CARAVEL MINERALS LIMITED

ACN 120 069 089

NOTICE OF GENERAL MEETING

General Meeting of the Company will be held at CWA House, 1176 Hay St, West Perth WA on 13 March 2013 at 10am (WST).

This Notice of General Meeting 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 prior to voting.

Should you wish to discuss any matter please do not hesitate to contact the Company by telephone on

+61 8 9316 0766.

CARAVEL MINERALS LIMITED ACN 120 069 089

NOTICE OF GENERAL MEETING

Notice is hereby given that a general meeting of Shareholders of Caravel Minerals Limited ( Company ) will be held at CWA House 1176 Hay St West Perth WA on 13 March 2013 at 10am (WST) ( Meeting ).

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

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 as Shareholders on 11 March 2013 at 5pm (WST).

Terms and abbreviations used in this Notice and Explanatory Memorandum are defined in Section 7.

AGENDA

1. Resolution 1 – Approval of Acquisition of Quadrio Resources Limited

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

“That, for the purposes of section 611 item 7 of the Corporations Act, and for all other purposes, Shareholders approve the acquisition of 100% of the issued capital of Quadrio Resources Limited in accordance with the Acquisition Agreement, for:

(a) the issue of 135,000,000 Shares ; and
(b) the grant of 20,000,000 Unlisted Options ;

on the terms and conditions in the Explanatory Memorandum accompanying this Notice."

Stantons International Securities has prepared an independent expert’s report on the proposed Acquisition and has concluded that the proposed Acquisition is fair and reasonable to the existing Shareholders. Refer to Section 3.9 for further information.

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person (and any associate of such a person) who is a party to the Acquisition.

2. Resolution 2 – Adoption of Caravel Minerals Employee Share

Acquisition Plan

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

“That, for the purposes of Listing Rule 7.2 Exception 9(b), as an exception to Listing Rule 7.1, sections 259B and 260A of the Corporations Act and for all other purposes, approval is given for the establishment of the “Caravel Minerals Employee Share Acquisition Plan” on the terms and conditions summarised in Schedule 2 and in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and any of their associates.

However, the Company will not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy 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.

3. Resolution 3 – Authority to Allocate Plan Shares to a Director – Mr Marcel Hilmer

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

"That, conditional upon Resolution 2 being approved, pursuant to and in accordance with Listing Rule 10.14, and for all other purposes, the Shareholders authorise the Allocation of up to 7,500,000 Shares under the Caravel Minerals Employee Share Acquisition Plan, and the provision of a loan, to Mr Marcel Hilmer for the purpose of acquiring the Shares under the Caravel Minerals Employee Share Acquisition Plan on the terms and conditions in the Explanatory Memorandum."

Voting Exclusion

However, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy 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.

Dated 7 February 2013

BY ORDER OF THE BOARD

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Simon Robertson Company Secretary

CARAVEL MINERALS LIMITED ACN 120 069 089

EXPLANATORY MEMORANDUM

1. Introduction

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at the CWA House 1176 Hay St West Perth WA , Western Australia on 13 March 2013 at 10am (WST).

This Explanatory Memorandum should be read in conjunction with, and forms part of, the accompanying Notice. The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions set out in the Notice.

A Proxy Form is located at the end of the Explanatory Memorandum.

2. Action to be taken by Shareholders

Shareholders should read the Notice and this Explanatory Memorandum carefully before deciding how to vote on the Resolutions.

2.1 Proxies

A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (a 'proxy') to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, sign and return the Proxy Form to the Company in accordance with the instructions thereon. Lodgment of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

Please note that:

(a) a member of the Company entitled to attend and vote at the General Meeting is entitled to appoint a proxy;
(b) a proxy need not be a member of the Company; and
(c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed Proxy Form provides further details on appointing proxies and lodging Proxy Forms.

2.2 Voting Prohibition by Proxy Holders

In accordance with section 250BD of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on Resolutions 2 and 3 if:

(a) the person is either:
(i) a member of the Key Management Personnel of the Company; or
(ii) a Closely Related Party of such a member, and
(b) the appointment does not specify the way the proxy is to vote on Resolutions 2 and 3.

However, the prohibition does not apply if:

(c) the proxy is the Chairman; and
(d) the appointment expressly authorises the Chairman to exercise the proxy even if Resolutions 2 and 3 are connected directly or indirectly with remuneration of a member of the Key Management Personnel of the Company.

3. Summary of Transaction

3.1 Background

On 23 January 2013 the Company announced that it had entered into a binding memorandum of understanding to acquire 100% of the issued capital of Quadrio from a wholly owned subsidiary of Kingsgate Consolidated Limited ( Kingsgate ) ( Acquisition ).

Quadrio holds a number of tenements in Western Australia and Queensland that are prospective for gold, copper and molybdenum mineralisation. An overview of the projects comprising these tenements ( Projects ) is provided in Section 3.2.

Under the terms of the Acquisition, the Company has agreed to issue Shares and grant Unlisted Options as consideration to the Vendor.

Neither the Vendor nor Kingsgate currently hold any Shares in the Company.

Following Completion of the Acquisition, the Vendor, who will receive the Consideration Securities, will hold up to the following number of Shares and exercise the following voting power in the Company:

	Number of Shares	Voting Power
Vendor	135,000,000	36.26%

If all of the Consideration Options are exercised (and assuming the Company does not issue any further Shares), the Vendor will hold the following number of Shares and exercise the following voting power in the Company:

	Number of Shares	Voting Power
the Vendor	155,000,000	39.51%

As a consequence of the Vendor’s voting power in the Company on Completion of the Acquisition and voting power if all of the Consideration Options are exercised, the Company will need Shareholder approval to complete the Acquisition. Specifically, Shareholder approval

is required pursuant to Item 7 of section 611 of the Corporations Act because the Acquisition will result in the Vendor acquiring ownership of more than 20% of the issued share capital of the Company.

3.2 Overview of the Projects

Quadrio’s assets comprise seven separate projects, and an extensive proprietary geochemical database, in Western Australia, with potential for gold and base metal deposits, and a single, but relatively advanced, gold – copper project in Queensland.

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The Wynberg Project, located in the Cloncurry copper-gold District, contains an Inferred JORC resource of 3.1 million tonnes grading 1.4 g/t gold for 140,109 contained ounces1. Copper - mineralization is also present and in some of the interpreted blocks reaches grades of 0.5% 1.0%. The mineralization is open both at depth and along interpreted strike. The potential for high grade structures is demonstrated by multiple intersections including 12 metres @ 7.1 g/t, 6 metres @ 17.1 g/t, 26 metres @ 3.8 g/t, 16 metres @ 3.6 g/t, 26 metres @ 2.4 g/t, 4 metres 16.5 g/t, 8 metres @ 3.5 g/t and 3 metres @ 22.4 g/t gold. While drilling has locally tested to vertical depths of up to 150 metres, most of the resource occurs above 100 metres below surface. Additional geochemical and geological targets have still to be evaluated by drilling. This project is believed to represent an excellent opportunity for early mine development.

The Western Australian projects have multiple drill ready targets that are considered to have a high potential for discovery of significant gold, copper-gold and copper-molybdenum mineralisation. A brief description of each as follows:

The Calingiri Project comprises a virgin discovery of a regional trend of copper – molybdenum –gold mineralization extending for at least 30 kilometres. Limited drilling demonstrates the potential for economic grade mineralization with intersections including 80 metres @ 0.42% Cu and 171 ppm Mo, 94 metres @ 0.4% Cu, 75 metres @ 0.4% Cu, 26 metres @ 0.7% Cu and 44 metres @ 0.8% Cu. Systematic geochemical and geophysical data indicates the potential for extensive mineralised systems along the entire 30 kilometre trend. The early stage results are believed to be comparable with world class copper-molybdenum-gold belts.

At the Bryah Project, 2 large geochemical anomalies have been defined in a geological setting that is directly analogous to that of Sandfire Resources’ Degrussa copper-gold deposit. The anomalies are defined by pathfinder elements typical of the both the Degrussa mineralisation and volcanogenic massive sulphide (VMS) deposits worldwide.

The Kukerin, Ausgold JV, Perenjori and Holleton West Projects have all been generated from Quadrio’s proprietry regional geochemical database. Follow up exploration has defined several significant zones of previously unknown near surface gold mineralisation (including an intersection of 21 metres grading 3.5 g/t gold) where further evaluation is required.

The regional database (comprising 150,000 samples covering an area of 120,000 square kilometres) provides an unparalleled opportunity to evaluate the potential for multiple commodities within a geological terrane that is, in particular, prospective for gold and nickel as well as other base and precious metals.

The West Musgrave Project comprises a large (1,807 square kilometre) area with geology (mid Proterozoic felsic volcanics) that is prospective for gold and base metals. Due to native title related issues the area has never been covered by any ground based exploration in modern times. Quadrio, however, has recently signed an agreement that will allow access for exploration.

3.3 Competent Person Signoff

The information in this Notice that relates to Exploration Results and Mineral Resources estimates is based on information compiled by Tony Poustie who is a full-time employee of Kingsgate and a fellow of the Australian Institute of Mining and Metallurgy. Mr Poustie has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that 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 Poustie consents to the inclusion in the Notice of the matters based on his information in the form and context in which it appears and with the consent of Kingsgate.

3.4 Commercial Terms

On 22 January 2013 the Company entered into the Acquisition Agreement with the Vendor to acquire 100% ownership of Quadrio for consideration as follows:

(a) 135,000,000 Shares to be issued to Vendor (being the nominee of the Vendor) ( Consideration Shares );
(b) 20,000,000 Unlisted Options to Vendor (being the nominee of the Vendor) ( Consideration Options );

(together the Consideration Securities ).

Resolution 1 seeks Shareholder approval for the for the allotment and issue of the Consideration Securities to the Vendor as well as the potential acquisition of a relevant interest in the issued voting shares of the Company by the Vendor and Kingsgate in excess of the threshold prescribed by Section 606(1) of the Corporations Act by virtue of the issue of the Shares and the potential exercise of the Unlisted Options to be issued to the Vendor.

The Corporations Act and ASIC Regulatory Guide 74 set out a number of regulatory requirements which must be satisfied.

Refer to Section 4 for further details.

The parties to the Acquisition Agreement intend to enter into a formal share sale agreement to more fully document the terms of the Acquisition consistent with the terms of the Acquisition Agreement ( Formal Agreement ).

The Acquisition is conditional upon, and subject to, satisfaction of the following conditions:

(a) the Company completing financial, technical and legal due diligence on Quadrio and its assets and undertaking, to the sole and absolute satisfaction of the Company (acting reasonably);
(b) the Vendor completing a financial, technical and legal due diligence on the Company, to the sole and absolute satisfaction of the Vendor (acting reasonably);
(c) the Vendor obtaining any necessary consent or approval, or completing any required notification, in connection with the lease sharing arrangement referred to in clause 5 of the Acquisition Agreement (refer below for further details about the lease sharing arrangement);
(d) the Company obtaining a report from an independent expert that the acquisition of Quadrio proposed by the Acquisition Agreement is fair and reasonable;
(e) the Company having obtained all necessary shareholder approvals required by the Corporations Act and the Listing Rules in relation to the Acquisition and any other approvals upon which the Company or the Vendor determine approval of the Acquisition is conditional;
(f) the transfer of the Wynberg Project tenements to Quadrio; and
(g) the provision of a letter of waiver of the fixed and floating charge over or affecting the shares in Quadrio which is a fixed and floating charge over all the assets of Kingsgate.

The Acquisition Agreement provides that the Formal Agreement will contain detailed warranties that are customary for a transaction of this type. These warranties are expected to include warranties from the Vendor in respect of Quadrio and the title and standing of the tenements comprising the Projects.

The Vendor has the right to appoint a nominee to the Board of the Company to be appointed upon completion of the Acquisition. No decision has been made as to whether the Vendor will appoint a nominee or who that person will be.

Quadrio currently has three full time employees who are paid a total of approximately $400,000 (inclusive of superannuation) and three casual employees who are paid on an hourly rate. The Company has agreed that Quadrio will have outstanding employee entitlements for annual leave and long service leave at settlement owed to these employees.

It is intended that two other employees of the Vendor will be appointed by the Company on terms to be agreed between those employees and the Company.

The parties have agreed to an office sharing arrangement whereby the offices currently occupied by the Vendor will be used by the Company from completion of the Acquisition and costs associated with the lease of these premises will be apportioned between the parties equally. The lease expires in August 2013 and the parties have agreed it will not be renewed.

The Vendor will procure that Quadrio maintains its assets as they are currently maintained up until completion of the Acquisition.

The Vendor has acknowledged that none of the Consideration Shares will be disposed of for a period of 18 months from the date of issue of the Consideration Shares or as otherwise required by the ASX (which the Vendor has acknowledged to be a period of 12 months from issue). The Vendor has agreed that it will sign such form of escrow agreement as required by the ASX.

3.5 Effect of the Acquisition on the Company

(a) Capital Structure

Below is a table showing the Company’s current capital structure and the possible capital structure on completion of the Acquisition, and upon exercise of all of the Consideration Options and assuming no Shares are issued by the Company and none of the Options (other than the Consideration Options) expire, or are exercised, and none of the Performance Shares expire, or are converted, prior to the date that all of the Consideration Options have been exercised.

	Shares	Options	Performance
			Shares
Balance at the date of this	237,347,608	78,376,269	6,000,000
Notice
Balance following	372,347,608(1)	98,376,269(1)	6,000,000
Completion of the
Acquisition
Balance following exercise	392,347,608(2)	78,376,269	6,000,000
of the Consideration
Options

(1) Pursuant to the Executive Services Agreement between the Company and its Chief Executive Officer, Marcel Hilmer, the Company has agreed to either issue 7,500,000 Shares (pursuant to a Company approved employee share scheme) or grant 7,500,000 Options (each exercisable at $0.04 on or before the date that is three years from the date of grant) to Mr Hilmer subject to shareholder approval. The Company is seeking approval to issue 7,500,000 Plan Shares to Mr Hilmer pursuant to the Caravel Minerals Employee Share Acquisition Plan in Resolution 3. Refer to Section 6 for further details.
(2) Assumes all of the Consideration Options are exercised prior to the expiry date.

The table above shows the possible capital structure of the Company that will give the Vendor the maximum voting power.

(b) Pro Forma Balance Sheet following the Acquisition

Section 5.4.1 of the Independent Expert’s Report contains the unaudited balance sheet of the Company at 31 December 2012 adjusted for completion of the Acquisition and issue of all Consideration Securities contemplated by this Notice.

The Vendor does not currently hold any Shares or Options in the Company.

The following table outlines the voting power of the Vendor under various scenarios depending on whether the Consideration Options have been exercised.

In addition, Kingsgate is considered to have a relevant interest in the securities of the Vendor by virtue of holding 100% of the voting rights in the Vendor.

Kingsgate does not have a relevant interest in any Shares or Options as at the date of this Notice.

this Notice.
Event causing the Share issue	Number of Shares issued to the Vendor	% of Share capital held by Vendor on issue of the Shares
Prior to Completion of the Acquisition	Nil	0%
On Completion of the Acquisition	135,000,000(1)	36.26%(2)
On exercise of the Consideration Options	155,000,000(3)	39.51%(4)

(1) Assuming no other Shares are issued (except as contemplated by this Notice) and no Options are exercised or Performance Shares are converted.
(2) If Shareholders approve Resolutions 2 and 3, the Company will Allocate 7,500,000 Plan Shares to its Chief Executive Officer, Mr Marcel Hilmer and the Vendor’s voting power will be 35.54%.
(3) Assumes all of the Consideration Options are exercised prior to the expiry date. Assuming no further Shares are issued, no Performance Shares are converted and only those Options issued to the Vendor are exercised after the date of the Notice.
(4) If Shareholders approve Resolutions 2 and 3, the Company will Allocate 7,500,000 Plan Shares to its Chief Executive Officer, Mr Marcel Hilmer and the Vendor’s voting power will be 38.76%.

As a consequence of the Vendor’s voting power in the Company on Completion of the Acquisition, the Company will need Shareholder approval to complete the Acquisition. Specifically, Shareholder approval is required pursuant to Item 7 of section 611 of the Corporations Act because the Acquisition will result in the Vendor and Kingsgate acquiring a relevant interest of more than 20% of the issued share capital of the Company.

(d) Vendor’s Voting Power Increase/Decrease

The Vendor’s voting power in the Company may change as follows:

(i) Increase in the Vendors’s voting power:
(A) Acquisition of Shares by the Vendor on and off market. The Vendor could increase its Shareholding under the creep provisions of the Corporations Act allowing it to acquire 3% every 6 months.
(B) Cancellation of Shares held by Shareholders other than the Vendor.
(ii) Decrease in the Vendor’s voting power:
(A) Disposal of Shares held by the Vendor.

(B) Issue of Shares by the Company to Shareholders other than the Vendor.
(C) Exercise of Options (other than the Consideration Options) by Option holders.
(D) Conversion of Performance Shares into Shares.
(E) Exercise of a portion of Consideration Options rather than all of the Consideration Options.

3.6 Advantages of the Acquisition

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder's decision on how to vote on Resolution 1. Refer to sections 9.2 to 9.8 of the Independent Expert’s Report for further advantages:

(a) If the Acquisition is approved, the Company will increase its exposure in Australia to gold and base metal assets and will spread its risk in case its existing assets are not commercially successful .
(b) The Company will be able to increase its value if it is able to achieve exploration success in gold, copper and/or molybdenum from the Projects including through potential gold operations or by on-selling or farming-out the Projects to other mining companies for a profit.
(c) The Company’s ability to raise funds may be improved.
(d) If the Projects are commercially successful, the chances of the Consideration Options being exercised) may be enhanced. Exercise of all of the Consideration Options would result in the Company receiving $2,000,000 from the Vendor.
(e) Shareholders may be given the opportunity to sell their Shares in excess of the Share price at the date of announcement of the Acquisition.
(f) If the Vendor appoints a nominee to the Board of the Company, this person may bring further technical and business experience to the Board.

3.7 Disadvantages of the Acquisition

The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder's decision on how to vote of Resolution 1. Refer to sections 9.9 to 9.13 of the Independent Expert’s Report for further disadvantages:

(a) Should the Acquisition be completed, the Company's Shareholders will have their voting power reduced and the Vendor will become the largest shareholder of the Company. As such, the ability of the existing Shareholders to influence decisions, including the composition of the Board or the acquisition or disposal of assets will be reduced accordingly and the Vendor may have the ability to significantly influence or control the Company. In addition, the size of the Vendor’s interest may lead to an “overhang” in the market.
(b) Quadrio has no cash reserves but has current liabilities totaling approximately $114,000. If the Acquisition is completed, the Company will need to meet these liabilities.

(c) The price of Shares at the time of any exercise of Consideration Options may be in excess of the Company's recent Share price (between $0.03 and $0.035) and the $0.10 exercise price of the Consideration Options.
(d) If the Projects are not commercially viable, the Company may incur losses.
(e) The Company will be exposed to the risks associated with the Projects (refer to Section 3.8 for further information).

3.8 Risk Factors

The Company will undertake the requisite due diligence process (including title, legal, technical and other risks) prior to completion of the Acquisition. While this process is undertaken to identify any material risks specific to Quadrio and the Projects, it should be noted that the usual risks associated with companies with a small market capitalisation undertaking exploration and development activities of large scale projects in the gold, copper and molybdenum sectors are expected to remain after the completion of due diligence.

Shareholders and investors should also be aware that the Acquisition Agreement to acquire Quadrio is conditional on a number of events (refer to Section 3.4 above). Accordingly there is a risk that the Acquisition may not be completed.

Investing in a company involves risks of various kinds, some of which are within the realms of influence of the Company and some, arising from external factors, which may be beyond the control of the Company. A summary of the risks associated with the Acquisition and ongoing exploration and development of the Projects are outlined in Schedule 1.

3.9 Independent Expert's Report

The Directors resolved to appoint Stantons International Securities as an independent expert and commissioned it to prepare a report to provide an opinion as to whether or not the proposal in Resolution 1 is fair and reasonable to the existing Shareholders.

What is fair and reasonable must be judged by the independent expert in all the circumstances of the proposal. This requires taking into account the likely advantages to Shareholders if the proposal is approved and comparing them with the disadvantages to them if the proposal is not approved.

Stantons International Securities has concluded that the proposed Acquisition is fair and reasonable to the existing Shareholders.

The Company strongly recommends that you read the Independent Expert's Report in full, a copy of which is in Annexure A to this Explanatory Memorandum. The Independent Expert’s Report refers to the Agricola Valuation Report, a copy of which is in Annexure B to this Explanatory Memorandum.

3.10 Section 611 Corporations Act

(a) Section 606 of the Corporations Act prohibits a person acquiring a relevant interest in the issued voting shares of the Company if, because of the acquisition, that person’s or another person’s voting power in the Company increases from:
(i) 20% or below to more than 20%; or
(ii) a starting point that is above 20% and below 90%.

(b) The voting power of a person in the Company is determined by reference to section 610 of the Corporations Act. A person’s voting power in the Company is the total of the votes attaching to the Shares in the Company in which that person and that person’s associates (within the meaning of the Corporations Act) have a relevant interest.
(c) Under section 608 of the Corporations Act, a person will have a relevant interest in Shares if:
(i) the person is the registered holder of the Shares;
(ii) the person has the power to exercise or control the exercise of votes or disposal of the Shares; or
(iii) the person has over 20% of the voting power in a company that has a relevant interest in Shares, then the person has a relevant interest in said Shares.
(d) For the purpose of determining who is an associate you need to consider section 12 of the Corporations Act. Any reference in chapters 6 to 6C of the Corporations Act to an associate is as that term is defined in section 12. The definition of 'associate' in section 12 is exclusive. If a person is an associate under section 11, 13 or 15 of the Corporations Act then it does not apply to chapters 6 to 6C. A person is only an associate for the purpose of chapter 6 to 6C if he is an associate under section 12.
(e) A person (second person) will be an associate of the other person (first person) if:
(i) the first person is a body corporate and the second person is:
- (A) A body corporate the first person controls;
- (B) A body corporate that controls the first person: or
- (C) A body corporate that is controlled by an entity that controls the first person;
(ii) the second person has entered, or proposes to enter into, a relevant agreement with the first person for the purpose of controlling or influencing the composition of the board of a body corporate or the conduct of the affairs of a body corporate; and
(iii) the second person is a person with whom the first person is acting or proposes to act, in concert in relation to the affairs of a body corporate.
(f) The Corporations Act defines 'control' and 'relevant agreement' very broadly as follows:
(i) Under section 50AA of the Corporations Act control means the capacity to determine the outcome of decisions about the financial and operating policies of the Company. In determining the capacity you need to take into account the practical influence a person can exert and any practice or pattern of behaviour affecting the financial or operating policies of the Company.
(ii) Under section 9 of the Corporations Act relevant agreement means an agreement, arrangement or understanding:

  - (A) whether formal or informal or partly informal and partly informal;

  - (B) whether written or oral or partly written and partly oral; and

  - (C) whether or not having legal or equitable force and whether or not based on legal or equitable rights.

(g) Associates are determined as a matter of fact. For example where a person controls or influences the Board or the conduct of the Company’s business affairs, or acts in concert with a person in relation to the entity’s business affairs.
(h) Section 611 of the Corporations Act has exceptions to the prohibition in section 606 of the Corporations Act. Item 7 of section 611 of the Corporations Act provides a mechanism by which Shareholders may approve an issue of Shares to a person which results in that person’s or another person’s voting power in the Company increasing from:
(i) 20% or below to more than 20%; or
(ii) a starting point that is above 20% and below 90%.
(i) To comply with the requirements of the Corporations Act (as contained in ASIC Regulatory Guide 74), the Company provides the information in Section 4 of the Explanatory Memorandum to Shareholders in relation to Resolution 1.

4. Resolution 1 – Approval of Acquisition of Quadrio Resources Limited

4.1 General

Resolution 1 seeks Shareholder approval under item 7 of section 611 of the Corporations Act to issue securities exceeding 20% of the Company’s fully diluted share capital to a party.

A company is not required to obtain Shareholder approval under Listing Rule 7.1 where Shareholder approval is granted under item 7 of section 611 of the Corporations Act. Accordingly, Shareholder approval to issue the Consideration Securities to the Vendor is not required pursuant to Listing Rule 7.2 exception 16. Accordingly, the issue of Consideration Securities to the Vendor will not be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

Resolution 1 is an ordinary resolution.

4.2 Information required by item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74

The information that Shareholders require under item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74 is as follows:

(a) The identity of the acquirer and any person who will have a relevant interest in the Consideration Securities to be acquired

The acquirer is the Vendor.

The Vendor is a private company incorporated in Australia and is a wholly owned subsidiary of Kingsgate, which is listed on the Australian Securities Exchange.

Kingsgate has a relevant interest in the Consideration Securities to be allotted to the Vendor because it holds 100% of the Vendor.

(b) Full particulars (including the number and percentage) of the shares in the Company to which the acquirer is and will be entitled immediately before and after the Acquisition and the maximum extent of the increase in the acquirer’s voting power in the Company (including their associates) as a result of the Acquisition.

The Vendor does not hold any Shares in the Company prior to completion of the Acquisition.

Refer to Section 3.5 for full particulars (including the number and percentage) of the Shares in which the Vendor and Kingsgate will have a relevant interest in immediately before and after completion of the Acquisition and after exercise of the Consideration Options (assuming all of the Consideration Options are issued).

