CARNAVALE RESOURCES LIMITED

ABN 49 119 450 243

PROSPECTUS

For a pro-rata non-renounceable entitlement offer of 1 Option for every 1 Share held by Shareholders on the Record Date at an issue price of 0.5 cents per Option, to raise up to approximately $368,000

The Offer is not underwritten.

The Company will seek quotation of the Options on ASX within 7 days of the date of this Prospectus.

This document is important and requires your immediate attention. It should be read in its entirety before deciding to participate. Due to the nature of the Company’s activities, the Options offered by this Prospectus should be considered speculative. Investors may lose some or all of their investment. Accordingly investors should consult their professional advisers before making an application for Options offered by this Prospectus.

INDEX

Section		Page
1	Corporate Directory and Brief Instructions	2
2	Details of the Offer	3
3	Capital Structure and Effect of the Issue	6
4	Risk Factors	7
5	Additional Information	10
6	Glossary	15

TIMETABLE OF IMPORTANT DATES


Event	Date*
Lodge Prospectus with ASIC	Thursday28 January2010
Shares quoted ex-rights	Tuesday2 February2010
Record date to determine entitlements	Monday8 February2010
Opening date and dispatch of prospectus	Thursday11 February2010
Closing date	Friday26 February2010
Allotment of Options and dispatch of holding statements	Monday 8 March 2010
*These dates are indicative only. The Company reserves the right to vary the Opening Date and the Closing Date, subject to compliance with the ASX ListingRules. This mayimpact on subsequent dates.

*These dates are indicative only. The Company reserves the right to vary the Opening Date and the Closing Date, subject to compliance with the ASX Listing Rules. This may impact on subsequent dates.

IMPORTANT NOTICE

Shareholders should read this Prospectus in its entirety and, if in doubt, should consult their professional advisers before deciding whether to accept their Entitlements.

This Prospectus is dated 28 January 2010. A copy of this Prospectus was lodged with ASIC on 28 January 2010. ASIC and ASX take no responsibility for the contents of this Prospectus. No applications for Options will be accepted nor will Options be allotted or issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Application will be made within seven days after the date of this Prospectus for admission of the securities offered by this Prospectus to quotation on ASX.

In preparing this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act 2001 and that certain matters may reasonably be expected to be known to investors and professional advisers who investors may consult.

No person is authorised to give any information or to make any representation in connection with the Issue described in this Prospectus. Any information or representation which is not contained in this Prospectus or disclosed by the Company pursuant to its continuous disclosure obligations may not be relied upon as having been authorised by the Company in connection with the Issue or this Prospectus.

This Prospectus is a “transaction-specific” prospectus issued under section 713 of the Corporations Act. Section 713 allows the issue of a more concise prospectus in relation to an offer of continuously quoted securities. The Prospectus is therefore intended to be read in conjunction with the publicly available information in relation to the Company, which has been notified to the ASX; it does not include all information that would be included in a prospectus for an initial offering of securities in a company that is not already listed on the ASX. Accordingly, prospective investors should also have regard to other publicly available information in relation to the Company before deciding whether to apply for securities under this Prospectus.

The Offer contained in this Prospectus is only available for acceptance by Shareholders with a registered address as at the Record Date in Australia or New Zealand. This Prospectus has not been, nor will it be, lodged, filed or registered with any regulatory authority under the securities laws of any other country. The securities the subject of this Prospectus have not been, nor will they be, approved by or registered with any regulatory authority of any other country. This Prospectus does not constitute an offer or issue in any place in which, or to any person to whom, it would not be lawful to make such an offer or issue.

A number of terms and abbreviations used in this Prospectus have the defined meanings set out in Section 6.

