unless it is attached to a hard copy of the Prospectus or it accompanies the complete and unaltered version of this Prospectus. During the Offer any person may obtain a copy of this Prospectus free of charge by contacting the Company.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. An investment in the securities the subject of this Prospectus should be considered speculative.

Certain terms and abbreviations used in this Prospectus have defined meanings which are explained in the Glossary.

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CORPORATE DIRECTORY

BOARD OF DIRECTORS

Mr Seamus Cornelius (Chairman) Mr Anthony Maslin (Managing Director) Mr Sam Wright (Non-Executive Director)

SOLICITORS

Fairweather Corporate Lawyers Ground Floor 1 Havelock Street WEST PERTH WA 6005

JOINT COMPANY SECRETARIES

Mr Sam Wright Ms Jodi Haslinger

BUSINESS OFFICE

50 Derby Road SUBIACO WA 6008 Tel: +61 8 9380 6063 Fax: +61 8 9381 4056

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 2 45 St George's Terrace PERTH WA 6000 Tel: +61 8 1300 787 272

UNDERWRITER

Mac Equity Partners Pty Ltd 50 Derby Road SUBIACO WA 6008

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1. TIMETABLE AND IMPORTANT DATES

The following key dates are indicative only and may be subject to change without notice.

Prospectus lodged with ASIC and ASX	24 January 2011
Shares trade "ex" the entitlements issue on ASX	28 January 2011
Record Date	3 February 2011
Despatch of Prospectus and Opening Date	9 February 2011
Closing Date	23 February 2011
Despatch of holding statements	3 March 2011

The Company reserves the right to extend the Closing Date by giving at least 6 business days notice to the ASX. Accordingly the date the Securities are expected to commence trading on ASX may vary.

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2. DETAILS OF THE OFFER

2.1 The Offer

The Company is making a pro-rata non-renounceable rights issue of Securities to Shareholders who are registered as at 5.00 pm WST on 3 February 2011 ("Record Date").

The Offer is made on the basis that for every 4 Shares held as at the Record Date, Shareholders as Eligible Participants will have the right to subscribe for 1 Share at an issue price of 22 cents for each Share subscribed for. Each Eligible Participant will be entitled to 1 free Option for every 2 Shares subscribed for under the Prospectus. The exercise price of the Options is 30 cents and the expiry date is 31 January 2016. The full terms of the Options are set out in section 5.2.

In the calculation of any entitlement, fractions will be rounded down to the nearest whole number.

Based on the capital structure of the Company at the date of this Prospectus, approximately 8,010,002 Shares and 4,005,001 Options will be offered pursuant to this Offer to raise approximately $1,762,200 (before the costs of the Offer).

The Company has a total of 12,500,000 Options on issue. The terms of those Options do not allow for participation by Option holders in new issues of securities. Those Option holders may, however, be able to exercise their Options according to their terms and conditions. If an Option holder exercises an Option before the Record Date then the number of Shares and Options issued under this Prospectus will increase.

This Offer is made on a non-renounceable basis which means that Eligible Participants may not sell or transfer all or part of the entitlement. If an entitlement is not taken up under the Offer by the Closing Date, the Offer will lapse.

The Entitlement of each Shareholder is shown on the Entitlement and Acceptance Form accompanying this Prospectus. The details of how to accept the Entitlement is set out below.

2.2 No Minimum Subscription

There is no minimum subscription.

2.3 Underwriter

The Company has appointed Mac Equity Partners Pty Ltd as the Underwriter to the Offer under the terms of the Underwriting Agreement.

The Offer is underwritten up to the Underwritten Amount of $1,762,200 in accordance with the terms of the Underwriting Agreement. The Underwriter will be paid an underwriting fee of $105,732 plus GST being a 6% plus GST underwriting fee of the total underwritten amount. The material terms of the Mandate letter and the Underwriting Agreement are set out in section 6.1.

The Underwriting Agreement provides for the appointment of sub-underwriters. Fees payable to the sub-underwriters are at the discretion of the Underwriter. The Company is not responsible for any payment of fees to sub-underwriters.

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2.4 Action required

If you wish to take up all of your Entitlement, you can complete the accompanying Entitlement and Acceptance Form in accordance with the instructions set out and lodge the form together with your cheque for the amount shown on the form so that it reaches the Company's share registry:

By post:

Buxton Resources Limited c/- Computershare Investor Services Pty Limited GPO Box D182 PERTH WA 6001 By delivery: Buxton Resources Limited c/- Computershare Investor Services Pty Limited Level 2, 45 St George's Terrace PERTH WA 6000

Completed Entitlement and Acceptance Forms must reach the Company's share registry by no later than 5.00 pm WST on 23 February 2011.

Cheques and drafts should be made payable to "Buxton Resources Limited – Trust Account" and crossed "Not Negotiable".

Alternatively, you can elect to pay by electronic funds transfer by BPAY in accordance with the instructions on the Entitlement and Acceptance Form. It is your responsibility to ensure the payment is received by the Company by no later than 5.00pm WST on 23 February 2011. You should be aware that your own financial institution may implement earlier cut off times with regards to electronic payment and you should take this into consideration when making payment. The Company accepts no responsibility for incorrectly completed BPAY payments.

If paying by BPAY please forward the completed Entitlement and Acceptance Form to the Company's share registry by post or delivery to the addresses above or by facsimile to the Company on +61 8 9381 4056.

