CARNAVALE RESOURCES LIMITED — Capital/Financing Update 2007

Oct 21, 2007

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22 October 2007

The Manager ASX Ltd Level 4, 20 Bridge Street Sydney, NSW 2000

Dear Sir

NON-RENOUNCEABLE ENTITLEMENT OFFER OF OPTIONS

As indicated in the Initial Public Offering Prospectus dated 15 January 2007, Carnavale Resources Limited is pleased to announce that the Company will undertake a non-renounceable entitlement offer of options on the basis of one option for every one share held at an issue price of one cent per option. The key dates are summarised below and an Appendix 3B is attached.

Lodgement of Prospectus Shares commence trading ex Entitlement basis Record Date for determining Entitlements Prospectus despatch date and Opening Date Closing Date of the Offer Issue of Options & despatch of holding statements

29 October 2007 31 October 2007 7 November 2007 12 November 2007 27 November 2007 5 December 2007

Yours faithfully

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Paul Jurman Company Secretary

CARNAVALE RESOURCES LIMITED

ABN 49 119 450 243 30 Ledgar Road, Balcatta Western Australia 6021 T: +61 8 9240 6876 F: +61 8 9240 2406 E: admin @carnavaleresources.com W: www.carnavaleresources.com

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

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

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public. Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

CARNAVALE RESOURCES LIMITED

ABN

49 119 450 243

We (the entity) give ASX the following information.

Part 1 - All issues

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

1 +Class of +securities issued or to be Options. issued 2 Number of[+] securities issued or to Approximately 51,650,110. be issued (if known) or maximum number which may be issued 3 Principal terms of the[+] securities Each option is to subscribe for one ordinary (eg, if options, exercise price and share at an issue price of 20 cents, with an expiry date; if partly paid + expiry date of 30 June 2009. securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

• See chapter 19 for defined terms.

24/10/2005

Appendix 3B

Appendix 3B New issue announcement

4 Do the[+] securities rank equally in all No. respects from the date of allotment with an existing[+] class of quoted +securities? If the additional securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration One (1) cent per option. 6 Purpose of the issue Loyalty issue to shareholders and to provide (If issued as consideration for the working capital. acquisition of assets, clearly identify those assets) 7 Dates of entering[+] securities into To be advised. uncertificated holdings or despatch of certificates Number +Class 8 Number and +class of all 29,950,110* Ordinary fully paid +securities quoted on ASX shares. ( including the securities in clause 2 if applicable) 51,650,110 Options exercisable at 20 cents on or before 30 June 2009.

• Includes 900,000 shares that are subject to voluntary escrow. For full details refer to Attachment 1.

• See chapter 19 for defined terms.

1/1/2003

Appendix 3B

Number +Class 9 Number and +class of all 21,700,000 Ordinary fully paid +securities not quoted on ASX shares. ( including the securities in clause 2 if applicable) 10 Dividend policy (in the case of a N/A trust, distribution policy) on the increased capital (interests)

Part 2 - Bonus issue or pro rata issue

11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered 14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has+security holders who will not be sent new issue documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations	No
	Non-renounceable
	One option for every share held
	Ordinary shares
	Wednesday, 7 November 2007
	N/A
	Fractional entitlements will be rounded down.
	Offer document will only be sent to shareholders with addresses in Australia and New Zealand. Shareholders with an address outside these countries will not be eligible to participate in the offer.
	Tuesday, 27 November 2007

• See chapter 19 for defined terms.

1/1/2003

Appendix 3B

20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of+security holders 25 If the issue is contingent on +security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and prospectus or Product Disclosure Statement will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable) 29 Date rights trading will end (if applicable) 30 How do+security holders sell their entitlements_in full_through a broker? 31 How do+security holders sell_part_ of their entitlements through a broker and accept for the balance? 32 How do+security holders dispose of their entitlements (except by sale through a broker)? 33 +Despatch date	N/A – offer is not underwritten.
	N/A
	N/A
	N/A
	N/A
	N/A
	Monday, 12 November 2007.
	N/A
	N/A
	N/A
	N/A
	N/A
	N/A
	Wednesday, 5 December 2007.

• See chapter 19 for defined terms.

1/1/2003

Appendix 3B

Part 3 - Quotation of securities

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

34 Type of securities ( tick one ) (a)[Securities described in Part 1 ]

• (b) All other securities

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

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

TO BE PROVIDED

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories

1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

TO BE PROVIDED

37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

38 Number of securities for which +quotation is sought 39 Class of +securities for which quotation is sought

• See chapter 19 for defined terms.

1/1/2003

Appendix 3B

• 40 Do the[+] securities rank equally in all respects from the date of allotment with an existing[+] class of quoted +securities? If the additional securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

• 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period

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

Number +Class 42 Number and[+] class of all[+] securities quoted on ASX ( including the securities in clause 38)

• See chapter 19 for defined terms.

1/1/2003

Appendix 3B

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the +securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted[+] quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

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

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the[+] securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before[+] quotation of the[+] securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

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Sign here: ............................................................ Date: 22 October 2007 (Company secretary) Print name: Paul Jurman

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• See chapter 19 for defined terms.

1/1/2003

Appendix 3B

Attachment 1

Shares Voluntary Escrow Completion Date 500,000 21/11/2007 500,000 Shares Voluntary Escrow Completion Date 200,000 18/11/2007 200,000 18/12/2007 400,000

• See chapter 19 for defined terms.

1/1/2003

Appendix 3B