(c) The identity, associations (with the Company, the acquirer or any of their associates) and qualifications of any person who is intended to become a director if Shareholders agree to the acquisition

The Vendor has the right to nominate a nominee to be appointed to the Board of the Company upon Completion. No decision has been made as to whether the Vendor will appoint a nominee or who that person will be.

(d) The Vendor’s intentions regarding the future of the Company if Shareholders agree to the Acquisition and the allotment of the Consideration Securities in consideration for the Acquisition

The Vendor will be a Shareholder in the Company following completion of the Acquisition and, the Company understands that:

(i) other than as set out in Section 3, there is no intention to change the business of the Company;
(ii) there is no current intention to inject further capital into the Company. However, the Company may seek to raise further capital in 2013 if the need arises;
(iii) there is no intention to change the future employment of the present employees of the Company;
(iv) there is no proposal whereby any property will be transferred between the Company and the Vendor or any parties associated with any of them; and
(v) there is no intention to otherwise redeploy any of the fixed assets of the Company.
(e) Particulars of the terms of the proposed allotment of Securities and any contract or proposed contract between the acquirer and the Company or any of their associates which is conditional upon, or directly or indirectly dependent on, Shareholders agreement to the allotment of Securities to the Vendor in consideration of the Acquisition

Other than the Acquisition Agreement there are no contracts or proposed contracts between the Vendor and the Company or any of their associates which are conditional upon, or directly or indirectly dependent on, Shareholders agreement to the allotment of the Consideration Securities to the Vendor in consideration of the Acquisition. Refer to Section 3.4 for details of the key terms of the Acquisition Agreement.

(f) When the allotment of Securities to the Vendor as consideration under the Acquisition Agreement is to be made

The Consideration Securities will be issued to the Vendor on Completion of the Acquisition. Completion is expected to occur shortly after approval of the Acquisition by Shareholders.

(g) An explanation of the reasons for the proposed allotment of the Consideration Securities to the Vendor

The Consideration Securities will be issued to the Vendor on completion of the Acquisition as part of the consideration for the Acquisition.

The interests of the Directors in Resolution 1

None of the Directors have an interest in Resolution 1.

(i) Identity of the Directors who approved or voted against the proposal to put Resolution 1 to Shareholders and the Explanatory Memorandum

All of the Directors approved the proposal to put Resolution 1 to Shareholders.

(j) Any intention of the Vendor to change significantly the financial or dividend policies of the Company

The Vendor does not intend to change significantly the financial or dividend policies of the Company at this time.

(k) Recommendation or otherwise of each Director as to whether Shareholders should agree to the proposed allotment and the reasons for the recommendation or otherwise

See Section 4.3 in respect to the Directors’ recommendation.

(l) An analysis of whether the proposed allotment of Consideration Securities to the Vendor in consideration of the Acquisition is fair and reasonable when considered in the context of the interests of the Shareholders other than the Vendor.

Refer to section 3.9 of this Explanatory Memorandum.

4.3 Directors’ Recommendation

Based on the information available, including:

(a) the information contained in this Explanatory Memorandum; and
(b) the Independent Expert's Report in Annexure A,

the Directors consider that Resolution 1 is fair and reasonable insofar as Shareholders are concerned in the best interests of the Company and recommend that Shareholders vote in favour of Resolution 1.

Each of the Directors who holds Shares in the Company (or whose associated entities hold Shares) and is entitled to vote will vote their Shares in favour of the Acquisition.

Before making any decision about the Acquisition, Shareholders should read the Notice (including the Independent Expert’s Report in Annexure A) in its entirety and if in doubt about what action to take contact their professional advisers.

5. Resolution 2 – Adoption of Caravel Minerals Employee Share Acquisition Plan

5.1 Introduction

Resolution 2 seeks Shareholder approval for the establishment of the Caravel Minerals Employee Share Acquisition Plan ( Share Plan ) for the purposes of the Corporations Act and for all other purposes.

Resolution 2 is an ordinary resolution.

The Board has the view that the most effective way to align the interests of the eligible Employees and Shareholders of the Company is for the Employees to be Shareholders.

The aim of this plan is to allow the Board to assist eligible Employees, who in the Board’s opinion are dedicated and will provide ongoing commitment and effort to the Company. Eligible Employees are full-time or permanent part-time Employees of the Company or its subsidiaries (which includes Directors). The Company intends to loan funds to certain eligible Employees in order to purchase Shares under the Share Plan. The Board will determine on a case by case basis whether an Employee is eligible for a loan and will determine the loan terms and conditions.

The key features of the Share Plan and the loan are as follows:

(a) The Board will determine the number of Plan Shares to be Allocated to eligible Employees and the issue price of the Plan Shares in its sole discretion.
(b) The Company will be permitted to loan funds to eligible Employees to purchase Plan Shares.
(c) The loan will be a limited recourse loan provided the Employee remains employed by the Company, or a subsidiary of the Company, for a period, or periods, as determined by the Board.
(d) The loan will be interest free provided the Employee remains employed by the Company, or a subsidiary of the Company, for a period, or periods, as determined by the Board.
(e) In the event that the Employee leaves before the interest free period determined by the Board, interest will be charged equal to the market rate of interest that would have accrued on the loan from the date of advance of the funds to the repayment date.

(f) The Plan Shares will be Allocated at a small discount either through the issue of new Shares or the purchase of Shares on-market.
(g) Plan Shares may be subject to a sale restriction for a certain period.
(h) A Trust will be set up as the holding mechanism for Plan Shares Allocated under the Share Plan. The Trustee will hold the Plan Shares on trust for the eligible Employee until the loan is repaid (or any other vesting conditions are satisfied).
(i) During the term of the loan, dividends will be retained by the Trustee and offset against the Employee's outstanding loan balance. A portion of the dividend may be released to the Employee to cover any tax liability as a result of the dividend.
(j) Subject to the Corporations Act and the Listing Rules, the Board will have the power to amend the Share Plan as it sees fit.

A detailed overview of the terms of the Share Plan is attached in Schedule 2.

5.2 Corporations Act

Section 259B(1) of the Corporations Act prohibits a company from taking security over its shares except as permitted by Section 259B(2) or 259B(3). Section 259B(2) states that a company may take security over shares in itself under an employee share scheme that has been approved by a resolution passed at a general meeting of the company.

Section 260A(1) of the Corporations Act prohibits a company from financially assisting a person to acquire shares in itself except in specific circumstances which include if the assistance is exempted under Section 260(C). Section 260(C)(4) provides for a special exemption for approved employee share schemes and states that financial assistance is exempted from Section 260(A) if it is given under an employee share scheme that has been approved by a resolution passed at a general meeting of the company.

Accordingly Shareholder approval is sought for Resolution 2 to ensure compliance with these sections of the Corporations Act.

6. Resolution 3 – Authority to Allocate Plan Shares to a Director – Mr Marcel Hilmer

6.1 Background

The Company proposes to Allocate a total of 7,500,000 Plan Shares to Mr Marcel Hilmer, the Company’s Chief Executive Officer and Executive Director, under the Share Plan.

The principal terms of the Share Plan are summarised in Schedule 2.

The Plan Shares will be Allocated at a $1,000 discount to the volume weighted average of the prices at which Shares were traded on the ASX during the five day period up to and including the date of Allocation of the Plan Shares.

The Company will provide a loan for the entire issue price of the Plan Shares. The principal terms of the loan are summarised in Schedule 2.

In the Company’s present circumstances, the Board considers that the incentive to Mr Hilmer that will be represented by the Allocation of these Plan Shares, are a cost effective and

efficient reward for the Company to make to appropriately incentivise the continued performance of Mr Hilmer and are consistent with the strategic goals and targets of the Company.

The Board considers that the Allocation of 7,500,000 Plan Shares to Mr Hilmer will align his interests with the interests of Shareholders. It is also usual that junior exploration companies remunerate their directors by way of share incentive plans in order to preserve cash and maximise exploration activities.

Resolution 3 is an ordinary resolution and is subject to the passing of Resolution 2.

6.2 Listing Rule 10.14

Shareholder approval is required under Listing Rule 10.14 for the proposed Allocation of the Plan Shares to Mr Hilmer and funding of the Plan Shares because Mr Hilmer is a related party of the Company.

As Shareholder approval is sought under Listing Rule 10.14, approval under Listing Rule 7.1 is not required. Accordingly, the Allocation of Plan Shares to Mr Hilmer will not reduce the Company's 15% capacity for the purposes of Listing Rule 7.1

The Chairman will not cast undirected votes on Resolution 3.

6.3 Specific information required under Listing Rule 10.15

Listing Rule 10.15 requires that the following information be provided to Shareholders for the purpose of obtaining Shareholder approval for the Allocation of the Plan Shares:

(a) The Plan Shares will be Allocated to Mr Hilmer indirectly through a Trust established under the Share Plan.
(b) The maximum number of Plan Shares that may be Allocated to Mr Hilmer pursuant to Resolution 3 is 7,500,000 consisting of two equal tranches of 3,750,000.
(c) The Plan Shares will be Allocated at a $1,000 discount to the volume weighted average of the prices at which Shares were traded on the ASX during the five day period up to and including the date of Allocation of the Plan Shares.
(d)
The Plan Shares will be granted in two tranches:

Plan Share Tranche	Sale Restriction Date
Tranche 1	One week from the date of Allocation
Tranche 2	Oneyear from the date of Allocation

If the Participant leaves prior to the relevant Sale Restriction Date passing, the full loan will become repayable and interest will be charged on the portion of the loan corresponding to the class, or classes, of Plan Shares for which the relevant Sale Restriction Date has not passed.

(e) There have not been any Plan Shares Allocated under the Share Plan to date;
(f) Under the Share Plan, only Employees (as defined in Section 7 of this Notice) are entitled to participate in the Share Plan. Mr Hilmer has been determined to be an Employee for the purposes of the Share Plan.

(g) A voting exclusion statement is included in the Notice.
(h) The material terms of the loan in relation to the Share Plan are detailed in section 3 of Schedule 2 of this Notice.
(i) The Company will Allocate the Plan Shares no later than 12 months after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the Listing Rules).

7. Definitions

$ means Australian Dollars.

Acquisition has the meaning in Resolution 1.

Acquisition Agreement means the binding memorandum of understating between the Company, and the Vendor dated 22 January 2013.

Agricola Valuation Report means the Independent Valuation Report on the Mineral Assets held by Quadrio Resources Limited in Western Australia and Queensland prepared by Agricola Mining Consultants Pty Ltd in Annexure B of this Notice .

Allocation means the allocation of a beneficial interest in newly issued Shares to a Participant by the Trustee or the transfer of a beneficial interest in Shares already held by the Trustee to a Participant following instruction from the Company in accordance with the terms of an Invitation and Allocate and Allocated have the corresponding meaning.

Article means an article of the Constitution.

ASIC means Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691) and, where the context permits, the Australian Securities Exchange operated by ASX.

Board means the board of Directors.

Chairman means the chairman of this Meeting.

Closely Related Party has the meaning in section 9 of the Corporations Act.

Company or Caravel means Caravel Minerals Limited ACN 120 069 089.

Consideration Options has the meaning in Section 3.4(b)

Consideration Securities has the meaning in Section 3.4.

Consideration Shares has the meaning in Section 3.4(a).

Constitution means the current constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Employee means a person who is a full-time or permanent part-time employee or officer or director of the Company and for whom the Company, or subsidiary of the Company, is required to deduct PAYG withholding payments under section 12-35, 12-40 or 12-45 of schedule 1 to the Taxation Administration Act 1953.

Explanatory Memorandum means the explanatory memorandum attached to the Notice.

Independent Expert’s Report means the independent expert’s report prepared by Stantons International Securities in Annexure A of this Notice.

Invitation means a written invitation to an Employee to participate in the Share Plan.

Key Management Personnel means a person having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company.

Kingsgate means Kingsgate Consolidated Limited ACN 000 837 472.

Listing Rules means the listing rules of ASX.

Meeting has the meaning in the introductory paragraph of the Notice.

Notice means this notice of meeting.

Option means an option to acquire a Share.

Performance Share means a performance share convertible into a Share upon achievement of the relevant milestone.

Plan Shares means Shares Allocated to a Participant under the Share Plan.

Projects has the meaning in Section 3.1.

Proxy Form means the proxy form attached to the Notice.

Quadrio means Quadrio Resources Limited ACN 002 949 108.

Resolution means a resolution contained in this Notice.

Schedule means a schedule to this Notice.

Section means a section contained in this Explanatory Memorandum.

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

Share Plan has the meaning given in Section 5.1.

Share Plan Rules means the rules of the Share Plan.

Shareholder means a shareholder of the Company.

Stantons International Securities means Stantons International Audit and Consulting Pty Ltd ACN 144 581 519 (trading as Stantons International Securities).

Trust means the trust established by the Company for the purpose of acquiring, holding and selling the Plan Shares on behalf of Participants.

Trustee means the trustee, being a wholly owned subsidiary of the Company, appointed for the purposes of the Share Plan.

Unlisted Option means an Option exercisable at $0.10 on or before the date that is three years from the date of issue and otherwise on the terms and conditions in Schedule 3.

Vendor means Dominion Mining Limited ACN 000 660 864, a wholly owned subsidiary of Kingsgate.

WST means Western Standard Time, being the time in Perth, Western Australia.

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

Schedule 1 – Risk Factors of the Acquisition

1. Introduction

There are a number of risks associated with the Acquisition that may have an impact on the financial returns received by Shareholders. These risks are important for Shareholders to understand.

Shareholders are already exposed to a number of risks through their existing shareholding in the Company. A number of these risks are inherent in investing in securities generally and also inherent in any mining company such as that of the Company.

The risk factors include, but are not limited to, those detailed below. Additional risks not presently known to the Company, or if known, not considered material, may also have an adverse impact.

The Directors believe that the advantages of the Acquisition outweigh the associated extent of the risks.

2.

Risks specific to the Projects

(a) Private Land

The majority of the Western Australian tenements being acquired pursuant to the Acquisition are over private land. In order for the Company to mine on the first 30 metres of this land, the Company will need to obtain the consent of the landowners. Further, given that the land is private land, if any deposits are discovered on this land, the Company will need to negotiate compensation arrangements with the landowners. Failure to do so may delay or impact on the operations of the Company on this land.

(b) Tenement Title

The Company’s mining exploration activities are dependent upon the grant, or as the case may be, the maintenance of appropriate tenements, which may be withdrawn or made subject to limitations. The maintaining of tenements, obtaining renewals, or getting tenements granted, often depends on the Company being successful in obtaining required statutory approvals for its proposed activities and that the tenements, licences, leases, permits or consents it holds will be renewed as and when required. There is no assurance that such renewals will be given as a matter of course and there is no assurance that new conditions will not be imposed in connection therewith.

(c) Aboriginal Land

Some of the tenements being acquired pursuant to the Acquisition are over Aboriginal land. The Company will require the agreement of the Aboriginal parties before entering the Aboriginal land. Failure to agree access to the Aboriginal land with the relevant parties will prevent the Company from undertaking any activities on this land.

(d) Future Capital Needs and Additional Funding

The future capital requirements of the Company will depend on many factors including the results of future exploration and business development activities. The Company believes its available cash and resources following the Acquisition should be adequate to fund its initial exploration work program, business development activities and other Company objectives.

The Company will in the future require additional funding there can be no assurance that additional financing will be available on acceptable terms, or at all. Any inability to obtain additional finance, if required, would have a material adverse effect on the Company’s business and its financial condition and performance.

(e) Payment Obligations

Under the tenements comprising the Projects the Company will become subject to payment and other obligations. In particular, tenement holders are required to expend the funds necessary to meet the minimum work commitments attaching to the tenements. Failure to meet these work commitments will render the tenement liable to be cancelled. Further, if any contractual obligations are not complied with when due, in addition to any other remedies that may be available to other parties, this could result in dilution or forfeiture of the Company’s interest in the Projects.

(f) Significant Shareholder

Following completion of the Acquisition, the Vendor will hold approximately 36% of the Shares, and be the Company’s largest shareholder. Consequently, the Vendor may have the ability to influence the election of Directors, the appointment of new management and the potential outcome of all matters submitted to a vote of Shareholders. The interests of the Vendor may differ from our interests and the interests of other Shareholders.

3. Mineral Industry Risks

(g) Exploration and Development Risks

The tenements are in the early stages of exploration and potential investors should understand that mineral exploration, development and mining are high-risk enterprises, only occasionally providing high rewards. In addition to the normal competition for prospective ground, and the high average costs of discovery of an economic deposit, factors such as demand for commodities, stock market fluctuations affecting access to new capital, sovereign risk, environmental issues, labour disruption, project financing difficulties, foreign currency fluctuations and technical problems all affect the ability of a company to profit from any discovery.

The quantities and grades included in the mineral resources stated in this Notice are estimates and may not prove to be an accurate indication of the quantity or grade of gold that has been identified or that the Company will be able to extract. No assurance can be given that any particular level of recovery from mineral resources or reserved will in fact be realised or that an identified mineral resource will ever qualify as commercially viable which can be legally and economically exploited

There is no assurance that exploration of the mineral interests to be acquired pursuant to the Acquisition, or any other projects that may be acquired by the Company in the future, will result in the discovery of an economically viable mineral deposit. Even if an apparently viable mineral deposit is identified, there is no guarantee that it can be profitably exploited.

(h) Operational Risks

The operations of the Company following completion of the Acquisition may be affected by various factors including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration or mining, operational and technical difficulties encountered in mining, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction costs,

adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment, fire, explosions and other incidents beyond the control of the Company.

These risks and hazards could also result in damage to, or destruction of, production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability. While the Company currently intends to maintain insurance within ranges of coverage consistent with industry practice, no assurance can be given that the Company will be able to obtain such insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims.

(i) Commodity Price Volatility and Foreign Exchange Risk

In the event that the Company achieves exploration success leading to production, the revenue it will derive through the sale of commodities exposes the potential income of the Company to commodity price risks.

Commodity prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world demand for gold, copper and molybdenum, forward selling by producers, and production cost levels in major metal-producing regions.

Moreover, commodity prices are also affected by macroeconomic factors such as expectations regarding inflation, interest rates and global and regional demand for, and supply of, the commodity 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.

(j) Dependence on key personnel

The Company is reliant on a number of key personnel employed by the Company. Loss of such personnel may have a materially adverse impact on the performance of the Company. While there can be no assurance given as to the continued availability of such key personnel, the Company has put in place employment contracts and equity participation programs with senior executives.

(k) Environmental Risks

Gold, copper and molybdenum mining is an industry that has become subject to increasing environmental responsibility and liability. The potential for liability is an ever present risk. Future legislation and regulations governing gold, copper and/or molybdenum production may impose significant environmental obligations on the Company in relation to gold, copper and/or molybdenum mining. The Company intends to conduct its activities in a responsible manner which minimises its impact on the environment, and in accordance with applicable laws.

The operations and proposed activities of the Company are subject to regulations concerning the environment. The Government and other authorities that administer and enforce environmental laws determine these requirements. As with all exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if mine development proceeds. The Company intends to conduct its activities in an environmentally responsible manner and in accordance with applicable laws.

The cost and complexity of complying with the applicable environmental laws and regulations may prevent the Company from being able to develop potentially economically viable mineral deposits.

Although the Company believes that it is in compliance in all material respects with all applicable environmental laws and regulations, there are certain risks inherent to its activities, such as accidental spills, leakages or other unforeseen circumstances, which could subject the Company to extensive liability.

Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations, which may be adopted in the future, including whether any such laws or regulations would materially increase the Company's cost of doing business or affect its operations in any area.

There can be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Company to incur significant expenses and undertake significant investments in such respect which could have a material adverse effect on the Company's business, financial condition and results of operations.

4. General Risks

(l) Economic Risk

Changes in the general economic climate in which the Company will operate following completion of the Acquisition 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 and the rate of growth of gross domestic product in Australia and other jurisdictions in which the Company may acquire mineral assets.

(m) Changes in Government Policies and Legislation

Any material adverse changes in government policies or legislation of Australia or any other country that the Company may acquire economic interests may affect the viability and profitability of the Company.

Schedule 2 - Summary of the Caravel Minerals Employee Share Acquisition Plan

Outline of Operation of the Share Plan

The objective of the Plan is to provide an incentive to Employees to share in the performance of the Company by the Company assisting Employees to acquire Shares under the Plan.

The Company will set up the Trust (as the mechanism for acquiring, holding and selling Shares under the Plan on behalf of Employees participating in the Plan. The Trustee will be bound by the rules of the Plan and a trust deed appointing and giving powers to the Trustee).

The Company will Allocate Shares to Employees in accordance with an invitation to participate. When an Employee accepts an Invitation and is Allocated Shares he becomes a Participant. The acquisition of the Plan Shares will be financed by a loan from the Company to a Participant.

The Company will Allocate Plan Shares to Employees, subject to specified restrictions.

At the Company’s sole discretion, the Plan Shares to be Allocated to Participants will be acquired by the Trustee on the ASX market or issued by the Company.

An offer of Plan Shares may only be made under the Plan if the number of Plan Shares when aggregated with:

(a) the number of Plan Shares which would be issued if an offer pursuant to the Plan was to be accepted; and
(b) the number of Plan Shares issued during the previous 5 years pursuant to the Plan (or any other incentive scheme),

but disregarding an offer made, or Plan Shares issued by way of or as a result of:

(c) an offer to a person situated at the time of receipt of the offer outside Australia;
(d) an offer that did not need disclosure to investors because of section 708 of the Corporations Act; or
(e) an offer made under a disclosure documents,

does not exceed 5% (or such other maximum permitted under any ASIC Class Order providing relief from the disclosure regime of the Corporations Act) of the total number of issued Shares as at the time of the offer. For the avoidance of doubt, where an offer of Plan Shares lapses without being accepted, the Plan Shares concerned shall be ignored in the above calculation.

Terms and Conditions of the Share Plan and terms on which Invitations may be made

Invitations will be made to Participants on such terms and conditions as the Board in its absolute discretion determines. Invitations will generally be made to Participants on terms and conditions including the following:

(a) An Invitation may specify that the Plan Shares to be Allocated under the Plan will be:
(i) acquired by the Trustee as a result of an issue of new Shares;
(ii) acquired by the Trustee on market;

(iii) Plan Shares held by the Trustee but which have not been Allocated to a Participant; or
(iv) acquired by the Trustee off-market generally or from another Participant who is disposing of Shares in accordance with any restrictions.

The Trustee may acquire Plan Shares in advance of making an Allocation using short term loans funds extended by the Company to the Trustee. Such loans will be repaid from the payment on Allocation of Plan Shares to the Participant.

(b) If there are more acceptances than Plan Shares available, the Board can scale back Allocations under the Invitation at its absolute discretion.
(c) It is the current intention of the Board that Plan Shares will be Allocated at a nominal discount to the volume weighted average of the prices at which the Shares were traded on the ASX during the week leading up to and including the date of Allocation of the Plan Shares unless otherwise determined by the Board, or another acceptable taxation valuation method for shares issued under an employee share scheme (as determined by the Board). The Board can determine to Allocate Plan Shares at a greater discount.
(d) Participants must pay for the Plan Shares Allocated to them with the proceeds of the loan provided to them by the Company.
(e) A loan may be provided on such terms as determined by the Board. The Company currently proposes to loan funds to Participants on the terms in item 3 below.
(f) Participants have no right to, or an interest in, Plan Shares under the Plan until the Plan Shares have been Allocated to them. A Participant has no right against the Company if Plan Shares under the Plan are not Allocated to them.
(g) Allocations of Plan Shares under the Plan may be made progressively at such times as and when such Plan Shares become available.
(h) If, for whatever reason, there are insufficient Plan Shares to satisfy the Allocations there is no requirement on the Company or the Trustee to Allocate the Plan Shares.
(i) No Allocation of Plan Shares will be made to Participants to the extent that it would contravene the Constitution, Listing Rules, the Corporations Act or any other applicable law.
(j) On Allocation, Participants will be entitled to exercise all rights of a shareholder attaching to the Plan Shares, subject to specified terms and restrictions.
(k) The Company may impose such restrictions on Plan Shares under the Plan as it sees fit for such period as it sees fit. The Plan provides for the release of restrictions in the event of a change of control event of the Company.
(l) Participants may request the Trustee to sell their Plan Shares if there are no restrictions on the Plan Shares and the value of the Plan Shares is greater than the loan. In this event the Trustee must sell the Plan Shares and the net proceeds of sale will be used to repay the loan and the balance, if any, paid to the Participant. In such circumstances the Trustee may sell the Plan Shares on market or off market or acquire the shares itself to be held pending their future Allocation under the Plan.
(m) The Invitation is personal to a Participant and may only be accepted by the Participant.
(n) Subject to the Corporations Act and the Listing Rules, the Board will have the power to amend the Plan as it sees fit.
Material terms of the loan

If the Company provides a loan to a Participant such Participant must accept the terms of the loan as part of the Invitation. The loan may only be used to pay for the Allocation of Plan Shares under the Plan.

The terms and conditions of the loan will be determined by the Board in its discretion.

A Participant may, at any time, repay part all or part of the amount of the loan.

Repayment of the loan does not operate to remove the sale restrictions which will continue to apply during the specified restriction period.

Until repayment of the loan in full, Participants have no right to have the Plan Shares transferred to them.

In the event that the Participant leaves within the restricted period determined by the Board, the loan must be repaid and interest will be charged equal to the market rate of interest that would have accrued on the loan from the date of advance of the fund to the date the loan amount is repaid in full.