If you wish to take up part of your Entitlement, complete the accompanying Entitlement and Acceptance Form in respect of the Shares and Options you wish to take up in accordance with the instructions set out in the form and lodge the form together with your cheque for the relevant amount (being the number of Shares you wish to take up multiplied by 22 cents per Share) so that it reaches the Company's share registry by post or delivery to the addresses above by no later than 5.00 pm WST on 23 February 2011.

Alternatively in taking up part of your Entitlement, you can elect to pay the relevant moneys by electronic funds transfer by BPAY on the same conditions as described above for full payment by BPAY including forwarding the completed Entitlement and Acceptance Form to the Company's share registry.

If you do not wish to take up any of your Entitlement, you do not need to take any action and your entitlement to the Shares and Options will lapse.

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2.5 Closing Date

The Closing Date for the Offer is 5.00 pm WST on 23 February 2011. The Directors reserve the right to extend the Closing Date by giving at least 6 business days notice to the ASX should it be considered by them necessary to do so. As such, the date the Shares and Options are expected to commence trading on ASX may vary with any change in the Closing Date.

2.6 Shortfall

Any Entitlement not accepted will form the Shortfall and will be dealt with in accordance with the Underwriting Agreement. The offer of any Shortfall is a separate offer made pursuant to the Prospectus. The issue of any Shortfall will be on the same terms on which the Offer has been offered to Shareholders pursuant to this Prospectus.

The Underwriting Agreement is subject to a number of termination events. If the Underwriting Agreement terminates and there is a Shortfall the Directors will attempt to place the Shortfall to parties determined in their absolute discretion within 3 months of the Closing Date.

2.7 Allotment

The Shares and Options will be allotted and issued as soon as practicable after the Closing Date.

Statements of holding for the Shares and Options will be mailed to applicants as soon as practicable after the Closing Date.

Prior to allotment of the Shares and Options, all application moneys will be held in trust for applicants. The Company will retain any interest earned on the application moneys.

No Securities will be allotted and issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

2.8 Official Quotation by ASX

Application to ASX for admission of the Shares and Options to Official Quotation will be made by the Company within 7 days of the date of this Prospectus.

If the Shares and Options are not admitted to Official Quotation on ASX within 3 months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, none of the Shares or Options offered by this Prospectus will be granted. In that circumstance, all applications will be dealt with in accordance with section 724 of the Corporations Act.

The fact that ASX may grant Official Quotation to the Shares and Options that may be issued pursuant to this Prospectus is not to be taken in any way as an indication of the merits of the Company or the Shares or Options offered for subscription.

2.9 ASX Listed Company

The Company is included in the Official List of ASX and the Listing Rules apply to the securities issued by the Company.

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2.10 Overseas Shareholders

This Prospectus and the accompanying Entitlement and Acceptance Form does not constitute an offer to subscribe for Shares or Options in any place in which, or to any person to whom it would not be lawful to make such an offer. No action has been taken to register or qualify the Shares and Options being offered or otherwise to permit a public offering of the Shares and Options in any jurisdiction outside Australia.

Shareholders with a registered address outside Australia should consult their professional advisers as to whether any governmental or other consents are required, or other formalities need to be observed to enable them to accept or deal with their Entitlement. The return of a completed Entitlement and Acceptance Form from a Shareholder with a registered address outside Australia will be taken by the Company to constitute a representation and warranty by that Shareholder that all relevant approvals have been obtained and that the Company may legally issue the Shares to that Shareholder.

There are additional statements below concerning the effect of the Offer to Shareholders with a registered address in New Zealand.

2.11 Offer in New Zealand

The Offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act and the Corporations Regulations 2001. In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings – Australia) Regulations 2008.

The Offer and the content of the Prospectus are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act sets out how the Offer must be made.

There are differences in how securities are regulated under Australian law.

The rights, remedies and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies and compensation arrangements for New Zealand securities.

Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to the Offer. If you need to make a complaint about the Offer, please contact the Securities Commission, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint.

The taxation treatment of Australian securities is not the same as for New Zealand securities.

If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser.

The Offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant. If you expect the securities to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars.

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As stated in section 2.8 of this Prospectus, the Company will apply to ASX for quotation of the Shares and Options offered under this Prospectus. If quotation is granted the Shares and Options offered under this Prospectus will be able to be traded on ASX. If you wish to trade the securities through that market, you will have to make arrangements for a participant in that market to sell the securities on your behalf. If the securities market does not operate in New Zealand, the way in which the market operates, the regulation of participants in that market, and the information available to you about the securities and trading may differ from securities markets that operate in New Zealand.

2.12 CHESS

The Company participates in the Clearing House Electronic Subregister System ("CHESS"). CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd ("ASTC"), a wholly owned subsidiary of ASX.

Under CHESS, the Company does not issue certificates to investors. Instead, Shareholders receive a statement of their holdings in the Company. If an investor is broker sponsored, ASTC will send a CHESS statement.

2.13 Risk Factors

Investors should carefully read the risk factors outlined in section4. An investment of this kind involves a number of risks, some of which are specific to the Company and the industry in which it operates.

2.14 Rights Attaching to Shares and Options

A summary of the rights attaching to Shares and Options is set out in section 5.

2.15 Summary

This section is not intended to provide full details and information on the Offer. Shareholders must read this Prospectus in full in order to make a fully informed investment decision.