SECTION 1 CORPORATE DIRECTORY

Board of Directors

Share Registry

Adam Sierakowski Non-Executive Chairman Ron Gajewski Executive Director - Australia Klaus Eckhof Non-Executive Director Peter Christie Non-Executive Director

Security Transfer Registrars Pty Ltd PO Box 535 Applecross Western Australia 6953 Telephone: +61 8 9315 2333

Company Secretary

Stock Exchange Listing

Paul Jurman

The Company’s shares and options are listed on the Australian Securities Exchange.

Registered Office

ASX Codes

30 Ledgar Road Balcatta, Western Australia 6021

CAV - ordinary shares CAVO - Options, the subject of this Prospectus

Telephone: +61 8 9240 6876 Facsimile: +61 8 9240 2406 Website: www.carnavaleresources.com

BRIEF INSTRUCTIONS

What You May Do

The number of Options to which you are entitled is shown on the accompanying Entitlement and Acceptance Form. You may:

Accept your Entitlement in full or part; or
Allow the whole of your Entitlement to lapse.

If You Wish To Take Up All or Part of Your Entitlement

Complete the accompanying Entitlement and Acceptance Form in accordance with the instructions set out in the form. Forward your completed Entitlement and Acceptance Form, together with your cheque for the amount shown on the form or for such lesser amount as you wish to apply for, so as to reach the Company’s share registry no later than 5.00pm AWST on 26 February 2010.

Entitlements Not Taken Up

If you decide not to accept your Entitlement, you do not need to take any action. The Options not accepted will form part of the Shortfall Options and the allocation of any Shortfall Options will be made at the sole discretion of the Directors.

SECTION 2 DETAILS OF THE OFFER

2.1 The Offer

This Prospectus is for a pro-rata non-renounceable offer and issue of 73,664,116 Options to Eligible Shareholders on the basis of 1 Option for every 1 Share held on the Record Date. Each Option allows the holder to subscribe for 1 Share upon payment of the exercise price of 20 cents no later than 5:00 pm AWST on 28 February 2013.

2.2 Issue Period

The opening date for acceptances of Entitlements is 11 February 2010. The closing date for acceptances is 5.00pm AWST on 26 February 2010. The Directors reserve the right to vary the Opening Date and Closing Date, subject to compliance with the ASX Listing Rules.

2.3 Purpose of the Issue

The purpose of the Issue is to reward the Company’s existing Shareholders for their continued support of the Company by enabling them to acquire Options to subscribe for additional Shares in the Company at an exercise price of 20 cents each and an expiry date of 28 February 2013.

The funds to be raised from the issue of Options are relatively small and assuming all Entitlements are taken up, the Issue will raise approximately $368,000 .

Proceeds raised (after costs of the Issue which are estimated to be $33,000) from the Offer will be applied in identifying, evaluating and acquiring advanced mineral projects and / or oil and gas opportunities and for general working capital. There is no minimum subscription under the Offer.

2.4 Entitlements and Acceptance

The number of Options to which you are entitled is shown in the accompanying Entitlement and Acceptance Form.

Shareholders who wish to accept all or part of their Entitlement may only do so on the personalised Entitlement and Acceptance Form, which is enclosed with their paper copy of this Prospectus.

If you decide to accept all or part of your Entitlement, you must:

i) complete the enclosed Entitlement and Acceptance Form;
ii) pay the relevant amount (equal to $0.005 per Option accepted) by cheque drawn on and payable at any Australian bank in Australian currency. Your cheque should be crossed "Not Negotiable" and be made payable to "Carnavale Resources Limited". You also have the choice of making payment by BPay - please refer to the Entitlement and Acceptance Form for details; and
iii) send the completed Entitlement and Acceptance Form with your cheque to Security Transfer Registrars Pty Ltd. The completed Entitlement and Acceptance Form and your cheque must be received by Security Transfer Registrars Pty Ltd by no later than 5.00pm AWST on 26 February 2010. Cash will not be accepted and receipts will not be issued.

If you decide not to accept your Entitlement, you need not do anything. If you decide not to accept all or any part of your Entitlement, the Options not accepted will be dealt with in accordance with Section 2.6.