If, after the relevant restricted period, the Participant ceases to be employed by the Company, or requests the Trustee to sell the Plan Shares Allocated to the Participant and the value of Plan Shares Allocated to the Participant under the Plan is greater than the loan, the Participant must immediately pay the Company the loan in full and the Trustee will transfer the Plan Shares to the Participant.

If, after the relevant restricted period, the Participant ceases to be employed by the Company, or requests the Trustee to sell the Plan Shares Allocated to the Participant and the value of Plan Shares Allocated to the Participant under the Plan is less than the loan, the Trustee will transfer the Plan Shares to the Company in full satisfaction of the loan.

Dividends declared on Plan Shares will be used to repay the loan. A portion of the dividend, determined by the Company, will be paid to the Participant so that the Participant can pay any tax liability in respect of the dividend paid.

If the Participant does not repay the loan as required by the terms of the loan then the Trustee is authorised to sell the Participant’s Plan Shares on market or off-market or may acquire them himself as Trustee for the purposes of the Plan. The net proceeds of sale will be used to repay the loan and the balance, if any, paid to the Participant.

The Company intends to make provisions in the loan in the event of a special circumstance, such as death or permanent incapacity of the Participant, occurring.

If a takeover is made or change of control event occurs made then restrictions in respect of the Participant’s Plan Shares may be waived. In such circumstances the Participant shall be entitled to authorise the Trustee to sell the Participant’s Plan Shares and the net proceeds of sale will be used to repay the loan and the balance, if any, paid to the Participant. If the takeover is not successful or the change of control event does not occur and the Plan Shares are not sold then the restrictions will continue to apply.

While the loan remains outstanding a Participant is not entitled to participate in any dividend reinvestment plan of the Company.

Subject to the Corporations Act and the Listing Rules, the Board will have the power to amend the terms and conditions of any loan as it sees fit.

Schedule 3 Terms and Conditions of the Unlisted Options

The general rights and liabilities attaching to Unlisted Options can be summarised as follows:

(a) Each Unlisted Option entitles the holder to subscribe for and be allotted one ordinary share in the capital of the Company.
(b) Each Unlisted Option has an exercise price of $0.10 ( Exercise Price ) and an expiry date of the date that is three years from the date of grant ( Expiry Date ).
(c) Each Unlisted Option is exercisable at any time after grant and on or prior to the Expiry Date.
(d) Unlisted Options may be exercised by notice in writing to the Company ( Notice of Exercise ) and payment of the Exercise Price for each Unlisted Option being exercised. Any Notice of Exercise of an Unlisted Option received by the Company will be deemed to be a notice of the exercise of that Unlisted Option as at the date of receipt.
(e) Shares will be allotted and issued pursuant to the exercise of Unlisted Options not more than 10 business days after receipt of a properly executed Notice of Exercise and payment of the requisite application moneys.
(f) Shares issued upon exercise of the Unlisted Options will rank equally in all respects with the Company's then issued Shares. The Company will apply for Official Quotation by ASX of all Shares issued upon the exercise of Unlisted Options.
(g) There are no participating rights or entitlements inherent in the Unlisted Options and holders will not be entitled to participate in new issues of capital offered or made to the Shareholders during the currency of the Unlisted Options. However, the Company will send a notice to each option holder at least 10 business days before the record date for any proposed issue of capital. This will give option holders the opportunity to exercise their Unlisted Options prior to the date for determining entitlements to participate in any such issue.
(h) There are no rights to a change in the exercise price, or in the number of shares over which the Unlisted Options can be exercised, in the event of a bonus issue by the Company prior to the exercise of any Unlisted Options.
(i) No application for quotation of the Unlisted Options will be made by the Company.
(j) The Unlisted Options are transferable provided that the transfer of Options complies with section 707(3) of the Corporations Act.
(k) In the event of any re-organisation of the issued capital of the Company on or prior to the Expiry Date, the rights of an option holder will be changed to the extent necessary to comply with the Listing Rules applying to a re-organisation at the time of the re-organisation.
(l) The Company will, at least 20 Business Days before the Expiry Date, send notices to the option holders stating the name of the option holder, the number of Unlisted Options held, the exercise price, and the consequences of non-payment.
(m) Cheques shall be in Australian currency made payable to the Company and crossed "Not Negotiable". The application for shares on exercise of the Secondary Options with the appropriate remittance should be lodged at the Company's share registry.

Annexure A – Independent Expert’s Report

PO Box 1908 West Perth WA 6872 Australia

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Level 2, 1 Walker Avenue West Perth WA 6005 Australia

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

4 February 2013

ABN: 84 144 581 519 AFS Licence No: 418019 www.stantons.com.au

The Directors Caravel Minerals Limited Unit 1, 15 Ogilvie Road MOUNT PLEASANT WA 6153

The Independent Expert has concluded that the transaction related to the Acquisition the subject of resolution 1 outlined in this Notice of General Meeting is fair and reasonable to the Shareholders of the Company (not associated with Dominion Mining Limited and Kingsgate Consolidated Limited) as at the date of this report.

Dear Sirs

Re: CARAVEL MINERALS LIMITED (ABN 41 120 069 089) ON THE PROPOSAL TO ACQUIRE MINERAL ASSETS BY ISSUING SHARES AND SHARE OPTIONS IN CARAVEL MINERALS LIMITED TO ACQUIRE 100% OF THE ISSUED CAPITAL OF QUADRIO RESOURCES LIMITED. SHAREHOLDERS MEETING PURSUANT TO SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT 2001 (‘TCA”)

1. Introduction

1.1 We have been requested by the Directors of Caravel Minerals Limited (“Caravel” or “the Company”) to prepare an Independent Expert’s Report to determine the fairness and reasonableness as noted in Resolution 1 relating to the proposal whereby Caravel will acquire 100% of the issued capital of Quadrio Resources Limited (“QRL”), a wholly owned subsidiary of Dominion Mining Limited (“Dominion”) who in turn is a wholly owned subsidiary of Kingsgate Consolidated Limited (“KCL”). QRL, a company incorporated in Australia, holds various interests in mineral exploration licences and tenements (“Mineral Assets”) in Western Australia and Queensland.

It is our understanding that pursuant to the Binding Memorandum of Understanding (“MOU”) between Caravel and Dominion released to the market on 23 January 2013, the consideration payable by Caravel to Dominion or nominee will be:

135,000,000 fully paid ordinary shares in Caravel (“Consideration Shares”); and
20,000,000 options exercisable at 10 cents on or before three years from issue date (“Consideration Options”) in Caravel.

The acquisition of all of the shares in QRL is for the purpose of this report known as the Acquisition. The Notice of Meeting (“Notice”) and Explanatory Memorandum to Shareholders (“EMS”) refers to the proposed acquisition of QRL from Dominion and the issue of shares and share options to Dominion or nominee.

Further details on the Mineral Assets owned or to be owned by QRL are referred to in the 17 December 2012 “Independent Valuation Report On The Mineral Assets Held by Quadrio Resources Limited in Western Australia and Queensland” (“Agricola Valuation Report”) of Agricola Mining Consultants Pty Ltd (“Agricola”) and signed by Malcolm Castle as referred to in paragraph 1.9 below and attached as an appendix to the Notice.

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Liability limited by a scheme approved under Professional Standards Legislation

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1.2 Under Section 606 of The Corporations Act ("TCA"), a person must not acquire a relevant interest in issued voting shares in a company if because of the transaction, that person’s or someone else's voting power in the company increases:
(a) from 20% or below to more than 20%; or (b) from a starting point that is above 20% and below 90%.

Under Section 611 (Item 7) of TCA, Section 606 does not apply in relation to any acquisition of shares in a company approved by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer or their respective associates. An independent expert is required to report on the fairness and reasonableness of the transaction pursuant to a Section 611 (Item 7) meeting.

Immediately after the issue of the Consideration Shares, there will be 372,347,608 Caravel fully paid shares on issue (up from the 237,347,608 fully paid shares on issue prior to the Acquisition). By acquiring all of the shares in QRL from Dominion, the KCL Group (that includes Dominion) will increase its fully paid shareholding interest in Caravel from nil% to approximately 36.26% (135,000,000 shares). Furthermore, if Dominion exercised the Consideration Options and there were no further issue of fully paid shares, Dominion would own 155,000,000 fully paid shares in Caravel representing approximately 39.51% of the expanded fully paid issued capital of Caravel (392,347,608 fully paid shares would be on issue). The above percentages are calculated before the exercise of any outstanding share options in the Company currently on issue; exclude the performance shares on issue and excludes the shares that are proposed to be issued to the Chief Executive Officer, Marcel Hilmer as noted in paragraph 2.2 below.

1.3 Therefore a notice prepared in relation to a meeting of shareholders convened for the purposes of Section 611 (Item 7) of TCA must be accompanied by an Independent Expert's Report stating whether the issue of ordinary shares (the Consideration Shares) and share options (the Consideration Options) to KCL as consideration for the Acquisition and allow Dominion to exercise the Consideration Options are fair and reasonable. To assist shareholders in making a decision on the proposals, the directors have requested that Stantons International Securities prepare an Independent Expert's Report, which must state whether, in the opinion of the Independent Expert, the issue of Consideration Shares and Consideration Options to Dominion and allowing the Consideration Options to be exercised are fair and reasonable to the non-associated shareholders of Caravel (not associated with Dominion and KCL).

1.4 Apart from this introduction, this report considers the following:

Summary of opinion
Implications of the proposals
Corporate history and nature of business of Caravel and QRL
Future direction of Caravel
Basis of valuation of Caravel shares and share options
Value of consideration
Basis of valuation of QRL
Conclusion as to fairness
Reasonableness of the offer
Conclusion as to reasonableness
Sources of information
Appendix A and our Financial Services Guide
1.5 In determining the fairness and reasonableness of the acquisition of 100% of the shares of QRL, whose Mineral Assets are interests in various mining tenements (and joint ventures) in Western Australia and Queensland (and also owns minor plant and equipment), we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Guide 111, “Content of Expert Reports”. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the

CAR7433/ Caravel IER on the Acquisition of QRL

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offer price on objective grounds after reference to that value (reasonableness). The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the “target” and irrespective of whether the consideration is scrip or cash. An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. Although in this case the proposed acquisition of QRL is not a takeover offer, we have considered the general principals noted above to determine our opinions on fairness and reasonableness.

1.6 In our opinion, taking into account the factors noted in this report, the proposals as outlined in paragraph 1.1 and resolution 1 may, on balance, taking into account the factors referred to in 9 below and elsewhere in this report, be considered to be fair and reasonable to the shareholders of Caravel (not associated with Dominion and KCL) as at the date of this report.
1.7 The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report, including the 17 December 2012 Agricola Valuation Report on the Mineral Assets owned by QRL prepared by Agricola a copy of which is attached as an appendix to the Notice.

2. Implications of the Proposals

2.1 As at 31 January 2013, there were 237,347,608 fully paid ordinary fully paid shares on issue in Caravel. The top 20 shareholders list as at 16 January 2013 discloses the following:

Shareholder Waratah Investments Limited HSBC Custody Nominees Australia Limited Dowland Pty Ltd Nicholas Charles Taylor	No. of fully paid shares % of issued fully paid shares 22,266,057 9.38 17,631,288 7.43 11,428,571 4.82 9,625,000 4.06
	60,950,916 25.69

The top 20 shareholders as per the top 20 shareholders list at 16 January 2013 owned approximately 51.55% (122,376,000 fully paid shares) of the ordinary issued capital of the Company. 2.2 In addition, there are on issue the following share options and performance shares as at 31 January 2013:

59,891,269 listed share options exercisable at 7 cents each, on or before 15 June 2015;
750,000 unlisted share options exercisable at 20 cents each, on or before 31 March 2013;
750,000 unlisted share options exercisable at 30 cents each, on or before 31 March 2013;
200,000 unlisted share options exercisable at 75 cents each, on or before 31 August 2013;
2,535,000 unlisted share options exercisable at 42 cents each, on or before 15 December 2013;
10,000,000 unlisted share options exercisable at 16.5 cents each, on or before 6 September 2013;
500,000 unlisted share options exercisable at 20 cents each, on or before 20 November 2014;
500,000 unlisted share options exercisable at 30 cents each, on or before 20 November 2014;
2,000,000 unlisted share options exercisable at 10 cents each, on or before 28 February 2015 (subject to vesting conditions);

CAR7433/ Caravel IER on the Acquisition of QRL

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700,000 unlisted share options exercisable at 10 cents each, on or before 20 March 2015;
150,000 unlisted share options exercisable at 10 cents each, on or before 25 March 2015;
400,000 unlisted share options exercisable at 10 cents each, on or before 17 May 2015;
4,000,000 unlisted Performance Shares A, convertible to shares by 22 April 2013, subject to milestone achievements; and
2,000,000 unlisted Performance Shares B, convertible to shares by 30 April 2016, subject to milestone achievements;

Under an agreement with Marcel Hilmer, the Chief Executive Officer of the Company, it is proposed that 7,500,000 shares will be issued to him in accordance with the Caravel Minerals Employee Share Acquisition Plan; subject to shareholder approval (resolution 3 in the Notice refers to the proposal to issue 7,500,000 shares to Marcel Hilmer under the Caravel Minerals Employee Share Acquisition Plan).

2.3 If the Acquisition is completed, the fully paid shareholding of Dominion (part of the KCL Group) would initially approximate 36.26%. Before the exercise of any share options (including the Consideration Options), there would be 372,347,608 ordinary shares on issue in Caravel post the Acquisition. In the event that the 20,000,000 Consideration Options were exercised by Dominion and no other fully paid shares were issued, Dominion would own 155,000,000 fully paid shares in Caravel representing an approximate 39.51% fully paid shareholding interest in Caravel. Dominion would need to pay Caravel the sum of $2,000,000 to exercise the Consideration Options. The fully paid shareholding of Dominion could reduce, if any or all of the outstanding and proposed share options are exercised into fully paid shares in Caravel; the performance shares (A and/or B) meet performance milestones and convert to ordinary fully paid shares in Caravel or new fully paid shares are issued to raise further working capital. In the event that 7,500,000 shares are issue to Marcel Hilmer as noted above and before the exercise of any share options, Dominion would own approximately 35.54% of the expanded issued capital of Caravel and there would be 379,847,608 shares on issue. In the event that the 7,500,000 shares to Marcel Hilmer were also issued and the 20,000,000 Consideration Options were exercised by Dominion and no other fully paid shares were issued, Dominion would own 155,000,000 fully paid shares in Caravel representing an approximate 38.76% fully paid shareholding interest in Caravel (399,847,608 shares would be on issue).
2.4 The current Board of Directors may change in the near future as a result of the Acquisition as Dominion has the right to nominate a nominee to be appointed to the Board upon completion of the Acquisition. No decision has been made as to whether Dominion will appoint a nominee to the Board or who that person will be. November 2012, the Board comprised David Archer, Marcel Hilmer, James Harris and Matthew May, however on 20 December 2012, David Archer and Matthew May resigned and Brett McKeon was appointed as a non-executive director. The Company Secretary is Simon Robertson.
2.5
QRL will become a legally wholly owned subsidiary of Caravel.
Corporate History and Nature of Businesses

Caravel

3.1 Principal Activities and Significant Assets

Caravel is an ASX listed mineral exploration and evaluation company having achieved an ASX listing on 3 November 2006. It was formerly known as Silver Swan Group Limited, but shareholders approved the change of name to Caravel Minerals Limited on 19 November 2012. The primary mineral commodity comprises gold. Its most significant mineral interests are as follows:

CAR7433/ Caravel IER on the Acquisition of QRL

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A Farm-In agreement to acquire up to an 80% interest in the La Codosera gold project in the Badajoz Province in Spain. The Company may earn up to an 80% interest by spending $3,000,000, staggered as to 51% upon expenditure of $1,500,000 and a further 29% upon expenditure of a further $1,500,000. To 10 January 2013, no interest has yet to be earned in the La Codosera gold project;
Quinns Project – a gold project 55km south of Meekatharra in Western Australia;
Abbotts Gold Project – comprises 10 tenements within 50km of Meekatharra;
Yagahong Copper/Gold Project – located 35km south east of Meekatharra.

Limited work has been undertaken on the Western Australian projects in the past 6 months.

QRL

3.2 QRL is incorporated in Australia and is a non-listed public company 100% owned by Dominion who in turn is a wholly owned subsidiary of KCL. QRL owns the Mineral Assets more fully described in the Agricola Valuation Report dated 17 December 2012. In addition, it owns approximately $92,495 (estimated book value as at 30 November 2012) of motor vehicles and mineral exploration plant. It is liable to pay certain employee entitlements and that the estimated liability as at 28 February 2013 is $114,000. In 2012, KCL was considering undertaking an initial public offering in relation to QRL but this was shelved due to market conditions.
3.3 We refer to the 17 December 2012 Agricola Valuation Report by Agricola on QRL’s Mineral Assets) and the EMS for more detailed information on QRL and its assets.
3.4 In addition, as noted in paragraph 5.4.1, we disclose the unaudited statement of financial position of QRL as at 30 November 2012 adjusted for the estimated employee liability due as at 28 February 2013, allowing for further depreciation of $10,000 to 28 February 2013 and expensing of the future income tax benefit. It is noted that at the date of Acquisition, the only assets of QRL will be the Mineral Assets (that includes interests in a joint venture and QRL earning interests in various tenements), plant and equipment (estimated $82,000) and the only liability will be a liability for annual and long service leave to several employees (estimated at $114,000).

4. Future Directions of Caravel

4.1 We have been advised by the directors and management of Caravel that:
There are no proposals currently contemplated either whereby Caravel will acquire any further properties or assets from Dominion (however Caravel will issue ordinary fully paid shares to Dominion or nominee and will issue Consideration Options to Dominion or nominee as outlined above in relation to the Acquisition) or where Caravel will transfer any of its property or assets to the KCL Group;
The composition of the Board may change in the short term as noted above;
The Company may raise further capital in 2013 if the needs arise and subject to market conditions;
No dividend policy has been set; and
The Company will endeavour to enhance the value of its interests in the Mining Assets (includes interests in farm-in agreements to earn interests in various tenements) to be acquired via the Acquisition and continue to evaluate its current mineral interests.

5. Basis of Valuation of Caravel Shares

5.1 Shares
5.1.1 In considering the proposal to acquire all of the shares and share options in QRL, we have sought to determine if the consideration payable by Caravel to Dominion is fair and reasonable to the existing non-associated shareholders of Caravel.

CAR7433/ Caravel IER on the Acquisition of QRL

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5.1.2 The offer would be fair to the existing non-associated shareholders if the value of the ordinary shares in QRL being acquired by Caravel is greater than the implicit value of the Consideration Shares (ordinary shares) and Consideration Options (ordinary share options) in Caravel being offered as consideration. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on QRL shares for the purposes of this report.
5.1.3 The valuation methodologies we have considered in determining a theoretical value of a Caravel share (and also a QRL share) are:
Capitalised maintainable earnings/discounted cash flow;
Takeover bid - the price at which an alternative acquirer might be willing to offer;
Adjusted net asset backing and windup value; and
• The market price of Caravel shares (and QRL shares).
5.2 Capitalised maintainable earnings and discounted cash flows.
5.2.1 Due to Caravel’s current operations, a lack of a reliable long term profit history arising from business undertakings and the lack of a reliable future cash flow from current business activities, we have considered these methods of valuation not to be relevant for the purpose of this report. Caravel made a loss of $5,408,888 for the year ended 30 June 2012 and as at 31 December 2012 has unaudited losses of approximately $26,132,000.
5.3 Takeover Bid
5.3.1 It is possible that a potential bidder for Caravel could purchase all or part of the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place and the directors of Caravel have formed the view that there are unlikely to be any takeover bids made for Caravel in the immediate future. However, if the agreement to acquire QRL is completed, the KCL Group will initially control approximately 36.26% of the expanded ordinary fully paid issued capital of Caravel.
5.4 Adjusted Net Asset Backing
5.4.1 We set out below a reviewed balance sheet (statement of financial position) of Caravel (Balance Sheet “A”) as at 31 December 2012, adjusted for estimated administration, corporate and exploration costs of $1,000,000 (disclosed as creditors and costs expensed) and depreciation of $10,000 for the period 1 January 2013 to 31 March 2013. In addition, we disclose a pro-forma consolidated Balance Sheet “B” assuming the following:
The acquisition of all of the shares in QRL by way of an issue of 135,000,000 Consideration Shares at a deemed issue price of 4.0 cents per share totalling ($5,400,000) and the issue of 20,000,000 Consideration Options at a deemed fair value of $220,700;
The incurring of cash costs relating to the Acquisition approximating $300,000; and
The issue of 7,500,000 shares to Marcel Hilmer at say 4.0 cents per share (deemed cost of $300,000).

In addition, we disclose the unaudited statement of financial position of QRL as at 30 November 2012 adjusted for the estimated employee liability due as at 28 February 2013, allowing for further depreciation of $10,000 to 28 February 2013 and expensing of the future income tax benefit. It is noted that at the date of Acquisition, the only assets of QRL will be the Mineral Assets (that includes interests in a joint venture and interests in various farm-in agreements), plant and equipment (estimated $82,000) and the only liability will be a liability for annual and long service leave to several employees (estimated at $114,000).

CAR7433/ Caravel IER on the Acquisition of QRL

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	Unaudited Adjusted 31 December 2012 Caravel $000 “A” Unaudited Pro-forma 31 December 2012 Caravel (including consolidation of QRL) $000 “B” Unaudited Adjusted Consolidated QRL 30 November 2012 $000
Current Assets Cash assets Trade and Other Receivables Available for sale of assets Other Total Current Assets Non Current Assets Property, Plant and Equipment Capitalised exploration costs Bonds Total Non Current Assets Total Assets Current Liabilities Trade and Other Payables Employee entitlements Total Current Liabilities Non Current Liabilities Owing to Caravel Employee entitlements Total Non Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	2,380 2,080 86 450 450 54 38 38 - 5 5 -
	2,873 2,573 140
	170 252 82 1,691 7,344 - - - 45
	1,861 7,596 127
	4,734 10,169 267
	1,225 1,225 13 57 150 93
	1,282 1,375 106
	- - - - 21 21
	- 21 21
	1,282 1,396 127
	3,452 8,773 140
	28,482 34,182 - 2,153 2,374 - (27,183) (27,783) 140
	3,452 8,773 140

The net asset (book value) backing per fully paid (pre Acquisition of QRL) ordinary Caravel share as at 31 December 2012 based on the unaudited adjusted (see above) balance sheet (Balance Sheet “A”) and 237,347,608 fully paid ordinary shares on issue is approximately 1.45 cents (refer paragraph 5.4.5 below). The above pro-forma consolidated balance sheet “B” has been prepared on the basis that the acquisition of QRL is not considered a business combination for accounting purposes under the accounting standard IFRS-3 “Business Combinations”.

5.4.2 Based on the unaudited pro-forma consolidated net asset book values, this equates to a value per fully paid ordinary share of approximately 2.31 cents per share (379,847,608 shares on issue) (ignoring the value, if any, of non-booked tax benefits and the ascribe value of the Mining Assets as per the Agricola Valuation Report).
5.4.3 We have accepted the amounts as disclosed for all current assets and non-current assets. We have been advised by the management of Caravel that they believe the carrying value of all current assets, fixed assets and liabilities at 31 December 2012 (as adjusted as noted above) are fair and not materially misstated. The figures are unaudited and no impairment tests have been conducted on the Caravel’s interest in mining tenements in Australia and overseas.

CAR7433/ Caravel IER on the Acquisition of QRL

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5.4.4 We note that the market has been informed of all of the current projects, joint ventures and farm in/farm out arrangements entered into between Caravel and other parties. We also note it is not the present intention of the Directors of Caravel to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value (as adjusted), is just that, theoretical. The shareholders, existing and future, must acquire shares in Caravel based on the market perceptions of what the market considers a Caravel share to be worth.
5.4.5 The market has either generally valued the vast majority of mineral exploration companies at significant discounts or premiums to appraised technical values and this has been the case for a number of years although we also note that there is an orderly market for Caravel shares and the market is kept fully informed of the activities of the Company. However, it is noted that from Caravel’s point of view as the legal parent company, the value ascribed to the 135,000,000 Consideration Shares to be issued to Dominion would be accounted for at the market value of a Caravel share at date of issue. It is noted that the cash reserves of Caravel are reasonable but taking into account its exploration and administration commitments over time, in the absence of further capital raisings, the Company would run out of cash reserves. For accounting purposes under IFRS, the consideration (in the form of Consideration Shares to acquire 100% of QRL) could be booked at the fair value of QRL (in effect mainly the fair value of the Mineral Assets of QRL less its liabilities) and not at the fair value of a Caravel ordinary fully paid share at the date of the Acquisition. However from Caravel’s point of view as the legal parent entity it will book the shares at market value at date of issue of the Consideration Shares that will assume to lie in the range of 3.0 cents to 4.3 cents per share. Accordingly, for the reasons outlined above, we believe that for the purpose of this report, it is not appropriate to use any technical value of a Caravel fully paid ordinary share in assessing whether the proposal to acquire QRL is fair and reasonable. We believe a pre-announcement market-based approach is a more suitable basis of assessing whether the proposed Acquisition is fair and/or reasonable. In the case of the Acquisition, the pre announcement price has been taken as prior to 23 January 2013. Since 1 October 2012 and to 22 January 2013, the shares in Caravel have traded on ASX at between 2.8 cents and 4.6 cents with a last sale on 22 January 2013 of 4.3 cents. The actual share price at the date of Acquisition of QRL (the date the Consideration Shares are issued) cannot be determined at this point of time.
5.5 Market Price of Caravel Fully Paid Ordinary Shares
5.5.1 Share prices in Caravel as recorded on the ASX since 1 July 2012 up to and including 22 January 2013 (the day before the announcement of the proposed Acquisition) have been as follows:

	High	Low	Closing Price	Volume
	Cents	Cents	Cents	000’s
July 2012	3.6	2.9	3.0	1 ,675
August 2012	3.7	2.8	3.0	3,014
September 2012	3.9	2.7	3.9	7,882
October 2012	4.6	3.5	3.9	9,979
November 2012	3.8	2.8	4.3	8,139
December 2012	4.0	3.0	3.0	6,677
January (to22nd)	3.5	2.8	3.4	3,480

As can be seen from the trading volume on ASX, there was moderate trading of the Caravel shares before the announcement of the Acquisition. The QRL acquisition was announced to the market on 23 January 2013. Subsequent to the announcement of the Acquisition, the shares in Caravel traded on ASX had been between 3.3 cents and 3.5 cents with a last sale on 1 February 2013 of 3.5 cents.