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3. PURPOSE AND EFFECT OF THE OFFER

3.1 Purpose of Offer and use of funds

The purpose of the Offer is to raise funds of approximately $1,762,200. The proceeds of the Offer are intended to be applied as follows:

Item Underwriting fee Other costs of the rights issue including share registry, ASIC and ASX fees, printing and miscellaneous expenses Zanthus Iron Project expenditure and development Sourcing new opportunities General working capital Total:	Amount $105,732 $15,000 $1,000,000 $100,000 $541,468 $1,762,200

The information set out in this section is indicative only and is a statement of present intention as at the date of this Prospectus. The exact quantum of funds expended by the Company on any particular item may change depending on the Company's circumstances and priorities.

The amount of general working capital referred to above may be applied towards corporate administration costs, further development of the Zanthus Iron Project or applied towards expenses incurred in the event that any new resource projects are identified

The Company is unable to determine how many (if any) Options will be exercised by Option holders to enable them to participate in the Offer. Accordingly, the Company is unable to determine the precise total amount of funds that will be raised pursuant to the Offer. To the extent additional funds are raised and additional Shares and Options are issued, proceeds will be allocated to general working capital and the issued capital items in the capital structure table and the cash and cash equivalents in the pro-forma balance sheet set out below will be adjusted accordingly.

3.2 Capital Structure

The direct effect of the Offer will be to increase the number of Shares and Options on issue by approximately 8,010,002 Shares and 4,005,001 Options.

Upon completion of the Offer, the issued capital of the Company will comprise:

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Shares	Number
Shares at the date of this Prospectus	32,040,010
Shares offered pursuant to this Prospectus	8,010,002
Post Completion of Offer	40,050,012
Options	Number
Options at the date of this Prospectus (unquoted)1	8,750,000
Employee and Consultant Options at the date of this Prospectus (unquoted)2	3,750,000
Options offered pursuant to this Prospectus	4,005,001
Post Completion of Offer	16,505,001

Note:

This table is based on the number of Shares and Options on issue as at the date of this Prospectus. The actual number of Shares and Options that are issued on completion of the Offer will depend on whether any of the existing Option holders exercise their Options into Shares before the Record Date.

1. 4,750,000 of these Options have an exercise price of 20 cents and an expiry date of 30 June 2012. 4,000,000 of these Options have an exercise price of 30 cents and an expiry date of 30 June 2012.

2. These Options have an exercise price of 35 cents and an expiry date of 31 January 2016.

The Options offered under this Prospectus have an exercise price of 30 cents and an expiry date of 31 January 2016. The terms of the Options are set out in section 5.2.

In addition to the above, Shareholder approval will be sought at a general meeting to issue up to 2,250,000 performance rights to the Directors as set out in section 6.4.

Further, Fairweather Corporate Lawyers or its nominee will be issued with 68,182 Shares in satisfaction of its legal fees of $15,000 in relation to this Prospectus. The Shares will be issued at a deemed issue price of 22 cents each being the same price offered to Shareholders under this Prospectus. By issuing Shares instead of cash the Company is able to preserve its cash reserves.

3.3 Pro-forma Balance Sheet

The effect of the Offer will be to increase cash reserves by approximately $1,762,200 (before estimated expenses of the Offer including the underwriting fee).

The unaudited pro-forma Balance Sheet has been prepared by adjusting the unaudited Balance Sheet as at 31 December 2010 to reflect the financial effect of the following transactions as if they had occurred at 31 December 2010.

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• (a) Issue of 8,010,002 Shares at an issue price of 22 cents per Share and 4,005,001 free Options issued in accordance with this Prospectus raising approximately $1,762,200.

• (b) Cash costs of $120,732 associated with the Shares and Options issued under this Prospectus representing an underwriting fee ($105,732) to the Underwriter and other Prospectus costs of $15,000.

• (c)

• Net cash proceeds of the issue therefore being $1,641,468.

• (d) Equity costs of the issue of 68,182 Shares to be issued to Fairweather Corporate Lawyers or its nominee in lieu of the payment of legal fees of $15,000.

Unaudited Pro-forma Consolidated Balance Sheet As at 31 December 2010

	Unaudited as at 31/12/10 $	Pro-forma as at 31/12/10 $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Accumulated losses TOTAL EQUITY	1,388,368 19,470	3,029,836 19,470
	1,407,838	3,049,306
	21,637	21,637
	21,637	21,637
	1,429,476	3,070,943
	23,095	23,095
	23,095	23,095
	1,406,380	3,047,848
	3,652,447 (2,246,067)	5,308,915 (2,261,067)
	1,406,380	3,047,848

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4. RISK FACTORS

4.1 Introduction

An investment in the securities the subject of this Prospectus is highly speculative as the Company is a minerals exploration company with projects in Western Australia. The Company's primary focus is on the Zanthus iron project.

The Board recommends that investors consider the risks described below and information contained elsewhere in this Prospectus, as well as consulting with their professional advisers before deciding whether or not to apply for the securities.

The following is a non-exhaustive list of the risks that may have a material effect on the financial position and performance of the Company and the value of its securities, as well as the Company's exploration, any development and mining activities and an ability to fund those activities.

The specific risks below are some of the risks specific to the Company including by reason of its involvement in the resource industry. The general investment risks below are some of the risks to the Company of a general economic nature.

4.2 Specific Risks

Exploration

Investors should understand that exploration and development is by its nature a high risk undertaking. There can be no assurance that the Company's exploration of its existing projects or any other exploration projects that may be acquired in the future will result in the discovery of a significant mineral resource. Even if a significant mineral resource is identified, there can be no guarantee that it can be economically exploited.