If you have any queries regarding your Entitlement, please contact Security Transfer Registrars Pty Ltd by telephone on +61 8 9315 2333 or your stockbroker or professional advisor.

SECTION 2 DETAILS OF THE OFFER

2.5 Offer not Underwritten

The Offer is not underwritten.

2.6 Shortfall

Any Options not taken up by Eligible Shareholders will become Shortfall Options. Shortfall Options will be dealt with by the Directors in their sole discretion (pursuant to Listing Rule 7.2, exception 3), within three months of the close of the Issue as permitted under the Listing Rules. The offer of Shortfall Options is a separate offer made pursuant to this Prospectus. Related parties will not be permitted to subscribe for Shortfall Options.

2.7 Overseas Residents

The Offer constituted by this Prospectus is made to residents of Australia and New Zealand only.

The Company is of the view that it is unreasonable to make an offer under this Prospectus to Eligible Shareholders outside of Australia and New Zealand having regard to:

a) the number of Eligible Shareholders with registered addresses in countries outside of Australia and New Zealand;
b) the number and value of the securities to be offered to Eligible Shareholders outside of Australia and New Zealand; and
c) the cost of complying with the legal requirements and requirements of regulatory authorities in the relevant overseas jurisdictions.

Accordingly, the Company is not required to make and does not make any offers under the Prospectus to Shareholders outside of Australia and New Zealand.

2.8 Allotment

The Directors will proceed to allot the Options as soon as possible after the Closing Date and after ASX approval for Official Quotation of the Options is received. In accordance with the Corporations Act 2001, all application monies shall, before the allotment and issue of Options pursuant to this Prospectus, be held by the Company in trust in a bank account established solely for that purpose.

Statement of Optionholdings will be dispatched as required by ASX.

2.9 ASX Listing

Within 7 days after the date of this Prospectus, application will be made to ASX for the Options offered by this Prospectus to be admitted to quotation on ASX. If an application for quotation of the Options is not made within 7 days after the date of this Prospectus, or ASX does not admit the Options to quotation within three months after the date of this Prospectus (or such longer period as may be permitted by the ASIC), no Options will be allotted and issued and all acceptance and application moneys will be refunded without interest (in accordance with section 724 of the Corporations Act) as soon as practicable.

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

2.10 Rights and Liabilities Attaching to Options

All Options will be allotted and issued on the terms and conditions set out in Section 5.2 of this Prospectus.

SECTION 2 DETAILS OF THE OFFER

2.11 Share Price Information

In the three months before lodgement of this Prospectus, the market price of Shares traded on ASX ranged from $0.12 (lowest) on 6 November 2009 to $0.255 (highest) on 27 January 2010. The last sale price before lodgement of this Prospectus was $0.25 on 27 January 2010.

2.12 Issue Expenses

The expenses of the Issue are estimated to be:

he expenses of the Issue are estimated to be:
ASIC lodgement fees ASX quotation fees Printing, postage and share registry costs Prospectus preparation and processing costs TOTAL	$ 2,010 20,501 4,900 5,589
	33,000

2.13 Taxation implications

The Directors do not consider it appropriate to give Shareholders advice regarding the taxation consequences of subscribing for Options. The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Shareholders.

Shareholders should consult their professional tax adviser in connection with subscribing for Options under this Prospectus.

2.14 Risk Factors

Investors should be aware that subscribing for Options the subject of this Prospectus involves a number of risks. The risk factors set out in section 4 of the Prospectus and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Options and underlying Shares.