It is noted that over the past several years, the vast majority of mineral exploration companies listed on the ASX are trading at significant discounts or premiums to appraised technical values and in some cases have traded at a discount to cash asset backing. In the case of Caravel, the monthly volume of trades on the ASX is large enough to argue that an orderly market exists for the Company’s shares. The “market” arguably is fully informed of

CAR7433/ Caravel IER on the Acquisition of QRL

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the Company’s activities. It is our opinion that it is appropriate to use a range of recent preannouncement trading market values as fair values to attribute to the Consideration Shares to be issued to Dominion.

5.5.2

The future value of a Caravel share will depend upon, inter alia:

the future prospects of its mineral assets and the Mineral Assets being obtained via the Acquisition;
the state of the gold, base metal and metal markets (and prices) in Australia and overseas;
the state of Australian and overseas stock markets;
the strength and performance of the Board and management and/or who makes up the Board and management;
the potential risk of operating outside Australia;
foreign exchange rates;
general economic conditions;
the liquidity of shares in Caravel; and
possible ventures and acquisitions entered into by Caravel.

5.6 Conclusion on the Value of Caravel Shares

We thus consider the fair value of a Caravel fully paid share for the purposes of this report to lie in the range of 3.0 cents and 4.3 cents in the absence of the Acquisition and have used a price of a Caravel share of 4.0 cents as the preferred pre announcement fair value of the ordinary fully paid shares to be issued (although arguably, the value could be lower and more approximating 3.5 cents). For the purposes of this report, we have considered that it is appropriate to use a range of prices for the Caravel ordinary fully paid shares in determining our opinion on fairness. The Directors of Caravel will need to consider the accounting standards in determining the final price attributable to the Consideration Shares (and Consideration Options) to be issued to acquire QRL. It is noted that the directors of Caravel considered that the fair value of a Caravel fully paid share at the time of discussions with the directors of KCL that occurred in November/December 2012 (but finalised on 23 January 2013) was approximately 4.0 cents. The closing price of a Caravel share on ASX as at 22 January 2013 was 3.4 cents (the last day of trading of shares in Caravel before the announcement). The shares in Caravel post the announcement of the Acquisition have traded on ASX at between 3.3 cents and 3.5 cents, with a last sale on 1 February 2013 of 3.5 cents. It could be expected that the share price could drift lower if the Acquisition did not proceed and no other significant acquisition was proceeded with in the short term or further cash funds were not raised in the near future.

5.7 Share Options in Caravel

If we assumed a fair value of a Caravel share to attribute to the Consideration Shares is 4.0 cents, then the value of a one Consideration Option to be issued to KCL is approximately 1.1037 cents. This is based on the following assumptions:

The Black Scholes option methodology is appropriate that assumes the Consideration Options would be exercised towards the end of the exercise period;
The “Market Value” of a Caravel share is 4.0 cents;
The Consideration Options are issued on or around 1 March 2013 and expire three years thereafter;
The exercise price for one Consideration Option is 10 cents;
The risk free interest rate is 2.62%; and
The volatility factor is 75%.

Thus the value of 20,000,000 Consideration Options approximates $220,700. The Consideration Options form part of the cost of Acquisition of QRL. The final value attributable to the Consideration Options may vary from the above estimate, but the difference should not be material.

CAR7433/ Caravel IER on the Acquisition of QRL

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6. Value of Consideration

6.1 Based on the pre-announcement share price the consideration range would be:

135,000,000 Consideration Shares 20,000,000 Consideration Options Total direct consideration Share Price	Low Preferred 3,780,000 112,583 $3,892,583 5,400,000 220,700 $5,620,700 2.8 cents 4.0 cents	High 5,805,000 251,500 $6,056,500 4.3 cents

We have excluded the indirect costs such as and legal and other fees and any applicable stamp duty. It is noted that at the time of negotiation of the Acquisition, the Caravel directors considered the fair value of a Caravel share to approximate 4.0 cents but probably in the range of 2.8 cents to 4.3 cents.

If the post announcemen t share prices are used (after 22 January 2013), the consideration would be:

135,000,000 Consideration Shares 20,000,000 Consideration Options Share price assumed to be	Low $ 4,455,000 132,000 4,687,000 3.3 cents	Mid Price $ 4,590,000 140,000 4,730,000 3.4cents	High $ 4,725,000 148,000
			4,873,000
			3.5 cents

If we used the 3.3 cent to 3.5 cent ASX share prices (post announcement) as noted above, the amounts attributable to the Consideration Shares would lie in the range of $4,455,000 to $4,725,000. The value of the Consideration Options would also vary to between $132,000 and $148,000 but still using the same assumptions as noted above except using a different market value of a Caravel share.

7. Basis of Valuation of QRL (and interests in the Mining Assets)

7.1 The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market.
7.2 QRL is an unlisted public company owned 100% by KCL (via KCL’s shareholding in Dominion), and therefore valuing the shares in QRL on a takeover basis and on a market based approach are not relevant. There are no indications that other parties wished to acquire all of the shares in QRL other than Caravel.
7.3 The Company has commissioned Agricola (Author of the Valuation Report was Malcolm Castle) to prepare a valuation report of the Mineral Assets owned by QRL. The Agricola Valuation Report of 17 December 2012 should be read in its entirety and a full copy of the Agricola Valuation Report is attached as an Appendix to the Notice and EMS. The Agricola Valuation Report ascribes a range of values to the Mineral Assets and for the purposes of our report we have used the low, high and mid range valuations referred to in the Agricola Valuation Report.
7.4 The unaudited adjusted consolidated balance sheet of QRL at 30 November 2012 is disclosed under paragraph 5.4.1 above. At the date of Acquisition, the assets (excluding the value of the Mining Assets) will total $82,000 and liabilities assumed will approximate $114,000 for a net book liability position of $(32,000). The balance sheet shows QRL does not carry forward capitalised exploration and evaluation expenditure but writes it off as incurred.

CAR7433/ Caravel IER on the Acquisition of QRL

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Completion of the Acquisition is conditional on all necessary due diligence being undertaken on the ownership of the Mining Assets of QRL. We advise that we have not undertaken any further steps to ascertain ownership of QRL and its assets and liabilities and the Mining Assets.
7.6 We have used and relied on the Agricola Valuation Report on the Mining Assets and have satisfied ourselves that:
Agricola is a suitably qualified consulting firm and has relevant experience in assessing the merits of mineral projects and preparing mineral asset valuations (also the principal author of the report Malcolm Castle is suitably qualified and experienced);
Agricola and Malcolm Castle are independent from Caravel; and
Agricola has to the best of our knowledge employed recognised methodologies in the preparation of the 17 December 2012 Agricola Valuation Report on the Mining Assets.
7.7 Agricola has provided a range of market values of the interests in the Mineral Assets. Agricola has ascribed a range of values to the Mineral Assets of QRL as follows:

All Mineral Assets as described in the Agricola Valuation Report	Low $ 20,600,000 20,600,000	Preferred $ 25,200,000 25,200,000	High $ 30,000,000
			30,000,000

7.8 Taking into account the unaudited adjusted 30 November 2012 other assets ($82,000) and liabilities ($114,000) and including the preferred fair value of the Mining Assets per the Agricola Valuation Report, the net fair value of QRL may have a preferred fair value of $25,168,000 (low value $20,568,000 and high value of $29,968,000,000).

If the acquisition of QR by Caravel is achieved, Caravel will need to meet the liabilities of QRL and its on-going exploration, corporate, rental and employee commitments.

Conclusion as to Fairness
The proposal to acquire the shares in QRL that has as its only significant asset, the Mining Assets for the consideration noted in paragraph 6.1, is believed to be fair to Caravel’s nonassociated shareholders if the value of the consideration offered is equal to or less than the value of the shares in QRL being acquired.
Due to the nature of the business of QRL, valuations are dependent upon the value placed on the Mining Assets of QRL. The valuation of mining interests and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation.
The actual consideration to Dominion is 135,000,000 Consideration Shares (and 20,000,000 Consideration Options) and based on the pre-announcement share price of 4.0 cents per share, the preferred consideration is $5,620,700 (low $3,892,583 and high $6,056,500) (see paragraph 6.1 above).

On a post announcement basis the potential total consideration could lie in the approximate range of approximately $4,687,000 to $4,873,000 with a deemed post announcement mid value of approximately 4,730,000.

8.4 In our opinion, taking into account the factors noted in this report, the proposals as outlined in paragraphs 1.1 and resolution 1 may on balance be considered to be fair at the date of this report.

The valuation of mineral interests and the valuation of future profitability and cash flows are extremely subjective as they involve assumptions regarding future events that are not capable of independent substantiation .

CAR7433/ Caravel IER on the Acquisition of QRL

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Reasonableness of the QRL Acquisition
9.1 We set out below some of the advantages and disadvantages and other factors pertaining to the proposed Acquisition that we considered in arriving at our conclusion on the reasonableness of the Acquisition.

Advantages

9.2 The Company further increases its exposure inside Australia to exposure to gold and base metal assets and spreads the risk in case the existing mineral assets owned by the Caravel Group are not commercially successful. The Acquisition if successful could lead to potential gold operations or the ability for Caravel to on-sell or farm-out the Mineral Assets (or part thereof) to other mining companies at a profit.
9.3 The Company may be better placed to raise further funds by way of share equity as a result of acquiring the Mining Assets (via acquiring all of the shares in QRL).
9.4 There is an incentive to Caravel and the KCL Group, to successfully exploit the Mining Assets as the KCL Group will have significant shareholding interests in Caravel. The Agricola Valuation Report notes the prospectivity pertaining to the Mining Assets and in particular the Calaringi- Wongan Hills- Kukerin-Holleston West-Perenjori prospects.
9.5 Diversification into a number of further mineral areas in Australia by acquiring QRL may reduce the risk. Caravel currently is attempting to earn an interest in the La Codosera Gold Project in the Badajoz Province in Spain. The Company may earn up to an 80% interest by spending $3,000,000, staggered as to 51% upon expenditure of $1,500,000 and a further 29% upon expenditure of a further $1,500,000. To 31 January 2013, no interest has yet to be earned in the La Codosera Gold Project. Should this project and other existing projects already owned by Caravel prove not to be commercially viable, diversification by acquiring 100% of QRL may reduce the risk (but at the same time Caravel is taking on significant exploration commitments).
9.6 In the event of commercial success of the Mining Assets, the chances of the proposed Consideration Options to be issued (refer paragraph 2.1 and elsewhere in this report) being exercised at 10 cents on or before three years from issue date may be enhanced. The Company would receive $2,000,000 from KCL if the Consideration Options were exercised.
9.7 Existing shareholders may be given the opportunity to sell their shares in excess of the share prices existing prior to the Acquisition announcement.
9.8 It would be expected that the proposed new board member (to be nominated by Kingsgate but not yet named) will bring further technical and business experience to the Board of Caravel.

Disadvantages

9.9 Currently, the KCL Group own no shares in the Company and if resolution 1 is passed, the KCL Group would obtain a shareholding interest of approximately 36.26% (and could rise to approximately 39.51% as noted above) (slightly lower percentage shareholding interests if 7,500,000 shares are issued to Marcel Hilmer as noted above) and this will be regarded as a cornerstone investor. However this potential significant interest can also lead to an “overhang” in the market. The KCL Group arguably is paying a premium for control in that it is receiving consideration post the 23 January 2013 announcement of between approximately $4,787,000 and $4,873,000 with a 25 January 2013 closing price value of approximately $4,873,000 but is giving up Mineral Mineral assets deemed to be currently valued at between $20,600,000 and $30,000,000 (preferred value $25,200,000) per the Agricola Valuation Report.
9.10 In general terms, investments in mineral exploration companies are high risk however for those shareholders who consider that the proposed Acquisition from Dominion is a risk worth taking, then the proposed Acquisition under resolution 1 may be reasonable.

CAR7433/ Caravel IER on the Acquisition of QRL

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9.11 The Mining Assets may not turn out to be commercially viable and thus losses may be incurred.
9.12 The share price of a Caravel share at the time of any exercise of the Consideration Options to ordinary shares in Carvel may well be in excess of the recent share prices (3.0 cents to 3.5 cents) and the 10 cent exercise price in relation to the Consideration Options.
9.13 QRL has no cash reserves but current liabilities totalling approximately $114,000. If the acquisition of QRL by Caravel is achieved, Caravel will need to meet the liabilities of QRL.

Other Factors

9.14 It is noted that for accounting purposes in the books of Caravel, the Consideration Shares will be booked at the market value of the ordinary shares in Caravel at the date the Consideration Shares are issued to Dominion. Caravel as the legal parent entity will account for the value of the Consideration Shares at the market value of the ordinary shares in Caravel that may be considered to be 4.0 cents per share (final cents per Consideration Share not known). Thus, as the legal potential owner of the shares in QRL, Caravel may record an investment in QRL of approximately $5,400,000 plus the value attributable to the Consideration Options (estimated at $220,700 as noted above). The ultimate fair value of an investment in QRL is at this stage unknown and write downs in the investment may be required at a later stage (particularly if commercial success is not forthcoming.
9.15 The number of fully paid ordinary shares on issue would initially rise by 135,000,000 to 237,347,608 (before exercise of any existing share options and proposed share options and any subsequent issue of shares pursuant to any new capital raising and shares issued to Marcel Hilmer). This could represent an approximate 56.88% increase in the ordinary shares of the Company. The existing shareholders interest in the expanded Caravel following the completion of the Acquisition reduces from 100% (pre Acquisition) to approximately 63.74% and may ultimately reduce to approximately 60.49% if only Dominion exercises its 20,000,000 Consideration Options (before the exercise of any existing share options and issue of 7,500,000 shares to Marcel Hilmer).
9.16 The Company post the Acquisition (of QRL) will have insufficient cash to meet planned exploration and administration expenditures in 2013. We understand that the Company is in discussions with various brokers to raise further funds, maybe in April 2013 and that the net raising may exceed $4,500,000. The Company will need to undertake a capital raising of some magnitude in order to meet planned costs and costs of exploration over the QRL tenements.

10. Conclusion as to Reasonableness

10.1 After taking into account the factors referred to in 9 above and elsewhere in this report, we are of the opinion that the advantages to the existing shareholders outweigh the disadvantages and thus the proposed Acquisition as noted in paragraphs 1.1 and resolution 1 in the Notice may be considered, on balance, to be reasonable to the existing non-associated shareholders of Caravel at the date of his report.
Sources of Information
11.1 In making our assessment as to whether the proposed Acquisition as noted in paragraph 1.1 is fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company, QRL and the Mining Assets that is relevant to the current circumstances. In addition, we have held discussions with the management of Caravel about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of Caravel.

CAR7433/ Caravel IER on the Acquisition of QRL

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11.2 Information we have received includes, but is not limited to:
a) Drafts of Notice of Caravel and EMS to 4 February 2013;
b) Discussions with management of Caravel and a representative of QRL;
c) Details of historical market trading of Caravel ordinary fully paid shares recorded by ASX for the period 1 January 2012 to 1 February 2013;
d) Shareholding details of Caravel as supplied by the Company’s share registry as at 10 December 2012 and 16 January 2013;
e) Audited balance sheet of Caravel as at 30 June 2012 and unaudited balance sheet as at 31 December 2012 and 31 December 2012;
f) Reviewed balance sheet of Caravel as at 31 December 2011;
g) Announcements made by Caravel to the ASX from 1 January 2012 to 4 February 2013 (2.40 pm Perth time);
h) The MOU between Caravel and KCL dated 22 January 2013 for the proposed acquisition of all of the shares in QRL;
i) The independent Agricola Valuation Report of Agricola dated 17 December 2012;
j) The estimated annual minimum mineral expenditure commitments on the Mining Assets;
k) The cash flow forecasts of Caravel for the period 1 January 2013 to 30 June 2013;
l) Un-audited balance sheet of QRL as at 30 November 2012;
m) Estimated employee liabilities of QRL as at 28 February 2013;
n) Permission correspondence from Agricola allowing us to use, refer to and rely on the 17 December Agricola Valuation Report attached to the Notice;
o) The Farm-In Agreement between QRL and Geodex Resources Pty Ltd of 23 February 2007 and a letter dated 10 May 2007 confirming that QRL has earned an 80% interest;
p) The Farm-In Agreement between QRL and Tech Australia Pty Ltd of 29 September 2011;
q) The Farm-In Agreement between QRL and Rubicon Resources Limited of 16 February 2012;
r) The Farm-In Agreement between QRL and Ausgold Limited of 20 January 2011;
s) The Farm-In Agreement between QRL and Sammy Resources Pty Ltd of 20 September 2009; and
t) Various summaries of access agreements to tenements of QRL.

11.3 Our report includes Appendix A and our Financial Services Guide attached to this report. The Agricola Valuation Report is a separate attachment to the Notice.

Yours faithfully

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities)

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J P Van Dieren - FCA Director

CAR7433/ Caravel IER on the Acquisition of QRL

APPENDIX A

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AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities dated 4 February 2013, relating to the acquisition of QRL as outlined in paragraph 1.1 of the report and resolution 1 in the Notice of Meeting to Shareholders and the EMS proposed to be distributed to the Caravel shareholders in mid February 2013.

At the date of this report, Stantons International Securities does not have any interest in the outcome of the proposals. There are no relationships with Caravel and QRL other than acting as an independent expert for the purposes of this report. Before accepting the engagement Stantons International considered all independence issues and concluded that there were no independence issues in accepting the assignment to prepare the Independent Experts Report. There are no existing relationships between Stantons International Securities and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at a maximum of $15,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities nor John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities does not hold any securities in Caravel, QRL and KCL. There are no pecuniary or other interests of Stantons International Securities that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities is the holder of an Australian Financial Services Licence (no 418019) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. The directors of Stantons International Audit and Consulting Pty Ltd are the directors of Stantons International Securities. Stantons International Securities has extensive experience in providing advice pertaining to mergers, acquisitions and strategic for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of Caravel in order to assist them to assess the merits of the proposed Acquisition as outlined in resolution 1 the EMS to which this report relates. This report has been prepared for the benefit of Caravel’s shareholders and does not provide a general expression of Stantons International Securities opinion as to the longer term value of Caravel and QRL and their assets. Stantons International Securities does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of Caravel and QRL. Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stantons International Securities to the form and context in which it appears.

CAR7433/ Caravel IER on the Acquisition of QRL

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DISCLAIMER

This report has been prepared by Stantons International Securities with due care and diligence. However, except for those responsibilities, which by law cannot be excluded, no responsibility arising in any way whatsoever for errors or omission (including responsibility to any person for negligence) is assumed by Stantons International Securities, Stantons International Audit and Consulting Pty Ltd, their directors, employees or consultants for the preparation of this report.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities may rely on information provided by Caravel and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), Caravel has agreed:

(a) To make no claim by it or its officers against Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which Caravel may suffer as a result of reasonable reliance by Stantons International Securities on the information provided by Caravel; and
(b) To indemnify Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from Caravel or any of its officers providing Stantons International Securities any false or misleading information or in the failure of Caravel or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities.

A draft of this report was presented to Caravel directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

CAR7433/ Caravel IER on the Acquisition of QRL

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FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities) Dated 4 February 2013

Stantons International Securities ABN 84 144 581 519 and Financial Services Licence 418019 (“SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide (“FSG”). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 418019;
remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

CAR7433/ Caravel IER on the Acquisition of QRL

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5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

SIS is ultimately a wholly division of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. Stantons International Audit and Consulting Pty Ltd also trades as Stantons International that provides audit, corporate services, internal audit, probity, management consulting, accounting and IT audits.

From time to time, SIS and Stantons International Audit and Consulting Pty Ltd and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited (“FOSL”). FOSL is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

CAR7433/ Caravel IER on the Acquisition of QRL

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Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

Contact details

You may contact us using the details set out above.

Telephone 08 9481 3188 Fax 08 9321 1204 Email [email protected]

CAR7433/ Caravel IER on the Acquisition of QRL

Annexure B – Agricola Valuation Report

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Malcolm Castle Agricola Mining Consultants Pty Ltd P.O. Box 473, South Perth, WA 6951 Phone: 61 (8) 9474 9351 Mobile: 61 (4) 1234 7511 Email: [email protected] ABN: 84 274 218 871

17 December 2012

The Directors CARAVEL MINERALS LIMITED Unit 1, 15 Ogilvie Road, Mt. Pleasant WA 6153

Dear Sirs,

Re: INDEPENDENT VALUATION OF THE MINERAL ASSETS HELD BY QUADRIO RESOURCES LIMITED in WESTERN AUSTRALIA and QUEENSLAND

I have been commissioned by the Directors of Caravel Minerald Limited (“Caravel” or the “Company”) to provide a Mineral Asset Valuation Report (“Report”) on the mineral assets held by Quadrio Resources Limited in Western Australia and Queensland. This report serves to present a technical and market valuation for the exploration assets based on the information in this Report.

The present status of the tenements listed in this report is based on information provided by the Company and is set out in the Tenement Schedule. The Report has been prepared on the assumption that the tenements are lawfully accessible for evaluation.

DECLARATIONS

Relevant codes and guidelines

This report has been prepared as a technical assessment and valuation in accordance with the Code for Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the “VALMIN Code”) , which is binding upon Members of the Australasian Institute of Mining and Metallurgy (“AusIMM”) and the Australian Institute of Geoscientists (“AIG”), as well as the rules and guidelines issued by the Australian Securities and Investments Commission (“ASIC”) and the ASX Limited (“ASX”) which pertain to Independent Expert Reports ( Regulatory Guides RG111 and RG112 ).

Where mineral resources have been referred to in this report, the classifications are consistent with the ”Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”), prepared by the Joint Ore Reserves Committee of the AusIMM, the AIG and the Minerals Council of Australia, effective December 2004.

Under the definition provided by the VALMIN Code, the properties are classified as ‘Development Projects’ which contain Mineral Resources and are committed to production and ‘exploration areas’, which are inherently speculative in nature. The properties are considered to be sufficiently prospective, subject to varying degrees of risk, to warrant further exploration and development of their economic potential.

Sources of Information

The statements and opinion contained in this report are given in good faith and this review is based on information provided by the title holders, along with technical reports by consultants, previous tenements holders and other relevant published and unpublished data for the area. I have endeavoured, by making all reasonable enquiries, to confirm the authenticity, accuracy and completeness of the technical data upon which this report is based. A final draft of this report was provided to the Company, along with a written request to identify any material errors or omissions prior to lodgement.

In compiling this report, I did not carry out a site visit to any of the Company’s Project areas. Based on my professional knowledge and experience and the availability of extensive databases and technical reports made available by various Government Agencies, I consider that sufficient current information was available to allow an informed appraisal to be made without such a visit.

The independent valuation report has been compiled based on information available up to and including the date of this report. Consent has been given for the distribution of this report in the form and context in which it appears. I have no reason to doubt the authenticity or substance of the information provided.

Qualifications and Experience

The person responsible for the preparation of this report is:

Malcolm Castle, B.Sc.(Hons), GCertAppFin (Sec Inst), MAusIMM

Malcolm Castle has over 45 years’ experience in exploration geology and property evaluation, working for major companies for 20 years as an exploration geologist. He established a consulting company 20 years ago and specialises in exploration management, technical audit, due diligence and property valuation at all stages of development. He has wide experience in a number of commodities including uranium, gold, base metals, iron ore and mineral sands. He has been responsible for project discovery through to feasibility study in Australia, Fiji, Southern Africa and Indonesia and technical Audits in many countries. He has completed numerous Independent Geologist’s Reports and mineral asset valuations over the last decade as part of his consulting business.

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Mr Castle completed studies in Applied Geology with the University of New South Wales in 1965 and has been awarded a B.Sc.(Hons) degree. He has completed postgraduate studies with the Securities Institute of Australia in 2001 and has been awarded a Graduate Certificate in Applied Finance and Investment in 2004.

Competent Persons Statement

The information in this report that relates to Exploration Results and Mineral Resources of the Company has been reviewed by Malcolm Castle, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Castle has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as an Expert and Competent Person as defined under the VALMIN Code and in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Castle consents to the inclusion in this report of the matters based on the information in the form and context in which they appear.

Independence

I am not, nor intend to be a director, officer or other direct employee of the Company or its related entities and have no material interest in the Projects or the Company. The relationship with the Company is solely one of professional association between client and independent consultant. The review work and this report are prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this Report.