Development and Mining

Possible future development of a mining operation at any of the Company's projects is dependent on a number of factors including, but not limited to, failure to acquire and/or delineate economically recoverable ore bodies, unfavourable geological conditions, failing to receive the necessary approvals from all relevant authorities and parties, unseasonal weather patterns, excessive seasonal weather patterns, unanticipated technical and operational difficulties encountered in extraction and production activities, mechanical failure of operating plant and equipment, unexpected shortages or increases in the price of consumables, spare parts and plant and equipment, cost overruns, risk of access to the required level of funding and contracting risks from third parties providing essential services.

In the event that the Company commences production, its operations may be disrupted by a variety of risks and hazards which are beyond its control, including environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, flooding and extended interruptions due to inclement or hazardous weather conditions and fires, explosions and other accidents.

Resource Estimations

Resources estimates are expressions of judgment based on knowledge, experience and resource modelling. As such, resource estimates are inherently imprecise and rely to some extent on interpretations made.

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Additionally, resource estimates may change over time as new information becomes available. Should the Company encounter mineralisation or geological formations different from those predicted by past drilling, sampling and interpretations, resource estimates may need to be altered in a way that could adversely affect the Company's operations.

Commodity and Currency Price Volatility

Any revenues derived from any future mining will primarily be derived from the sale of the relevant commodity such as iron ore. Consequently, any future earnings are likely to be closely related to the price of the relevant commodity and the terms of any offtake agreements which it enters into.

Metal prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world demand for metals, forward selling by producers and production cost levels in major mineral-producing regions. Metal prices are also affected by macroeconomic factors such as expectations regarding inflation, interest rates and global and regional demand for, and supply of, the relevant metal as well as general global economic conditions. These factors may have an adverse effect on the Company's exploration, development and production activities, as well as on its ability to fund those activities.

Commodities are principally sold throughout the world in US dollars. The Company's cost base is in Australian dollars. As a result, any significant and/or sustained fluctuations in the exchange rate between the Australian and US dollars and/or adverse movements in commodity prices, could have a materially adverse effect on the Company's operations, financial position (including revenue and profitability) and performance. The Company may undertake measures where deemed necessary by the Board to mitigate such risks.

Title

All of the tenements or licences in which the Company has or may earn an interest in will be subject to applications for renewal or grant (as the case may be). The renewal or grant of the terms of each tenement or licence is usually at the discretion of the relevant government authority.

Additionally, tenements are subject to a number of State specific legislative conditions including payment of rent and meeting minimum annual expenditure commitments. The inability to meet these conditions could affect the standing of a tenement or restrict its ability to be renewed.

If a tenement or licence is not renewed or granted, the Company may suffer significant damage through loss of the opportunity to develop and discover any mineral resources on that tenement.

Native Title and Aboriginal Heritage

The Native Title Act 1993 (Cth) recognises and protects the rights and interests in Australia of Aboriginal and Torres Strait Islander people in land and waters, according to their traditional laws and customs. There is a significant uncertainty associated with native title in Australia and this may impact upon the Company's operations and future plans.

Native title can be extinguished by valid grants of land or waters to people other than the native title holders or by valid use of land or waters. It can also be extinguished if the indigenous group has lost their connection with the relevant land or waters. Native title is

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not necessarily extinguished by the grant of mining licences, although a valid mining lease prevails over native title to the extent of any inconsistency for the duration of the title.

It is important to note that the existence of a native title claim is not an indication that native title in fact exists to the land covered by the claim, as this is a matter ultimately determined by the Federal Court. If native title rights do exist, the ability of the Company to gain access to tenements or to progress from the exploration phase to the development and mining phases of operations may be adversely affected.

The Company must also comply with Aboriginal heritage legislation requirements which require heritage survey work to be undertaken ahead of the commencement of mining operations.

Environmental

The Company's projects are subject to Commonwealth and State laws and regulations regarding environmental matters and the discharge of hazardous wastes and materials. As with all mineral projects, the Company's projects are expected to have a variety of environmental impacts should development proceed. Development of any of the Company's projects will be dependent on the Company satisfying environmental guidelines and, where required, being approved by government authorities.

The Company intends to conduct its activities in an environmentally responsible manner and in accordance with all applicable laws, but may still be subject to accidents or other unforeseen events which may compromise its environmental performance and which may have adverse financial implications.

Reliance on Key Personnel

The Company's success largely depends on the core competencies of its Directors and management and their familiarisation with, and ability to operate in, the metals and mining industry and the Company's ability to retain its key executives.

Future Capital Needs and Additional Funding

The funds raised by the Offer will be used to carry out the Company's objectives as detailed in this Prospectus and the Company’s announcements to ASX. The Company's ability to raise further capital (equity or debt) within an acceptable time, of a sufficient amount and on terms acceptable to the Company will vary according to a number of factors, including prospectivity of projects (existing and future), the results of exploration, subsequent feasibility studies, development and mining, stock market and industry conditions and the price of relevant commodities and exchange rates.

No assurance can be given that future funding will be available to the Company on favourable terms (or at all). If adequate funds are not available on acceptable terms the Company may not be able to further develop its projects and it may impact on the Company's ability to continue as a going concern.

Competition

The Company competes with other companies, including major mineral exploration and mining companies. These companies will likely have greater financial and other resources than the Company and, as a result, may be in a better position to compete for future business opportunities. Many of the Company's competitors not only explore for and produce minerals, but also carry out downstream operations on these and other products

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on a worldwide basis. There can be no assurance that the Company can compete effectively with these companies.

