CAZALY RESOURCES LIMITED — Capital/Financing Update 2009

May 14, 2009

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15 May 2009

Dear Shareholder

On 11 May 2009, the Directors of Cazaly Resources Limited (“Cazaly Resources”) lodged a prospectus for a one (1) for three (3) non-renounceable entitlements issue (“Entitlements Issue”) to its shareholders to raise approximately $3,587,093 through the issue of up to 21,739,960 Shares (“New Shares”) with one free attaching option to subscribe for fully paid ordinary shares in Cazaly Resources (“New Options”) for every two New Shares subscribed for. The New Options are exercisable at 20 cents each on or before 28 February 2011.

All Shareholders registered at 5:00pm WST on 22 May 2009 will be entitled to participate in a nonrenounceable entitlements issue of New Shares and New Options on the basis of 1 (one) New Share for every 3 (three) shares then held. Generally, shares purchased on market in the period from 18 May 2009 to 22 May 2009 are NOT entitled to participate in the entitlement issue. If you have any doubt, please consult your sponsoring broker.

The New Shares will be issued at a cost of 16.5 cents per New Share with one free attaching New Option for every two New Shares issued. The latest trading price on ASX of the ordinary fully paid shares prior to the date of this letter was 18 cents on 13 May 2009.

All shareholders whose registered address is in Australia and New Zealand are eligible to participate. Shareholders whose registered address is outside of Australia or New Zealand are not entitled to participate in the offer.

Full details of the issue are contained in the Prospectus dated 11 May 2009, which was lodged with the Australian Securities & Investments Commission and the Australian Stock Exchange Limited on Monday, 11 May 2009 . The Prospectus is available on ASX’s website and the Company’s website at www.cazalyresources.com.au.

The Prospectus together with an Entitlement and Acceptance Form will be mailed to all eligible shareholders on or about 25 May 2009. Other key dates which shareholders should note are as follows:

18 May 2009………………..……. Ordinary Shares trade ex-Entitlements on ASX 22 May 2009…….……….………. Record date for determining Entitlements

12 June 2009……………..……… Closing date for acceptances 17 June 2009………….…………. Expected date for allotment of New Shares and New Options

Application for New Shares and New Options under the Entitlements Issue may only be made by completing the Entitlement and Acceptance Form which accompanies the Prospectus. Shareholders eligible to participate in the Entitlements issue should read the Prospectus carefully. For further information on the Cazaly Resources Entitlements Issue you should contact your professional adviser.

Yours faithfully

Nathan McMahon Managing Director

Clive Jones Managing Director