Yours faithfully

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Malcolm Castle

B.Sc.(Hons) MAusIMM, GCertAppFin (Sec Inst)

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LOCATION AND TENURE

The Wynberg Project is located approximately 30 kms south‐west from the township of Cloncurry in north‐west Queensland. Access is gained by either the Flinders Highway or the southern Landsborough Highway. Graded station tracks are used to access the Wynberg, WOW and Black Siltstone Prospects.

The Company has a number of projects that are located within the Western Gneiss Terrane of the south West Yilgarn Province. These exploration properties comprise four projects, Calingiri‐Wongan Hills, Kukerin, Holleton West and Perenjori.

The topography is predominantly low rolling plain with elevations between 250 metres and 350 metres above sea level. The western limit of the region is defined by the Darling Scarp, west of which is a narrow coastal plain. The region is interspersed with discontinuous chains of saline playa lakes

The climate is Mediterranean in the south, with hot dry summers and cool wet winters, varying to temperate semi‐desert to the north and northeast. Claypans and saltpans may contain water for several months following rain.

The region is readily accessible via a network of highways and primary and secondary roads servicing numerous towns based on agriculture. Clearing of native vegetation is extensive, with small preserved stands of eucalypt and native forest throughout the south give way to lower acacia scrub to the east and northeast.

The Bryah Basin Project is located to the south west of Sandfire’s Degrussa deposit and includes interpreted Narracoota Volcanics that host Degrussa. The West Musgrave Project is targeting an interpreted regional domain structure seen in the magnetics and gravity. Beadell Resources Limited announced gold intercepts at their Handpump project in the West Musgraves. These initial results are the first significant gold intercepts from the West Musgrave and may point to a new Mesoproterozoic gold province.

TENEMENT SCHEDULE

Project	Tenement	Interest	Area (sq.km)	Status
	E69/2745	100%	460.45	Pending
West Musgrave	E69/2746 E69/2748	100% 100%	533.87 225.76	Pending Pending
	E69/2753	100%	86.59	Pending
Sub Total			1,306.66
	E69/2578	0%	438.69	Pending
Bentley	E69/2656	0%	61.70	Granted
	E69/2885	0%	49.34	Granted
Sub Total			549.73

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	E70/2835	100%	99.95	Granted
	E70/2836	100%	100.62	Granted
Kukerin	E70/2837	100%	99.66	Granted
	E70/2839	100%	71.62	Granted
	E70/2840	100%	99.30	Granted
Sub Total			471.14
Holleton West	E70/2622 E70/2623	100% 100%	49.45 29.10	Granted Granted
Sub Total			78.56
	E70/2788	100%	202.46	Granted
	E70/2789	100%	102.93	Granted
	E70/3547	100%	168.27	Granted
	E70/3674	100%	16.71	Granted
Calingiri	E70/3680	100%	29.42	Granted
	E70/3755	100%	14.71	Granted
	E70/3881	100%	58.79	Granted
	P70/1606	100%	37.00	Pending
	P70/1607	100%	196.00	Pending
Sub Total			826.31
	E70/2343	80%	17.68	Granted
	E70/2796	80%	5.89	Granted
	E70/2996	100%	5.89	Granted
Wongan Hills	E70/3430 E70/3431	100% 100%	7.45 5.89	Granted Granted
	P70/1576	100%	24.00	Granted
	P70/1593	80%	116.00	Granted
	E70/4327	100%	5.88	Granted
	E70/4328	100%	123.25	Granted
	E70/4329	100%	8.79	Granted
	E70/4330	1000%	14.63	Granted
Sub Total			335.36
Bryah Basin	E51/1344	100%	216.42	Granted
	E51/1290	70%	122.83	Granted
	E51/1369	100%	6.18	Granted
Sub Total			345.42
Perenjori	E70/2857	100%	104.39	Granted
Sub Total			104.39
Wynberg QLD	EPM12409	100%	12.85	Granted
	EPM15627	100%	38.53	Granted
Sub Total			51.38
AUSGOLD JV	E70/2908	40%	99.90	Granted
	E70/2970	40%	199.80	Granted
	E70/3201	40%	85.70	Granted
	E70/3012	40%	201.80	Granted
	E70/2910	40%	97.00	Granted
	E70/3754	40%	199.90	Granted
Sub Total			884.10

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The AUSGOLD JV comprises 6 exploration tenements in which Ausgold Limited have earned a 60% interest. Quadrio has the right to retain a 40% interest by pro rata funding future exploration. However, Ausgold have not yet submitted a forward programme and budget, and at this stage it is unclear as to their intentions for funding further work. Accordingly, no valuation is currently attributed to Quadrio’s interest.

The status of a cross section of the tenements has been verified based on a recent independent inquiry by me, pursuant to paragraph 67 of the Valmin Code. The tenements are believed to be in good standing at the date of this valuation as represented by the Company. Some future events such as the grant (or otherwise) of expenditure exemptions and plaint action may impact of the valuation and may give grounds for a reassessment.

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WYNBERG PROJECT

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LOCATION AND TENURE

The Wynberg Project is located approximately 30 kms south‐west from the township of Cloncurry in north‐west Queensland. Access is gained by either the Flinders Highway or the southern Landsborough Highway. Graded station tracks are used to access the Wynberg, WOW and Black Siltstone Prospects.

EPM 12409 covers 4 sub‐blocks or 12.85 square kilometres. EPM 15626 covers 12 sub‐blocks or 38.53 square kilometres.

Project	Tenement	Interest	Area (sq.km)	Status
Wynberg QLD	EPM12409 EPM15627	100% 100%	12.85 38.53	Granted Granted
Sub Total			51.38

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LOCAL GEOLOGY

The greater western part of the project area is largely covered by Tertiary and recent alluvium deposits. This cover comprises siliceous gravel consisting of hematitic altered soil with significant component of quartz and silcrete cobbles and pebbles out crop is only present in the western margin of the Project area. In the west of the project area the alluvium over lays outcrop and eastward overlying black soils.

The oldest rocks exposed in the project area are the metavolcanics and metasediments of the Middle Proterozoic Soldiers Cap Group. Unconformably overlying the Soldiers Cap Group are isolated remnants of the Gilded Rose Breccia, these are present on EPM 12409 and are considered to be derived from the Corella Formation.

Structural trends and bedding orientations are clearly visible on satellite images on air photos to the west of the Fisher creek Fault and are far less visible to the east. The best out crops east of the Fisher Creek Fault are to be found in major creek beds and tributaries. Mapping has been undertaken as creek bed traverses rather than as formal mapping traverses.

Lithologies encountered at Wynberg are meta‐pelites ‐ which are weakly bedded with fine bedding and/or Laminations. John Crossing reported that the pelites ranges from dark grey to black carbonaceous, the more carbonaceous pelites having stronger cleavage development which obscures bedding. The amphibolite units range textually from basalt to dolerite and even grained to porphyritic and are metamorphosed to amphibolite facies.

Unconformably overlying the volcano‐sediments are the carbonate breccia unit of the Gilded Rose Breccia, consisting of calc‐silicates, recrystallized carbonates and carbonate breccias. This unit is present at Wynberg isolated outliers forming sporadic remnant layer.

PREVIOUS EXPLORATION

Exploration work undertaken by BHP Minerals /Utah Development Corporation Limited produced several s broad gold and copper anomalous areas defined by stream sediment geochemistry. Stream sediment and ridge and spur soil geochemistry were too general to pinpoint costeans and drill targets.

Epoch Mining NL delineated anomalies by stream sediment and soil sampling, costeans and bedrock RAB drilling (very shallow hales, 1‐5m deep). This work delineated the Wynberg, WOW, Black Siltstone and Burnt Ute Prospects.

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Prospect Location and selected drill intercepts

WYNBERG PROSPECT

Mineralisation is hosted by linear structures which are confined to a 300m wide zone which trends in a NE‐SW direction. Previous interpretations have defined these structures in numerous trends however, recent RC drilling points to these being in a more grid N‐S direction. Three main lithological units are recognised.

An altered crystalline amphibolite and ferro silicate calc‐altered retrograde amphibolite
Undifferentiated fine grained sediments with varying degrees of siltstone, shales fine sandstones and chert. Micaceous phyllite composed of siltstones and fine to (rarely) medium grained sandstone, well foliated.
Medium grained silica rich albitised felsic, probably related to other felsic intrusives present in the project area. This unit is considered to be intrusive to the Soldiers Cap Group

Geology exposed in costean noted bedding as fine laminations (as in recent drilled diamond core) in cherty rocks (silica flooded siltstone and shales). In the southern part of the Wynberg grid, the

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bedding appears to trend in a north‐east (grid) direction: in the central part of the grid trends north‐ south (to grid) and in the northern part trends north‐west (grid). Bedding dips are generally between 65 degrees east to vertical. The amphibolite trend north‐south (grid) and may dipping to the west and may be intrusive as is the albitite.

The gold mineralisation is structurally controlled and appear to strike between north‐east and north‐ west (grid) and dips at angles from steeply east to 45o west. The structures are mineralised in both the sediments and the amphibolites. Preliminary Inferred Resource calculated in 1994 suggested the total gold mineral resources was 330,000 tonnes at 2.0 g/t Au, at 0.5 g/t Au cutoff grade , with over 20,000 ounces of gold. This estimate was compiled before the JORC code was introduced and no details of methodology are available.

Reported visible copper mineralisation and a gold anomalous stream sediment in the vicinity of 7000N on a Wynberg grid indicated that there is potential for additional gold mineralisation grid north of the currently established Wynberg Prospect grid.

Anomalous gold and copper geochemical sampling indicates that the mineralisation is open to the north‐east along the contact between and to the south west. There may also be further mineralisation to the south along another contact between sediments and amphibolite such as the encouraging interval in hole 12WYRC0032.

A fixed loop electromagnetic survey was completed in April, 2012 as an aid to identify possible massive sulphides which may host significant mineralisation at depth. The survey failed to identify a significant sulphidic body. The sulphides associated with the mineralisation at Wynberg are extremely low in the range 10 to trace and more commonly 1‐2%.

Recent Drilling

Previous percussion drilling at Wynberg comprised 78 RC holes drilled for a total drill meters of 3448m. A more recent drilling campaign at Wynberg totalled 5005 metres comprising 455 metres of diamond drilling and 4,550 metres of RC drilling. The drilling was aimed at testing the mineralisation beneath and lateral along strike from historic holes which were terminated in mineralisation

A large proportion of the earlier holes terminated in mineralisation. The most recent drilling campaign was designed to test the depth and lateral extent of the known mineralisation. The results confirmed previous drilling although the results were inconsistent due probably to narrow quartz veins that appear to be mineralisation host and to the inconsistent “nuggetty“nature of the mineralisation.

Four diamond holes were drilled in the recent program in order to gain an understanding of the structure which hosted the mineralisation. What measurements were taken indicated that the bedding is for most part dipping steeply east in holes 12WYDD 0001‐0004. Measurements collected from 12WYDD 0004 indicate that the bedding is dipping steeply west.

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Wynberg Prospect: mineralisation in historic drill holes

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Wynberg Prospect: Section 5400N, gold mineralisation present in historic drill holes.

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Resource estimate

A sectional interpretation, applying the interpretation as outlined in the figure below, and allowing a maximum intersection influence of 25 metres between sections (apart from the isolated intersection in hole 12WYRRC0032 which was allowed a 50 metre influence) produced an estimate of 3.1 million tonnes grading 1.4 g/t gold for 140,109 contained ounces. Copper mineralization is also developed and in some of the interpreted blocks reaches grades of 0.5% ‐ 1.0%.

The mineralization is open both at depth and along interpreted strike. While drilling has locally tested to vertical depths of up to 150 metres, most of the resource is developed above 100 metres.

WOW PROSPECT

The WOW prospect is located approximately 1 kilometer to the west of Wynberg. The main rock types are chert, siliceous siltstone, black schistose siltstone and amphibolite. The prospect is delineated by a number of stream sediment samples which indicated potential exists for the discovery of a similar style of mineralisation to that of Wynberg. The anomalous zones were interpreted as lens shaped trending east to west and parallel to lithological strike. The mineralisation is associated with sediments rather than amphibolite.

Geochemical sampling returned anomalous copper to 1000ppm which coincident with gold to 299ppb and arsenic to 320ppm. RAB holes drilled over the stronger soil anomalies indicate that a close correlation exists with soil sample results. This gives confidence to using soil geochemistry to define targets in the western part of permit EPM12409.

Soil sampling approximately delineates the perimeters of the anomalous zone with assay results greater than 100ppb gold. The inconsistent character of the soil samples in this setting did not succeed in defining a higher zone within the 100ppb zone which was intersects in holes WOW1 and WOW2.

The trend of anomalous Cu as indicated by the >200ppm is WNW‐ESE and forms an oval with long axis in the direction and is still open to the SE. The p>200 values occur in all rock types. Amphibolite may have an effect with the southern belt forming the boundary of the northern belt possibly causing elevated values. The anomalous zone of gold as defined by 100ppb similar to the 200ppm Cu but not as well defined

RAB drilling was undertaken over the stronger anomalies showed that a good correlation exists with soil results. Average copper and arsenic in soils was lower than for RAB believed to be due to leaching and dissemination. Gold was as twice as abundant in soils as in bedrock.

Two RC drill holes were drilled, both testing mineralisation exposed in the costeans dug to test soils anomalies. Hole WOW 1 gold, copper and arsenic were reported to be anomalous throughout the hole included a six meter intersection from 28 meters to 34 meters averaging 1.93ppm Au indicating a dip to north of approximately 55 degrees. WOW2 was later drilled in the opposite direction to test this theory and returned 4 meters at 3.0 g/t gold from a depth of 12 meters.

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Best Au Intercepts for WOW RC Drill holes.

Hole Number	From (m)	To (m)	Intercept:
			Width/Grade
WOW1	26	32	6m @ 1.96 ppm
WOW1	40	42	2m @ 0.60ppm
WOW2	12	16	4m @ 2.99ppm
WOW2	20	22	2m @ 2.43ppm

BLACK SILTSTONE PROSPECT

The Black Siltstone Cu‐Au Prospect lies to the north‐west of the Wynberg Prospect. Only a small part of the prospect lies within EPM 12409 the greater part extends into EPM15627. The prospect is underlain by siltstone with minor interbeds of amphibolite. Bedding trends exposed in costeans reveal that bedding trends between 010 degrees and 165 degrees and dips vertically to steeply east.

RAB Drilling

Forty seven RAB holes were drilled on three lines 100m apart at 20 meter spacings. Almost all samples were considered to be moderately to strongly anomalous in copper with only 11 samples containing less than 200ppm copper. The two highest copper values are in north‐eastern and north‐ western corners of the grid with 1300ppm and 1050ppm Cu respectively. It is difficult to interpret a trend direction but it may be in a north‐ease‐north direction.

Percussion Drilling

Three percussion drill holes were drilled for total drill meters of 121m with an average depth of 40.3m. BS2 was drilled to test the down dip gold mineralisation on line 4600N. A best intersection of 2m @ 2.3 g/t Au correlated well with the overlying costean value of 2m@ 0.42 g/t Au.

Black Siltstone Best Au Percussion Intercepts

Hole Number	mFrom	mTo	Intercept;
			Width/Grade
BS2	7	9	2m @ 2.02ppm
BS2	13	15	2m @ 0.92ppm
BS2	25	27	2m @ 2.43ppm

BURNT UTE PROSPECT

Burnt Ute Prospect has a large part of the defined area off the Project area‐ the area has been partially relinquished. The prospect is strongly copper and gold anomalous in stream soil and RAB traverses. Previous annual reports suggest that while there is poor outcrop and the prospect is close to an old paleoalluvial deposit the strong copper response in the soil geochemistry suggests a bedrock source for the mineralisation

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FLY PROSPECT

The Fly Prospect lies in the south western corner of EPM15627. This is defined largely on one rock chip which returned an assay of 0.529 ppm and two stream sediment samples which returned values of 560ppb (CC1056) and 295ppb (CC1057) respectively. A soil sampling program currently under may better define a mineralised zone.

PROJECT POTENTIAL

Previous exploration has highlighted anomalous values for gold and copper in the various prospects The greater part of previous exploration has focused on the area now covered by EPM12409 and in particular the northern half of the permit area. Much of the area covered by EPM15627 is obscured by recent alluvial material.

The greater part of the recent exploration work has concentrated on The Wynberg Prospect. The “Wynberg Trend” which extends in a north‐easterly direction from the Wynberg Prospect into EPM 15627 has remained untested to date.

Another mineralised trend, the informally named “Fisher Creek” trends in a northerly direction trends form the south‐western corner of the Wynberg Prospect through the Black Siltstone Prospect northwards. Previous RAB in limited length lines have failed to intercept any significant mineralisation.

The WOW Prospect is open to the north‐west and the north‐east and remains untested. Two RC holes drilled in the mid‐90s returned encouraging results. The Mineralisation was considered to be similar to the Wynberg Prospect and present as present as a lens. The mineralisation trend follows the sedimentary ‐ amphibolite contact.

The southern prospect Burnt Ute is open to the north east where there are encouraging stream sediment sampling. The highest assays copper are in the central part of the prospect and are off the tenement. Gold values are of a lower tenure and mirror the copper values.

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THE WESTERN AUSTRALIAN PROJECTS

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SOUTH WEST REGIONAL GEOLOGICAL SETTING

The Yilgarn Craton has been subdivided into a number of major crustal terranes based on the known geology, regional geophysical signatures and the age distribution of rocks. The Yilgarn Craton was further subdivided into three smaller terranes.

The westernmost subdivision, composed largely of older metamorphosed sedimentary rocks, was named the Balingup Terrane. The central subdivision is composed mostly of 2.64Ga granite and was termed the Boddington Terrane. Younger greenstone belts within the Boddington Terrane include the Saddleback greenstone belt which hosts the very large Boddington gold‐copper mine. The eastern Lake Grace Terrane (or Hyden Block) is composed of granulite facies granitic gneiss, gneissic remnants of greenstone belts, charnokitic granite and post‐tectonic granites.

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Granulite‐facies metamorphism and emplacement of granites throughout the southwest Yilgarn Province are synchronous with greenschist to lower amphibolite facies metamorphism in the Saddleback greenstone belt.

Research has not defined the extent of original greenstone belts in the high grade metamorphic rocks, in contrast to most of the Yilgarn Craton where the distinction is clear. Nevertheless, extensive areas have been defined and are interpreted as metamorphosed greenstone rocks.

Widely applied tools such as airborne magnetic data remain inconclusive. Airborne magnetic data has been used to interpret the large scale geology in terms of magnetic domains, however no on‐ going study has resolved this interpretation directly in terms of the underlying geology. Systematic geological research is required to make significant advances in understanding the geological evolution of the South West Yilgarn.

As for much of the Yilgarn Block, cover by laterite, sand and clay derived from deeply weathered bedrock and palaeochannel deposits is extensive. Most of the area is used for agriculture, with more than 90% of the land improved pasture or under crop.

Gold Deposits in High Grade Metamorphic Terranes

There is on‐going debate as to the formation of gold mineralisation in high grade metamorphic terranes. Certainly, low temperature and low pressure (greenschist facies) metamorphic terranes are significantly more endowed with gold than other areas. There is no consensus as to whether gold mineralisation in gneissic terranes originally formed at lower temperature and was subsequently metamorphosed, or whether gold mineralisation can form during high temperature and pressure metamorphism. As is commonly the case in geology, both mechanisms may operate.

South West Yilgarn includes a number of metallogenic models for gold mineralisation that can be applied to exploration. Irrespective of these models, there are sufficient analogue deposits and discovery histories to justify exploration.

Gold deposits in high grade metamorphic rocks are distributed worldwide, and include Big Bell, Griffins Find, Badgebup, Westonia and Tropicana in Western Australia. The Tropicana deposit provides a salient example of discovery process in Western Australia that mirrors the discovery of the Challenger and the Boddington mine. Tropicana was discovered on the eastern margin of the Yilgarn Craton during the last decade. The area had received no significant exploration for gold, despite the known substantial endowment of other parts of the Yilgarn Craton. A large scale gold anomaly, up to 60ppb gold, was recognised in regional scale geochemical data in an area of extensive cover by surficial deposits. The genesis of mineralisation at Tropicana remains subject to on‐going research, however exploration shows the deposit is hosted in high metamorphic grade gneissic rocks.

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CALINGIRI/WONGAN HILLS PROJECT

LOCATION AND TENURE

The Calingiri – Wongan Hills project is approximately 125 kilometres north east of Perth and covers an area of 654 square kilometres.


Project	Tenement Interest Area (sq.km) Status
Calingiri Sub Total	E70/2788 100% 202.46 Granted E70/2789 100% 102.93 Granted E70/3547 100% 168.27 Granted E70/3674 100% 16.71 Granted E70/3680 100% 29.42 Granted E70/3755 100% 14.71 Granted E70/3881 100% 58.79 Granted P70/1606 100% 37.00 Pending P70/1607 100% 196.00 Pending 826.31
Wongan Hills Sub Total	E70/2343 80% 17.68 Granted E70/2796 80% 5.89 Granted E70/2996 100% 5.89 Granted E70/3430 100% 7.45 Granted E70/3431 100% 5.89 Granted P70/1576 100% 24.00 Granted P70/1593 80% 116.00 Granted E70/4327 100% 5.88 Granted E70/4328 100% 123.25 Granted E70/4329 100% 8.79 Granted E70/4330 1000% 14.63 Granted 335.36

GEOLOGICAL SETTING

The Calingiri Project covers a regional copper‐molybdenum‐ gold mineralized belt in a previously unexplored part of the Yilgarn. Within the belt several isolated prospects have been tested with ground geophysics and subsequent limited deeper drilling (reverse circulation). Broad intervals of disseminated copper sulphide (chalcopyrite) and associated molybdenum mineralization have been intersected at the Bartel, Dasher and Chapman prospects.

PREVIOUS EXPLORATION

The Ninan Prospect, in the southern part of the Wongan Hills Greenstone Belt was explored previously with limited drilling into fresh bedrock which had defined a flat lying zone of copper –

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gold mineralization, including intersections of 47.2 metres grading 0.51% copper and 26 0 metres grading 0.72% copper. The Company commenced exploration in this area in 2005 and expanded its activities to the surrounding areas as tenure was secured.

Between 2005 and 2008, an extensive zone of shallow, oxide copper‐gold mineralization was defined including an intersection of 44 metres grading 0.75% copper from 36 metres (including 5 metres grading 3.79% copper and 1.87 g/t gold from 75 metres to the base of hole). More limited exploration also defined lead – zinc dominant multi‐element anomalism at the Mystery and Wongan West Prospects.

In 2009 extensive copper anomalism was identified at the Calingiri area, to the south of Wongan Hills, from reconnaissance roadside geochemical sampling carried out as part of the regional geochemical coverage of the South West Yilgarn area. Previous geological interpretation for this area indicated largely undifferentiated gneiss and granite gneiss. A new geological interpretation which included magnetic and radiometric data indicated a potentially significantly more prospective geological setting with a series of magnetic greenstones folded around what appears to be a large central granitoid intrusive.

Follow up off road detail geochemical sampling in 2009, defined several, copper dominant, anomalies, including the Bartel and Chapman Prospects and a copper (plus gold, lead and zinc anomaly at the Ablett Prospect. Initial Rotary Air Blast (RAB) or Air Core (AC) drilling designed to drill through relatively soft regolith to the top of relatively fresh bedrock confirmed bedrock anomalism (including the identification of visual copper mineralization within felsic, possibly granitoid, geology) at these prospects. Trial Induced Polarisation (IP) surveys were successful in defining a series of chargeability anomalies (potentially representing development of disseminated sulphide mineralization) which were tested by reverse circulation (RC) drilling.

This drilling, in 2010, comprising two holes at Bartel and one at Chapman, intersected broad zones of copper sulphide mineralisation at both prospects (e.g.124 metres grading 0.27% copper, including 75 metres grading 0.40% copper, with higher grade intersections including 5 metres grading 1.4%, 5 metres grading 1.0% and 12 metres grading 0.9% copper). Limited multi‐element analyses also showed an association of the copper mineralisation with gold and molybdenum – e.g. 10CARC001 33 – 38 metres, 5 metres grading 1.4% copper, 172 ppb gold and 1,100 ppm molybdenum and 10CARC003 48 – 53 metres, 5 metres grading 1.0 % copper and 180 ppb gold.

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Calingiri/Wongan Hills Project ‐ Location of prospects

Follow up exploration during 2011, comprising geological mapping, multi element soil geochemistry, RC and interface drilling and regional geophysics, delineated an extensive mineralized system extending in excess of 25 kilometres with a number of new prospects defining additional areas of priority focus.

Reconnaissance aircore drilling of the broader copper‐molybdenum system identified additional bedrock copper mineralisation within the system, including copper intercepts 12m grading 0.57% copper (to the bottom of hole), 27m @ 0.28% copper (including 3m grading 1.06% copper) and 15m grading 0.21% copper.

Follow up RC drilling at the Bartel and Chapman Prospects confirmed continuity of bedrock mineralization over significant strike lengths. Initial RC drilling at the Dasher prospect confirmed significant copper sulphide mineralization from each of the 2 holes drilled including an intersection

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of 80m grading 0.42% copper and 171ppm molybdenum, from a depth of 9 metres (excluding a late dyke within this intercept). This mineralization is open in all directions.

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Calingiri/Wongan Hills Project ‐ Location of previous Drilling

A detailed airborne magnetic and radiometric survey was flown both to aid geological interpretation and also to potentially define additional specific targets (the copper sulphide mineralization is in places associated with magnetite). A number of new targets have been defined from this data.