Potential Acquisitions

As part of its business strategy, the Company may make acquisitions of or significant investments in other resource projects. Any such transactions would be accompanied by risks commonly encountered in making such acquisitions.

4.3 General Risks

Securities Investments and Share Market Conditions

There are risks associated with any securities investment. The prices at which the securities trade may fluctuate in response to a number of factors.

Furthermore, the stock market, and in particular the market for exploration and mining companies may experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of such companies. These factors may materially adversely affect the market price of the securities of the Company regardless of the Company's operational performance. Neither the Company nor the Directors warrant the future performance of the Company, or any return of an investment in the Company.

Economic Risk

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors that may contribute to that general economic climate include the level of direct and indirect competition against the Company, industrial disruption, the rate of growth of gross domestic product in Australia, interest rates and the rate of inflation.

Legislative

Changes in relevant taxes, legal and administration regimes, accounting practices and government policies may adversely affect the financial performance of the Company.

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5. RIGHTS AND LIABILITIES ATTACHING TO SHARES AND TERMS OF OPTIONS

5.1 Rights Attaching to Shares

The rights and liabilities attaching to Shares in the Company are:

• (a) set out in the Constitution of the Company, a copy of which can be inspected, free of charge, at the registered office of the Company during normal business hours; and

• (b) in certain circumstances, regulated by the Corporations Act, the Listing Rules and the general law.

The following is a summary of the more significant rights and liabilities attaching to the Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

Voting

At any meeting, each Shareholder present in person or by proxy, attorney or representative has one vote for each ordinary fully paid Share held either upon a show of hands or by a poll. Holders of partly paid shares shall have a fraction of a vote for each partly paid share held with the fractional vote of each share being equivalent to the proportion which the amount actually paid (not credited) for that share is of the total amounts paid and payable (excluding amounts credited) for that share. Amounts paid in advance of a call are ignored when calculating proportions.

Subject to the Corporations Act in relation to a special resolution, a resolution of members at a general meeting will be carried if more than one half of the votes at the meeting are cast in favour of the resolution.

General Meetings

Each ordinary Shareholder in the Company will be entitled to receive notice of and attend and vote at general meetings of the Company and to receive all notices, accounts and other documents required to be sent to Shareholders under the Constitution of the Company or the Corporations Act. The Directors may whenever they think fit, convene a general meeting of the members of the Company and the Directors will convene a general meeting whenever requisitioned by the members in accordance with the Corporations Act.

Dividends

The profits of the Company, which the Directors may from time to time determine to distribute to the members by way of dividend, will be divisible amongst the members in proportion to the amounts paid on the shares held by them, subject to the rights attached to any shares issued upon special terms.

No dividend is currently declared or proposed.

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Rights on Winding Up

Subject to the rights of members (if any) entitled to shares with special rights in a winding up, all moneys and property that are to be distributed amongst members on a winding up, shall be distributed in proportion to which the amount paid on the shares of a member (including amounts credited) is of the total amount paid and payable (including amounts credited) on the shares of all members.

Transfer of Shares

Subject to the Constitution of the Company, the Corporations Act, the Listing Rules and any other applicable law of Australia, Shares are freely transferable.

Variation of Rights

The rights, privileges and restrictions attaching to Shares of a class, can be altered, with the approval of a special resolution passed at a separate general meeting of the holders of shares of that class, (being a three quarters majority of those holders who, being entitled to do so, vote at that meeting) or with the written consent of the holders of at least three quarters of that class of shares on issue. Any variation is subject to the provisions of the Corporations Act.

Creation and Issue of further Shares

The issue and allotment of any additional shares is under the control of the Directors, and, subject to any restriction on the issue and allotment of shares imposed by the Constitution of the Company, the Corporations Act, the Listing Rules or as may be directed by the members of the Company of a general meeting when authorising the issue of any new shares, the Directors may issue and allot such shares on such terms and conditions and with such rights and privileges as they deem fit.

Predominance of Listing Rules

If the Company is admitted to trading on the Official List, then despite anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision and it does not contain such a provision, the Constitution is deemed to contain that provision. If the Listing Rules require the Constitution not to contain a provision and it contains such a provision, the Constitution is deemed not to contain that provision. If a provision of the Constitution is inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

5.2 Rights attaching to Options

The terms of Options offered under this Prospectus are:

• (a) Each Option entitles the holder to one (1) Share.

• (b) The Options are exercisable at any time prior to 5.00pm WST on 31 January 2016 ("Expiry Date").

• (c) The exercise price of the Options is 30 cents per Option.

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• (d) The Options are freely transferable and quotation of the Options on the ASX will be sought.

• (e) The Company will provide to each Option holder a notice that is to be completed when exercising the Options ("Notice of Exercise"). The Options may be exercised wholly or in part by completing the Notice of Exercise and delivering it together with payment to the secretary of the Company to be received any time prior to the Expiry Date. The Company shall within 7 days after the receipt of such Notice of Exercise, issue Shares in respect of the Options exercised and dispatch a shareholder statement to the holder.

• (f) Upon the exercise of an Option and receipt of all relevant documents and payment, the holder in accordance with paragraph (e) will be allotted and issued a Share ranking equally with the then issued Shares.

• (g) There will be no participating rights or entitlements inherent in the Options and the holders will not be entitled to participate in new issues of capital which may be offered to Shareholders during the term of the Options. The Option holder has no rights to a change in the exercise price of the Option or a change to the number of underlying securities over which the Option can be exercised except in the event of a bonus issue. The Company will ensure that for the purposes of determining entitlements to any new issue, the record date will be at least 7 business days after the issue is announced. This will give Option holders the opportunity (where available) to exercise their Options prior to the date for determining entitlements to participate in any such issue.