2.15 CHESS and Issuer Sponsorship

The Company operates an electronic CHESS sub-register and an electronic issued sponsored sub-register. These two sub-registers make up the Company’s register of shares. The Company will not issue certificates to Optionholders. Rather, holding statements (similar to bank statements) will be dispatched to Optionholders as soon as practicable after allotment. Holding Statements will be sent either by CHESS (for Optionholders who elect to hold Options on the CHESS sub-register) or by the Company’s share registry (for Optionholders who elect to hold their Options on the Issuer sponsored sub-register). The statements will set out the number of Options allotted under the Prospectus and provide details of an Optionholders’ Holder Identification Number (for Optionholders who elect to hold Options on the CHESS sub-register) or Reference Number (for Optionholders who elect to hold their Options on the Issuer sponsored sub-register). Updated holding statement will also be sent to each Optionholder following the month in which the balance of their Optionholding changes, and also as required by the Listing Rules or the Corporations Act .

SECTION 3 CAPITAL STRUCTURE AND EFFECTS OF ISSUE

3.1 Capital Structure

The capital structure of the Company following the Offer (assuming full subscription) pursuant to this Prospectus is set out below.

	Ordinary shares	Options exercisable at 20 cents on or before 28/02/2013
On issue as at the date ofthisProspectus	73,664,116	-
Options now offered for subscription	-	73,664,116
*Total securities after completion of Issue*	*73,664,116*	*73,664,116*

3.2 Effect of the Issue

The principal effects of the Issue (assuming full subscription) are:

the Company’s cash funds and Shareholders’ equity will increase by approximately $368,000 less expenses of the Issue, which are estimated to be approximately $33,000; and
the total number of securities on issue will increase as stated in the table in section 3.1 of the Prospectus.

3.3 Financial Performance

The Issue will have no immediate effect on the Company’s financial performance, although the investment of the proceeds of the Issue may eventually have an effect on the financial performance of the Company depending on the success of that investment. The success of that investment is not something which is presently capable of being quantified.

SECTION 4 RISK FACTORS

The Options offered under this Prospectus should be considered speculative due to the present stage of development of the Company. The Directors strongly recommend investors examine the contents of this Prospectus and consult their professional advisers before deciding whether to apply for Options pursuant to this Prospectus. In addition, investors should be aware there are risks associated with an investment in the Company. There are certain general risks and certain specific risks which relate directly to the Company’s business and are largely beyond the control of the Company and the Directors because of the nature of the business of the Company.

This Prospectus carries no guarantee with respect to the return of capital or price at which the Options or Shares (resulting from the exercise of the Options) will trade.

The following summary, which is not exhaustive, represents some of the major risk factors that may affect the future operating and financial performance of the Company and the value of an investment in it, which potential investors need to be aware.

4.1 Mining and Exploration Risks

The primary business of the Company is exploration for, and commercial development of, mineral ore bodies, which is subject to the risks inherent in these activities. Its operations are still in the exploratory phase. The current and future operations of the Company may be affected by a range of factors, including:

geological conditions
limitations on activities due to seasonal weather patterns
alterations to joint venture programs and budgets
unanticipated operational and technical difficulties encountered in exploration activities
mechanical failure of operating plant and equipment
adverse weather conditions, industrial and environmental accidents, industrial disputes and other force majeure events
unavailability of drilling and other equipment and skilled personnel
unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment and labour
prevention of access by reason of political or civil unrest, outbreak of hostilities, inability to obtain regulatory or landowner consents or approvals, or native title issues
risks of default or non-performance by third parties providing essential services.

No assurance can be given that exploration will be successful or that a commercial mining operation will eventuate.

The ultimate success and financial viability of the Company depends on the discovery and delineation of economically recoverable ore reserves, design and construction of efficient mining and processing facilities, and competent operational and managerial performance. There is no assurance that exploration and development of the mineral interests held by the Company (which are all at an exploration stage), or any other projects that may be acquired by the Company in the future, will result in the discovery of an economic deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be profitably exploited.

Development of a commercial mining operation is also dependent on the Company's ability to obtain necessary titles and governmental and other regulatory approvals.