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Calingiri/Wongan Hills Project ‐ Aeromagnetics

The main prospects identified include the following:

DASHER with 2 RC holes drilled and including 80m @ 0.42% Cu and 171ppm Mo 11CARC011. There is a significant IP anomaly associated with robust Cu Mo surface anomaly.

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CHAPMAN with 13 RC holes drilled and including 94m @ 0.4% Cu including 5m @ 1% Cu (10CARC007). There is a robust IP anomaly and substantial Cu surface anomaly.

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BARTEL with 12 RC holes drilled and including 75m @ 0.4% Cu including 5m @ 1% Cu (10CARC003). There is a significant IP anomaly with a large multi‐element soil anomaly.

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PROJECT POTENTIAL

Definition of the continuity of this system is based on copper and molybdenum anomalism in soil being identified in regions where either outcrop or laterite has been noted in the mapping. Current regolith interpretation points to a similar potential within the interpreted system where surface geochemistry has not been effective on account of the regolith profile being either depleted or masked by recent alluvium. The initial surface geochemical sampling was only analysed for gold, arsenic, lead and copper.

Following the identification of molybdenum mineralization in the initial drilling at the Bartel and Chapman prospects molybdenum (and other multielement) analyses were carried out on retained material from selected surface samples along an interpreted mineralized trend between the Bartel and Chapman Prospects (and additional samples over the Ablett Prospect.

The ruslt suggest that the Bartel area has the strongest surface expression for molybdenum with other significant anomalism throughout, and open beyond, the trend. Significantly, previous drilling targeted on the Bartel, Chapman and Dasher Prospects has not tested the strongest parts of the molybdenum anomalies.

The figure summarises the extent of molybdenum analyses from drilling and shows all significant intersections greater than 3 metres. Less than 5% of all drilling in the Calingiri/Wongan region has been assayed for molybdenum. The following table summarises all significant molybdenum intersections returned from drilling to date

Hole No	From (m)	To (m)	Interval (m)	Intersection
09CAAC062	3	6	3	3m @ 289.00 ppm
10CARC001	33	40	7	7m @ 591.27 ppm
10CARC002	0	3	3	3m @ 101.00 ppm
10CARC002	45	48	3	3m @ 193.00 ppm
10CARC007	18	24	6	6m @ 236.60 ppm
10CARC007	35	40	5	5m @ 69.58 ppm
11CARC003	15	21	6	6m @ 377.50 ppm
11CARC003	45	48	3	3m @ 140.50 ppm
11CARC003	57	73	16	16m @ 115.74 ppm
11CARC003	122	129	7	7m @ 115.37 ppm
11CARC005	114	125	11	11m @ 1,350.50 ppm
11CARC006	47	53	6	6m @ 872.57 ppm
11CARC011	17	21	4	4m @ 130.55 ppm
11CARC011	52	116	64	64m @ 191.49 ppm
11CARC011	138	141	3	3m @ 111.60 ppm
11CARC012	141	144	3	3m @ 244.63 ppm
11CARC012	180	183	3	3m @ 235.17 ppm
08WHAC049	9	12	3	3m @ 182.00 ppm

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Table 1: Significant Mo Intersections >3m using 100ppm Mo lower cut and maximum internal dilution of 3m

The high metamorphic grade of the bedrock provides some ambiguity when determining the mineralisation model of the prospects drilled to date. Several mineralisation styles are considered plausible within the project area:

Porphyry copper ‐ molybdenum systems associated with felsic intrusives and the hanging wall stratigraphy (modified by metamorphic/structural overprint).
Volcanogenic massive sulphide (VMS) Copper systems (modified by metamorphic/structural overprint).
Supergene copper deposits (associated with near surface oxidation of any primary mineralised systems).

KUKERIN PROJECT

LOCATION AND TENURE

The Kukerin Project covers an area of 471.2 square kilometres located between the towns of Dumbleyung, Nyabing and Kukerin.

Project	Tenement	Interest	Area (sq.km)	Status
	E70/2835	100%	99.95	Granted
	E70/2836	100%	100.62	Granted
Kukerin	E70/2837	100%	99.66	Granted
	E70/2839	100%	71.62	Granted
	E70/2840	100%	99.30	Granted
Sub Total			471.14

GEOLOGICAL SETTING

The Kukerin Project tenements are interpreted to overlie a regional north‐west trending structure, termed the Kukerin Shear Zone (KSZ) within granulite and gneissic stratigraphic. Surface geochemical anomalies appear to be related to both the KSZ and a zone which trends to the north east away from the KSZ. The shear zone conform with the crustal scale boundary separating the Boddington Terrane to the west and the Lake Grace Terrane to the east.. The boundary between these domains is marked by modern seismic activity and corresponds with a break in the regional gravity.

Felsic to mafic granulite, gneiss and granitoid occur as scattered exposures throughout farming paddocks on the tenements. Substantial areas are covered by alluvial sediment in broad ephemeral drainage systems.

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The regolith types are dominated by thin rocky soil and sand over fresh to completely weathered bedrock, with thin sand or soil over pisolitic laterite at higher elevations.

Eight prospects have been identified within the project and include the Bottleneck, Stanley Hill, and Brays prospects that lie within the KSZ, with the Butterfly Dragonfly, Golf Course and East Golf Course Prospects (North East Prospects) lying on the north east trending geological interval as defined in the magnetics. The eighth prospect, Wishbone, lies on the western side of the KSZ.

PREVIOUS EXPLORATION

Quadrio commenced exploration in 2006, collecting 2,845 shallow auger samples on 50 metre to 400 metre spacings as follow‐up to anomalous road side and paddock sampling. Results in auger samples included assays up to 590ppb gold and 269ppm copper, predominantly from prospects in the northeast of the project area.

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Kukerin Project Magnetics and Prospects

At East Golf Course prospect, a coherent +100ppb gold‐in‐soil anomaly, with a maximum 415ppb gold, was shown to extend for more than two kilometres. RAB drilling included up to 9 metres averaging 300ppb gold in hole MRB17 on the margin of this anomaly.

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Between 2006 and 2007, 471 interface drillholes (i.e. drilling only designed to penetrate the softer weathered rock above the interface with hard bedrock) were completed. The results confirmed that the surface sampling was indicative of bedrock mineralisation, showing broad low grade gold anomalies with significant intercepts recorded at Golf Course, East Gold Course, Brays and Bottleneck prospects.

A detailed, 10,000 line kilometre airborne magnetic and radiometric survey was completed. These data show a northwest trending low magnetic zone, which is interpreted to represent a shear zone locally referred to as the Kukerin Shear. The Kukerin Shear has become the primary focus of subsequent exploration, with the Bottleneck Prospect located near a prominent regional scale deflection.

In 2008, 31 RAB and 103 aircore holes were drilled at Bottleneck and Brays Prospects. Drilling at Bottleneck prospect resulted in a best intercept of 21 metres averaging 3.5g/t gold (08KUAC075 from 24m).

Analysis of samples at the base of weathering for nickel group elements using a hand held X‐Ray analyser showed sporadic anomalies up to 637ppm nickel and 2,100ppm chrome.

Detailed drilling at Bottleneck during 2009 confirmed the strong intercept in 08KUAC075 with very detailed drilling, giving 15 metres averaging 5.3g/t in 09KUAC009 (from 45m). Step out drilling confirmed high grade gold mineralisation on three sections over a distance of 50 metres, with the high grade zone open to the north west..

Interface drilling up to 5 kilometres southeast of Bottleneck and at Stanley Hill, 11 kilometres northwest of Bottleneck, returned geochemically anomalous results but no potentially economic grade intersections were encountered.

Hole Number Easting metres Northing metres From Depth metres	Intercept metres Gold Grade g/t
08KUAC075 598400 6308100 24	21 3.5
including 24	3 12.2
08KUAC111 598333 6308101 15	1 2.9
09KUAC002 598365 6308100 42	3 1.5
09KUAC007 598375 6308125 33	3 2.2
09KUAC008 * 598400 6308100 30	18 3.1
09KUAC009 598379 6308100 30	15 5.3
09KUAC011 * 598385 6308075 42	3 6.8
09KUAC012 * 598385 6308117 24	6 10.0
09KUAC158 598370 6308110 24	7 6.3
including 24	1 22.0
09KUAC164 598350 6308125 14	12 7.5
including 24	1 75.0

Collar coordinates in MGA94 Zone 50. Intercepts reported >1.0g/t gold

indicates close spaced or twin drillhole relative to 08KUAC075

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Bottleneck Prospect

The Bottleneck Prospect was discovered as a result of testing the interpreted regional KSZ with interface drilling. The discovery hole of 21m @ 3.5 g/t Au was followed up with drilling which confirmed significant gold mineralization with intersections of 15m @ 5.3 g/t Au & 6m @ 10.0 g/t Au. More recent close spaced drilling produced 12m @ 7.5 g/t Au (including 1m @ 75.0 g/t) and 7m @ 6.3 g/t Au (including 1m @ 22.0 g/t) along strike of the discovery hole confirming a west north‐ west strike of the mineralisation at a slightly lower angle to the orientation of the KSZ. This step out drilling was intentionally close spaced in order to gain an understanding of the primary controls (specifically strike) to higher grade gold mineralisation.

Drilling supports the concept that the mineralisation at Bottleneck is open to the north west and may be offset by a fault in the south east. A supergene gold zone has been identified in detailed drilling, and some holes through this zone remain in gold mineralisation untested at depth.

With the exception of the area between Bottleneck and Stanley Hill, and the north western portions of the project, all prospects have been systematically covered with surface geochemistry and at least one phase of interface drilling. Except for limited historical RC holes at the Wishbone Prospect, no prospects have received any deeper RC or Diamond drilling.

Stanley Hill Prospect

Following recognition of the KSZ as a potential conduit for gold mineralisation in early 2008, surface geochemistry refocused along this structure. This defined a series of gold in soil anomalies at the Stanley Hill Prospect which subsequently received a first pass interface drilling programme. One of the interface drilling traverses encountered a broad zone of elevated gold mineralisation at the interface and open to the north. The paucity of drilling in the area warrants further drilling.

Bottleneck to Stanley Hill’ Prospect

Recent access agreements with the land owner who holds the majority of the land between Bottleneck and Stanley Hill will enable the Company to complete systematic geochemical coverage and likely follow up interface drilling. This area is deemed a high priority on account of its location between the two prospects but more importantly it is where the regional KSZ appears to kink, so changing its strike more to the west. These types of kink have long been considered in many geological environments as a preferred area for gold mineralisation.

Nickel – copper potential

Most of the Prospects within the Kukerin Project are gold targets, but anomalous levels of nickel, chrome and especially copper also exist in various interface holes at the Bottleneck, Brays & Butterfly Prospects. Surface geochemistry (using both laboratory assays, and Dominion’s (now Quadrio) hand held XRF Niton Instrument) supports a broad copper and associated nickel anomaly within the KSZ that may be related to metamorphosed ultramafic stratigraphy. These warrant further evaluation to determine the nickel prospectivity of the area. Laboratory and XRF Niton analysis of some 1m drill hole samples in the field indicate cohesive systems of elevated nickel,

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copper and chrome in saprolite, particularly at the Brays Prospect. However, laboratory assays have generally only been completed on bottom of hole (BOH) samples.

PROJECT POTENTIAL

Exploration between 2006 and 2011 confirms that low order geochemical anomalies through the region can be upgraded to more advanced gold exploration targets. Soil geochemical anomalies identified via a regional program of wide‐spaced geochemistry have been shown to represent gold mineralisation in shallow bedrock. Anomalies at the base of weathering are an order of magnitude higher than the soil anomalies, however no targets have been tested with effective drilling into bedrock.

The acquisition of regional magnetic data resulted in exploration migrating away from the initial geochemistry based prospects to new targets drilling reflecting a combination of magnetic interpretation and geochemical anomalies. Discovery of highly anomalous gold in interface drilling at Bottleneck has justified this move, although the initial success is yet to be translated into a clear bedrock drill target.

At Bottleneck, anomalous gold mineralisation in the weathering zone is untested in bedrock. The mineralisation at Bottleneck may be open to the northwest and offset by a fault to the southeast. In new terrains, exploration must be receptive to the fact that norms may be different and good geological control is required to increase the potential for success.

Bedrock drilling, including more expensive diamond drilling, should be undertaken at more advanced prospects, such as Bottleneck, to gain knowledge of the structural geology, alteration and mineralisation.

Additional systematic interface drilling coverage may also be needed to understand the geochemical regime around individual anomalies. Surface geochemical anomalies may be transported away from the bedrock source and not directly overlie mineralisation.

The Kukerin Project is considered to have a high potential for discovery of significant gold mineralisation with future exploration. The current level of information for base metal or nickel mineralisation is insufficient to comment on the potential for discovery of deposits of these minerals.

PERENJORI PROJECT

LOCATION AND TENURE

The Perenjori Project comprises 1,550 square kilometres located approximately 100 kilometres southeast of the town of Geraldton and on the northern edge of the wheat belt of Western Australia. Geraldton is a major coastal town and port for the export of wheat, mineral sands, iron ore and base metal concentrate from the region.

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The project area is well serviced with roads and rail. From Perth, access is gained by travelling north for 269 kilometres along the Great Northern Highway to the town of Wubin. Access within the project area is via the sealed road between Wubin and Perenjori, a distance of 100 kilometres, and thence via unsealed subsidiary roads that provide access to farming properties. From Geraldton, access is gained by travelling 130 kilometres east along the sealed Geraldton‐Mt Magnet road to Mullewa. The tenements are located between 30 and 180 kilometres southeast of Mullewa along the Mullewa‐Wubin Road through Perenjori. Both Perenjori and Wubin are connected to Geraldton via a railway, which is primarily used for transport of wheat to Geraldton, and for machinery and supplies into the region.

The project area is all under cultivation primarily for wheat and sheep.

The climate is transitional semi‐desert, which receives most of its rain during winter. The topography varies from gently rolling to low hills.

Project	Tenement	Interest	Area (sq.km)	Status
Perenjori	E70/2857	100%	104.39	Granted
Sub Total			104.39

GEOLOGICAL SETTING

The project lies at the northern limit of the Lake Grace Terrane of the SWY and across the boundary with the Murchison Domain of the Youanmi Terrane to the northeast. To the east of this boundary is the Koolanooka Hills/Bowgarderd Hills greenstone belt, a north‐northwest trending belt of banded iron formation, amphibolitic mafic rocks and minor sediment and intermediate to felsic volcanic rocks. West of the boundary, scattered exposures of greenstone are evident through farming paddocks. The surface geology is dominated by residual soils and laterite duricrust on hill tops.

The area has a history of iron ore mining from the Koolanooka and Mt Gibson iron ore deposits. Each of these deposits was first mined during the late 1960s into the 1970s. Production has re‐ commenced at both deposits in response to increased demand for iron ore, with hematite ore from Mt Gibson and magnetite ore from Koolanooka transported to Geraldton for export.

PREVIOUS EXPLORATION

Dominion commenced exploration in the area in 2007 in response to anomalous results in its regional sampling program. At the Rocky Ridge Prospect, a 6 ppb gold anomaly was identified in an area of sandy soils associated with a broad east‐west trend evident in regional magnetic data.

Initial exploration comprised 1,134 surface and auger geochemical samples in paddocks adjacent to the roadside anomaly, which returned up to 330ppb gold. The surface geochemical anomaly was followed up with 235 RAB and aircore drillholes for a total of 6,589 metres on east‐west, 500 metre spaced lines. The drilling returned a best result of 7 metres averaging 2.0g/t Au (07PEAR122 from 9m), including 3 metres averaging 4.9g/t gold, at the Rocky Ridge prospect. A 1,500 line kilometre

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airborne magnetic and radiometric survey was conducted on 100 metre spaced lines over portion of the area following these results.

The surface geochemical sampling coverage was increased during 2008 in response to the grant of a new tenement, with 1,050 new samples giving results up to 188ppb gold. At Rocky Ridge prospect, 235 infill RAB and aircore holes and eight RC drillholes were completed over more than 1 kilometre of strike of the gold geochemical anomaly to depths up to 160 metres. Seven of the RC drillholes intersected low grade mineralisation, including 10 metres averaging 0.2g/t gold (07PERC008 from 100m) beneath an interface result of 10 metres averaging 0.38g/t Au (Hole 07PEAC170).

Surface geochemical sampling in 2006 outlined a significant gold anomaly on tenement E70/2857 (the Rocky Ridge Prospect’) in an area of no previously recorded exploration activity. Early indications from shallow drilling, pointed to a strong association between the anomalous surface geochemistry and underlying mafic granulite stratigraphy.

A significant gold in bedrock anomaly, including interface drilling intersections of 7 metres grading 2.0 g/t gold (07PEAR122 from 9 metres depth to the end of hole), 6 metres grading 1.0 g/t gold (07PEAC369 from 24 metres) and 3 metres grading 1.5 g/t gold (07PEAR242 from 18 metres) have defined the gold system within the interface. The intersections (table below) showed good correlation with noted bedrock alteration and also corresponded well with the overlying soil geochemistry).

An aeromagnetic (Magnetic and Radiometric) survey was conducted across the central area of E70/2857. Numerous structural features were identified, and the bedrock gold system followed these trends.

Eight reverse circulation drill holes were completed to test the interpreted down dip extension of the interface drilling intersections. Several low grade gold zones were identified and generally indicating a steep dip to the gold mineralisation.

Further infill interface drilling (to 50m E‐W spacing) defined broad north easterly trending zones of gold mineralisation in bedrock, which correspond to the main magnetic trends. However, several higher grade gold intercepts seen in the northern traverses suggest that there is a north south orientation to higher grade primary mineralization.

Considering the current area of drilling activity lies within a small opening of surface soils and calcretes more reflective of the underlying bedrock, and the anomaly continues to be seen both to the north and south where the soils become less effective due to the mapped sandy alluvium, Rocky Ridge Prospect warrants further drilling both north and south.

Focussed interface drilling at the Rocky Ridge Prospect has confirmed a direct link between surface geochemistry, gold within the weather bedrocks, and regional magnetic stratigraphic trends. The majority of this interface and RC drilling remains limited to the first part of the anomaly encountered during the initial paddock geochemistry. The gold system remains open to the south and north‐east were further drilling is warranted.

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Perenjori Project – Surface Geochemistry and Drilling

PROJECT POTENTIAL

Interface drilling at the Rocky Ridge prospect has confirmed that regional surface geochemical sampling was effective, leading to definition of a broad northeast trending low grade gold anomaly in bedrock. The geochemical trend corresponds to an arcuate trend observed in magnetic data, although the significance of this magnetic trend is yet to be explained. The trend crosses over the notional boundary between the Lake Grace Terrane and the Youanmi Terrane, and could reflect a deep seated crustal feature.

Limited, wide spaced bedrock drilling underneath the gold anomaly in interface drilling has intersected low grade mineralisation consistent with the magnitude of the geochemical anomalies, however the nature and controls on bedrock gold are not known.

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As with all of the South West Yilgarn projects, the lack of exposure and the high grade of metamorphism means that the understanding of the geology is evolving.

The adjacent Murchison Domain of the Youanmi Terrane is well endowed with gold, iron ore and base metal mineralisation, and has correspondingly attracted higher levels of exploration during the recent metals boom. Areas under cultivation, such as the Perenjori Project, are yet to receive the systematic and aggressive exploration afforded other areas of the Yilgarn Craton.

Exploration has shown that even subtle gold anomalies in regional surface sampling, if interpreted correctly, can be developed into bedrock exploration targets. While bedrock drilling is yet to intersect potentially economic grades of gold mineralisation, that drilling is wide spaced and has tested only a small portion of the gold anomalous area. Extending the coverage of detailed magnetic data may significantly assist future exploration.

The Perenjori Project is regarded as an exploration area that is prospective not only for gold but also for base metals and iron ore. The exploration is high risk, but the encouragement from exploration in a relatively small portion of the project area suggests that additional exploration is warranted.

HOLLETON WEST PROJECT

LOCATION AND TENURE

The Holleton West Project comprises two granted exploration licences covering an area of 78.56square kilometres. The project is located five kilometres east of the regional town of Hyden, which services the surrounding wheat growing industry.

Minor gold production in the area is from the Holleton Gold Centre, which is located 20 kilometres to the northeast area of the project area.

Project	Tenement	Interest	Area (sq.km)	Status
Holleton West	E70/2622 E70/2623	100% 100%	49.45 29.10	Granted Granted
Sub Total			78.56

GEOLOGICAL SETTING

The project overlies mixed mafic to felsic granulites, gneisses and granitic intrusions approximately 60 kilometres west of the Southern Cross Greenstone Belt. Exposure is poor, although granite, felsic to mafic granulite and gneiss, graphitic schist and ultramafic rocks occur as scattered exposures throughout the project. Numerous east‐west oriented linear magnetic anomalies represent Proterozoic dolerite dykes.

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The tenement covers a prominent north‐south striking magnetic anomaly that was originally interpreted as a sequence of banded iron formation or ultramafic units. The anomaly shows a right lateral offset in the central part of the tenement.

PREVIOUS EXPLORATION

Dominion commenced gold exploration during 2007 at Soldiers Prospect, in the northern portion of the tenement area and located 85 kilometres south‐southeast of the Westonia (Edna May) gold deposit.

Aircore drilling during 2007 and 2008 gave weakly coherent anomalous gold in bedrock anomalies that broadly reflected the surface soil samples. Initial results include 1 metre @ 1.7g/t gold (07HWAC015 from 60m; end of hole), 15 metres @ 0.5g/t gold (08HWAC085 from 18 metres) and a best result of 1 metre @ 8.8g/t gold (07HWAC093 from 27 metres to end of hole). Detailed drilling around this prospect was not successful in outlining a substantial bedrock drill target.

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Holleton West Project Regional Setting

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In the southern portion of the project area, 11 aircore holes for 474 metres combined were drilled to evaluate a north‐south trending strong magnetic anomaly observed in regional magnetic data. The drilling showed that in the north of the Dragon Rocks prospect area, referred to as Dragon Rocks North, the magnetic anomaly represents metamorphosed banded iron formation whereas in the south the anomaly can be attributed to metamorphosed and interleaved ultramafic, mafic and metasedimentary rocks.

At the southern magnetic anomaly, a line of RAB drilling showed two ultramafic units, a thinner western ultramafic associated with metasediment a thicker eastern ultramafic unit.

The western magnetic anomaly is associated with elevated base metals and chrome. RAB drill results include 9 metres averaging 443ppm nickel and 1,815ppm chrome (08HWAC101 from 18m). Six lines of ground electrical geophysical (EM) surveying over the western ultramafic identified a strong conductor corresponding with a graphitic siltstone unit. No bedrock drilling was undertaken.

Over the eastern ultramafic unit, drilling showed moderate to strongly anomalous copper associated with weak nickel abundances. EM surveying over the eastern ultramafic unit did not detect any significant anomalies.

No follow‐up exploration was undertaken over the area of metamorphosed banded iron formation at Dragon Rocks North.

Soldiers Prospect ‐ Gold anomalism was identified by shallow auger sampling in the west, but a major alluvial system cuts through this prospect to the east and renders surface sampling in this particular area ineffective.

Various phases of interface drilling have been completed to define peak gold anomalism in bedrock and to define if elevated gold also exists below the alluvial system. This work tightened the main area of gold prospectivity and proved that there are a number of anomalous zones of gold. An intercept of 1m @ 8.8 g/t Au at bottom of hole plus a number of other promising intercepts warrant additional drilling.

The system is currently open to the south, and a regolith covered zone in this area may be a good target for auger sampling in between the best gold intercepts and granitoid outcrops. It could indicate structural complexities and assist in determining if the system can be traced further to the south in this zone.

PROJECT POTENTIAL

At Dragon Rocks, EM anomalies associated with interleaved ultramafic rocks and graphite bearing sediment remain untested. While not eliminating the potential of this area for nickel, the presence of graphite, a strong conductor, increases the difficulty for exploration by rendering the use of EM, a key exploration method, unreliable. The absence of any significant EM anomaly over the eastern ultramafic suggests the potential for significant nickel mineralisation there is low.

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Soil geochemical anomalies associated with the eastern ultramafic remain open to the north, however the absence of a corresponding magnetic anomaly indicative of ultramafic rocks suggests the potential for this area is low.

The presence of banded iron formation units, which are a potential host to gold mineralisation, at Dragon Rocks North suggests that this area should be explored systematically for gold. There may also be potential for nickel mineralisation in ultramafic units that are not visible in magnetics due to the strong magnetic anomaly sourced from the bif.

At Soldiers Prospect, several phases of interface drilling show that the extensive coherent surface anomalies are not represented by corresponding anomalous gold in interface drilling. However, the presence of isolated high gold grades at the bottom of hole suggest that additional exploration is warranted. At present, the level of geological control on the distribution of mineralisation is low.

The Holleton West Project area is a greenfields exploration area where systematic exploration coverage is incomplete. Additional exploration for gold at Soldiers Prospect and at Dragon Rocks North is warranted, as is nickel exploration at Dragon Rocks North. Based on the results to date, CJS considers that the Holleton West Project has low to moderate potential for discovery of significant gold or nickel mineralisation.

BRYAH BASIN PROJECT

LOCATION AND TENURE

The Bryah Basin Project covers an area of 345.4 square kilometres located 100 kilometres north of Meekatharra and 100 kilometres south west of Sandfire’s Degrussa project.