• (h) If there is a bonus issue ("Bonus Issue") to Shareholders, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the holder would have received if the Option had been exercised before the record date for the Bonus Issue ("Bonus Shares"). The Bonus Shares must be paid up by the Company out of profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue, and upon issue will rank equally in all respects with the other Shares on issue as at the date of issue of the Bonus Shares.

• (i) In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, all rights of an Option holder are to be changed in a manner consistent with the Listing Rules.

In addition to the Options issued under this Prospectus, the Company has issued 4,750,000 unquoted Options with an exercise price of 20 cents and an expiry date of 30 June 2012, 4,000,000 unquoted Options with an exercise price of 30 cents and an expiry date of 30 June 2012 and 3,750,000 unquoted Options with an exercise price of 35 cents and an expiry date of 31 January 2016.

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6. ADDITIONAL INFORMATION

6.1

Underwriting Agreement

On 21 January 2011, the Company and the Underwriter entered into the Underwriting Agreement pursuant to which the Underwriter agreed to underwrite the total amount of the Offer, being the Underwritten Amount.

The Underwriter must lodge or cause to be lodged applications for the Shortfall within 5 business days of receiving notice of the Shortfall from the Company.

The Company will pay the Underwriter a fee in respect of underwriting the Offer in an amount equal to 6% plus GST of the Underwritten Amount (that is, $105,732 being 6% of $1,762,200), exclusive of GST. The Underwriter is entitled to be reimbursed for all reasonable out-of-pocket expenses.

The Underwriting Agreement imposes obligations on the Company including an obligation to offer the Shares in accordance with regulatory requirements. The Underwriting Agreement further contains various representations and warranties made by the Company to the Underwriter which are customary for an agreement of this nature.

As is normal for underwriting agreements of this nature, the Underwriter has a wide discretion to terminate its obligations under the Underwriting Agreement on the occurrence of numerous events, which may occur before the issue or allotment of Shares to the Underwriter. Amongst the numerous events is a fall in indices event allowing the Underwriter to terminate its obligations if the S&P/ASX 200 Index closes trading at a level that is 85% or less of the level at the closing of trading at the date of the Underwriting Agreement. Another matter providing the Underwriter with a right to terminate is where an adverse change occurs in respect of the Company or its assets which has a material adverse effect.

By the Underwriting Agreement, the Underwriter may at its discretion appoint subunderwriters to subscribe for any Shortfall.

6.2 Sub-Underwriting

In accordance with the Underwriting Agreement the Underwriter has appointed subunderwriters to subscribe for part of the Shortfall.

The Underwriter has entered into a priority sub-underwriting agreement with Tao Yuan Resources Ltd by which Tao Yuan Resources Ltd will sub-underwrite the first 500,000 Shortfall Shares ($110,000).

The Underwriter has advised the Company that it has entered into (or will enter into) general sub-underwriting agreements with clients after the priority sub-underwriter has subscribed for Shortfall on the proviso that none of the sub-underwriters will have a relevant interest in excess of 20%.

Each of the Directors will enter into general sub-underwriting agreements as follows:

(a) Mr Seamus Cornelius - 227,273 Shares ($50,000) (b) Mr Anthony Maslin - 227,273 Shares ($50,000) (c) Mr Sam Wright - 113,636 Shares ($25,000)

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The Company will not be seeking Shareholder approval for the issue of securities to Directors in the event their sub-underwriting commitment is called upon, as issues under underwriting agreements in relation to rights issues are excepted from the Listing Rule 10.11 requirement of approval for issues of securities to directors.

Each of the sub-underwriters will receive 1 free Option in accordance with this Prospectus for every 2 Shares subscribed for.

6.3 Relevant interest of Underwriter and Sub-underwriters

The Underwriter currently holds no Shares and has no relevant interest in securities in the Company. It does not intend to acquire any Shares prior to the Record Date.

In the unlikely circumstance that all Shareholders decide not to take up their Entitlement and the sub-underwriters renege on their obligations to subscribe for Shortfall Shares as instructed by the Underwriter, and the Underwriting Agreement has not been terminated, the Underwriter could increase its shareholding in the Company to 20%.

Tao Yuan Resources Ltd is a priority sub-underwriter to the Offer and currently has a relevant interest of 70,000 Shares in the Company. In the event that only Tao Yuan Resources Ltd takes up its Entitlement under the Offer and the full sub-underwriting commitment is called upon, Tao Yuan Resources Ltd will be issued with 500,000 Shares under the Offer plus being issued with 17,500 Shares by taking up its Entitlement. Based on the current capital structure of the Company his relevant interest after the Offer could change from 0.22% to 1.47%.

Mr Seamus Cornelius is a sub-underwriter to the Offer and currently has a relevant interest of 500,000 Shares in the Company. In the event that only Mr Cornelius takes up his Entitlement under the Offer and the full sub-underwriting commitment is called upon, Mr Cornelius will be issued with 227,273 Shares under the Offer plus being issued with 125,000 Shares by taking up his Entitlement. Based on the current capital structure of the Company and his relevant interest after the Offer could change from 1.56% to 2.13%.