SECTION 4 RISK FACTORS

4.2 Changes in Government Policy

Adverse changes in government policies or legislation in Brazil and other jurisdictions in which the Company may operate from time to time affecting foreign ownership of mineral interests, taxation, profit repatriation, royalties, land access, labour relations, and mining and exploration activities may affect the operations of the Company.

4.3 Metal Market Conditions

The Company's ability to benefit from any future mining operations will depend on market factors, some of which may be beyond its control. The world market for gold and other minerals that the Company may explore for is subject to many variables and may fluctuate markedly.

4.4 General Economic Conditions

Factors such as inflation, currency fluctuations, interest rates, supply and demand, industrial disruption, government policy and legislation, have an impact on operating costs, commodity prices, and the parameters in which the Company operates. Factors that may be beyond the control of the Company include:

general economic conditions in Australia and the countries in which the Company operates and, in particular, inflation rates, interest rates, exchange rates, commodity supply and demand factors;
financial failure or default by a participant in any of the joint ventures or other contractual relationship to which the Company is, or may become, a party;
insolvency or other managerial failure by any of the contractors used by the Company in its activities; and
industrial and landholder disputes.

These as well as other conditions can affect the Company’s future revenues and profitability and the price of its securities.

4.5 Environmental Risks

The Company's projects are or may be subject to various laws and regulations regarding environmental matters and the discharge of hazardous waste and materials. The Company may be required to comply from time to time with environmental management issues that arise from factors beyond its control.

4.6 Tenement Title Risks

Mineral licences are granted subject to various conditions including, but not limited to, work and expenditure conditions. Failure to comply with these conditions may expose the licences to forfeiture.

All of the licences in which the Company has an interest will be subject to application for renewal from time to time. The renewal of the term of each licence is subject to the applicable legislation in the relevant jurisdiction. If a licence is not renewed for any reason, the Company may suffer significant damage through loss of the opportunity to develop and discover any mineral resources on that licence.

SECTION 4 RISK FACTORS

4.7 Capital Requirement Risk

Investors should be aware that the Company will have no operating revenue in the foreseeable future and must continue to fund its exploration programs through equity capital. The continued viability of the Company is therefore dependent upon:

the success of this Issue;
the success of the Company's efforts to attract joint venture partners who will undertake or share all or part of the exploration expenditure; and
the successful raising of funds in the future.

4.8 Share Market Risk

Applicants should be aware that there are risks associated with any stock market investment. It is important to recognise that share prices may fall as well as rise, and the Company’s shares may trade below or above the issue price. Share prices for exploration companies are generally subject to wide fluctuations, which may be unrelated to the operating performance of the relevant company. Such fluctuations may adversely affect the market price of securities. The Company’s continued listing on the ASX (and therefore the availability of a ready market for the Shares) depends on the Company’s continued compliance with the ASX Listing Rules.

4.9 Sovereign Risk

Civil and political unrest and an outbreak of hostilities are significant risks in Brazil that could affect the Company’s access to its project areas and subsequent exploration and development.

4.10 Speculative Nature of Investment

The above list of risk factors is not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Options offered under this Prospectus.

SECTION 5

ADDITIONAL INFORMATION

5.1 Continuous Disclosure and Documents Available for Inspection

This Prospectus is issued pursuant to section 713 of the Corporations Act 2001 using the special prospectus content rules for continuously quoted securities.

The Company is a disclosing entity within the meaning of the Corporations Act 2001 and is subject to regular reporting and disclosure obligations, which require it to disclose to ASX any information of which it becomes aware concerning the Company which a reasonable person would expect to have a material effect on the price or value of the securities of the Company.

Therefore the Company is only required to provide in this Prospectus information on the:

(a) effect of the issue of the Options on the Company; and
(b) the rights attaching to the Options (and the Shares over which they have rights of conversion) being offered by the Prospectus.

There is no obligation to include general information in relation to the assets and liabilities, financial position and performance, profits and losses, and prospects of the Company. Information, which is already in the public domain, has not been reported in this Prospectus, other than that which is necessary to make this Prospectus complete.