Project	Tenement	Interest	Area (sq.km)	Status
	E51/1344	100%	216.42	Granted
Bryah Basin	E51/1290	70%	122.83	Granted
	E51/1369	100%	6.18	Granted
Sub Total			345.42

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Bryah Project Location

LOCAL GEOLOGY

The project area straddles the boundary between the Bryah Basin and the Proterozoic Yerrida Basin. The basins within the Capricorn Orogen may represent former back‐arc basins that formed in an extensional tectonic or parts of a former intracratonic rift system.

The sedimentary successions of the Yerrida Basin overly the Glengarry Basin to the east and Yilgarn Craton to the south, and are overlain to the north and east by the Bangemall, Officer and Savory Basins. In the project area, foliated to mylonitic granitic rocks, amphibolite and undivided granitic rocks of the Archaean Marymia Inlier and quartz muscovite schists, mylonitic schists and phyllonites of the Peak Hill Schist that represents the deformed south western end of the Marymia Inlier are overlain by sedimentary rocks of the Proterozoic Yerrida Basin including (i) siltstone, mudstone, fine‐ grained sandstone and minor dolostone, chert and conglomerate of the Collier Group and (ii) basaltic hyaloclastite (autoclastic volcanic breccia) of the Narracoota Formation.

The Archaean and Proterozoic rocks in the project area are cut, and bound, by a number of regional‐ scale, ENE‐WSW‐ and NW‐SE‐striking faults and crustal fractures possibly analogous to the Jenkins Fault Zone that can be traced along strike for up to between 100 and 300 km. The rocks are also cut by minor, WNW‐ESE‐striking faults that are up to 30 km‐long. In the project area the rocks of the Marymia Inlier are folded about an E‐W‐ to ENE‐WSW‐trending anticline (domal structure) that, 40 km to the west of the project area, is spatially associated with the gold deposits of the Peak Hill goldfield.

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Bryah Local Geology and soil anomalies

DEGRUSSA AND CONNECTOR MINERALISED ZONES – SANDFIRE RESOURCES NL

The Doolgunna project is currently being explored by Sandfire Resources NL. The tenements cover approximately 40 km strike length of the Jenkin Fault Zone (JFZ). The JFZ is a complex system up to 5 kilometres wide of interconnecting structures and forms the boundary between the Yerrida basin to the south and the Padbury and Bryah basins to the north. Sandfire has identified a zone of near surface oxide gold mineralisation over a strike length of 200 metres by programs of shallow reconnaissance RAB drilling.

Sandfire previously discovered up to seven oxide gold prospects at Doolgunna including the Old Highway and DeGrussa prospects, where a number of high‐grade intersections were reported. During a program of follow‐up RC drilling at two zones of high‐grade sulphide mineralisation were encountered at DeGrussa and Conductor 1. These discoveries appear to comprise volcanogenic massive sulphide (VMS) style mineralisation located beneath an oxide copper‐gold zone.

Follow‐up drilling to test a large and very strong conductor located immediately north of the DeGrussa mineralization confirmed the presence of a large body of sulphide mineralization located approximately 160m north of DeGrussa at Conductor 1.

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PREVIOUS EXPLORATION

A program of geological mapping and soil geochemistry was completed in 2011 covering a 30 km x 10‐15 km area of Naracoota Volcanics (geological host of the Degrussa copper‐gold deposit). These programmes have defined a number of prospective anomalies which are thought to represent high priority targets. There had been little previous exploration but the regional mapping and geochemistry carried out by the GSWA highlights a very prospective analogous setting to that of Degrussa.

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Bryah Project Surface Geochemical Anomalies

Two zones of copper‐zinc anomalism, each about 2 km long and up to 500m wide, overly basal andesitic volcanics. Two large multi‐element anomalies, an easterly arsenic‐bismuth‐indium‐ antimony (plus weaker copper‐silver‐lead‐molybdenum) anomaly and a western manganese (plus weaker lead‐bismuth‐antimony) overly a mixed sequence of volcaniclastics and fine grained sediments. These elements are considered to be useful pathfinders to Degrussa style copper ‐ gold deposits, whereas both copper and gold can often be leached in the near surface weathering profile.

The As‐Bi‐In‐Sb‐Ag‐Pb‐Mo Anomaly is considered to be a highly coincident VMS pathfinder anomaly. Weak (above background) copper anomalism is present almost entirely covered by colluvium, however detailed mapping of the anomaly encountered outcrops of felsic vitric ash‐fall tuff. The

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anomaly shows a near 1:1 relationship with thorium and uranium radiometric highs suggesting a felsic source.

The Mn‐Pb‐Sb anomaly includes Soil values with Mn ≤17765ppm. Rock chip samples are up to 48.6% Mn. With a coincident K radiometric anomaly. It is along strike from main anomaly and mapping indicates it is within manganiferous graphitic shales/mudstones.

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==> picture [452 x 160] intentionally omitted <==

Bryah Project – Surface Anomalies over Thorium Radiometrics

Although only limited outcrop can be mapped, manganiferous shales assaying up to 48.6% manganese have been located within the large (2.5 km x 1.0 km) western anomaly. The eastern anomaly is also coincident with a prominent radiometric (uranium/thorium) anomaly suggesting the presence of felsic magmatism.

PROJECT POTENTIAL

The project is at an early stage with only limited surface work completed. The anomalies, and the geological setting, are consistent with indications of mineralisation within the Naracoota Volcanics. The project is considered to be at a very early stage.

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WEST MUSGRAVES AND BENTLEY PROJECT

Following the Beadell Resources Limited (Beadell) gold intercepts at their Handpump project in the West Musgraves, including 15m @ 2.3g/t Au from 30m and 10m @ 1.04g/t Au from 25m, Quadrio pegged four tenement applications, with terms reached for a farm‐in JV on an additional three tenements, targeting an interpreted regional domain structure seen in the magnetics and gravity. These initial results by Beadell herald the first significant gold intercepts from the West Musgrave and may point to a new Mesoproterozoic gold province.

Project	Tenement	Interest	Area (sq.km)	Status
	E69/2745	100%	460.45	Pending
West Musgrave	E69/2746 E69/2748	100% 100%	533.87 225.76	Pending Pending
	E69/2753	100%	86.59	Pending
Sub Total			1,306.66
	E69/2578	0%	438.69	Pending
Bentley	E69/2656	0%	61.70	Granted
	E69/2885	0%	49.34	Granted
Sub Total			549.73

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West Musgraves Project Regional Setting

The project is approximately 30km north east of Warburton and covers Mesoproterozoic geology, prospective for gold and base metals. A major NW domain fault, interpreted from geophysical data, extends from the area of Beadell’s recent Handpump gold discovery.

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West Musgraves Project Aeromagnetics

PROJECT POTENTIAL

Several alteration zones identified by remote sensing and there are historic references to Cu mineralization with prominent circular magnetic feature with reported coincident EM anomaly. There is no historical ground exploration due to native title access issues.

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REFERENCES

Crowe R, 2011, “Wynberg Project, Queensland Annual Report Exploration Permit 12409 from 23 November2010 to 22 November 2011” Kingsgate Consolidated Limited, October 2011

Crowe R, 2011, “Wynberg Project, Queensland Annual Report Exploration Permit 15627 from 25 August 2010 to 24 August 2011” Kingsgate Consolidated Limited, October 2011

Graham Kubale G, 2012, “Handover Notes for Wynberg Project”, Kingsgate Consolidated Limited August 2012

Stephens, C, 2010, “INDEPENDENT Geologist’s Report On Exploration Properties Located in the Southwest Yilgarn Region of Western Australia, Prepared On Behalf Of Yilgarn Metals Limited”, October 2010

Stephens, C, 2010, “INDEPENDENT Technical Valuation of the Dominion Database in the Southwest Yilgarn Region of Western Australia, Prepared On Behalf Of Yilgarn Metals Limited”, 24 May 2010

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VALUATION ASSESSMENT

The Wynberg Project has estimated Mineral Resources or Exploration Targets. When a resource or defined body of mineralisation has been outlined and its economic viability has still to be established (i.e. there is no ore reserve) then a Comparable Transactions approach is usually applied, often stated as a percentage of metal value. This can be applied to Mineral Resource estimates and Exploration Targets in accordance with the JORC code with appropriate discounts for risk in the different categories.

With gold projects the method requires allocating a dollar value to resource ounces of gold in the ground. This may also apply to well established zones of mineralisation which have not formally been categorised under the JORC code. An additional risk weighting may be appropriate in these circumstances.

The Exploration Projects are considered to be relatively early stage exploration projects. Several methods of valuation are available for such projects where a Mineral Resource has not yet been estimated in accordance with the JORC code. These include the use of valuations based on past exploration expenditure and valuations based on perceived prospectivity.

Exploration projects can be extremely variable and the use of comparable transactions is unlikely to produce a statistical spread of values for “similar” projects. This method can be used where a Mineral Resource has been estimated. The Prospectivity Exploration Multiplier (PEM) is based on past expenditure while the Kilburn Geoscience Rating (Geo‐factor Rating) is based on opinions of the prospectivity hence tenements can have marked variation in value between the methods.

The ‘Geo‐factor Rating’ method of valuation for exploration tenements is the preferred valuation method for the Company’s current tenements as it focusses on the future prospectivity of the area.

The Geo‐factor Rating method systematically assesses and grades four key technical attributes of a tenement to arrive at a series of multiplier factors. The Basic Acquisition Cost (BAC) is the important input to the method and it is calculated by summing the application fees, annual rent, work required to facilitate granting (e.g. native title, environment etc.) and statutory expenditure for a period of 12 months. This is usually expressed as average expenditure per square kilometre. Equity and grant status are also taken into account. Each factor then multiplied serially to the BAC. The ‘Base Value is multiplied by the prospectivity rating (the assessment of prospectivity factors multiplied together) to establish the overall technical value of each mineral property.

Where exploration has produced documented results a PEM can be derived which takes into account the valuer’s judgment of the success of the previous exploration techniques and results.

Paragraph 65 of RG 111 discusses a preference for the use of more than one valuation methodology. In the absence of a resource estimate in accordance with the JORC code an alternative method to the Geo‐factor Rating method might consider past expenditure on the tenements and the uplift of value provided by encouraging result.

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Past expenditures for the Company’s current tenements are not available from all the previous explorers of the same ground over the duration of modern exploration and reliance is mainly placed on the Geo‐factor method.

COMPARABLE TRANSACTIONS – REDBANK COPPER DEPOSIT

MINERAL RESOURCE ESTIMATES

A resource estimate in accordance with the JORC code has been compiled for the Carnegie project and is accepted here for the purpose of the valuation.

Inferred Resource – 3.1 million tonnes at 1.4 g/t Au for 140,000 contained ounces

VALUATION METHODOLOGY

Contained metal is calculated from the deposit tonnes and grade in the categories of the JORC code. The estimated contained value for the Inferred Resource is estimated based on current metal prices. The current gold price is estimated at approximately A$1,620 per tonne on 7 December 2012.

A discount factor is applied to the contained value to recognise the JORC category and allow for resource risk. The base value for the project is estimated by multiplying the contained value by the discount factors. A further discount is also applied to the contained value to recognise the project operational factors which relate to copper deposits.

Resource Category Discounts
Measured Resource	80%
Indicated Resource	70%
Inferred Resource	60%
Exploration Target	50%
Operations Factors	Gold
Recovery	100%
Mining	100%
Processing	100%
Rail	100%
Port	100%
Capex	100%
Marketing	100%
Total Operating Discount	100%

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Base Value = [Contained metal][Value of gold per ounce][Resource Discount]

Base Value A$M
Measured	-
Indicated	-
Inferred	135.62
Exploration Target	-
Total	135.62
A$ perounce	$972.00

Average Acquisition Cost

A range of average acquisition cost (AAC) percentages is estimated based on a database of comparative transactions in the mineral industry over the last 20 years. The percentage represents the amount paid for deposits as a proportion of the contained value adjusted for the uncertainty of the Category assigned under the JORC code.

The Average Acquisition Cost (AAC) for projects lies in the range of 2% to 4.5%. The data set does not differentiate between resource categories and it is implicit that this has been taken into account with risk related discounts. Information on sales internationally has shown a pattern for the AAC as shown in the chart and percentile table.

	Average Acquisition Cost
AAC Percentiles Percentile 10th 25th 50th 75th 90th AAC 2.2% 2.6% 3.0% 3.6% 3.9%

For the purpose of this valuation the Average Acquisition Cost for the lower, preferred and higher value is selected at the 25th, 50th and 75th percentiles. The Base Value is multiplied by AAC Percentiles to arrive at the estimated project technical value.

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Technical Value

Technical Value = [Base Value]*[Average Acquisition Cost%]

Total Project Technical Value,
A$M
Low	3.53
High	4.88
Preferred	4.07
% of contained value	1.80%
A$ perounce	$29.16

Market Value

In arriving at a fair market value for a particular exploration tenement, I have considered the current market for exploration properties in Australia and overseas. It is considered appropriate to apply a significant discount to the technical value of the Mineral Resources.

The current market value for exploration mineral projects in Australia is considered to be depressed but is slightly elevated for resources estimated in accordance with the JORC code and a market factor of 5 to 10% has been applied to the technical value for Wynberg gold resource. The market factor for exploration projects of 0% to ‐10% has been applied to the remainder of the portfolio.

Market Value = [Technical Value]*[Adjusted Market Factor]

Total Project Market Value, A$M
Low	3.70
High	5.37
Preferred	4.54
% of contained value	2.01%
A$ perounce	$32.51

GEO‐FACTOR RATING METHOD

BASE VALUE

This represents the exploration cost for the current period of the tenements. The current Base Acquisition Cost (BAC) for exploration projects is considered to be the average expenditure for the first year of the licence tenure. Exploration Licences in Western Australia, for example, attract a minimum annual expenditure for the first three years of $300 per square kilometre and annual rent of $43.50. A 10% administration fee is taken into account to imply a BAC of $360 to $400 per square kilometre. A similar approach based on expenditure commitments is taken for Prospecting Licences and Mining Leases.

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	Licence Type Expend. Rent Admin Total $/km2 BAC ‐ Low BAC ‐ High Exploration Licence (E, $/km2) 300 43.50 34.35 377.85 378 360 400 Prospecting Licences (P, $/Ha) 40.00 2.20 4.22 46.42 4,642 4,400 4,900 Mining Lease (M, $/Ha) 100.00 15.00 11.50 126.50 12,650 12,000 13,300

The Company has equity as shown in the table in the tenements. An allowance of 25% equity is applied to the Bentley Project where equity has yet to be established. A 40% discount is applied to applications.

Base Value = [Area][Grant Factor][Equity]*[Base Acquisition Cost]

Quadrio Resources Limited

Project	Equity	Km2	Status
				Low	High
West Musgrave
E69/2745	100%	460.45	Pending	360	400
E69/2746	100%	533.87	Pending	360	400
E69/2748	100%	225.76	Pending	360	400
E69/2753	100%	86.59	Pending	360	400
Bentley
E69/2578	25%	438.69	Pending	360	400
E69/2656	25%	61.70	Granted	360	400
E69/2885	25%	49.34	Granted	360	400
Kukerin
E70/2835	100%	99.95	Granted	360	400
E70/2836	100%	100.62	Granted	360	400
E70/2837	100%	99.66	Granted	360	400
E70/2839	100%	71.62	Granted	360	400
E70/2840	100%	99.30	Granted	360	400
Holleton West
E70/2622	100%	49.45	Granted	360	400
E70/2623	100%	29.10	Granted	360	400
Calingiri
E70/2788	100%	202.46	Granted	360	400
E70/2789	100%	102.93	Granted	360	400
E70/3547	100%	168.27	Granted	360	400
E70/3674	100%	16.71	Granted	360	400
E70/3680	100%	29.42	Granted	360	400
E70/3755	100%	14.71	Granted	360	400
E70/3881	100%	58.79	Granted	360	400
P70/1606	100%	37.00	Pending	4400	4900
P70/1607	100%	196.00	Pending	4400	4900
Wongan Hills

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E70/2343	80%	17.68	Granted	360	400
E70/2796	80%	5.89	Granted	360	400
E70/2996	100%	5.89	Granted	360	400
E70/3430	100%	7.45	Granted	360	400
E70/3431	100%	5.89	Granted	360	400
P70/1576	100%	24.00	Granted	4400	4900
P70/1593	80%	116.00	Granted	4400	4900
E70/4327	100%	5.88	Granted	360	400
E70/4328	100%	123.25	Granted	360	400
E70/4329	100%	8.79	Granted	360	400
E70/4330	1000%	14.63	Granted	360	400
Bryah Basin
E51/1344	100%	216.42	Granted	360	400
E51/1290	70%	122.83	Granted	360	400
E51/1369	100%	6.18	Granted	360	400
Perenjori
E70/2857	100%	104.39	Granted	360	400
Wynberg QLD
EPM12409	100%	12.85	Granted	360	400
EPM15627	100%	38.53	Granted	360	400

PROSPECTIVITY ASSESSMENT FACTORS

An assessment of the prospectivity of tenements was carried out. This includes a consideration of

Regional mineralization, old and current workings and the validity of conceptual models.
Local mineralization within the tenements and the application of conceptual models within the tenements.
Identified anomalies warranting follow up within the tenements.
The proportion of structural and lithological settings within the tenements and difficulty encountered by cover rocks and other factors.

KILBURN RATING CRITERIA ‐ SIMPLIFIED

KILBURN RATING CRITERIA ‐ SIMPLIFIED	KILBURN RATING CRITERIA ‐ SIMPLIFIED	KILBURN RATING CRITERIA ‐ SIMPLIFIED	KILBURN RATING CRITERIA ‐ SIMPLIFIED	KILBURN RATING CRITERIA ‐ SIMPLIFIED
Rating	Off Site Factor	On Site Factor	AnomalyFactor	Geological Factor
1	Indications of Prospectivity	Indications of Prospectivity	No targets outlined	Generally favourable geological environment

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2	Resource targets Identified	Targets identified with successful earlydrilling	Exposure of mineralised zones or surface drilling (RAB)	Generally favourable lithology with structures or exposures of mineralised zones
3	Along Strike or adjacent to known mineralization	Grade intercepts on adjacent sections ‐ Exploration Targets Estimated from sound evidence	Significant grade intercepts not yet linked on cross and longsections	Significant mineralised zones exposed in prospective host rocks
4		Inferred Resource identified not yet estimated	Grade intercepts on adjacent sections

Assessments in each category are based on a set scale (see above and Appendix) and are multiplied together to arrive at a “prospectivity index”.

Prospectivity Index = [Off Site Factor][On Site Factor][Anomaly Factor]*[Geology Factor]

Project					Anomaly	Anomaly	Geology	Geology
	Low	High	Low	High	Low	High	Low	High
West Musgrave	1.00	1.10	1.00	1.10	1.25	1.35	1.20	1.30
Bentley	1.00	1.10	1.00	1.10	1.25	1.35	1.20	1.30
Kukerin	1.25	1.35	2.00	2.10	2.25	2.35	1.50	1.60
Holleton West	1.25	1.35	2.00	2.10	2.25	2.35	1.50	1.60
Calingiri	1.25	1.35	2.00	2.10	2.50	2.60	1.50	1.60
Wongan Hills	1.25	1.35	2.00	2.10	2.50	2.60	1.50	1.60
Bryah Basin	1.00	1.10	1.25	1.35	1.50	1.60	1.50	1.60
Perenjori	1.25	1.35	2.00	2.10	2.00	2.10	1.50	1.60
Wynberg QLD	1.25	1.35	2.00	2.10	2.50	2.60	1.75	1.85

TECHNICAL VALUE

An estimate of technical value has been compiled for the tenements based on the base acquisition cost, area, grant status, equity and ratings for prospectivity.

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Technical Value = [Base Value][Prospectivity Index]*

Project	Low	High	Preferred
West Musgrave	423,000	666,000	544,500
Bentley	51,000	79,000	65,000
Kukerin	1,433,000	2,008,000	1,720,500
Holleton West	238,000	335,000	286,500
Calingiri	7,768,000	10,878,000	9,323,000
Wongan Hills	5,953,000	8,334,000	7,143,500
Bryah Basin	312,000	469,000	390,500
Perenjori	282,000	398,000	340,000
Wynberg QLD	203,000	280,000	241,500
	16,663,000	23,447,000	20,055,000

Exploration Tenements – Alternative Valuation Methods:

There is a preference for the use of more than one valuation methodology for the same tenements expressed in Paragraph 65 of Regulatory Guide 111. An alternative method to the Geo‐factor Rating method might consider past expenditure on the tenements and the uplift of value provided by encouraging result indicated by the Prospectivity Enhancement Multiplier (PEM).

PEM Range Criteria 1.3 – 1.5 Exploration has considerably increased the prospectivity (geological mapping, geochemical or geophysical) 1.5 – 2.0 Scout Drilling has identified interesting intersections of mineralization 2.0 – 2.5 Detailed Drilling has defined targets with potential economic interest. 2.5 – 3.0 A resource has been defined at Inferred Resource Status, no feasibility study has been completed

Complete records of past expenditure for the Projects are not available from the previous explorers. The project has been extensively explored in the past with mapping, satellite imagery, geophysics, surface geochemistry and historical drilling forming part of the data base.

It is considered reasonable to suggest that the current value of these work elements would be as shown in the following table. This is considered speculative (but plausible) and the successful results of the work indicate that drilling has defined targets with potential economic interest with the potential to contain medium sized deposits. This would attract Prospectivity Enhancement Multipliers as set out below.

PEM Method

PEM Method
		PEM			Technical Value
Project	Expenditure	Low	High	Low	High	Preferred
West Musgrave	34,591	1.25	1.35	43,239	46,698	44,969
Bentley	18,872	1.25	1.35	23,590	25,477	24,533
Kukerin	3,226,317	1.50	1.60	4,839,476	5,162,107	5,000,791

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Holleton West	597,977	1.25	1.35	747,472	807,270	777,371
Calingiri	3,761,941	1.50	1.60	5,642,912	6,019,106	5,831,009
Wongan Hills	2,108,269	1.50	1.60	3,162,404	3,373,231	3,267,817
Bryah Basin	866,228	1.00	1.10	866,228	952,850	909,539
Perenjori	994,497	1.00	1.10	994,497	1,093,947	1,044,222
Wynberg QLD	2,143,366	2.00	2.10	4,286,732	4,501,069	4,393,900
	13,752,059			20,606,549	21,981,754	21,294,151

MARKET VALUE

In arriving at a fair market value for a particular exploration tenement, I have considered the current market for exploration properties in Australia. It is considered appropriate to apply a significant discount to the technical value of the exploration potential of the tenements.

I have considered the country risk and current market for exploration properties in Australia. An assessment of country risk and an assessment of the business climate have been provided by a specialist firm (source: www.coface.com). The rating for Australia is ‘A1’ for country risk and ‘A1’ for business climate which are considered to be low. This rating will affect the market factor in assessing market value.

The current market value for mineral projects in Australia is considered to be depressed and a market discount factor of 0% to ‐10 % has been applied to the technical value of the other projects.

Market Value = [Technical Value][Adjusted Market Factor]*

Market Value
Project	Low	High	Preferred
West Musgrave	381,000	666,000	523,500
Bentley	45,000	79,000	62,000
Kukerin	1,290,000	2,008,000	1,649,000
Holleton West	214,000	335,000	274,500
Calingiri	6,990,000	10,878,000	8,934,000
Wongan Hills	4,493,000	6,994,000	5,743,500
Bryah Basin	280,000	469,000	374,500
Perenjori	254,000	398,000	326,000
Wynberg QLD	183,000	280,000	231,500
	14,130,000	22,107,000	18,118,500

VALUATION OF THE QUADRIO DATABASE

The southwest Yilgarn Craton (“SWY”) has not received intensive exploration due in large part to the lack of recognised endowment. Two small deposits, Griffins Find and Badgebup, were mined

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historically but the discovery of the 21 million ounce Boddington gold‐copper deposit demonstrated that the region could host major mineral deposits.

The region differs from “typical” Yilgarn Craton granite greenstone terranes in the high grade of metamorphism and the accompanying strong structural deformation. This presents both a fundamental challenge and an opportunity for exploration through the SWY, as much of the geology and controls on mineralisation may have to be re‐learnt.

In acquiring the exploration projects and the regional geochemical database, the Company will hold a strategic package of projects plus an information database that is unique to explorers within the region. The region to be one where the understanding of the geology is still developing, and where there is a paucity or absence of modern mineral exploration. Agricola Mining Consultants Pty Ltd agrees with the Company that the regional geochemical database is underexploited. Some of the identified gold anomalies are similar in size to those associated with large greenstone hosted gold deposits, suggesting that the endowment of the region may prove to be significantly underestimated. The database also provides a unique opportunity to analyse for a wider range of geochemical elements and to explore for deposit types other than gold. The SWY is known to host mineral occurrences other than gold including copper‐lead‐zinc, tin‐tantalum‐lithium and titanium‐ vanadium.

Dominion (now Quadrio) began acquiring the database in 1998. The program followed on from Dominion’s success in discovering the 2 million ounce Challenger deposit in South Australia, in an area entirely covered by recent sediments and where previous exploration was limited. A similar discovery history has since played out at the Tropicana deposit, located on the eastern edge of the Yilgarn Craton in Western Australia, where total ore reserves of 3.3 million ounces of gold have been announced.

Dominion progressively collected samples on a 500 metre spacing along roadsides throughout the SWY. Samples were analysed for a limited suite of elements with a focus on gold. Progressive evaluation resulted in five exploration projects being identified based on opportunistic first pass analysis. Subsequent exploration has demonstrated extensive development of highly metamorphosed greenstone belt rocks that were not previously recognised.