Mr Anthony Maslin is a sub-underwriter to the Offer and currently has a relevant interest of 132,500 Shares in the Company. In the event that only Mr Maslin takes up his Entitlement under the Offer and the full sub-underwriting commitment is called upon, Mr Maslin will be issued with 227,273 Shares under the Offer plus being issued with 33,125 Shares by taking up his Entitlement. Based on the current capital structure of the Company and his relevant interest after the Offer could change from 0.22% to 0.98%.

Mr Sam Wright is a sub-underwriter to the Offer and currently has no relevant interest of Shares in the Company. In the event that the full sub-underwriting commitment is called upon, Mr Wright will be issued with 113,636 Shares under the Offer. Based on the current capital structure of the Company and his relevant interest after the Offer could change from 0% to 0.28%.

6.4 Interests of Directors

Other than as set out below or elsewhere in this Prospectus, no Director or proposed Director holds at the date of this Prospectus, or held at any time during the last two years before the date of lodgement of this Prospectus with ASIC, any interest in:

• (a) the formation or promotion of the Company; or

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• (b) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Company or the Offer; or

• (c) the Offer;

and no amounts have been paid or agreed to be paid by any person and no benefits have been given or agreed to be given by any person:

• (d) to a Director or proposed Director to induce him or her to become, or to qualify as, a Director; or

• (e) for services provided by a Director or proposed Director in connection with the formation or promotion of the Company or the Offer.

Directors	Current Relevant Interest in Shares*	Current Relevant Interest in Options*
Seamus Cornelius	500,000	Nil
Anthony Maslin	132,500	Nil
Sam Wright	Nil	Nil

*In addition to the interests set out in the above table, it is intended that Shareholder approval will be sought at a general meeting to issue up to 500,000 performance rights to Seamus Cornelius, up to 1,500,000 performance rights to Anthony Maslin and up to 250,000 performance rights to Sam Wright. The terms of the performance rights once resolved will be disclosed to Shareholders in the notice of meeting papers.

The table above does not take into account the Shares and Options that Directors may be entitled to pursuant to this Offer. The Directors have indicated that they each intend to take up their Entitlements.

As set out in section 6.3 above, the Directors have entered into a sub-underwriting agreement with the Underwriter in which they will subscribe for Shortfall Shares.

Mr Seamus Cornelius is currently paid $50,000 per annum as a director's fee plus statutory superannuation currently at 9% per annum. In the two years prior to the date of this Prospectus Mr Cornelius has not received any remuneration.

Mr Anthony Maslin is paid $150,000 per annum base salary plus statutory superannuation currently at 9% per annum. Mr Maslin does not receive a separate director's fee. In the two years prior to the date of this Prospectus Mr Maslin has received a total remuneration of approximately $13,625. Mr Maslin is an authorised representative of the Underwriter and has received earnings of approximately $2,307 from the Underwriter in the 2 years prior to the date of this Prospectus. However, Mr Maslin holds no equity in the Underwriter and will receive no benefit from the engagement of the Underwriter.

Mr Sam Wright is currently paid $30,000 per annum as a director's fee plus $36,000 per annum as company secretarial fees. In the two years prior to the date of this Prospectus Mr Wright has received a total remuneration of approximately $3,000.

Directors are also entitled to be reimbursed for reasonable expenses incurred by them in providing their services to the Company.

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6.5 Interests of Experts and Advisors

Except as disclosed in this Prospectus, no expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, nor any firm in which any of those persons is or was a partner nor any company in which any of those persons is or was associated with, has now, or has had, in the two year period ending on the date of this Prospectus, any interest in:

• (a) the formation or promotion of the Company; or

• (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or

• (c) the Offer.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, securities or otherwise) have been paid or agreed to be paid to any expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, or to any firm in which any of those persons is or was a partner or to any company in which any of those persons is or was associated with, for services rendered by that person in connection with the formation or promotion of the Company or the Offer.

Fairweather Corporate Lawyers has acted as solicitors to the Company in relation to the Offer. In respect of this work, the Company will incur liability of $15,000 exclusive of GST. As set out in section 3.2, Fairweather Corporate Lawyers or its nominee will be issued with 68,182 Shares in satisfaction of its legal fees of $15,000. Subsequently fees will be paid in accordance with normal hourly rates. In the 2 years prior to the date of this Prospectus, Fairweather Corporate Lawyers has not been paid any other amounts by the Company.

Mac Equity Partners Pty Ltd is underwriting the Offer. The material terms of the Underwriting Agreement and the fees to be paid to Mac Equity Partners Pty Ltd are set out in section 6.1. In the 2 years prior to the date of this Prospectus, Mac Equity Partners Pty Ltd has been paid $2,427 as payment of rent and outgoings by the Company for premises leased to the Company.

6.6 Expenses of the Offer

The total expenses of the Offer including underwriting fees, legal fees, ASX and ASIC fees and other miscellaneous expenses will be approximately $120,732.

6.7 Consents

The following parties has given their written consent to be named in this Prospectus and for the inclusion of statements made by that party (as described below in the form and context in which they are included), and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

FW Legal Pty Ltd trading as Fairweather Corporate Lawyers has consented to Fairweather Corporate Lawyers being named as the Solicitors to the Offer.

Mac Equity Partners Pty Ltd has consented to being named as the Underwriter to the Offer and the inclusion in the Prospectus of all statements referring to it.

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Computershare Investor Services Pty Limited has consented to being named as the Share Registry to the Company.

The parties referred to above in this section:

• do not make, or purport to make any statement in this Prospectus, or on which a statement made in this Prospectus is based other than as specified in this section;

• to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in the Prospectus with the consent of that party as specified in this section; and

• has not caused or authorised the issue of this Prospectus.

