BUXTON RESOURCES LIMITED — Share Issue/Capital Change 2007

Oct 18, 2007

BUXTON RESOURCES LIMITED ACN 125 049 550

TERMS AND CONDITIONS OF OPTIONS

BUXTON RESOURCES LIMITED ACN 125 049 550

TERMS AND CONDITIONS OF OPTIONS

$1.$ Entitlement

• $(a)$ Subject to option terms 7, 8 and 9 and Buxton Resources Pty Ltd (to be renamed Buxton Resources Limited) ("Company") being admitted to quotation on Australian Stock Exchange Limited and its shares admitted to official quotation ("ASX"), each option entitles the registered option holder to subscribe for and be allotted one ordinary share in the capital of the Company. credited as fully paid, at an exercise price of \$0.20 per share ("Exercise Price").
• $(b)$ The Company must, as soon as it is reasonably practicable to do so, allot shares on exercise of the option in accordance with the listing rules ("Listing Rules") of ASX and register the option holder or its nominee as a shareholder in the register of members in respect of the shares so allotted. No option may be exercised if to do so would contravene the Corporations Law or the Listing Rules.
• $(c)$ Shares issued on the exercise of options will rank pari passu with all existing ordinary shares in the capital of the Company from the date of issue.

$2.$ Exercise of Options

• $(a)$ An option is exercisable by the registered option holder lodging the notice of exercise of option in the form set out below together with, subject to option terms 7, 8 and 9, the Exercise Price for each share to be issued on exercise and the relevant option certificate, at any office of the Company's share registrar. The exercise of some options only does not affect the registered option holder's right to exercise other options at a later time.
• $(b)$ Remittances must be made payable to the Company and cheques should be crossed "not negotiable".
• $(c)$ Options may be exercised at any time on or before 5.00 pm on 30 June 2012.
• $(d)$ An option not exercised by 5.00 pm on 30 June 2012lapses.

3. Transfer

• $(a)$ Subject to this option term 3 and any restrictions imposed by ASX, options may be transferred at any time before lapsing.
• $(b)$ Subject to this option term 3, options are transferable by any standard form of transfer. Executed and stamped transfers will be recorded in the Company's option register on lodgement of the transfer and relevant Certificate at any office of the Company's share registrar. The Company will cancel the Certificate and issue a new Certificate in the name of the transferee for the number of options so transferred.

$\overline{4}$ . Option certificates

• No exercise or transfer of an option represented by an option certificate may be $(a)$ registered until that certificate is surrendered to the Company or the option holder provides the Company with a statutory declaration, in a form satisfactory to the Company, to the effect that the certificate has been lost or destroyed and indemnifies the Company against any loss or damage if the original certificate is found.
• $(b)$ If the option holder exercises or transfers less than all options represented by a certificate then the Company will cancel the certificate and issue a new certificate for the balance.

5. Quotation

Ouotation of the options on ASX will not be sought by the Company. The Company must apply to the ASX for official quotation of the shares issued on any exercise of an option.

6. Dividends

Shares issued on any exercise of an option will rank pari passu with all existing ordinary shares in the capital of the Company from the date of issue and will be entitled to each dividend for which the books closing date for determining entitlements falls after the date of issue.

$7.$ Bonus issue

If the Company makes a bonus issue of shares or other securities pro rata to holders of ordinary shares (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) at a time when:

• an option has not been exercised in full; or $(a)$
• $(b)$ an option has been exercised, but shares the subject of the exercise have not been issued in fulfilment of the Company's obligation in that regard, before the record date for determining entitlements to the bonus issue,

then the number of shares over which the option is exercisable or has been exercised (as the case may be) will be increased by the number of securities which the holder of the option would have received if the option had been exercised before the record date for the bonus issue.

$\overline{\mathbf{8}}$ . Rights issue

If the Company makes an offer of ordinary shares pro rata to all or substantially all holders of ordinary shares (other than a bonus issue or an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) where $(S + D)$ (as defined below) exceeds P (as defined below) at a time when:

$(a)$ an option has not been exercised in full; or

the option has been exercised, but shares the subject of the exercise have not $(b)$ been issued in fulfilment of the Company's obligation in that regard, before the record date for determining entitlements to the rights issue.

then the Exercise Price per share will be reduced according to the following formula:

$$
O1 = O - E(P - S + D)
$$
$$
N + 1
$$

Where:

• $O¹$ $=$ the new Exercise Price per share
• $\Omega$ the old Exercise Price per share $\equiv$
• $E$ the number of shares into which one option is exercisable $=$
• the average market price of fully paid ordinary shares (weighted by P $=$ reference to volume) sold in the ordinary course of trading on the ASX during the 5 trading days before the ex rights date or ex entitlements date
• S the subscription price (application money plus calls) for new shares $=$ issued under the rights issue
• D $\equiv$ if the ordinary shares are trading on the ASX on a ex dividend basis, the (if any) dividends (on a per share basis) which have been declared but not yet paid is existing shares (except those to be issued under the rights issue)
• N number of shares required to be held to receive a right on one new $\equiv$ share.

The number of shares which the option holder is entitled to subscribe for on exercise of the option is to remain unchanged.

$9₁$ Reconstruction

The rights of an option holder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

$10.$ Advice

The Company must give notice to the option holder of any adjustment to the number of shares which the option holder is entitled to subscribe for or be issued on exercise of the option or the exercise price per share in accordance with the Listing Rules.

$11.$ Right to participate in future issues

The option holder may only participate in new issues of securities to holders of shares to the extent the option has been exercised, if that is permitted by its terms, and the shares allotted in respect of the option before the record date for determining entitlements to the issue. The Company must give notice to the option holder of any new issue before the books closing date for determining entitlements to the issue in accordance with the Listing Rules.