CANYON RESOURCES LIMITED — Capital/Financing Update 2013

Dec 29, 2013

Canyon Resources Limited ACN 140 087 261 353 Rokeby Road Subiaco WA 6008 www.canyonresources.com.au

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30 December 2013

Dear Shareholder

Canyon Resources Limited – pro-rata non-renounceable entitlement issue

As announced on 24 December 2013 Canyon Resources Limited (ACN 140 087 261) ( Canyon or the Company ) is undertaking a 1 for 2 pro rata non-renounceable entitlement issue ( Entitlement Issue or Offer ) of approximately 35,753,481 fully paid ordinary shares ( New Share ) at an issue price of $0.045 per New Share to raise up to approximately $1,608,907 (based on the number of Shares on issue at the date of the Prospectus). The Offer will include 1 free attaching option to acquire a Share ( New Option ) for every 1 New Share subscribed for and issued. The Company lodged a prospectus for the Offer ( Prospectus ) with ASIC and ASX on 24 December 2013.

The funds raised from the Offer are planned to be used in accordance with the table set out below:

Item	Proceeds of the Offer	$	%
1.	Expenses of the Offer	134,000	8.33
2.	Payment of deposit under Farm-in and Joint Venture Agreement	150,000	9.32
3.	Exploration on Cameroon Projects under Farm-in and Joint Venture Agreement	700,000	43.51
4.	Exploration on Burkina Faso projects	350,000	21.75
5.	Working capital	274,907	17.09
	Total	1,608,907	100

The Offer is being made to all shareholders of the Company ( Shareholders ) named on its register of members at 5:00pm WST on 7 January 2014, whose registered address is in Australia or New Zealand.

New Shares will rank equally with all fully paid ordinary shares in the capital of the Company ( Shares ) already on issue. The New Options will be exercisable at $0.06 each on or before 31 January 2017.

Following completion of the Offer, the Company will have issued approximately 35,753,481 New Shares and 35,753,481 New Options resulting in total Shares on issue of approximately 107,260,443 and total Options on issue of approximately 53,109,611.

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A copy of the Prospectus is available on ASX’s and the Company’s website. Eligible Shareholders will be mailed a Prospectus together with an Entitlement and Acceptance Form no later than 9 January 2014. Your entitlement will be set out on the personalised Entitlement and Acceptance Form accompanying the Prospectus.

For the purposes of calculating each Eligible Shareholders’ entitlement, fractions of entitlements have been rounded down to the nearest whole number of New Shares.

Actions required of Eligible Shareholders

There are a number of actions Eligible Shareholders may take:

• You may wish to accept all of your rights to subscribe for New Shares pursuant to the Prospectus ( Entitlement ). To take up all or some of your Entitlements you will need to ensure your application money for the Entitlements you wish to take up is received by Computershare Investor Services Pty Limited ( Share Registry ) by no later than 5:00pm WST on 31 January 2014, by completing and returning your Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the amount indicated on the Entitlement and Acceptance Form or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form.

• You may wish to accept part of your Entitlement. To take up part of your Entitlement you will need to ensure your application money for the Entitlements you wish to take up is received by the Share Registry by no later than 5:00pm WST on 31 January 2014, by completing and returning your Entitlement and Acceptance Form by filling in the number of New Shares you wish to accept in the space provided on the Entitlement and Acceptance Form together with your cheque, drawn on an Australian bank or bank draft made payable in Australian currency, for the appropriate application monies or making a payment by BPAY in accordance with the instructions on your Entitlement and Acceptance Form (at $0.045 per New Share).

• You may do nothing. If you choose to do nothing with your Entitlements, while you will continue to hold the same number of Shares, your interest in the Company will be diluted and you will receive no value for your Entitlement.

1 New Option with an exercise price of $0.06 and an expiry date of 31 January 2017 will be issued for every 1 New Share subscribed for and issued under the Offer.

Information for Option Holders

The terms and conditions of the options you currently hold do not entitle you to participate in the Entitlement Issue unless you exercise your options in time for new shares to be issued and to be entered on the Company’s register of members on or before 5:00pm WST on 7 January 2014 ( Record Date ).

To exercise your options and thereby participate in the Entitlement Issue, you will need to deliver the following to the Share Registry at Computershare Investor Services Pty Limited, GPO Box D182, Perth WA 6840.

• (i) a notice of exercise of options;

• (ii) an option certificate (where the options are certificated) or a copy of a holding statement (where the options are uncertificated) in respect of those options to be exercised; and

• (iii) payment for the exercise price in respect of those options to be exercised by way of a cheque made payable to “Canyon Resources Limited”.

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To ensure that your new shares are allotted prior to the Record Date, the above must be received by the Company no later than 5:00pm WST on 3 January 2014 . If received after this date, issue of new shares prior to the Record Date cannot be assured.

Before deciding whether to exercise any or all of your options, you should read the Prospectus in its entirety.

Key dates for the Offer

Lodgement of Prospectus with the ASIC	Lodgement of Prospectus with the ASIC			24 December 2013
Lodgement of Prospectus & Appendix	3B with ASX			24 December 2013
Notice sent to Option holders				30 December 2013
Notice sent to Shareholders				30 December 2013
Ex date				31 December 2013
Record Date for determining Entitlements				7 January 2014
Prospectus despatched to Shareholders			&	9 January 2014
Company announces despatch	has	been
completed
Closing Date*				31 January 2014
Securities quoted on a deferred settlement		basis		3 February 2014
ASX notified of under subscriptions				4 February 2014
Despatch of holding statements				10 February 2014
Quotation of Securities issued under the Offer*				10 February 2014

If you have any queries concerning the Entitlement Issue, or the action you are required to take to subscribe for New Shares, please contact your financial adviser or Phil MacLeod, Canyon’s Company Secretary, on +61 8 6143 4256.

Yours sincerely

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Phillip MacLeod Company Secretary

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