6.8 Share Trading History

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest and lowest market price of the Company’s quoted Shares on ASX during the 3 months immediately preceding the date of lodgement of this Prospectus with ASIC and the respective dates of those sales and the last sale prior to lodgement of this Prospectus were:

	Price	Date
Highest	37 cents	12 January 2011
Lowest	9.6 cents	18 and 19 October 2010
Latest	29 cents	21 January 2011

6.9 Continuous Disclosure Obligations

The Company is a "disclosing entity" (as defined in Section 111AC of the Corporations Act) for the purposes of section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company's securities. The Shares that will be issued pursuant to this Prospectus and the Shares that will be issued on exercise of the Options offered under this Prospectus will be in the same class of Shares that have been granted official quotation by ASX during the 3 months prior to the issue of this Prospectus.

In general terms "transaction specific prospectuses" are only required to contain information in relation to the effect of the Offer on the Company and the rights and liabilities attaching to the securities offered. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company.

Having taken such precautions and having made such enquiries as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the 3 months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters

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as they arise for the purpose of ASX making that information available to the securities market conducted by ASX.

Information that is already in the public domain has not been reported in this Prospectus other than that which is considered necessary to make this Prospectus complete.

The Company, as a disclosing entity under the Corporations Act, states that:

• (a) it is subject to regular reporting and disclosure obligations;

• (b) copies of documents lodged with ASIC in relation to the Company (not being documents referred to in section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, the offices of ASIC; and

• (c) it will provide a copy of each of the following documents, free of charge, to any person on request between the date of issue of this Prospectus and the Closing Date:

• (i) the annual financial report most recently lodged by the Company with ASIC;

• (ii) any continuous disclosure notices given by the Company after the lodgement of the annual financial report and before the lodgement of the copy of the Prospectus with ASIC.

The Company lodged its latest annual financial report with ASX on 29 October 2010. The following documents have been lodged with ASX since the date of lodgement of the Company's latest annual financial report:

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Date	Description of Announcement
29/10/2010	Quarterly Activities and Cashflow Report
01/11/2010	High Grade Magnetite Discovery at Zanthus
01/11/2010	Notice of Annual General Meeting/Proxy Form
08/11/2010	Significant New Iron Discovery at Zanthus – A Regional First
11/11/2010	Buxton Board Changes
11/11/2010	Final Director's Interest Notice M Ivey
15/11/2010	Initial Directors Interest Notice A Maslin
29/11/2010	Buxton Board Changes and Address Changes
29/11/2010	2010 Annual General Meeting Results
29/11/2010	2010 AGM Presentation
01/12/2010	Final Director's Interest Notice
02/12/2010	Initial Director's Interest Notice
06/12/2010	Amended Initial Director's Interest Notice
21/12/2010	Securities Trading Policy
04/01/2011	Director Appointment/Resignation
04/01/2011	Initial Director's Interest Notice
05/02/2011	Final Director's Interest Notice
07/01/2011	Trading Halt
11/01/2011	Capital Raising
24/01/2011	Appointment of Corporate Advisor

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7. DIRECTORS' AUTHORISATION AND CONSENT

This Prospectus is authorised by the Company and lodged with the ASIC pursuant to section 718 of the Corporations Act.

Each Director has consented to lodgement of this Prospectus with ASIC in accordance with the terms of section 720 of the Corporations Act and has not withdrawn that consent.

Dated: 24 January 2011

....................................... Signed for and on behalf of Buxton Resources Limited By Sam Wright Director

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8. GLOSSARY

Where the following terms are used in this Prospectus they have the following meanings:

ASIC means the Australian Securities and Investments Commission.

ASX means the ASX Limited ACN 008 624 691.

Board means the Board of Directors.

Closing Date means the closing date for receipt of Application Forms under this Prospectus, estimated to be 5.00 pm WST on 23 February 2011 or an amended time as set by the Board.

Company or Buxton means Buxton Resources Limited ABN 86 125 049 550. Constitution means the constitution of the Company. Corporations Act means the Corporations Act 2001 (Cth). Director means a director of the Company. Eligible Participants means shareholders who are registered as at 5.00 pm WST on 3 February 2011 who are entitled to subscribe under the Offer. Entitlement means the right of a Shareholder to subscribe for Securities under the Offer. Entitlement and means the personalised entitlement and acceptance form Acceptance Form attached to or accompanying this Prospectus. Listing Rules means the official listing rules of the ASX. Offer means the offer of Securities pursuant to this Prospectus. Official List means the official list of ASX. Official Quotation means official quotation by ASX in accordance with the Listing Rules.

Opening Date means the date on which the Offer opens. Option means an option to acquire a Share in the capital of the Company.

Prospectus means this Prospectus. Record Date means 3February 2011 being the date for determining the Shareholder’s Entitlement to participate in this Offer.

Securities

means Shares and Options.

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Share means a fully paid ordinary share in the Company. Shareholder means the registered holder of Shares in the Company.

Shortfall means the Shares and Options forming Entitlements, or parts of Entitlements, not accepted by Shareholders. Underwriter means Mac Equity Partners Pty Ltd (ACN 126 369 640).

Underwriting means the underwriting agreement between the Company Agreement and the Underwriter summarised in section 6.1. Underwritten Amount means $1,762,200. WST means Western Standard Time as observed in Perth, Western Australia.

$ means Australian dollars unless otherwise stated.

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