The Company believes that it has fully complied with the general and specific requirements as set forth by the ASIC and ASX in relation to continuous disclosure, which includes notifying ASX of any information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities.

Copies of documents lodged with the ASIC in relation to the Company may be obtained from, or inspected at, an office of the ASIC. The Company will provide, free of charge, a copy of any of the following documents to any person who requests a copy prior to the Closing Date:

(a) the financial report for the year ended 30 June 2009;
(b) any continuous disclosure notices given by the Company during the period starting after lodgement with the ASIC of the financial report referred to in paragraph (a) and ending before lodgement of this Prospectus with ASIC.

The documents referred to in paragraph (b) are the following:

Date Description of Announcement

09/10/2009 Annual General Meeting 20/10/2009 Change of Directors Interest Notice 22/10/2009 Notice re Annual Report to shareholders 22/10/2009 Notice of Annual General Meeting / Proxy Form 27/10/2009 Change of Directors Interest Notice 30/10/2009 Quarterly Activities and Cash Flow Report 18/11/2009 Update on Investment in KILO Goldmines Ltd 27/11/2009 AGM Results and Board Changes 27/11/2009 Final Director`s Interest Notice 08/01/2010 Trading Halt 08/01/2010 Request For Trading Halt 12/01/2010 Placement and Upcoming Rights issue of Options 21/01/2010 Completion of Placement and Appendix 3B

SECTION 5 ADDITIONAL INFORMATION

As this Prospectus is issued under the special prospectus content rules set out in section 713 of the Corporations Act 2001, it contains details specific to the Issue. If you require any further information in relation to the Company, the Directors recommend that you take advantage of the ability to inspect or obtain copies of the documents referred to above. All requests for copies of the above documents should be addressed to Company Secretary, Carnavale Resources Limited at PO Box 717, Balcatta, Western Australia or by facsimile to +61 8 9240 2406.

None of the information referred to in this section 5.1 is incorporated by reference into this Prospectus or is issued with this Prospectus.

5.2 Terms and Conditions of Options

The terms and conditions of the Options are as follows:

a) Each Option entitles the holder to subscribe for and be allotted one Share. The exercise price of each Option is $0.20.
b) The Options are exercisable at any time prior to 5.00pm AWST on 28 February 2013 ("the Expiry Date") by notice in writing to the Directors accompanied by payment of the exercise price as detailed in (a) above.
c) The Options are transferable and an application will be made to the ASX for Official Quotation of the Options.
d) Shares allotted and issued pursuant to the exercise of an Option will be allotted and issued not more than 10 business days after receipt of a properly executed notice of exercise of the Option and payment of the requisite application moneys.
e) All Shares issued upon exercise of the Options will rank pari passu in all respects with the Company’s fully paid ordinary shares. The Company will apply for Official Quotation by ASX of all Shares issued upon exercise of the Options within three business days after the date of allotment of those Shares.
f) There are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered or made to shareholders during the currency of the Options. However, if required by ASX Listing Rules, the Company will send a notice to each optionholder before the record date for any proposed issue of capital on a pro-rata entitlement offer basis. This will give optionholders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.
g) There are no rights to a change in exercise price, or in the number of Shares over which the Options can be exercised, in the event of a bonus issue by the Company prior to the exercise of any Options.
h) In the event of any reorganisation of the issued capital of the Company on or prior to the Expiry Date, the rights of an optionholder will be changed to the extent necessary to comply with the applicable ASX Listing Rules at the time of the reorganisation.
i) The Company will, at least 20 business days before the Expiry Date, send notices to the optionholders stating the name of the optionholder, the number of Options held and the number of securities to be issued on exercise of the Options, the exercise price, the due date for payment and the consequences of non-payment.