The database has been valued by an independent geologist in 2010 in an internal memorandum to Quadrio. Agricola has reviewed the valuation and considering the number of samples collected and entered into the database and the current cost of acquiring similar quality and quantity of data agrees with the value of $3.0 million .

Stephens, C, 2010, “INDEPENDENT Technical Valuation of the Dominion Database in the Southwest Yilgarn Region of Western Australia, Prepared On Behalf Of Yilgarn Metals Limited”, 24 May 2010

VALUATION OPINION

Wynberg Inferred Resource (Comparative Transactions Method)

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Total Project Technical Value,
A$M
Low	3.53
High	4.88
Preferred	4.07
% of contained value	1.80%
A$ perounce	$29.16

Exploration Properties (Geoscientific Rating Method)

Market Value
Project		Low	High	Preferred
West Musgrave		0.38	0.67	0.52
Bentley		0.05	0.08	0.06
Kukerin		1.29	2.01	1.65
Holleton West		0.21	0.34	0.27
Calingiri		6.99	10.88	8.93
Wongan Hills		4.49	6.99	5.74
Bryah Basin		0.28	0.47	0.37
Perenjori		0.25	0.40	0.33
Wynberg QLD		0.18	0.28	0.23
	0	14.13	22.11	18.12

Quardio Database (Reliance on an Independent Expert)

Estimated Value ‐ $3.0 million

Based on an assessment of the factors involved I estimate the value for exploration projects to be

in the range A$20.6 million to A$30.0 million with a preferred value of A$25.2 million.

This valuation is effective on 17 December 2012.

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APPENDIX 1 MINERAL ASSETS VALUATION METHODOLOGY FOR EXPLORATION TENEMENTS

FAIR MARKET VALUE OF MINERAL ASSETS

Mineral assets include, but are not limited to, mining and exploration tenements held or acquired in connection with the exploration, the development of, and the production from those tenements together with all plant, equipment and infrastructure owned or acquired for the development, extraction and processing of minerals in connection with those tenements.

Mineral assets classification	Mineral assets classification
Exploration areas	Mineralization may or may not have been identified, but where a mineral resource has not been defined.
Advanced exploration areas	Mineral resources have been identified and their extent estimated (possibly incompletely). This includesproperties at the earlystage of assessment.
Pre-development projects	A positive development decision has not been made. This includes properties where a development decision has been negative, properties on care and maintenance and properties held on retention titles.
Development projects	Committed to production, but which, are not yet commissioned or not initially operating at design levels.
Operating Mines	Mineral properties, particularly mines and processing plants, which have been fully commissioned and are in production.

The fair market value of a mineral asset is the estimated amount of money or the cash equivalent or some other consideration for which the mineral asset should change hands between a willing buyer and a willing seller in an arm’s length transaction. Each party is assumed to have acted knowledgeably, prudently and without compulsion.

The value of a mineral asset usually consists of two components,

The underlying or Technical Value which is an assessment of a mineral asset’s future net economic benefit under a set of appropriate assumptions, excluding any premium or discount for market, strategic or other considerations.
The Market Component, which is a premium relating to market, strategic or other considerations which, depending on circumstances at the time, can be either positive, negative or zero.

When the technical and market components of value are combined the resulting value is referred to as the market value. A consideration of country risk should also be taken into account for overseas projects.

The value of mineral assets is time and circumstance specific. The asset value and the market premium (or discount) changes, sometimes significantly, as overall market conditions, commodity prices, exchange rates, political and country risk change.

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REGULATORY AUTHORITIES

Mineral asset valuations are governed by the VALMIN code and ASIC Practice Note 43 in Australia and by the CIMVAL code, NI43‐101 and TSXV Appendix 3G in Canada

THE VALMIN CODE

The four main requirements of the VALMIN Code are

Transparency The report needs to explain how the valuation was done and the assumptions used in calculating the value. The objective is to provide sufficient information that other people can come up with the same answer.

Materiality This means the valuer has to ensure that all important data that could have a significant impact on the valuation is included in the report.

Competence The valuer must be competent at doing valuations. The person needs to be an expert in the particular exploration target being evaluated. Typically the person needs at least 5 years’ experience in that commodity.

Independence . The valuer must act in a professional manner and not favour the buyer or the seller. In other words the price must be set at a “fair market value”. To achieve independence, the valuer must not receive any special benefit from doing the study.

The decisions as to the valuation methodology or methodologies to be used and the content of the Report are solely the responsibility of the Expert or Specialist whose decisions must not be influenced by the Commissioning Entity. The Expert or Specialist must state the reasons for selecting each methodology used in the Report. Methods chosen must be rational and logical and be based upon reasonable grounds.

The Expert or Specialist should make use of valuation methods suitable to the Mineral or Petroleum Assets or Mineral or Petroleum Securities under consideration. Selection of the appropriate valuation method will depend on, inter alia:

(a) the purpose of the Valuation;
(b) the development status of the Mineral or Petroleum Assets;
(c) the amount and reliability of relevant information;
(d) the risks involved in the venture; and
(e) the relevant market conditions for commodities and/or shares.

The Expert or Specialist should choose, discuss and disclose the selected valuation method(s) appropriate to the Mineral or Petroleum Assets or Mineral or Petroleum Securities under consideration, stating the reasons why the particular valuation method(s) have been selected in relation to those factors set out in Paragraph 39 and to the adequacy of available data. It may also

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be desirable to discuss why a particular valuation method has not been used. The disclosure should give a sufficient account of the valuation method(s) used so that another Expert could understand the procedure used and assess the Valuation. Should more than one valuation method be used and different valuations result, the Expert or Specialist should comment on the reason(s) for selecting the Value adopted.

Australian Securities and Investment Commission – Regulatory Guides RG111 and RG112

It is not the ASIC’s role or intention to limit the expert’s exercise of skill and judgment in selecting the most appropriate method or methods of valuation. However, it is appropriate for the expert to consider:

(a) the discounted cash flow method;
(b) the amount which an alternative acquirer might be willing to offer if all the securities in the target company were available for purchase;

The ASIC does not suggest that this list is exhaustive or that the expert should use all of the methods of valuation listed above. The expert should justify the choices of valuation method and give a sufficient account of the method used to enable another expert to replicate the procedure and assess the valuation. It may be appropriate for the expert to compare the figures derived by more than one method and to comment on any differences.

The complex valuations in an expert’s report necessarily contain significant uncertainties. Because of this an expert who gives a single point value will usually be implying spurious accuracy to his or her valuation. An expert should, however, give as narrow a range of values as possible. An expert report becomes meaningless if the range of values is too wide. An expert should indicate the most probable point within the range of values if it is feasible to do so.

The expert should carry out sufficient enquiries or examinations to establish reasonable grounds for believing that any profit forecasts, cash flow forecasts and unaudited profit figures that are used in the expert’s report, and have been prepared on a reasonable basis. If there are material variations in method or presentation the expert should adjust for or comment on them in the report.

The expert should discuss the implications to his or her valuation if:

(a) the current market value of the subject of the report is likely to change because of market volatility (for example, boom or depression); or
(b) the current market value differs materially from that derived by the chosen method.

VALUATION METHODOLOGY FOR EXPLORATION TENEMENTS

Valuation of exploration properties is exceptionally subjective. If an economic resource is subsequently identified then a new valuation will be dramatically higher, or alternatively if expenditure of further exploration dollars is unsuccessful then it is likely to decrease the value of the Tenements. There are a number of generally accepted procedures for establishing the value of exploration properties and, where relevant, the use of more than one such method to enable a

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balanced analysis and a check on the result has been undertaken. The value will always be presented as a range with the preferred value identified. The preferred value need not be the median value, and will be determined by the Independent Expert based on his experience.

The Independent Expert, when determining a value for a mineral asset, must assess a range of technical issues prior to selection of a valuation methodology. Often this will require seeking advice from a specialist in specific areas. The key issues are:

geological setting and style of mineralization
level of knowledge of the geometry of mineralization in the district
mining history, including mining methods
location and accessibility of infrastructure
milling and metallurgical characteristics of the mineralization
results of exploration including geological mapping, costeaning and drilling of interpretation of geochemical anomalies
parameters used to identify geophysical and remote sensing data anomalies
location and style of mineralization identified on adjacent properties
appropriate geological models

In addition to these technical issues the Independent Expert needs to make a judgement about the market demand for the type of property, commodity markets, financial markets and stock markets. The technical value of a property should not be adjusted by a “market factor” unless there is a marked discrepancy between the technical value and the market value. When this is done the factor should be clearly identified.

Where there are identified reserves it is appropriate to use financial analysis methods to estimate the net present value (NPV) of the properties. This technique has deficiencies which include assessment of only a very narrow area of risk, namely the time value of money given the real discount rate, and the underlying assumption that a static approach is applicable to investment decision making, which is clearly not the case.

When assessing value of exploration properties with no identified mineral resources or only inferred resources it is inappropriate to prepare any form of financial analysis to determine the net present value. The valuation of exploration tenements or licences, particularly those without identified resources, is highly subjective and a number of methods are appropriate to give a guide as discussed below.

All of these valuation methods are relatively independent of the location of the mineral property. Consequently the valuer will make allowance for access to infrastructure etc. when choosing a preferred value. It is observed that the Prospectivity Exploration Multiplier (PEM) is heavily based on

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the expenditure, while the Kilburn Geoscience Rating (Kilburn) is more heavily based on opinions of the prospectivity hence tenements can have marked variation in value between the methods. If the Kilburn assessment is high and the PEM is low it indicates effective well focussed exploration, if the Kilburn is low and the PEM high it suggests that the tenement is considered to have lower prospectivity.

PROSPECTIVITY ENHANCEMENT MULTIPLIER (PEM) OR MULTIPLE OF EXPLORATION EXPENDITURE (MEE)

Past expenditure on a tenement and/or future committed exploration expenditure can establish a base value from which the effectiveness of exploration can be assessed. Where exploration has produced documented results a PEM can be derived which takes into account the valuer’s judgment of the prospectivity of the tenement and the value of the database.

PEM Factors Used in this valuation method

PEM Range	Criteria
0.2 – 0.5	Exploration (past and present) has downgraded the tenement prospectivity, no mineralization identified
0.5 – 1.0	Exploration potential has been maintained (rather than enhanced) by past and present activity from regional mapping
1.0 – 1.3	Exploration has maintained, or slightly enhanced (but not downgraded) the prospectivity
1.3 – 1.5	Exploration has considerably increased the prospectivity (geological mapping, geochemical or geophysical)
1.5 – 2.0	Scout Drilling has identified interesting intersections of mineralization
2.0 – 2.5	Detailed Drilling has defined targets with potential economic interest.
2.5 – 3.0	A resource has been defined at Inferred Resource Status, no feasibility study has been completed
3.0 – 4.0	Indicated Resources have been identified that are likely to form the basis of a prefeasibility study
4.0 – 5.0	Indicated and Measured Resources have been identified and economic parameters are available for assessment.

Future committed exploration expenditure is discounted to 60% by some valuer’s to reflect the uncertainty of results and the possible variations in exploration programmes caused by future undefined events. Expenditure estimates for tenements under application are often discounted to 60% of the estimated value by some valuer’s to reflect uncertainty in the future granting of the tenement. The PEM Factors are defined in the table.

GEO‐FACTOR RATING METHOD (KILBURN)

Valuation is based on a calculation in which the geological prospectivity, commodity markets, financial markets, stock markets and mineral property markets are assessed independently. The Kilburn method is essentially a technique to define a value based on geological prospectivity. The method appraises a variety of mineral property characteristics:

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location with respect to any off‐property mineral occurrence of value, or favourable geological, geochemical or geophysical anomalies;
location and nature of any mineralization, geochemical, geological or geophysical anomaly within the property and the tenor of any mineralization known to exist on the property being valued;
number and relative position of anomalies on the property being valued;
geological models appropriate to the property being valued.

The Method systematically assesses and grades these four key technical attributes of a tenement to arrive at a series of multiplier factors. The Basic Acquisition Cost (BAC) is the important input to the Kilburn Method and it is calculated by summing the annual rent, statutory expenditure for a period of 12 months and administration fees.

The current Base Acquisition Cost (BAC) for exploration projects is considered to be the average expenditure for the first year of the licence tenure. Exploration Licences in Western Australia, for example, attract a minimum annual expenditure for the first three years of $300 per square kilometre and annual rent of $43.50. A 10% administration fee is taken into account to imply a BAC of $360 to $400 per square kilometre. A similar approach based on expenditure commitments is taken for Prospecting Licences and Mining Leases

	Licence Type Expend. Rent Admin Total $/km2 BAC ‐ Low BAC ‐ High Exploration Licence (E, $/km2) 300 43.50 34.35 377.85 378 360 400 Prospecting Licences (P, $/Ha) 40.00 2.20 4.22 46.42 4,642 4,400 4,900 Mining Lease (M, $/Ha) 100.00 15.00 11.50 126.50 12,650 12,000 13,300

The multipliers or ratings and the criteria for rating selection across these four factors are summarised in the following table.

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KILBURN GEO-FACTOR RATING CRITERIA - MODIFIED

			Mineralization - On
	Rating	Address - Off Property	Property	Anomalies	Geology
Low	0.5	Very little chance of mineralization, Concept unsuitable to environment	Very little chance of mineralization, Concept unsuitable to environment	Extensive previous exploration with poor results - no encouragement	Generally Unfavourable lithology
Average	1	Indications of Prospectivity, Concept validated	Indications of Prospectivity, Concept validated	Extensive previous exploration with encouraging results - regional targets	Deep alluvium Covered Generally favourable geology
	1.5	RAB Drilling with some scattered results	Exploratory sampling with encouragement, Concept validated	Several early stage targets outlined from geochemistry and geophysics	Shallow alluvium Covered Generally favourable geology (50-60%)
	2	Significant RC drilling leading to advance project status	RAB &/or RC Drilling with encouraging intercepts reported	Several well defined surface targets with some RAB drilling	Exposed favourable lithology (60-70%)
	2.5	Grid drilling with encouraging results on adjacent sections	Diamond Driing after RC with encouragement	Several well defined surface targets with encouraging drilling results	Strongly favourable lithology (70-80%)
High	3	Resource areas identified	Advanced Resource definition drilling - early stage	Several significant subeconomic targets - no indication of volume	Highly prospective geology (90 - 100%)
	3.5	Along strike or adjacent to known mineralization at Pre-Feasibility Stage	Resource areas identified	Subeconomic targets of possible significant volume - early stage drilling
	4	Along strike or adjacent to Resources at Definitive Feasibility Stage	Along strike or adjacent to known mineralization at Pre-Feasibility Stage	Marginal economic targets of significant volume - advanced drilling
	4.5	Along strike or adjacent to Development Stage Project	Along strike or adjacent to Resources at Definitive Feasibility Stage	Marginal economic targets of significant volume - well drilled at Inferred Resource srage
Very High	5	Along strike or adjacent to Operating Mine	Along strike or adjacent to Development Stage Project	Several significant ore grade correlatable intersections with estimated resources

Estimate of project value is carried out on a tenement by tenement basis and uses four calculations as shown below. The value estimate is shown as a range with a preferred value.

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Base Value = [Area][Grant Factor][Equity]*[Base Acquisition Cost]

Prospectivity Index = [Off Site Factor][On Site Factor][Anomaly Factor][Geology Factor] Technical Value = [Base Value][Prospectivity Index]

Market Value = [Technical Value]*[ Market Premium Factor]

VALUATION OF RESOURCES BY COMPARABLE TRANSACTIONS

If a property in the recent past was the subject of an arms‐length transaction, for either cash or shares (i.e. from a company whose principal asset was the mineral property) then this forms the most realistic starting point, provided that the deal is still relevant in today’s market. Complicating matters is the knowledge that properties rarely change hands for cash, except for liquidation purposes, estate sales, or as raw exploration property when sold by an individual prospector, or entrepreneur.

Any underlying royalty or net profits interests or rights held by the original vendor of the claims should be deducted from the resultant property value before determination of the company’s interest. Also, reductions in value should be made where environmental, legal or political sensitivities could seriously retard the development of exploration properties.

It should be noted again that exploration is cyclical, and in periods of low metal prices there is often no market, or a market at very low prices, for ordinary exploration acreage (inventory property) unless it is combined with a significant mineral deposit, or with other incentives.

Truly Comparable Transactions are rare for early stage properties without defined drill targets. This is natural in a recession, as companies focus on brownfields exploration. Inflated prices paid for property in fashionable areas should not be discounted because they reflect the true market value of a property at the transaction date. If however, the market sentiment is not so buoyant then adjustments must be made.

When only a resource or defined body of mineralisation has been outlined and its economic viability has still to be established (i.e. there is no ore reserve) then a Comparable Transactions approach is usually applied, often stated as a percentage of metal value. This can be applied to Mineral Resource estimates and Exploration Targets in accordance with the JORC code with appropriate discounts for risk in the different categories.

	Resource Category Discounts Measured Resource 80% Indicated Resource 70% Inferred Resource 60%

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Exploration Target

50%

The dollar value must take into account a number of aspects of the resources including:

The confidence in the resource estimation (the JORC Category).
The quality of the resource (grade and recovery characteristics)
Possible extensions of the resource in adjacent areas
Exploration potential for other mineralisation within the tenements
Presence and condition of a treatment plant within the project
Proximity of toll treatment facilities, infrastructure, development and capital expenditure aspects

A similar approach can be taken with other metals including uranium or base metals sold on the spot market and benchmarks are similar to gold properties. Value is estimated as a percentage of contained value once appropriate discounts for uncertainty relating to resource categorisation are taken into account. An example of appropriate discounts for Rare Earths, Iron Ore and Base Metals is included below but these must be considered on a case‐by‐case basis.

Operations Factors	Rare Earths	Iron Ore	Base Metals
Recovery	60%	88.00%	100%
Mining	100%	90.00%	100%
Processing	50%	80.00%	90%
Rail	75%	80.00%	90%
Port	90%	70.00%	90%
Capex	50%	70.00%	90%
Marketing	75%	85.00%	90%
Total Operating Discount	7.6%	21.10%	59.0%

The AAC for gold projects lies in the range of 2% to 5%. The data set does not differentiate between resource categories and it is implicit that this has been taken into account with risk related discounts. Information on sales internationally has shown a pattern for ‘Apparent Acquisition Cost’ (AAC) over the last twenty years as shown in the following chart.

Comparative transactions in the gold industry over the last 20 years

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5.00% Average Acquisition Cost
4.00%
3.00%
2.00%
1.00%
0.00%
1990 1995 2000 2005 2010
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For the purpose of valuation the Average Acquisition Cost for the lower, preferred and higher value is selected at the 25[th] , 50[th] and 75[th] percentiles.

		AAC Percentiles
Percentile	10th	25th	50th	75th	90th
Average Acquisition Cost	2.2%	2.5%	3.0%	3.4%	3.9%
VALUATION REFERENCES

AusIMM, (2004), “Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code), prepared by the Joint Ore Reserves Committee (JORC) of the AusIMM, the Australian Institute of Geoscientists (AIG) and the Minerals Council of Australia (MCA)”, (The JORC Code) effective December 2004.

AusIMM. (2005), “Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the VALMIN Code)” 2005 Edition.

AusIMM, (1998), “Valmin 94 – Mineral Valuation Methodologies”.

Barnett, D W and Sorentino, C, 1994. Discounted cash flow methods and the capital asset pricing model, in Proceedings Mineral Valuation Methodologies 1994 (VALMIN ‘94) pp 17‐35 (The Australasian Institute of Mining and Metallurgy: Melbourne).

CANADIAN INSTITUTE OF MINING, METALLURGY AND PETROLEUM, (2000), “CIM Standards on Mineral Resources and Reserves‐Definitions and Guidelines”. Prepared by the CIM Standing Committee On Reserve Definitions. Adopted by CIM Council August 20, 2000.

CIM, (April 2001), “CIM Special Committee on Valuation of Mineral Properties (CIMVAL)” Discussion paper.

CIM, (2003) – “Standards and Guidelines for Valuation of Mineral Properties. Final Version, February 2003” Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVAL).

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Goulevitch J and Eupene G S; 1994; Geoscience rating for valuation of exploration properties – applicability of the Kilburn Method in Australia and examples of its use; Proceedings of VALMIN 94; pages 175 to 189; The Australasian Institute of Mining and Metallurgy, Carlton, Australia.

Kilburn, LC, 1990, “Valuation of Mineral Properties which do not contain Exploitable Reserves” CIM Bulletin, August 1990.

Lawrence, M.J, 2007. Valuation methodology for Iron Ore Mineral Properties – thoughts of an Old Valuer: Iron ore Conference, Perth WA, 20 – 22 August 2007.

Rudenno, (1998), “The Mining Valuation Handbook”.

Rudenno, (2009), “The Mining Valuation Handbook” 3[rd] Edition.

Wellmer, F., 1989, “Economic Evaluations in Exploration”, Springer.

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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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CARAVEL MINERALS LIMITED

REGISTERED OFFICE:

ACN:120 069 089

Unit 1 15 Ogilvie Road MOUNT PLEASANT WA 6153

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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: CVV 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 10.00am (WST) on 13 March 2013 at CWA House, 1176 Hay Street, West Perth WA 6005 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 of Acquisition of Quadrio Resources Limited
Adoption of Caravel Minerals Employee Share Acquisition Plan
Authority to Allocate Plan Shares to a Director - Mr Marcel Hilmer

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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.

If you wish to appoint the Chairperson as your proxy and you do not wish to direct the Chairperson how to vote, please mark "X" in the box.

By marking this box, you acknowledge that the Chairperson may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him/her other than as a proxy holder will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution. The Chairperson of the Meeting intends to vote undirected proxies in favour of the resolution.

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

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Reference Number:

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2887233171

CVV

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 CARAVEL MINERALS LIMITED. 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. Please also refer to Section B of this proxy form and ensure you mark the box in that section if you wish to appoint the Chairperson as your Proxy.

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 CARAVEL MINERALS LIMITED.

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.

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.

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

Proxy forms (and any Power of Attorney under which it is signed) must be received by Security Transfer Registrars Pty Ltd no later than 10.00am (WST) on 11 March 2013, 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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0618233171

AI assistant

CARAVEL MINERALS LIMITED — Proxy Solicitation & Information Statement 2013

64732_rns_2013-02-10_b0040bea-86ac-46c3-ac46-2d25f25a45cb.pdf

CARAVEL MINERALS LIMITED

NOTICE OF GENERAL MEETING

NOTICE OF GENERAL MEETING

AGENDA

1. Resolution 1 – Approval of Acquisition of Quadrio Resources Limited

Voting Exclusion

2. Resolution 2 – Adoption of Caravel Minerals Employee Share

Acquisition Plan

Voting Exclusion

3. Resolution 3 – Authority to Allocate Plan Shares to a Director – Mr Marcel Hilmer

Voting Exclusion

BY ORDER OF THE BOARD

EXPLANATORY MEMORANDUM

1. Introduction

2. Action to be taken by Shareholders

2.1 Proxies

2.2 Voting Prohibition by Proxy Holders

3. Summary of Transaction

3.1 Background

3.2 Overview of the Projects

3.3

Competent Person Signoff

3.4 Commercial Terms

3.5 Effect of the Acquisition on the Company

(a) Capital Structure

(b) Pro Forma Balance Sheet following the Acquisition

3.6 Advantages of the Acquisition

3.7 Disadvantages of the Acquisition

3.8 Risk Factors

3.9

Independent Expert's Report

3.10 Section 611 Corporations Act

4. Resolution 1 – Approval of Acquisition of Quadrio Resources Limited

4.1 General

4.2 Information required by item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74

(c) The identity, associations (with the Company, the acquirer or any of their associates) and qualifications of any person who is intended to become a director if Shareholders agree to the acquisition

(d) The Vendor’s intentions regarding the future of the Company if Shareholders agree to the Acquisition and the allotment of the Consideration Securities in consideration for the Acquisition

(f) When the allotment of Securities to the Vendor as consideration under the Acquisition Agreement is to be made

(g) An explanation of the reasons for the proposed allotment of the Consideration Securities to the Vendor

The interests of the Directors in Resolution 1

(i) Identity of the Directors who approved or voted against the proposal to put Resolution 1 to Shareholders and the Explanatory Memorandum

(j) Any intention of the Vendor to change significantly the financial or dividend policies of the Company

5. Resolution 2 – Adoption of Caravel Minerals Employee Share Acquisition Plan

5.1 Introduction

5.2 Corporations Act

6. Resolution 3 – Authority to Allocate Plan Shares to a Director – Mr Marcel Hilmer

6.1 Background

6.2 Listing Rule 10.14

6.3 Specific information required under Listing Rule 10.15

7. Definitions

Schedule 1 – Risk Factors of the Acquisition

1. Introduction

2.

(a) Private Land

(b) Tenement Title

(c) Aboriginal Land

(d) Future Capital Needs and Additional Funding

(e) Payment Obligations

(f) Significant Shareholder

3. Mineral Industry Risks

(g) Exploration and Development Risks

(h) Operational Risks

(i) Commodity Price Volatility and Foreign Exchange Risk

(j) Dependence on key personnel

(k) Environmental Risks

4. General Risks

(l) Economic Risk

(m) Changes in Government Policies and Legislation

Schedule 2 - Summary of the Caravel Minerals Employee Share Acquisition Plan

Schedule 3 Terms and Conditions of the Unlisted Options

Annexure A – Independent Expert’s Report

1. Introduction

2.

Implications of the Proposals

Caravel

QRL

4.

CARAVEL MINERALS LIMITED Proxy Solicitation & Information Statement 2013