5.3 Rights and Liabilities Attaching to Shares

Full details of the rights and liabilities attaching to Shares are set out in the Company’s current constitution and, in certain circumstances, are regulated by the Corporations Act 2001, the ASX Listing Rules and the general law. A copy of the Company’s constitution is available for inspection at the offices of the Company and the Company will supply a copy (free of charge), upon request, to any investor. The following is a broad summary of the rights attaching to all Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders.

SECTION 5

ADDITIONAL INFORMATION

All Shares issued upon exercise of the Options issued under this Prospectus will from the time they are issued, rank equally with all of the Company’s existing Shares.

General Meetings

Each shareholder is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, financial reports and other documents required to be furnished to shareholders under the Constitution or the Corporations Act and the Listing Rules.

Voting Rights

Subject to any special rights or restrictions for the time being attached to any class or classes of Shares in the Company (at present there are none), at a general meeting every shareholder present in person or by proxy, attorney or representative will have on a show of hands one vote and, on a poll, one vote for each Share held.

Dividend Rights

Subject to the rights of holders of any Shares created or raised under any special arrangement as to dividends (at present there are none), any dividend as declared shall be payable on all Shares in proportion to the amount of capital for the time being paid up or credited as paid up in respect of such Shares.

Rights on Winding Up

Subject to the rights of holders of Shares with special rights in a winding-up (at present there are none), on a winding-up of the Company all monies and property that are to be legally distributed among holders of Shares will be distributed in proportion to the amounts paid up (or which at the commencement of the winding-up ought to have been paid up) on those Shares compared with the total paid-up capital of the Company.

Transfer of Shares

Subject to the Constitution, the Corporations Act, the Listing Rules and any other applicable laws of Australia, and subject to any restrictions applicable to Shares which have been designated by the ASX as "restricted securities", Shares are freely transferable.

Listing Rules

Despite anything in the constitution of the Company, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the constitution to contain a provision or not to contain a provision the constitution is deemed to contain that provision or not to contain that provision (as the case may be). If a provision of the constitution is or becomes inconsistent with the Listing Rules, the constitution is deemed not to contain that provision to the extent of the inconsistency.

5.4 Litigation

The Company is not involved in any legal proceedings.

SECTION 5 ADDITIONAL INFORMATION

5.5 Directors’ Interests

5.5.1 Directors’ Holdings

The interests of the Directors in securities of the Company as at the date of this Prospectus are as follows:

Name of Director	Ordinary Shares
Mr A Sierakowski	750,000
Mr R Gajewski	3,665,344
Mr K Eckhof	-
Mr P Christie	522,001

5.5.2 Directors’ Remuneration

Directors are entitled to Directors’ fees and other emoluments, which are disclosed in the Company’s annual financial reports.

Mr Sierakowski receives non-executive director’s fees and allowances of $35,000 per annum. Mr Gajewski receives executive director’s fees and allowances of $264,000 per annum. Mr Eckhof and Mr Christie receive non-executive director’s fees of $24,000 per annum and $25,000 per annum respectively.

Corporate Consultants Pty Limited, an entity of which Mr Gajewski is a director and a shareholder, provides administration, accounting, company secretarial services and office space to the Company and has assisted with the preparation of this Prospectus and has been paid (or is owing) $3,000 for assistance with this Prospectus. Fees paid or payable to Corporate Consultants Pty Limited for the two year period ending on the date of this Prospectus are approximately $141,716.

Price Sierakowski Pty Limited, an entity of which Mr Sierakowski is a director and a shareholder, provides legal services and advice to the Company. Fees paid or payable to Price Sierakowski Pty Limited for the two year period ending on the date of this Prospectus are approximately $52,903.

Trident Capital Pty Limited, an entity of which Mr Sierakowski is a director and a shareholder, provided corporate advisory services to the Company. Fees paid or payable to Price Sierakowski Pty Limited for the two year period ending on the date of this Prospectus are approximately $20,000.

Except as disclosed in this Prospectus, no Director or proposed Directors (whether individually or in consequence of the Directors' association with any Company or firm or in any material contract entered into by the Company) has now or has had in the two year period ending on the date of this Prospectus, any interest in:

the formation or promotion of the Company; or
property acquired or to be acquired by the Company in connection with:
its formation or promotion; or
o this Offer of securities; or
this Offer of securities.

Except as disclosed in this Prospectus, no amount of any kind (whether in cash or shares or otherwise) has been paid or agreed to be paid to any Director or proposed Director or to any Company or firm with which a Director is associated to induce him to become, or to qualify as, a Director, or otherwise for services rendered by him or any Company or firm with which the Director is associated in connection with the promotion or formation of the Company or this Offer of securities.

SECTION 5

ADDITIONAL INFORMATION

5.6 Interests of named persons

Other than as set out below or elsewhere in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, promoter of the Company, underwriter or financial services licensee named in the Prospectus as a financial services licensee involved in the Issue has, or had within 2 years before lodgement of this Prospectus at ASIC, any interest in:

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

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons for services rendered by him in connection with the formation or promotion of the Company.

5.7 Consents

Security Transfer Registrars Pty Ltd has given its consent to be named in the Prospectus as the share registry for Carnavale Resources Limited in the form and context in which it is named. Security Transfer Registrars Pty Ltd:

(i) do not make this Issue;
(ii) have not authorised or caused the issue of this Prospectus; and
(iii) do not make, or purport to make, any statement in this Prospectus,

(nor is any statement based upon a statement made by them, other than the respective references to their names) and to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than the respective references to their names.

5.8 Directors’ Consent

This Prospectus is dated 28 January 2010 and is issued by Carnavale Resources Limited.

In accordance with section 720 of the Corporations Act 2001, each Director has consented to the lodgment of this Prospectus with ASIC and has not withdrawn that consent.

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Signed for and on behalf of Carnavale Resources Limited by Adam Sierakowski Chairman

SECTION 6 GLOSSARY

The following terms and abbreviations used in this Prospectus have the following meanings:

Term Meaning Application an application made on an Entitlement and Acceptance Form attached to this Prospectus. AWST Australian Western Standard Time. ASIC Australian Securities and Investments Commission. ASX ASX Limited (ACN 008 624 691). ASX Listing Rules or official Listing Rules of ASX. Listing Rules Closing Date the last day for the receipt of completed Entitlement and Acceptance Forms for the Options offered by this Prospectus, being 5.00pm (AWST) on 26 February 2010 unless varied by the Company. Company Carnavale Resources Limited ABN 49 119 450 243 Director(s) the directors of the Company from time to time and any one of them. Eligible Shareholder Is a person who, as at the Record Date, appears as a Shareholder of the Company on the Company’s register of Shareholders and who has a registered address in either Australia or New Zealand. Entitlement(s) the entitlement of an Eligible Shareholder to apply for Options. Entitlement and the personalised Entitlement and Acceptance Form accompanying an Eligible Acceptance Form(s) Shareholder’s copy of this Prospectus. Issue the issue of the Options comprised in the Offer. Offer the offer of Options pursuant to this Prospectus. Official Quotation official quotation on the official list of ASX. Opening Date the first day for the receipt of completed Entitlement and Acceptance Forms for the Options offered by this Prospectus, being 11 February 2010 unless otherwise varied by the Company. Option(s) an option to acquire one Share, each exercisable at $0.20 on or before 28 February 2013, and otherwise on the terms and conditions set out in Section 5.2. Prospectus this prospectus dated 28 January 2010. Share(s) a fully paid ordinary share in the capital of the Company. Shareholder(s) a shareholder in the Company. Shortfall Options Options not taken up by Eligible Shareholders pursuant to their Entitlements.

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CARNAVALE RESOURCES LIMITED — Capital/Financing Update 2010

64607_rns_2010-01-28_bc354307-f242-4396-bd74-14ac58f6d134.pdf